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Massachusetts Alcohol Task Force Reports To Treasurer

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One year ago, Massachusetts Treasurer Deborah Goldberg convened an Alcohol Task Force to review the state’s alcoholic beverages industry. The idea was to generate “forward looking” recommendations of ways to modernize the state’s alcoholic beverage regulations.  All matters relating to alcoholic beverages are broadly under the jurisdiction of the Massachusetts Alcoholic Beverages Control Commission (“ABCC”), an agency within the state Treasurer’s department.

In late 2017, the Task Force released a lengthy report containing numerous findings and recommendations.  https://www.mass.gov/news/alcohol-task-force-report

As an example, regarding grocery stores, the Task Force recommended:

  • That local licensing authorities (LLAs) have the authority to decide the number of liquor licenses to be issued to grocery stores and supermarkets in their community.  This would be a marked change from the current law, which puts a “quota” on the number of off-premises or “package store” licenses available in particular municipalities, based on their population; and
  • That the ABCC be able to require grocery stores and supermarkets to designate a separate and/or particular area to sell alcohol within the licensed building, preferably with a separate door entrance and separate from the general areas to purchase non‐alcohol products.

Another Task Force recommendation proposed adopting a rule that out‐of‐state drivers licenses be an acceptable form of identification that a customer is of legal age to purchase alcohol in Massachusetts.  Another calls for more flexibility regarding licensee manager eligibility, despite prior criminal records.

The Task Force’s report only contains recommendations – it does not by itself change anything.  Its recommendations are subject to legislative and administrative review and modification before any may be enacted. Even if its recommendations are substantially changed, or ignored, the report is worthwhile as a snapshot of an alcoholic beverages industry in transition, as well as a road map for routes into a future that may, or may not, be taken.

Possible New Tax On Alcohol Sales In Boston

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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

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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.

ABCC Investigates Pay-to-Play

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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

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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.

Bottle-Keep Service Comes to Boston

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A new restaurant will soon be opening in Downtown Crossing and with a unique service that will set it apart from other options in the city. Mast’ Restaurant located at 145 Province Street will have a bottle-keep service, which according to general manager Nicholas Garoufalis does not exist anywhere else in the city.

A bottle-keep service allows patrons to store unfinished bottles of liquor at the restaurant in their name for future use. The bottle will be kept in the name of the purchaser at the restaurant and can also be gifted to other friends. This service is seen in other parts of the country and is popular oversees in places like Japan.

204 C.M.R. 2.18 allows a section 12 licensee to reseal a bottle of wine for a purchaser to take off the premises. The regulation does not address liquors, or resealing to keep at the licensed premises.

204-4.03 prohibits certain practices which are close to the bottle-keep service but are factually different. These include:

(a) offer or deliver any free drinks to any person or group of persons;

(b) deliver more than two drinks to one person at one time;

(c) sell, offer to sell or deliver to any person or group of persons any
drinks at a price less than the price regularly charged for such drinks
during the same calendar week, except at private functions not open to
the public;

(d) sell, offer to sell or deliver to any person an unlimited number of
drinks during any set period of time for a fixed price, except at private
functions not open to the public;

(e) sell, offer to sell or deliver drinks to any person or group of
persons on any one day at prices less than those charged the general
public on that day, except at private functions not open to the public;

(f) sell, offer to sell or deliver malt beverages or mixed drinks by the
pitcher except to two or more persons at any one time;

(g) increase the volume of alcoholic beverages contained in a drink
without increasing proportionately the price regularly charged for such
drink during the same calendar week;

(h) encourage or permit, on the licensed premises, any game or contest
which involves drinking or the awarding of drinks as prizes.

The difference is that Mast’ will likely keep a regular price list for the bottle, only provide one drink from the bottle at a time, and possibly keep the price per drink in proportion to the single drink prices. Because this service differs slightly from bottle service it may cause change to how the licensing board views these services and how restaurants offer them.

The novelty of the service, and potentially the popularity of it, will determine whether it catches on at other Boston restaurants.

New “Direct Wine Shipper” License Included In State Budget

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The FY 2015 state budget signed by Governor Deval Patrick last week includes a provision that creates a new Direct Wine Shipper license in Massachusetts. The law will take effect on January 1, 2015 and will take Massachusetts off of a dwindling list of states that bar direct wine shipping, a list that includes: Alabama, Arkansas, Delaware, Kentucky, Mississippi, Oklahoma, Pennsylvania, South Dakota, and Utah. This change in Massachusetts law comes after intense pressure by industry groups and local sports figures.

The new law requires wineries, vineyards, or manufacturers to apply for a state-issued shipping license and pay a $300 fee, with a $150 renewal fee every year. All shipped packages must be marked to require a signature upon deliver with the words “CONTAINS ALCOHOL: REQUIRES SIGNATURE OF AND PERSONAL DELIVERT TO A PERSON LEGALLY AUTHORIZED TO CONSUME ALCOHOLIC BEVERAGES IN THE COMMONWEALTH” with a seal of licensure. The wine must be purchased and shipped to a Massachusetts resident who is 21 years of age and older. The new license allows shippers to deliver no more than 12 cases of wine to consumers each year.

Any person, firm, or corporation who violates these new provisions will be deemed to have engaged in a deceptive act or practice under chapter 93A and may be subject to license suspension or fines.

The new law does not address the delivery-truck law which requires a delivery permit for each truck involved in the delivery of alcohol, at a cost of $200 per permit. Most states allow for one permit to cover an entire freight company. According to the Boston Globe, State Representative Ted Speliotis of Danvers will push for a fleet-wide permit system if the existing law has a detrimental effect to wine shippers.

Summary of ABCC Actions – June 2014

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Ten recent decisions by the Massachusetts Alcoholic Beverages Control Commission (“ABCC” or “Commission”) were published in early June.

One “automatic amusement device” case was brought against a licensee, the Knights of Columbus lodge in Wakefield, for permitting gambling on its premises in violation of 204 CMR 2.05(2).  Two machines located in a room near the entrance were determined by investigators to be gambling devices.  The manager reported that the lodge had arranged a 50-50 proceeds split with the owner of the machines.  The licensee was ordered to have the devices removed immediately and the Commission suspended the license for ten days, with five days to be served and five days to be held in abeyance for two years, provided that no further violations occur.

Two cases involved restaurant licensees charged with purchasing alcoholic beverages from package stores (rather than from wholesalers, importers or manufacturers).  Whaleback Restaurant (Bourne) and Combination Improvement Club (Methuen) each stipulated to allegations of sales of alcoholic beverages purchased from a §15 package store, in violation of M.G.L. c. 138 § 23.  Evidence of the transgressions included admissions from the licensee, package store stickers on bottles and evidence of glue-like substances in the shape of a retail price sticker. Because the licensees had been in business for lengthy periods of time (10 years and more than 50 years, respectively) without a record of previous violations, the Commission issued each a warning.

Five “sale to minor decisions” were published, with four of the five cases involving “sting operations,” in which ABCC Investigators utilized underage operatives to attempt to purchase alcohol on licensed premises:

Licensees Sinnis Pub (Dudley) and Kwik Stop (Dudley) each stipulated to allegations of making a sale or delivery of alcoholic beverages to a person under 21 years of age after an underage operative working with ABCC investigators purchased alcohol without being asked for identification.  Because each licensee had been in business for ten years with no previous violations, the Commission issued each a warning.  Similarly, licensee Vorelli’s (Provincetown) was determined to have permitted the sale or delivery of an alcoholic beverage to a minor when an underage operative was in possession of an alcoholic beverage on its premises and was not asked for identification.  Because the licensee had been in business for more than thirty-five years with no previous violations, the Commission issued a warning.  Nor’east Beer Garden (Provincetown) also stipulated to a sale or delivery to an underage person after failing to request ID from an operative; a three day suspension was issued, to be held in abeyance for two years, provided that no further violations occur.

Bay State Wine & Spirits (Canton) was also investigated for alleged sales or deliveries of alcoholic beverages to underage individuals, partially in response to information provided to the ABCC by the Canton Police Department.  During a span of thirty minutes on an evening in October 2013, Investigators recorded two sales to underage individuals using a fraudulent ID (neither individual working with ABCC investigators) on the premises.  Subsequent to the incidents, the licensee made efforts to institute additional employee training and to confiscate fraudulent identification. The Commission suspended the license for five days, with the suspension to be held in abeyance for two years provided that no further violations occur.

Acting on an anonymous complaint filed with the Commission, ABCC Investigators reported a violation of M.G.L. c. 94 § 186 at The End Zone Sports Pub (Mendon) for falling below standards of purity.  Investigators reported finding twelve alcoholic beverage bottles that contained foreign matter (fruit flies).  Because the licensee had been in business for 10 years with no previous violations, the Commission issued a warning.

Finally, the license of the Hillside Country Club (Rehoboth) had previously been indefinitely suspended for violations of M.G.L. 151A §§ 14 and 15 (regarding payroll taxes).  Based on evidence introduced at a hearing in November 2013 that demonstrated the licensee’s good standing with the state and with wholesalers, the indefinite suspension was reversed to a suspension of time served (from January 17, 2013 to October 5, 2013).

Summary of ABCC Actions – May 2014

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Fourteen recent decisions by the Massachusetts Alcoholic Beverages Control Commission (“ABCC” or “Commission”) were published in early May.   Eleven of the fourteen decisions involved allegations of sales of alcoholic beverages to a person under the age of 21, two concerned “automatic amusement devices”, and one the rules for “club” licenses.  The moral of the May decisions?  If you have to be a liquor licensee caught violating a liquor law, be in business for many years before that happens – and don’t let it happen twice!

The club license decision was perhaps the most unusual.  The Polish American Citizens Club of Webster received an indefinite suspension from the Commission in July of last year for failing to file annual reports with the ABCC for the years 2003 – 2012, and also for having changed officers and directors without appropriate approvals from local and state licensing authorities.  The Club brought its records up to date, and the ABCC rescinded the indefinite suspension.  However, the Club went without a license from the end of July to the beginning of November.  The decision serves as a reminder to club licensees of the need to file annual reports with the ABCC concerning their officers and their compensation.

The two “automatic amusement devices” cases were brought for having such devices (which are licensed under M.G.L. c. 140 §177A) in rooms that were closed off and not in open view at all times.  The Commission cited the licensees under the Alcoholic Beverages laws for “permitting an illegality” on their premises, in violation of 204 CMR 2.05(2).  Each of the licensees installed “see-through” doors after the date they were cited but before the hearing, and was given a warning by the Commission, which noted that each licensee had been in operation for many years without previous violations (for 22 years and “over 100 years”, respectively).

Turning to the “sales to minor” decisions, ten of the eleven concerned “sting operations,” where ABCC Investigators send an underage operative into a licensed premises to attempt to purchase alcohol.  In the eleventh case, the ABCC investigators encountered an under-aged patron who had already been served an alcoholic beverage without benefit of a “sting”.  In each of the eleven decisions, the licensee stipulated to the violation, so only the penalty portion of the ABCC’s decision was really at issue.

Six of the eleven licensees were given warnings, mostly due to having been in business for extended periods without any previous violations. These included:  Panchos Mexican Restaurant (Pittsfield) (over ten years); Plainville Liquors (Plainville package store) (nineteen years); South Liquor Mart (Plainville package store) (more than twenty years); Xtra Mart (Spencer package store) (more than twenty years); and Powers Restaurant & Café (West Springfield restaurant) (a truly remarkable more than sixty years with no previous violations).  Another licensee with no previous violations was also given a warning, Rama Wine & Spirits (Norwood package store), not because of the length of time it had been in business, but because “The Commission considered the extenuating circumstances which occurred at the time of the offense and which later resulted in the death of the clerk’s family member…..”  The Commission did not elaborate within their decision as to the specific nature of the “extenuating circumstances”.

Four more licensees were presumably first time violators, but perhaps not in business for such significant periods of time, as they were each given three day suspensions, to be held in abeyance for two years provided no further violations occur.  These four included Seaside Wine & Spirits (New Bedford package store); The Thirsty Whale (Newburyport restaurant); King Jade Restaurant (Northridge); and Sharon Market (Sharon package store).

The last “stung” licensee was Knox Trail Inn (Otis).  Within the previous two (2) years, the Commission had already found a violation and ordered a three (3) day suspension, to be held in abeyance provided no further violations occurred.  Accordingly, for this second violation within two years, the Commission suspended the license for four days, of which two will be served and two to be held in abeyance for two years provided no further violations occur.  Plus, the Commission reinstated the prior suspension, so the licensee will serve a total of five (5) days, with two to be held in abeyance.

Robert W. Hurwitz and Eugene R. Richard Named Super Lawyers

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Partners of the firm Robert W. Hurwitz and Eugene R. Richard have both been named Massachusetts and New England Super Lawyers for the tenth consecutive year.  Bob was named in the field of construction law, and Gene handles a range of business and legal issues, including contract negotiation and enforcement, administrative and regulatory law, and corporate law.

The Super Lawyers list appears in Boston Magazine as well as the publication New England Super Lawyers, and recognizes the top five percent of attorneys in New England.

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