California Alcoholic Beverage Control Allows Licensees to Establish Meal Partnerships

The California Department of Alcoholic Beverage Control (ABC) on May 20, 2020, promulgated its "Fifth Notice of Regulatory Relief," which continues a trend of the Department's recognizing the need to grant flexibility to bars and restaurants in light of the COVID-19 pandemic. In its "First Notice of Regulatory Relief," the Department provided guidance for ABC licensees to sell and deliver prepared drinks and premixed cocktails in to-go containers that could accompany meals prepared by the licensee. Before the COVID-19 crisis, delivering premixed cocktails and/or alcoholic beverages in to-go containers was not permitted.

Given the pandemic and the need for its licensee constituents to bolster revenues, the Department continues to relax temporarily certain rules. Because not all licensees serve meals or operate kitchens, the Fifth Notice of Regulatory Relief allows, on a temporary basis, licensees that do not operate kitchen facilities and do not prepare bona fide meals on the licensed premises to partner with businesses that do offer meals to sell to-go containers of alcoholic beverages along with those meals. The Relief has three parameters:

1. The meal provider must be regularly engaged in the business of preparing and offering bona fide meals for sale to the public. The meal provider may be a traditional restaurant, fast-food restaurant, food truck (or similar mobile meal provider) or similar business that prepares and serves bona fide meals. The ABC licensee must notify the Department of the agreement and relationship created between them and the meal provider. Meal providers can be affiliated with multiple ABC licensees but must treat them equitably in their agreements with each of them.
2. All orders for food and alcoholic beverages must be made to or coordinated by the ABC licensee. Orders and payment from consumers for alcohol and food must be received by the ABC licensee. The ABC licensee may then pass on the food order and a portion of the payment to its meal provider.
3. For deliveries away from the licensed premises, the ABC licensee must receive the food order from its meal provider, then deliver both the meal and the alcoholic beverages to the consumer in a single transaction originating from its licensed premises. This must be done even if using a third-party delivery service. That is, the alcoholic beverages may not be delivered to the consumer separately from a meal delivered by the food provider and cannot leave the licensed premises without being accompanied by the appropriate food order.

Next Steps

In order to assist licensees and restaurants, Holland & Knight has prepared a Meal Provider Cooperation Agreement that can be used as a starting point to facilitate the creation and documentation of the relationship permitted by the Department. The draft agreement also includes the requisite notice to the Department. The draft form is available on Holland & Knight's website. Please note that the use of the draft agreement and/or the notice does not create an attorney-client relationship between you and Holland & Knight nor does it create attorney-client privilege. Feel free to reach out to the authors with any questions about your individual requirements or circumstances.

DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Please contact your responsible Holland & Knight lawyer or the author of this alert for timely advice.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.