Alert: New California Law Allows Distilled Spirits and Wine Events

Suppliers May Give Free Wine, Distilled Spirits, Food and Entertainment At Private Events

On September 30, 2008, Governor Schwarzenegger signed into law a bill authorizing distilled spirits and wine suppliers to hold private events and provide free wine, distilled spirits, food and entertainment to guests.  This new law blows a hole through current prohibitions on providing free goods or other things of value to consumers in connection with the sale or distribution of alcoholic beverages.

Prior to passage of Assembly Bill 2293, suppliers relied on the "private party exception" to hold certain events under Business & Professions Code section 23399.1.  During recent years, suppliers held events at unlicensed premises following the strict requirements of the private party exception to hold events for consumers without running afoul of the prohibitions on favoring a particular retailer and on giving away free goods.  The California Department of Alcoholic Beverage Control ("ABC") found some of these events to be problematic and District Offices attempted to shut down events.  ABC rescinded its policy guidance on what constitutes private events and tried to impose constraints on the commercial use of the private party exception.

The new law provides a safe harbor for private events.  It allows suppliers of distilled spirits and wine to host a dozen private parties each year for up to 400 guests, and even more parties for a more discrete guest list.  Beginning January 1, 2009, distilled spirits suppliers and wineries can provide free wine, distilled spirits, food and entertainment under the following conditions:

1) Invitation Only: Guests must be invited. Invitations must be made by email, telephone, mail or in person. Invitations cannot be made by other means. Guests must be 21 years of age or older. Each guest may bring one guest.

2) Responsible Host: The supplier hosting the event must be present. The host supplier must pay for the free alcoholic beverages, food and entertainment. In other words, a supplier cannot require a wholesaler to pay for all or part of the party.

3) Party Size: The total number of attendees cannot exceed 400.

4) Party Rules: The event cannot exceed four hours. The event must end by 2:00 a.m.

5) Party Frequency: Each supplier only may host 12 events per calendar year of more than 100 guests. Each supplier only may host 24 events per calendar year of 100 people or less.

6) Venue: A catering license must be issued for the event venue. In California, in order to obtain a catering license, the applicant must operate a restaurant. Then the caterer seeks permission from ABC to hold an event at a specific location. Under this new law, events at wineries or other unlicensed locations may only be held if a caterer has obtained permission to serve alcohol at the venue. If the event is held at a winery, no distilled spirits may be served. Only eight events per year may be held at any one venue.

7) Retail Licensed Premise: An event may not be held at a retail licensed premise such as a hotel, bar or restaurant.

8) Additional Freebies: The host may provide a free ride home to guests as long as it is ground transportation only to the guests' home or hotel. Aside from food, alcoholic beverages, other beverages, entertainment and a free ride home, no other free things may be given away.

9) Fees: ABC may charge fees for issuing the catering permits; and fees for administering the new law not to exceed $200 per event.

The law goes into effect January 1, 2009 and will be found at Business and Profession Code § 25600.5.