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Revisions to Beverage Law

Posted By Brook Bristow, Thursday, May 25, 2017
Hello, Together SC members!

As you’ll recall, since last summer, nonprofits across South Carolina have had to deal with the fallout from the new DOR and SLED crackdown on special events, which has included donated alcohol from breweries, wineries, and distilleries to your organizations. If you need a refresher, you can revisit a blog I wrote last year.

You can also go back to some of the discussion had on the Together SC blog about the issue. The bottom line was that after the crackdown, producers were not longer allowed to donate product to nonprofit organizations. The only donations that could occur were from wholesalers, and even then, nonprofit special events had to meet several criteria in order to receive such a donation.

Well, we have good news! This year, the South Carolina General Assembly heard those concerns and passed S. 114, which will fix many of the issues experienced over the last year. The bill is expected to be signed by the Governor this week. So, what is being fixed and what will the procedure be going forward? Here is a quick rundown:

How will licensing work? 
In order to receive any donation, you’ll need to apply to DOR for a nonprofit special event permit. Most nonprofits have undoubtedly done this before and are aware of the process which is staying pretty much the same. You’ll be limited to four of these permits each year and each event cannot last more than 72 hours.

Who can donate? 
You can solicit and receive donations from both producers and wholesalers of alcohol. For whomever you’re approaching, they need to be licensed in South Carolina, even if you’re talking to an out-of-state entity. This means that breweries, wineries, importers, and distilleries may donate. It also means that for the first time, brewpubs may donate as well.

What can be donated? 
For alcohol, you can have beer, wine, and spirits. It would also include other malt beverages or fermented beverages. No matter what is being donated, it must be something registered with DOR. Unfortunately, products produced at home by non-professionals such as beer and wine are not allowed.

How will a donation work? 
No matter if a producer or wholesaler is donating to you, the donation will need to be transferred from a wholesaler. You can either pickup the donation at the wholesaler’s place of business or have it delivered to the event site, which you will need to be in control of - meaning, your license will need to have that date on it in addition to the event date if it is earlier. You'll need to have your license in hand from DOR under either circumstance. The wholesaler will also provide you with an invoice. You’ll need to have this along with your license at the event.

Can we get help at the event? 
Yes, a producer will be able to provide employees or agents to assist in pouring and may also provide equipment to pour. Whomever they provide will need to have received the appropriate alcohol training, of course. A wholesaler may not provide employees or agents to pour. However, it may provide you with equipment to pour.

So, that’s all of the good news. The bad news is that unfortunately, this new law won’t take place until 6 months from now - meaning, we’re looking at November for when things can get back to normal. In the meantime, you’ll have to continue to operate how you have been for the last year. 

If you need any assistance, feel free to reach out.

Brook Bristow

Owner, Bristow Beverage Law

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Tags:  beverage law  Legal  Legislative  Together SC 

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Beverage Laws - FAQ with Brook Bristow

Posted By Brook Bristow, Bristow Beverage Law, Saturday, August 6, 2016

Thank you everyone for attending the session on Wednesday. I enjoyed presenting to you. As promised, here are answers to many of the questions you asked during the webinar. These answers are designed to address multiple questions at once that were related to one another.

As a lawyer, I’m ethically required to tell you that the following answers to your questions should not be construed or treated as legal advice and that nothing herein is intended to create an attorney-client relationship. The creation of the attorney-client relationship would require direct, personal contact between you and our firm and would also require an explicit agreement by the firm that confirms that an attorney-client relationship is established and the terms of that relationship. You should not act or rely upon information contained in these materials without seeking professional legal advice. Ok, end disclaimer. Thank you again!

FAQ

We have an event in the fall. In years past, we have always purchased the beer from the Budweiser distributor. Will we be allowed to continue to do this? Or, will we have to start purchasing the beer from a store?

You can continue to purchase the beer from the distributor. Just remember that you can also request that it be donated so long as your event meets the criteria of providing an economic benefit.

Is the law stating that church organizations charities with a 501c3 are defined as a retailer? 

Any nonprofit holding a special event is now classified as a retailer. It doesn’t matter if it is a church.

If we hold a fundraiser, where our volunteers serve and handle all products, are we retailers?

You’re retailers once you enter into the system. Once that special event permit is acquired, you’re a retailer. But simply having a fundraiser and having your volunteers serve doesn’t make you a de facto retailer. However, it is probably best to proceed like you are.

As long as we have someone else hired to pour the beer at our event, we are able to accept the donation of the alcohol?

Assuming you meet the requirements, you can accept the product regardless. Now, the pouring is another issue altogether. Hire a service or get volunteers. That is the best way to comply.

We have had a distributor serve as an event sponsor in the past. They would send us a check. We would then go purchase their product from a local store. Is this still allowed?

This is a gray area right now. You’re probably better off having them donate product as opposed to cutting you a check if you have a special event permit.

Can we accept donations from liquor stores? Can liquor store employees act as bartenders?

I’d be careful with this. Retailers aren’t supposed to sell or donate to other retailers. You’re probably not prohibited from having those employees volunteer or work for you, though.

If our nonprofit gives away donated alcohol using a professional bartending service at an event -- does not sell it -- are we still considered a retailer?

If you have a special event permit, you’re a retailer. That’s what gets you - not that you have a bartending service. But as a retailer, having a bartending service is wise.

We are planning a spirit tasting at our upcoming benefit concert. Do we need to prove the economic impact in some way to qualify for the exception?

You might have to prove it to your wholesaler assuming you’re having the product donated.

Just to clarify, assuming the 3-prong test is met, and the donation is permitted -- only wholesalers may donate?  Producers themselves may never donate, correct?

Yes, only wholesalers may donate. Producers cannot donate product at all.

Can we accept a wine tasting donation from a South Carolina based winery or brewery?  What about out of state producers?

By tasting donation, I’m guessing you mean product in general for your event. From a brewery - no. From a distillery - no. From an in-state winery - possibly. SC Wineries have an ability to do various things within the tiers if their wine is made from 60% SC juice.

If we have an event at a venue (hotel) that has a bar and has a permit already, if we are paying for the alcohol to be provided by the hotel, will we (our organization) need to have a separate permit for the event?

If alcohol is being sold, it is always wise to get a permit. But, assuming you have purchased the alcohol and are having the venue serve it, then you might be able to not with certain circumstances.

Can a restaurant donate alcohol to our event?  In our case the restaurant has purchased the alcohol from their distributor and then donated the product they purchased to us.

You’ll probably be ok here, but tread carefully.

Can a producer donate to a nonprofits event or does it have to come from the wholesaler?

Product must come through the wholesaler without exception.

I am an independent contractor (LLC). I have one liquor client - it is a producer. I market and promote. Am I restricted as if I AM a producer, or is there wiggle room?

I’m unclear about the circumstances here. If the question is what can you do as a producer, then the answer is nothing. No donations at all.

If beer/wine is purchased retail for an event, not donated, can it be given away at the event and still be in compliance?

Nothing requires you to sell product at an event. Of course, you might still need a proper permit.

Would working with a wholesaler be more of a hassle for producers? Meaning...are they less likely to donate to us because of this process?

Producers cannot donate any longer, so they are completely out of the process. Most, of course, are happy to donate time to come to events and help. However, what they are allowed to do for events is now dramatically limited.

Can individuals (not wholesalers or producers) still donate alcohol (bottles of wine, keg, etc.)?

This is another area to be careful in.

If you are having an event at a brewery that produces the beer on site and serves on site, is it legal for the producer to serve the beer and donate a portion of the proceeds from sales to your nonprofit?

Most likely, this would be ok. Many nonprofits work with breweries to have events there where a portion of the proceeds goes to the organization. Such a practice is probably still ok.

What form(s) do we have to fill out for special events as "retailers" to be in compliance with SLED and SC DOR?

Use the ABL-900 form that you can download from the DOR website. It will be pretty easy to navigate. (Here is a link to the form: https://dor.sc.gov/forms-site/Forms/ABL900_10222014.pdf.)

What legislative action can we take regarding these beverage laws?

There will be legislation filed next year that will address the nonprofit donation issues. SCANPO will be working with our team to get you the information so that you can assist then. In the meantime, write or call your State Representative and Senator to alert them to the issue. Most will already be aware of it. (Here is a link to find your representative: http://www.scstatehouse.gov/legislatorssearch.php.)

It is required for you to have a license if you are having an event at a brewery? Or is the liability on them in that case?

An event at a brewery is perfectly fine. Odds are that you wouldn’t need a special event permit for that.

Is there any effect on long-term, existing donation agreements: For example, if a wholesaler agreed to donate to an event for 5-year period, is that affected?

This situation would need to be reviewed with your wholesaler that the agreement is with. Again, a wholesaler can still donate; however, you might want to check with them to ensure that they still want to and can given the new requirements for donation.

How can we prove that we are benefiting state revenue with our event?

There isn’t a litmus test, and most likely, you won’t have to prove it. But you do need to comply with the request to provide an economic benefit. Generally, that can be done by just having people come to your event. It might not be a bad idea to track where the attendees are from. Showing tourism would be an easy way to make your case if it came down to it.

Can we include a bottle of wine or beer in a silent auction package?

It’s most likely that there isn’t a problem with that.

In the past we had Budweiser donate money to us, then we turned around and bought beer with it. So this is not allowed anymore?

Be careful with this if you have a special event permit. Have product donated, if possible.

Are manufacturers allowed to sell their products to nonprofits at deeply discounted rates?

No. Manufactures cannot sell their products to nonprofits at all. All products must come through a wholesaler whether that product is purchased or donated.

What about using alcohol (wine and beer) from last year at this year's benefit?

Well, just from a beer producer standpoint, I’d be careful using year old beer that isn’t a bigger ABV beer. That beer probably isn’t work serving. That problem doesn’t necessarily exist with wine. Now, using product that you already have in your possession is probably fine.

What are the implications of a ticketed event for a nonprofit fundraiser?

If you have a ticketed event, then you should get a special event permit.

If you have a free event for major donors and there is no fee to come to the event, can you have alcohol donated?

Probably so. Just remember the factors necessary to get a donation.

If a local producer is participating, they bring their own product, provide the sample tastings and then take the left over product back with them, is that still considered a donation?

The producer cannot bring the product. The only possible exception is an in-state winery that meets certain criteria.

AB L-900 permit...is it required if you have a ticketed or team event (dance, gala, golf tournament) and the beverages are purchased but given away at the event?

ABL will most likely consider alcohol to be included in the ticket price, so it would be best to get the permit.

Can you clarify difference between producers, manufacturers, and wholesalers?

Manufacturers and producers are the same thing. Just a different way of saying it. The same as saying wholesalers and distributors. It’s just a different way of saying the same thing. The difference between manufacturers/producers and wholesalers is that the manufacturer is the one that makes the product and the wholesaler is the one that purchases the product from the manufacturer to sell to a retailer.

If you purchase the alcohol for the event and charge a ticket price, will we be able to distribute to attendees?

By distribute, I am guessing you mean serve it to the attendees. Yes, of course. That would be included in the ticket price.

 

Thank you everyone for your questions. I hope my responses have been helpful to you, but remember you can always reach out to the SCANPO team with any additional concerns.

Brook Bristow

Owner, Bristow Beverage Law

Tags:  beverage law  Legal  Legislative  SCANPO 

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Brewery Beer Donations at Risk

Posted By Brook Bristow, Bristow Beverage Law, Friday, July 22, 2016

Hi SCANPO friends, 

As someone deeply involved in the alcoholic beverage industry, I'm concerned with SLED's (SC Law Enforcement Division) anticipated stepped-up enforcement of a 20-year-old state law prohibiting breweries from donating their products to nonprofits.

It's always been the policy, but it hasn't been wholly enforced until now; that's why everyone is getting upset.

I predict that the crackdown will ultimately affect manufacturers of wine and spirits, along with any charitable groups seeking alcohol donations for special events. You can learn more about how these laws will affect you (and whether there's a need to change these laws) by joining me on August 3 at 11 am for my Wednesday Webinar presentation.

This is huge - it's not just about beer. The new focus on upholding these laws will affect everybody.

You can find out more by reading my overview on the policy and how it will affect nonprofits.

I hope you can join me on August 3.

Brook Bristow

Beverage Law Attorney and Owner of Bristow Beverage Law

P.S. Read more about SLED's plans in a recent Post and Courier article.

Below is a picture of Brook in front of the Cloud Gate in Chicago, IL.

Tags:  Advocacy  beer donations  fundraising  Legal  nonprofits  rules  SLED 

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