Are the COVID-19 related state alcoholic changes here to stay?
Are the COVID-19 related state alcoholic...

Since the issuance of the shelter at home orders (beginning in March, at least for the North East region), the alcohol buying habit of consumers adapted rapidly: regardless of bar and restaurant partial closures (or limitation of operations), retail and internet sales of wine, beer and spirit increased steadily. According to Nielsen’s market data, total alcohol sales outside of bars and restaurants have surged roughly 54% during the pandemic (as of March 2020). Also, the sales of spirits with higher alcohol content registered a 27% increase compared to the same period of last year. Online sales surged 262% (compared to last year). These data and trend have been confirmed by a Jama Network Open study and by the National Institute of Alcohol Abuse and Alcoholism (as of September 2020).

From a regulatory perspective, in the span of a few months after the issuance of shelter in place orders, the legal landscape of almost all states has been subject to a steady but seismic shift: state and local regulatory agencies rushed to both change rules of sales of their on-premises licensees (bars and restaurants) and to facilitate the delivery of alcoholic products at home.

The increase in sales and alcohol delivery affected either the licensees of the on-premises tier and the online/off-premises one across the board.

In New York, beginning on March 16, 2020,all licensed on-premises establishments (e.g. restaurants, bars, and taverns) and alcohol manufacturers have been banned from selling on-premises alcohol but allowed to sell for off-premises consumption along with food (or to deliver it to consumer’s residence) during their hours of operation. Similarly, New York wineries with a on-premises license have been allowed to sell non-New York alcoholic products. These privileges will sunset on January 31, 2021 (unless extended).

In Massachusetts, on April 3, 2020, the Alcoholic Beverage Control Commission issued an advisory  based on Governor Baker’s bill authorizing on-premises licensees to sell 192 ounces of malt beverages and 1.5 liter of wine for off-premises consumption along with food, for the duration of the Governor’s declared state of emergency.

In Connecticut, on or around March 31, 2020, the Department of Consumer Protection issued a series of rules and procedures allowing restaurants to sell alcoholic beverage for pick-up. Those who pick up the order must be of legal drinking age and cannot be intoxicated. On April 9, 2020, the Department suspended the requirement to obtain a signature of an individual of legal drinking age for residential deliveries.

In New Jersey, only certain licensed establishments may sell alcoholic beverages and food, during their normal business hours, in original sealed containers for customer pick up or delivery. For delivery, licensed establishments must obtain a transit insignia from the NJ ABC Division or use an otherwise licensed entity authorized to transport alcohol.

In Pennsylvania, Governor Wolf signed House Bill 327 (Act 21, 2020) allowing the temporary sale of alcoholic beverage to-go from bars and restaurants during their hours of operations. These establishments have the responsibility to verify the age of the purchaser (over 35y).

Similar take-out legislation has been introduced in Delaware, allowing restaurants to sell alcoholic beverage with food for pick-up or drive-through until March 31, 2021, as long as alcohol sales do not exceed 40% of the bill.

Almost all states have introduced regulations allowing takeout or curbside pick-up sales of alcohol (including spirit, wine and/or beer) with or without food for on-premises consumption licensees. Some states have opted for not enforcing any prohibition in place.

However, not all states have allowed on-premises consumption licensees to deliver alcohol at home. Many have introduced limitations that alcohol (wine, beer, cider or spirit) can be sold only with food. Among those that banned home delivery are Alabama; Arkansas (if delivered by a third party); Delaware; Kansas; North Dakota; Pennsylvania; Rhode Island; South Carolina; South Dakota; Utah; Wyoming.  

All these regulations prove non only that alcohol is still a critical commodity but also that these temporary consumers’ choices are challenging the three-tier system. Consumers might also shape a new framework in which they push to establish a direct connection with domestic and foreign alcohol manufacturers,  especially when it comes to a deeper knowledge of ingredients, processes, and historical and cultural background of the alcoholic products.

It is unlikely whether these provisions will be repealed once the pandemic is officially over. From a regulatory perspective, these temporary measures – non-existing before their introduction – proved to be compatible with the current legal landscape. From the consumers’ perspective, any statutory limitation of certain consumers’ purchasing choices must be met with specific purposes of the law. Litigation will likely be one of the possible tools to reshape the current “temporary” measures. 

by Luca CM Melchionna. This note appeared on the Inaugural Winter 2020/2021 Vol 1, Issue 1 of the Newsletter of the New York State Bar Association Wine, Beer & Spirit Law Committee.