Hurwitz, Richard & Sencabaugh LLP is pleased to announce that Bob Hurwitz and Gene Richard have been named Massachusetts and New England Super Lawyers for the fifteenth consecutive year, and that Dan Sencabaugh has been named a Massachusetts and New England Rising Star for the third time. Bob Hurwitz and Dan Sencabaugh received their honor in the field of construction law while Gene Richard received his recognition in the field of administrative law for his work as a liquor licensing attorney. The Super Lawyers and Rising Stars lists appear in Boston Magazine as well as the publication New England Super Lawyers. The Super Lawyers list recognizes the top five percent of attorneys in New England while the Rising Stars list recognizes the top 2.5 percent of attorneys 40 years old and under or in practice for 10 years or less.
ABCC Clarifies “Store Limit” Procedure
On January 1, 2016, the number of off-premises (or “package store”) liquor licenses any person or combination of persons will be authorized to legally hold in Massachusetts, directly or indirectly, will increase from five (5) to seven (7). While the increase will go into effect as of New Year’s Day, there was some confusion as to the mechanics to be used to go about getting a 6th or 7th license.
Normally, any prospective liquor licensee files an application with the local licensing authorities. Notice of the application is then published and abutters are notified of the application, a public hearing is held at the local level, and then the application is forwarded to the state Alcoholic Beverages Control Commission (“ABCC”) for their consideration and approval as well. Generally, at best, there is a two to three month lag between the initial filing of an application and actually receiving issuance of a license. Accordingly, in order to receive a license as soon after January 1 as possible, some prospective multiple licensees had filed applications with local licensing authorities in 2015, hoping to gain approvals in advance of January 1 and be ready to open as soon after January 1, 2016 as possible.
However, the ABCC recently issued an Advisory clarifying the procedures to be followed. In the Advisory, the ABCC basically said, “Not so fast!” The ABCC says that any person seeking a 6th or 7th liquor license cannot file an application before January 1, 2016. Since January 4 is the first business day in 2016, don’t look for companies that already hold 5 licenses to be open for business in additional locations until later in January or, more likely, February of the new year.
Powdered Alcohol In Massachusetts
The federal Alcohol and Tobacco Tax and Trade Bureau (“TTB”) recently approved the sale of four powdered alcohol products. This follows the approval and later rescission of approval by TTB of seven powdered alcohol products in 2014.
Although this time it appears the TTB approval will stand, the Massachusetts Alcoholic Beverages Control Commission (“ABCC”) quickly issued an advisory ruling essentially stating “NOT IN MY COMMONWEALTH!” Two days after the TTB approval, the ABCC Advisory stated that Massachusetts laws prohibit the importation, sale, and manufacturing of powdered alcohol in Massachusetts.
The ABCC reasoned that:
1. M.G.L. Chapter 138 regulates both alcoholic beverages and alcohol;
2. Powdered alcohol is not a “liquid”, and thus not an “alcoholic beverage”; and
3. Existing liquor licenses for wholesalers, manufacturers and retailers only authorize the sale of alcoholic beverages – and thus, not alcohol in powdered, non-liquid form.
Some wags were heard to wonder if the ABCC were called only the Massachusetts Alcohol Control Commission whether the Advisory would have come out the other way. California, for example, took a much more welcoming approach to powders years ago in Regulation 2557.
The company that came up with “Palcohol” extols its convenience, portability and flexibility, noting that hikers for example would be able to enjoy an alcoholic beverage by a stream in the woods after a long day on the trail, without having had to carry the beverage part of their beverage all day long.
Opponents note the same convenience, portability and flexibility of Palcohol might prove irresistible to minors and other mischief-minded or just careless individuals.
Next up? How the state will regulate different forms of marijuana if legalized.
Possible New Tax On Alcohol Sales In Boston
The Boston Globe reported today that two Boston city councilors have filed a “home rule petition” seeking approval of a 1 to 2 percent sales tax on all retail sales of alcoholic beverages within Boston (whether in restaurants, bars, supermarkets or package stores). The substantial revenues that would be collected – expected to reach millions of dollars annually – would be earmarked exclusively for support of substance abuse prevention and treatment programs.
The proposal was offered by City Council President Bill Linehan and City Councilor Frank Baker. In order to go into effect, it would need to first be passed by both the Boston City Council and the State Legislature. The Globe reported that Mayor Walsh released a statement sympathetic with the goals of treatment programs, but was non-committal regarding passage of the proposed tax. Alcoholic beverages are already subject to an excise tax, and a state-wide sales tax at the retail level passed by the Legislature in 2009 was repealed by voters in a statewide referendum in 2010.
The Globe also reported that the proposal for a new tax on alcohol sales was quickly opposed by several industry groups.
Summary of ABCC Actions – January 2015
Summary of ABCC Actions
Eight recently published ABCC decisions decided cases dealing with gambling devices on licensed premises, sales of alcohol to a minor and intoxicated persons, and purchase of alcohol by a restaurant from a non-wholesaler.
The non-permitted gambling devices cases involved the Billerica Elks Lodge, American Legion Post in Kingston, and the Malden Elks and Moose Lodges. In the former three cases, the ABCC suspended the clubs licenses for five days, two days to be served and three to be held in abeyance for two years provided no further violations occurred. The ABCC also stipulated that each licensee not possess in or on the licensed premises any automatic amusement device or video poker machine. The Billerica Elks Lodge received only a three day suspension, with all three days to be held in abeyance for 2 years pending any further violation. However, the Lodge had also not filed required annual reports with the ABCC with the names and addresses of corporate officers and the compensation paid to employees, so the ABCC added a separate 3 day suspension for this, with those 3 days also to be held in abeyance for 2 years (the suspensions to run concurrently). Also, the ABCC directed the Lodge to file annual reports for the years 2003 to 2014 within one week of receiving their decision, or face “indefinite suspension” of their license.
GPS Wine & Spirits in Brookline was found to have made a sale to a minor, and was given an eight day suspension, with one day to be served and seven to be held in abeyance for two years. Interestingly, the business had an Advanced ID Detection Scan machine, but when the ABCC investigator passed the fraudulent ID used by the minor in question through the scanner, it was not approved.
The ABCC ordered a four day suspension (2 to be served and 2 to be held in abeyance for 2 years) for the Sinnis Pub in Dudley, after they were found to have provided several “shots” of alcohol to an intoxicated patron. An ABCC investigator on hand saw the patron, determined he was intoxicated, and then viewed sales of several shots to the patron thereafter within a relatively brief period. When asked for identification by the investigator, the intoxicated patron responded with a succinct “verbal salute” (set out in quotes in the ABCC decision) which evidenced truculence if not intoxication!
The Singapore Restaurant in Fitchburg also was found to have made a sale to an intoxicated person, as was given a six day suspension, two to be served and four to be held in abeyance for two years
Finally, the Kathmandu Spice Restaurant in Arlington was found to have repeatedly purchased alcohol from a package store rather than a wholesaler, and was given a thirty day suspension and ordered to destroy the alcoholic beverages in question. The restaurant was also given a warning for failure to post required notices of penalties.
New Legislation May Change Wine Shipper License
Before the new direct wine shipper license will go into effect Beacon Hill has already started to tinker with the statutory limits of the license. This week Rep. John Sciback a Democrat from South Hadley and the House Chair of the Joint Committee on Consumer Protection and Professional Licensure introduced a bill that would amend the s. 19F license to allow for direct shipments to re-sellers, and not just consumers. This change may create an end-run around wholesalers for manufacturers looking to move product into the hands of retailers. See the full text below.
Section 19F of chapter 138 of the General Laws, inserted by section 162 of chapter 165 of the acts of 2014, is hereby amended by striking out subsection (b) and inserting in place thereof the following subsection:-
(b) Under this section, a direct wine shipper licensee may make sales and delivery of wine: (1) at retail directly to residents of the commonwealth who are 21 years of age or older, for personal use and not for resale; (2) at wholesale in kegs, casks, barrels or bottles to a person licensed pursuant to section 12, 13 or 14; provided, however, that all direct deliveries of wine from a winery to a licensee pursuant to section 12, 13, or 14 shall not exceed 250 cases of wine annually; (3) at wholesale for the sole purpose of resale in containers in which wine was delivered to any person licensed pursuant to section 15; provided, however, that all direct deliveries of wine from a winery to a section 15 licensee shall not exceed 250 cases of wine annually; (4) at wholesale to a person licensed pursuant to section 18, 19 or 19B; (5) at wholesale to churches and religious societies, educational institutions, incorporated hospitals, homes for the aged, manufacturers of food products and manufacturers of drugs and chemicals pursuant to section 28; or (6) at wholesale to a registered pharmacist holding a certificate of fitness pursuant to section 30.
Wine Industry Preparing For Changes In The New Year
Starting January 1, 2015 wineries, vineyards, and other wine manufacturers can begin the process of becoming licensed to directly ship wine to Massachusetts consumers. This change in M.G.L. c. 138 was included in the FY 2015 Budget signed into law by Governor Deval Patrick.
According to the Boston Globe at least 91 wineries have already applied for the new license. Because both manufacturers and the trucks used for transporting wine are regulated by the state FedEx has also applied for an additional 700 licenses to transport.
Massachusetts is one of the leading states in the nation in per capita wine consumption and the new direct wine shipper license will open a new avenue for out of state wine manufacturers.
The new license will allow manufacturers to deliver directly to consumers, but not allow sales to Massachusetts retailers. The ABCC issued an advisory on direct wine shipping that will help guide the wine industry in interpreting the new changes. This advisory includes who qualifies for the new license and how to comply with reporting obligations as well as licensing fees.
ABCC Investigates Pay-to-Play
According to the Boston Globe the Alcoholic Beverages Control Commission (“ABCC”) has issued subpoenas to breweries, distributors, and retailers as part of an investigation into whether breweries or distributors have made payments to retailers for shelf and tap space, a practice known as pay-to-play. This practice is illegal under both state and federal law
Examples the Globe gives for what may constitute pay-to-play includes salesman offering a retailer a cut of the commission or marketing budget, a brewer offering to donate additional beer to a restaurant, a bar demanding a rebate for stocking company’s beer, or a distributor giving free equipment.
The Globe article mentions that the ABCC has not sanctioned a a business for pay-to-play in at least 18 years. This coupled with the fact that the number of investigators in the agency is in decline and the number of craft breweries in the state is growing creates an environment where there is more competition for shelf space and less of an opportunity for oversight.
Summary of ABCC Actions – November 2014
The Massachusetts Alcoholic Beverages Control Commission (“ABCC” or “Commission”) recently published five new decisions:
First, the ABCC ruled on an appeal from a Chicopee decision to deny a §15 all alcohol license transfer. In the appeal the appellant, Mormax Corporation d/b/a BJ’s Wholesalers, argued that the town’s decision to deny a license transferred from Winn Liquors, Inc. was arbitrary and capricious.
After a Local Board hearing on May 17, 2012, Chicopee cited two reasons for denying the transfer application: 1) the lack of public need or interest for another liquor license in the immediate area; and 2) an overflow crowd of individuals expressing opposition to the transfer at the public hearing.
The Commission found as the appellant argued that the decision from the local board was inadequate as it lacked legally sufficient ground by not setting forth anything other than insignificant general findings. The Commission noted that at least six residents who spoke in opposition were owners of competing package stores and two others were current or past employees of competing package stores. In doing so the Commission restated in the decision that competition should not be considered when determining whether a license should be granted or transferred.
Further, the appellant argued, and the Commission agreed, that the Local Board failed to consider the “preferred zone” where the new licensee would be located which is separate from residential areas, close to where the original licensee operated, and in a commercial district with a portion of the residents coming from outside of the community.
The matter was remanded back to the local board with the recommendation that the license transfer be granted.
The Commission also held a hearing regarding a violation of 204 CMR 2.05 at Pier 37 Boathouse in Falmouth. After an investigation it was found that the licensee had failed to complete the fire and building safety checklist as prescribed by the Fire Marshal prior to each opening. The licensee stipulated to the violation and the Commission suspended the license for 16 days of which nine days were held in abeyance for a period of two years.
In April, the Commission held a hearing regarding licensee Ancient Marinere in Foxborough. Investigators allegedly discovered fruit flies in multiple liquor bottles during an investigation on August 23, 2013. Citing a violation of 204 CMR 2.05(2) to wit: M.G.L. c. 94 § 186, the ABCC suspended the license for two days with the full suspension in abeyance for a period of two years.
The Commission heard an appeal from a Grafton decision to revoke a §15 wine and malt beverage license from Village Dairy after a sting operation allegedly caught the licensee selling alcoholic beverages to a person under 21 in violation of M.G.L. c. 138 § 34. The Commission found that the penalty by the board was unreasonable as the Commission has consistently held that the policy behind a sting operation should be the education of licensees in the risks associated with selling alcoholic beverages without requesting proof age.
The Commission remanded to the Local Board with the recommendation the license be suspended for 20 days and that the licensee submit an application for a change of manager.
Finally, the Commission held a hearing regarding an alleged violation at East Side Athletic Assn. of Malden. There investigators found three devices in the club characterized as gambling devices. After finding there was a violation of 204 CMR 2.05(i) the Commission suspended the license for 20 days with 5 days held in abeyance. The devices were removed and the licensee was ordered not to possess any automatic amusement devices or video poker machines.
ABCC Issues Advisory On New Sunday Opening Time
This month the ABCC released an advisory highlighting and explaining the new changes to Sunday opening times for off-premise licensees.
Effective on October 23, 2014 off-premise licensees may sell alcoholic beverages beginning at 10:00 a.m on Sundays. However, this new opening time does not come without certain actions that must be taken by the licensee.
In the advisory the ABCC writes, “Although under the law, these licensees are entitled as a matter of right to open at 10:00 a.m. and as such do not need the approval of the Local Licensing Authorities, licensees must notify the Local Licensing Authorities about the change of hours.”
This step should not be an overwhelming deterrence to the new early opening times as it can be completed by following the the change of hours process found on the ABCC’s website. Through this process licensees will be able to notify their local licensing authority of their new opening time. Since the law does not go into effect for another twenty days this gives licensees plenty of time to complete this process in time for early opening.
If a licensees fails to follow this process the licensee will be prohibited from making sales at the earlier time.