SB-389 Guidance: Off-Sale Privileges for Certain On-Sale Licensees

On October 8, 2021, Senate Bill 389 (Dodd, Chapter 657, Statutes of 2021) was signed into law. Although similar to some of the prior regulatory relief that was offered in 2020 through 2021 due to the COVID-19 pandemic, this bill contains key differences that will take effect when the regulatory relief expires on January 1, 2022.

SB-389 authorizes certain restaurant and alcohol manufacturer license types to sell distilled spirits in manufacturer-sealed containers (e.g. sealed cans or bottles) for off-site consumption as long as the order is picked up from the premise by the consumer and proper identification is displayed. This bill also authorizes those licensees to sell for off-site consumption distilled spirits and single-serve wine that are not in manufacturer-sealed containers (e.g. a cocktail or a serving of wine) subject to specific provisions, including the following:

1. The alcohol order may only be sold in conjunction with a bona fide meal;
2. It must be picked up at the premise by the consumer who ordered it;
3. Proper identification is provided; and
4. The alcoholic beverage is packaged in a container having a securing lid or cap that is sealed in a manner designed to prevent consumption without the seal being broken, among other specified requirements.

Prior to exercising the off-sale privileges of alcohol in nonmanufacturer-sealed containers, the licensee must notify ABC of their intent to do so.

Delivery of the alcoholic beverages authorized pursuant to this bill is expressly prohibited, whether by the licensee or by any third-party delivery service. The allowances established by this bill are scheduled to end on January 1, 2027.

• 1. What licensees can participate in off-sale alcoholic beverage sales pursuant to this bill?

  This bill applies to the holder of an on-sale license that is issued for a bona fide public eating place that has off-sale privileges. This includes Type 41, Type 47, and Type 75 licenses. It also applies to a licensed beer manufacturer, licensed wine manufacturer, or licensed craft distiller that operates a bona fide public eating place at its premises of production.

  To sell distilled spirits or wine for off-site consumption as authorized by this bill, the licensee must have on-sale wine or distilled spirits privileges. For example, a Type 41 license cannot sell distilled spirits pursuant to this bill since that license type does not provide distilled spirits privileges.

• 2. What is a manufacturer-sealed container vs. a to-go nonmanufacturer-sealed container?

  A manufacturer-sealed container is a container, such as a bottle or can, that is filled and sealed by the manufacturer of the alcohol. A nonmanufacturer-sealed container (to-go) is a container filled by the retail licensee that has a secure lid or cap that is sealed in a manner designed to prevent consumption without removal of the lid or cap by breaking the seal. A nonmanufacturer-sealed container is considered an “open container” if transported in a motor vehicle. In addition to other requirements, licensees selling nonmanufacturer-sealed alcoholic beverages to-go must post a notice that states the following:

  “Alcoholic beverages that are packaged by this establishment are open containers and shall not be transported in a motor vehicle except in the vehicle’s trunk or, if there is no trunk, the containers shall be kept in some other area of the vehicle that is not normally occupied by the driver or passengers. This does not include a utility compartment or glove compartment (see Vehicle Code Section 23225). Additionally, these beverages shall not be consumed in public or in any other area where open containers are prohibited by law.”

• 3. May a to-go nonmanufacturer-sealed container leave the premises after being opened or partly consumed?

  No. Licensees are responsible for ensuring compliance with this restriction. Similarly, partially consumed alcoholic beverages, such as those ordered while dining-in, cannot be packaged to-go.

• 4. What alcohol can be delivered?

  Existing law generally allows an on-sale retail license to sell or deliver manufacturer-sealed containers of beer and wine for consumption off the licensed premises. This bill does not alter these privileges in any way. However, alcoholic beverages sold pursuant to this bill cannot be delivered. This means that manufacturer-sealed distilled spirits and nonmanufacturer-sealed distilled spirits or single-serve wine cannot be delivered to consumers.

• 5. What alcohol can be sold in nonmanufacturer-sealed to-go containers?

  Manufacturer-sealed distilled spirits and nonmanufacturer-sealed containers of distilled spirits or single-serve wine may be sold for consumption off the licensed premises if the beverages are ordered and picked up directly from the premises in person by the consumer who must present an ID to verify they are of legal age and are the person who placed the order. Beer cannot be sold in a nonmanufacturer-sealed container. Other conditions apply to the sale of nonmanufacturer-sealed to-go alcoholic beverages, including but not limited to, the types of alcohol allowed to be sold under a particular license.

• 6. What are the conditions to sell to-go alcoholic beverages not in manufacturer-sealed containers?

  Nonmanufacturer-sealed to-go alcoholic beverages may be distilled spirits, mixed drinks, or single-serve wine that are prepared by the on-sale retailer on the licensed premises and are not sold to the consumer in the original manufacturer-sealed container. These types of drinks are considered “open container” alcoholic beverages and may only be sold with a bona fide meal. Further requirements for the sale of nonmanufacturer-sealed to-go alcoholic beverages are:

  1. Must be ordered and picked up in-person by the consumer directly from the licensee (i.e., they cannot be delivered to the consumer away from the licensed premises). The ordering consumer must present a valid ID to verify legal alcohol consumption age and that they are the consumer who placed the order.
  2. The alcoholic beverage is packaged in a container with a secure lid or cap that is sealed in a manner designed to prevent consumption without removal of the lid or cap by breaking the seal.
  3. Wine can only be sold in single-serve containers, meaning containers that hold between 187 milliliters and 355 milliliters (between 6.3 and 12 ounces).
  4. Mixed drinks and cocktails sold for off-sale consumption cannot contain more than 4.5 ounces of distilled spirits per drink. There is a limit of 2 to-go drinks not in a manufacturer-sealed container per individual meal.
  5. The alcoholic beverage container must be clearly and conspicuously labeled or otherwise identified as containing alcohol so that it is easily identified as containing an alcoholic beverage.
  6. There is a specific warning sign posted on the premises, online, or wherever necessary to ensure the consumer purchasing the alcoholic beverages is given notice of open container laws.
  7. The licensee has notified the department of their intent to sell nonmanufacturer-sealed to-go containers of alcoholic beverages.

  The alcohol sold may only be that which is allowed by the particular license type and specifically excludes beer from being sold in nonmanufacturer-sealed containers.

• 7. Nonmanufacturer-sealed alcoholic beverages must be sold in conjunction with a bona fide meal. What does this mean?

  A bona fide meal must conform to the guidance issued by the department on July 5, 2020, entitled “What is required to be considered a ‘meal’?”.

• 8. Do I need to notify the department of my intent to sell alcohol in nonmanufacturer-sealed containers?

  Effective January 1, 2022, licensees must notify the department of their intent to sell nonmanufacturer-sealed to-go alcoholic beverages. Licensees must use the Alcohol To-Go Notification Tool to submit their notice of intent prior to exercising the privilege. Licensees eligible to exercise the privilege of sales of nonmanufacturer-sealed alcoholic beverages to-go may begin sales immediately after submitting the online notification and posting the required warning sign.

• 9. What are the requirements for the posted sign needed to sell nonmanufacturer-sealed alcoholic beverages for off-site consumption?

  The warning sign must be conspicuously posted on the premises, online, or wherever necessary to ensure the consumer ordering and purchasing the alcoholic beverages is given notice of open container laws. While there are no size or color specifications for the sign, it must be conspicuous, which means it must be readily observable by customers. It must contain the verbiage as follows:

  “Alcoholic beverages that are packaged by this establishment are open containers and shall not be transported in a motor vehicle except in the vehicle’s trunk or, if there is no trunk, the containers shall be kept in some other area of the vehicle that is not normally occupied by the driver or passengers. This does not include a utility compartment or glove compartment (see Vehicle Code Section 23225). Additionally, these beverages shall not be consumed in public or in any other area where open containers are prohibited by law.”

  NOTE: This language is slightly different from the language previously required by the department’s regulatory relief. Licensees should replace any previous notices with this statutory language.

  This warning sign can be downloaded or printed from the department’s website.

• 9. Can the department place conditions on an on-sale license that prohibits or restricts the sale of alcohol allowed by this bill?

  Yes. With good cause, the department may at any time impose conditions on a license restricting or prohibiting the licensee from selling or furnishing alcoholic beverages pursuant to this bill. Good cause includes, but is not limited to, a written request, that states the reason for the restriction or prohibition, from a local law enforcement agency or local governing body or its designated subordinate officer or agency. Licensees would be able to petition the department to remove or modify the condition within 10 days following imposition of the condition. If a petition is not submitted within 10 days, then the licensee would need to wait one year, pursuant to existing law, before the licensee may file a petition for the removal or modification of the condition. When petitioning the department for the removal or modification of the condition, the licensee has the burden of establishing that the condition is unreasonable or that no good cause exists for its imposition. The condition shall remain in place until a final determination is made.

• 10. Are on-sale licensees required to sell alcoholic beverages for off-site consumption?

  No. This bill does not make selling alcohol for consumption off-site a requirement for any on-sale licensee.