Monthly Archives: March 2014

OLCC Priority Violations

Compliance, OLCC,

OLCC Priority Violations.  There are 1000’s of licensed businesses in Oregon.  This can be great for Oregonians, but can present a real challenge to the OLCC in terms of monitoring them for compliance.  The OLCC must decide each day how to allocate its enforcement officers and focus its efforts across the state.  In order to maximize the effectiveness and coverage of their enforcement efforts, the OLCC focuses on a subset of licensed businesses and a subset of violations.

Licensees can benefit by understanding how the OLCC prioritizes their efforts.

That doesn’t mean that the OLCC is simply turning a blind eye to other businesses or violations.  For example, the OLCC’s minor decoy program involves visits to randomly selected businesses across the state.  In addition, even if a violation is not a “priority violation,” the OLCC may still take action if the violation is discovered.

The OLCC typically focuses on businesses with documented compliance problems.  The compliance problems may be documented from calls for service from local law enforcement, citizen complaints, or prior warnings or violations from the OLCC.  The take-away for licensees is that they should operate their business in a manner that minimizes calls for service and citizen complaints.  And, maybe even more importantly, licensees should take note if their business starts getting visits from local law enforcement or starts to receive citizen complaints.  These may be early warning signs of problems and provide a licensee with an opportunity to take corrective action BEFORE the issues develop into problems with the OLCC.

The OLCC also has identified what it considers priority violations and include the following:

Category I Violations

• Failure to maintain liquor liability insurance or bond (see Section 200L)
• Licensee convicted of a felony
• History of serious & persistent problems (HSPP)
• Restriction violation
• Unauthorized interest in a business (involves an unlicensable person)
• Operating while suspended

Category II/II(a) Violations

• Interfered with investigation
• Material false statement
• Under the influence of intoxicants on duty
• Failed to call police at Inspector’s request
• Denied Inspector/police officer access to premises (during business hours)
• Failed to promptly admit Inspector/officer (when premises is or appears closed)
• Unlawful drug activity on the licensed premises (II(a))

Category III/III(a) Violations

• Failed to verify the age of a minor
• Permitted minor to consume alcohol
• Sale to VIP
• Allowing VIP to consume alcohol
• Permitting disorderly activity
• Permitting unlawful activity

Licensees should understand the nature of these violations and be vigilant to ensure that they do not occur at their business.  Well drafted house policies, ongoing training efforts and trustworthy management and staff are essential to operating a profitable and compliant licensed business in Oregon.

Washington Distilleries Will Likely Be Able to Offer Samples This Summer!

Laws & Rules, WSLCB

Washington Distilleries Will Likely Be Able to Offer Samples This Summer!

Senate Bill 6226 went to the governor for signature on March 12th.  The governor has not yet taken any action on the bill.  If no action is taken, it is considered approved and moves forward.  The governor has until April 5th to take action.  Given the large amount of support for this bill on both sides of the aisle, it is not anticipated that it will be vetoed.  Assuming no veto, the bill would become law on June 12th.

The key elements of the bill are as follows:

  • Increases the annual spirits production limit for craft distillers from 60,000 gallons to 150,000 gallons.
  • Eliminates the three liter per day per person limit on the sale of spirits by a craft distiller for off-premises consumption.
  • Authorizes a craft distillery to charge customers a fee for spirits samples of 1/2 ounce or less served to them on premises, but does not require such a charge.
  • Authorizes any licensed distillery to:
    • sell spirits of its own production for consumption off the premises;
    • contract with, and sell spirits to other licensed distillers and manufacturers; and
    • provide for free, or for a charge, spirits samples of 1/2 ounce or less to customers on the premises, subject to a daily maximum of two ounces per person per day.
      • Samples will likely be restricted to unaltered samples by rule–no mixed samples.
      • Samples must be provided by someone with a current, valid MAST permit.
  • Authorizes special occasion licensees to pay for spirits immediately following a special occasion event.
  • Authorizes a special occasion licensee to charge reasonable booth fees to a distillery participating in the event.

You can monitor the progress of the bill here.

The TTB Issued a Ruling Regarding “Wine” Growlers

Laws & Rules, OLCC, TTB, , , ,

The TTB issued a ruling yesterday regarding “wine” growlers that should be of particular interest to Oregon licensees because it conflicts with Oregon law.  Oregon passed legislation in 2013 that made it legal under state law for most on- and off-premises licensees to sell growlers of malt beverage, wine and cider.  The OLCC has created an FAQ detailing this law change.  The Ruling is particularly important to any licensee that is currently selling wine growlers without a TTB taxpaid wine bottling house approval.  The OLCC could charge such licensees with permitting unlawful activity for such sales.  Permitting unlawful activity is a category III violation under Oregon law and is subject to the OLCC’s escalating penalty schedule.

The Ruling.  In short, the TTB Ruling has held that the “filling of growlers with taxpaid wine for the purpose of consumption off of the premises is an activity that may be conducted lawfully only by a qualified taxpaid wine bottling house” (emphasis added).  You can view the Ruling here.

Growlers are increasingly popular.  Growlers are increasingly popular with brewers and consumers.  Many, but not all, states allow certain licensees to sell growlers.  States are also increasingly enacting laws that allow brewers and other licensees to sell growlers.  In addition, advocacy groups are pushing to allow the sale of growlers in more states and to expand the privileges in states that already allow growler sales.  This Ruling could substantially impact the continued growth of this trend, particularly for wine and cider growlers.

What is a growler?  A growler is a container used to store, transport and dispense beer.  Growlers are typically made of glass or ceramic materials and have a mechanism for securely closing the container.  Growlers often hold 64 ounces, but can hold more or less than that.  A properly sealed growler can maintain the freshness of beer for a week or more.  The term “growler” is thought to date back to the late 19th century when fresh beer was carried from the local pub to one’s home using a galvanized pail and the sound that the CO2 made when it escaped from the lid as the beer sloshed around sounded like a “growl”.  Consumers can typically bring their own growler to a retailer, or purchase a growler from the retailer at the time that it is filled.

Growlers and federal law.  The TTB has issued formal guidance regarding beer growlers that clarifies that beer growlers are allowed.  The TTB’s Ruling on wine growler explains that federal law is different for the various alcoholic beverage commodities: malt beverage, wine and spirits.  Accordingly, the fact that beer growlers are permitted under federal law does not necessarily mean that they are permitted for other commodities, such as wine.

More on beer growlers.  The TTB makes a distinction between when a growler is a bottle or a large glass.  The determination turns solely on how the growler is filled.  If a growler is filled in advance of sale, it is a bottle.  If a growler is filled at the time of sale, it is a large glass.  The distinction is important because a growler that is considered a “large glass” is not subject to Federal labeling requirements and “bottles” are.  The TTB’s Ruling on wine growlers makes a similar distinction.

For those of us who were looking forward to the wide availability of wine growlers, this Ruling is disappointing.

 

How Can Barbershops and Salons Give Clients Free Beer and Wine Without a Liquor License?

Compliance, OLCC

How Can Barbershops and Salons Give Clients Free Beer and Wine Without a Liquor License in Oregon?

Many barbershops and salons offer this clients free beer and/or wine before, during, or after their service in Oregon.  In many states, this would be illegal unless the business had a liquor license.  Some barbershops and salons in Oregon have liquor licenses that allow them to sell beer and wine to their clients, but that is typically more the exception than the rule.

The OLCC allows business that do not sell food or beverage for on-premises consumption to provide beer and wine free of charge to guests. You primarily see this at barbershops, salons, spas, etc., but there is no reason that an art studio or other business that did not sell food and beverages could not do this provided that they complied with the requirements.

The requirements are as follows:

  1. No sales or charges for the wine;
  2. Wine must be provided to anyone in the business without discrimination.  In other words, there business cannot require that a customer make a purchase to obtain the free beer or wine.  In practice, although such a business must make the beer or wine available to anyone that walks in the door who asks, it typically is limited to customers by virtue of non-customers being unaware of the requirement.  That being said, there is the possibility for abuse;
  3. The business cannot sell food and beverage for on-premises consumption.  Such businesses need to have a liquor license;
  4. The provision of beer or wine at no cost cannot serve as an inducement to purchase entertainment or other services.  In other words, the business cannot offer a one hour service or class for $20 with all you can drink, and then at the end of the service or class, offer another class for $20 with all you can drink, etc.  The provision of free beer or wine must truly be incidental to the primary business which is not food and beverage related.

Any business considering offering free beer or wine in this manner should carefully develop policies for how to do so in compliance with Oregon law and regularly train their staff to ensure that the business does not expose itself to liability.  Such business practices can garner the attention of local law enforcement, the OLCC, or neighborhood associations and can result in regularly problems or general liability if not done correctly.

To see if a barbershop near your offers free beer, you might want read this article.

OLCC Privatization: The 2014 Oregon Legislative Sessions Ends With No Overhaul of the OLCC

OLCC, Privatization, Uncategorized

OLCC Privatization: The 2014 Oregon Legislative Sessions Ends With No Overhaul of the OLCC.

The Oregon Legislature adjourned on Friday March 7th.  Senate Bill 1559 that proposed to “modernize” the OLCC did not even make the list of the session’s biggest issues.

The likely reason for the quiet death of SB 1559 is that Oregon lawmakers signaled early that the proposal was essentially doomed.  In short, the bill would have allowed grocery stores, drug stores, and other retail locations with more than 10,000 square feet to sell distilled spirits while preserving the OLCC’s control over the supply chain.  The bill also would have potentially provided existing liquor stores with a path to continued viability.  This compromise on liquor privatization was apparently too much of a compromise–leaving most stakeholders unhappy without enough to bring them all together.

To be fair, privatization, modernization, or whatever you want to call it will have winners and losers.  Potentially big winners and big losers.  With stakes that involve so much money and the very viability of a business model in some cases, making everyone happy will likely be impossible.  For this reason, the proponents of privatization may have a better chance at the ballot box than the legislature.

The Northwest Grocer Association has filed numerous initiatives seeking to privatize the OLCC and to allow businesses with over 10,000 square feet to sell spirits at retail.  At some point, they will select one version to qualify for the 2014 ballot.  By filing numerous versions, the Association has been able to keep its options open with the goal of building the best coalition possible to back the ballot in the fall.  The initiatives have some commonalities with Washington’s Initiative 1183, which may or may not be a good thing.