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ABCC Clarifies “Store Limit” Procedure

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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.

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.

ABCC Issues Advisory On New Sunday Opening Time

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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.

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.

Senate Passes Bill to Allow Sale of Alcohol Before Noon On Sundays

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The Massachusetts State Senate passed a bill today which would allow off-premise licensees to sell alcoholic beverages at retail before noon on Sundays. The bill was sponsored by State Senator Steven Howitt of Seekonk. The bill will now be considered by the House.

The full text of the bill:

SECTION 1. Paragraph 52 of section 6 of chapter 136 of the General Laws, as appearing in the 2010 Official Edition, is hereby amended by striking out, in line 168, the words “12:00 noon” and inserting in place thereof the following words: – 10:00 a.m.

Recent ABCC Decision a Win for Liquor License Applicants

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The Massachusetts Alcoholic Beverages Control Commission (ABCC) recently issued a decision in favor of a liquor license applicant in Falmouth.

Murphy’s Package Store (Murphy’s) applied to the Falmouth Board of Selectmen to move from its existing Main Street location to new premises approximately four miles away in West Falmouth. After hearing testimony both in favor and opposed to the move, the Board of Selectmen voted 3 to 2 to deny the application. The issues of traffic and parking at the new location were hot topics at both the Falmouth hearing, and at the subsequent appeal before the ABCC.

The ABCC disapproved of the Board of Selectmen’s denial, and remanded the matter back to the Board with the recommendation that the application be granted. In doing so, the ABCC made statements that may help counter some of the common tactics used by opponents to liquor license transfers.

All cases involving the issuance or transfer of liquor licenses in Massachusetts involve a determination of a public need for the license. However, a licensing board in reaching a decision concerning public need is required to make specific findings that are supported by the record. Regarding Murphy’s, the ABCC stated that the Board of Selectmen’s denial was inadequate as it merely recited a summation of the opponents who testified about parking and traffic. The [ABCC] finds this decision to be a general finding (emphasis added). To distinguish, the ABCC cited the case Exotic Restaurant Concepts and stated that [r]ecitals of testimony do not constitute findings. See Exotic Rests. Concept, Inc. v. Boston Licensing Board, Suffolk Superior Court, C.A. No. 07-3287 (Borenstein, J.). In denying the application for transfer, the Board of Selectmen merely recited the statements of the opponents concerning traffic and parking, and this is insufficient to deny a license transfer. In fact, the record reflected that adequate parking was available and neither the Police Chief nor Fire Chief had any objections to the transfer.

Additionally, the ABCC refused to give any weight to one opponent’s statement that there existed another package store located less than ½ mile away from the proposed transfer location. The ABCC stated that “[t]his distance between the existing package store and the proposed location of Murphy’s was not verified to the [ABCC], nor was it explained how this distance was calculated or calibrated.”

The ABCC noted that a single liquor store in one area of a town could be considered a monopoly. The ABCC in its decision stated that “the action of the Local Board in denying this application has the effect of continuing in place the monopoly held by the sole § 15 license in this section of the town.”

Based on the ABCC’s Murphy’s decision, liquor license applicants are advised to prepare to substantively counter objections that may be raised by opponents. Common general objections such as traffic, parking, and proximity of other package stores can be countered by a license applicant who builds a strong and detailed record at the hearing.

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