NJABC Relaxes Additional Regulations in Response to COVID-19 Crisis

On April 7, 2020, we published a blog explaining the guidance and forms of relief recently provided by the New Jersey Division of Alcoholic Beverage Control (“Division”) to liquor license holders throughout the state. The issued guidance and relief pertain to operations of alcoholic beverage licensees and permittees during the state of emergency declared to address the COVID-19 crisis. Since that time, the Division has issued three new special rulings to address additional COVID-19 related issues. Each special ruling is summarized briefly below.

Special Ruling Granting Relaxation of Signature Requirement, Product Returns, Credit, Notices of Obligation, and Bill and Hold

This special ruling grants relaxation of several regulations promulgated under the Alcoholic Beverage Control Act (the “Act”), as well as under a previous special ruling.

  • Signature on Invoices: To comply with social distancing protocols, the Division temporarily suspended the requirement that a licensee must sign and date a delivery slip, invoice, manifest, waybill, or similar document at the time of delivery of any alcoholic beverage by a licensed manufacturer, importer, or wholesaler. It sets forth acceptable alternative methods for signature, which includes methods like sending a contemporaneous email confirming receipt, photographing the invoice and confirming electronically with the wholesaler, or using the retailer’s own pen to acknowledge receipt. This modification runs through the period of the “social distancing” restrictions or the termination of the state of emergency, whichever is earlier.
  • Return of Product: Ordinarily, a manufacturer, brewery, winery, distiller, wholesaler, or distributor may not accept returns except in limited circumstances such as breakage, product defect, spoilage, or product delivered in error. The Division will now allow such licensees to accept returns of alcoholic beverages purchased and/or delivered between February 23 and March 16, 2020 for credit. This applies only to products in unopened and sealed cases in the manufacturer’s original configuration, and it is permissive, meaning these licensees are not required to accept returns. It is intended in part to accommodate on-premises consumption licensees that had stocked up on alcoholic beverages in anticipation of St. Patrick’s Day events and other celebrations that ultimately were cancelled due to social distancing requirements. This provision runs through the termination of the state of emergency, unless otherwise modified.
  • Extension of Credit: In normal times, licensed wholesalers usually extend credit to retailers for 30 days from the date of delivery of alcoholic beverages. This special ruling allows for an extension of this 30-day period until May 15, 2020, provided the on-premises retailers accepted the deliveries between February 23 and March 16, 2020. This does not, however, apply to any purchase orders submitted after March 16, 2020. This relief is intended to benefit on-premises consumption licensees forced to offer only pickup and delivery orders, resulting in a significant reduction in business, and is not provided to liquor or package good stores that have been deemed “essential retail stores.”
  • Notices of Obligations: The Division will allow wholesalers to send Notice of Obligations to defaulting retailers by email, rather than personally or by first class mail.
  • Bill and Hold: A previous special ruling authorized the practice of “bill and hold,” whereby wholesalers may sell products to retailers at perceived better prices and store the products at the wholesalers’ warehouses for a period of 75 days. For existing orders that are being held, this storage period is now extended until 30 days beyond the termination of the State of Emergency established by Executive Order 103 or the relaxation of the social distancing requirements.

Special Ruling Granting Relaxation of Transit Insignia Requirements

This special ruling concerns the requirement that retail consumption or distribution licensees seeking to deliver alcoholic beverages directly to consumers must obtain a transit insignia from the Division or use an otherwise licensed entity authorized to transport alcoholic beverages. In light of current circumstances, there has been a high volume of applications for transit insignias and a backlog in issuance. For this reason, the special ruling allows licensees eligible for a transit insignia to print out the receipt generated from the Division’s online licensing system after completing the application, and keep the receipt in the designated vehicle while performing deliveries until the licensee receives the transit insignia decal. This eliminates the wait time between the issuance of the decal and receipt of the actual insignia and will allow these licensees to perform home deliveries on an expedited basis. This relief will continue for the length of the public health emergency, as declared by the Governor.

Special Ruling on Using Distilled Spirits as Hand Sanitizer

In light of the COVID-19 emergency, through this special ruling, the Division stated that it will exercise its discretion and take no regulatory action against the manufacturing of hand sanitizer using distilled spirits, which is normally outside the scope of distillery licenses. The Plenary Distillery Licensees and Craft Distillery Licensees choosing to manufacture hand sanitizer must abide by the Federal Alcohol and Tobacco Tax and Trade Bureau (“TTB”) guidance, regulations, and requirements. As of this writing, TTB has issued guidance permitting the manufacturing of hand sanitizer to address the significant demand, which has been initially approved through June 30, 2020. These licensees are required to notify the Division of such manufacturing, and the permission is granted for so long as the TTB guidance remains in effect.

The attorneys at Gibbons will continue to monitor developments within this space and provide pertinent updates as this crisis continues to unfold.

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