Type 17 (Beer and Wine Wholesaler) and License Type 20 (Beer and Wine Off-Sale Retailer) are issued in conjunction, the privileges associated with the combination license are not equivalent to those of the 02 Winegrower’s License. A Type 17 License “permits incidental sales to other supplier-type licensees” and a Type 20 License “authorizes the sale of beer and wine for consumption off the premises where sold.” The joint issuance of the two licenses is authorized by Section 23378.2 of the California Code and permits the issuance of a package off-sale beer and wine license to a licensed California wholesaler if only wine is sold from the retail premises. It is significant to note that when shipping out-of-state, a 17/20 licensee is considered a retailer resulting access to thirteen states.
General Counsel of the California ABC recently revealed that many 17/20 permit holders were not fulfilling all requirements of the combination license and were instead operating more like Type 02 (winery) licensees because many were unaware that 17/20 permit holders must act as a bona fide wholesaler in order to comply with the provisions of the license. Please note that to operate as bona fide wholesaler, a 17/20 permit holder must sell to retailers, in general, at least every 45 days.
Section 23779 - No wholesale license shall be issued to any person who does not in good faith actually carry on or intend to carry on a bona fide wholesale business by sale to retail licensees of the alcoholic beverage designated in the wholesale license, and the department may revoke any wholesale license when the licensee fails for a period of 45 days actively and in good faith to engage in the wholesale business…Sale by a wholesale licensee to himself as a retail licensee is not the transaction of a bona fide wholesale business.
Effective January 1, 2012 ABC created a new license (limited off-sale wine license. Section 23393.5 includes specific exceptions to standard retail licensing investigation requirements for this license type. This license is designated as “Type 85” by the CA Department of Alcoholic Beverage Control. The use of online ordering of alcoholic beverages has significantly increased with the proliferation of the internet in the past decade. California statutes have not kept pace with the changing needs for licensees who desire to conduct their business by on-line computer, telephone, or direct mail. Prior to this statute, a licensee who wanted to make sales of wine directly to the consumer via the internet was required to make application for an off-sale beer and wine license, together with a beer and wine wholesaler license. This combination, most commonly referred to as a 17/20, required the licensee to maintain a bona fide wholesale business (Business and Professions Code section 23779). The Type 85 license enables a licensee to make direct sales of wine to consumers via the internet, direct mail, or telephone from a premise not open to the public, without the requirement to also hold a wholesaler license. The Type 85 is identified as an “off-sale retail” license and most provisions related to investigating retail license types are applicable unless specifically exempted by the statute. Tied-house prohibitions for off-sale licensees are applicable to this license type unless specifically exempted.
Application procedures for a Type 85 are similar to those for other retail licenses, although some ABC Act provisions such as those related to number limitations within counties and establishing public convenience or necessity do not apply. Applications are subject to a $100 original fee and $278 annual fee. This new license does not replace the 17/20 combinations for those who wish to operate as a wholesaler in addition to selling wine to consumers. The following highlights some of the privileges and restrictions associated with the Type 85 license.
· All sales of wine must be conducted via direct mail, telephone, or the internet.
· The Type 85 license prohibits the licensee from conducting sales directly to the consumer from a premise open to public.
· The Type 85 licensee can assist a non-profit organization holding a temporary wine license in conducting a wine tasting, but this privilege shall only apply to wine produced for the Type 85 under a brand they own exclusively and have donated or sold to the licensee for the event.
· The Type 85 licensee can give or sell wine to a non-profit organization.
· The Type 85 licensee is not authorized to conduct an instructional tasting event for consumers pursuant to a Type 86 license.