TITLE 3. ALCOHOLIC BEVERAGE AND CANNABIS CONTROL

VIRGINIA ALCOHOLIC BEVERAGE CONTROL AUTHORITY

Proposed Regulation

Title of Regulation: 3VAC5-50. Retail Operations (amending 3VAC5-50-10 through 3VAC5-50-150, 3VAC5-50-170 through 3VAC5-50-220, 3VAC5-50-240, 3VAC5-50-250, 3VAC5-50-260).

Statutory Authority: §§ 4.1-103 and 4.1-111 of the Code of Virginia.

Public Hearing Information: No public hearing is currently scheduled.

Public Comment Deadline: September 27, 2024.

Agency Contact: LaTonya D. Hucks-Watkins, Senior Legal Counsel, Virginia Alcoholic Beverage Control Authority, 7450 Freight Way, Mechanicsville, VA 23116, telephone (804) 213-4698, FAX (804) 213-4574, or email latonya.hucks-watkins@virginiaabc.com.

Basis: Section 4.1-103 of the Code of Virginia provides that the Virginia Alcoholic Beverage Control Authority Board of Directors (board) has the authority to adopt regulations and to do all acts necessary or advisable to carry out the purposes of Title 4.1 of the Code of Virginia. Section 4.1-111 of the Code of Virginia requires the board to promulgate regulations regarding requirements and restrictions on retail and other licensees.

Purpose: This regulation is essential to protect the health, safety, and welfare of citizens because it provides comprehensive guidance for retail licensees on numerous issues, including designated manager requirements, qualifications, gifts of alcohol, and license-specific requirements for such licensees as restaurants, bed and breakfast establishments, marketplace licensees, clubs, and caterers.

Substance: The proposed amendments (i) allow licensees to serve an entire container of spirits if the container contains 16 ounces or less and the alcohol by value content is 15% or less; (ii) add the word "grain" before "alcohol"; (iii) add limitations on mixed beverage licensees that serve flights of samples so that the licensees are limited to no more than five mixed beverages, and each shall contain no more than one ounce of distilled spirits; (iv) add a subsection that limits the number of times a nonmember may frequent a club, requires nonmembers to be accompanied by club members, and makes it a violation if the club occupancy consists of a number of nonmembers that exceeds the number of club members; (v) add a provision that a nonmember attending a member-sponsored private function is not to be counted as a guest with respect to the club guest restrictions; (vi) clarify language; and (vii) remove redundant or duplicative language.

Issues: The primary advantage to the public is that the proposed amendments remove text that is redundant and make the regulation easier to read. The regulation is updated to account for low-alcohol beverage coolers. Additionally, the regulation is revised to remove requirements that are no longer applicable since license reform. The advantage to the Commonwealth is that requirements that are simply restatements of the Code of Virginia do not have to be maintained and the result is a more condensed regulatory chapter. Also, the Commonwealth benefits because the regulation will be up to date with the Code of Virginia. There are no disadvantages to the public or Commonwealth.

Department of Planning and Budget's Economic Impact Analysis:

The Department of Planning and Budget (DPB) has analyzed the economic impact of this proposed regulation in accordance with § 2.2-4007.04 of the Code of Virginia and Executive Order 19. The analysis presented represents DPB's best estimate of the potential economic impacts as of the date of this analysis.¹

Summary of the Proposed Amendments to Regulation. The Virginia Alcoholic Beverage Control Authority Board of Directors (board) proposes to (i) remove the exception for the City of Danville, where wine and beer can be sold for off-premises consumption as late as 1:00 am as opposed to midnight everywhere else in Virginia; (ii) expand the availability of an employee compensation plan based on total sales, including the sale of alcoholic beverages to other retailers than just beer and wine only establishments; (iii) allow a mixed beverage restaurant licensee to serve the entire contents of a low alcohol beverage cooler; (iv) allow sale of a flight of samples or a flight of up to five mixed beverages that do not contain more than one ounce of distilled spirits; (v) increase the required monthly sales of oysters and other seafood for gourmet oyster house licensed establishments from $1,000 a month to $2,000 a month; (vi) revise the methodology to determine the membership level of a club; (vii) remove subject's height from identification requirements; and (viii) make editorial changes aimed at removing text that the board indicates is redundant of the Code of Virginia or otherwise updating the language to comport with current practices within the industry and the agency.

Background. This regulation contains rules about alcoholic beverage retail operations, including but not limited to designated manager requirements, licensee qualifications, gifts of alcohol, and license specific regulations for such licensees as restaurants, bed and breakfast establishments, marketplace licensees, clubs, and caterers. After conducting a comprehensive review of this chapter, the board proposes several changes. One such change would remove the exception for the City of Danville, where wine and beer can be sold for off-premises consumption as late as 1:00 a.m. as opposed to midnight everywhere else in the Commonwealth. The board reports that this exception was provided a long time ago to accommodate workers who were working for a large employer in the locality that had a shift end at midnight, but that that facility is no longer in operation. Consequently, the board proposes to repeal the exemption.

Another proposed change would expand the availability of a compensation plan that is based on total sales, including the sale of alcoholic beverages to employees of retailers other than beer and wine only establishments. The current regulation contains a blanket requirement that the compensation of a retail employee must be based, in whole or in part, only upon the volume of alcoholic beverage sales. However, the regulation also provides an exception that allows the compensation of employees of retail wine and beer only licensees to be based on the total volume of sales of the business, including the sales of alcoholic beverages. The proposal would expand the availability of such a compensation plan to retailers other than wine and beer retailers. The board also proposes to allow the entire contents of a container of spirits to be served in its original package for on-premises or off-premises consumption, provided that the containers are small and have a low alcohol content. The current language states that serving the entire contents of a spirits bottle is prohibited. However, since the adoption of this prohibition, low alcoholic beverage coolers emerged in the market. In order to accommodate the consumption of cocktails that have low alcohol content and that are in smaller volume containers designed for a single serving, the board proposes to allow a mixed beverage restaurant licensee to serve the entire contents of a low alcohol beverage cooler for on-premises and off-premises consumption if the container is 16 ounces or less and the alcohol by volume content is 15% or less.

Similarly, the board proposes to expand the sale of samples. Currently, the regulation allows the sale of a flight of no more than five different spirits products, where each product contains no more than one-half ounce of distilled spirits. In addition, the board would also allow the sale of a flight of no more than five mixed beverages that do not contain more than one ounce of distilled spirits. Such sales are currently not allowed explicitly. However, the board believes that such samples are already being served to customers. The purpose of this change is to provide for a more comprehensive and specific regulation on such sales by introducing limits in terms of number of mixed beverages such flights can contain as well as limitation on the spirits content. Moreover, the proposal would increase the required monthly sales of oysters and other seafood for gourmet oyster house licensed establishments from $1,000 a month to $2,000 a month. Currently, the required monthly sales of food for other types of licensed establishments such as boats, restaurants, and hotels are all $2,000. Generally speaking, the intent of food sales thresholds is to discourage establishments from solely focusing on alcohol sales. This change would bring the required monthly food sales from gourmet oyster houses in line with other types of establishments.

The proposed changes would also revise the methodology by which the membership level of a club is determined, to use the current rather than the average membership, and remove subject's height from identification requirements because height is not clearly associated with age and is not contained on some forms of identification. The remaining proposed changes are editorial in nature and are intended to remove text that the board states is redundant of the Code of Virginia, or otherwise update the language to comport with current practices within the industry and the agency.

Estimated Benefits and Costs. The impetus for the City of Danville's exemption, which allows sales of beer and wine to occur until 1:00 a.m. as opposed to midnight, was to provide convenience for the workers of a large employer in the city who left the late shift after midnight and wished to purchase alcohol for off-premises consumption. The exemption is locality-wide, and currently anyone in the city can purchase beer and wine until 1:00 a.m. and any licensee can sell beer and wine until 1:00 a.m. The proposed revised hours would apply to all consumers and licensed stores equally in the locality. Thus, this change is unlikely to provide any disproportionate advantage or disadvantage to specific consumers or stores within the City of Danville. It would be rational to expect a reduction in the volume of beer and wine sales in the city as the number of hours in which beer and wine could be bought and sold legally decreases. However, some consumers would likely adjust the timing of their purchases and offset the potential reduction. However, there are no data available that could be used to determine the volume of sales or the number of transactions involving beer and wine that occurs after midnight in the City of Danville. Nor does any discernible information exist with which to estimate the likely reduction in sales. Also, compared to other localities in the Commonwealth, the consumers and stores in Danville currently enjoy an additional hour to buy and sell wine or beer. Under the proposed change, they would lose that convenience or advantage, but they would not be any worse off than other consumers statewide. Additionally, some non-Danville residents that live just outside the city limits, and stores that operate just inside the city limits selling to non-Danville residents, would also lose their advantage to buy or sell wine and beer for an additional hour.

The change involving employee compensation plans results from comments the board received regarding the prohibition on the ability of licensees other than beer and wine only licensees to utilize an employee compensation plan based on alcohol sales. The comments reflected a perception that the exemption for the beer and wine only licensees is not fair to the other types of licensees. In response, the board proposes to expand the availability of this exemption to all licensees. The board believes that the proposal is more equitable since this exception would be accessible to others. The board also concedes that such a change may appear to have the effect of encouraging consumption of alcohol as employees may increase alcohol sales; however, the board counters this concern by stating that all alcohol consumption must adhere to the rules and regulations that place limits on consumption of alcohol and require the servers to monitor the signs of overconsumption, which are specifically designed to identify overconsumption patterns and prevent it from happening. If retail establishments other than beer and wine only licensees choose to adopt a compensation plan based on sales including alcohol sales, the employees would clearly have an incentive to promote sales, subject to the rules and regulations. Such an objective may lead to better customer service and product knowledge, thereby enhancing the overall customer experience as well as boosting employee morale and creating a more engaged workforce. However, such incentives may also unintentionally increase the risk of irresponsible sales and other violations, which may necessitate either additional training about the rules or additional monitoring to mitigate such risks. Assuming employees are fully knowledgeable about the rules, they may be able to find compliant and creative ways to promote total sales, rather than increasing sales to a customer who is at risk of overconsumption. However, no information exists to estimate the magnitude of such an impact.

The proposal to allow licensees to serve the entire contents of a low alcohol beverage cooler for on-premises and off-premises consumption would allow consumers to purchase and licensees to sell such coolers. Thus, an increase in sales of such cocktails may be expected. Similarly, the proposed changes would explicitly allow sales of no more than five mixed beverages that do not contain more than one ounce of distilled spirits. This change may help clarify that such sales would not constitute a violation if the licensee is already engaged in such sales, and also inform other licensees that such cocktails can be sold. Thus, an increase in sales of such cocktails may be expected. The proposal to increase the required monthly sales of food for oyster house establishments from $1,000 to $2,000 is not expected to create a significant economic impact. According to the board, there are only two such licensees in Virginia. Although there is no information about the current monthly sales of the two establishments, it would be highly unlikely that their monthly sales would be less than $2,000 for them to be a viable business operation. Thus, this proposed change is not expected to introduce a hardship on the two licensees if the proposed higher food sales threshold goes into effect. The proposed revision to the methodology used to determine the membership of a club would likely help improve compliance and enforcement of this requirement. The existing language specifies that the average number of club members in the preceding 12 months is used to determine the membership level. The proposed amendment would revise the methodology to use the current number of members to determine a club membership. According to the board, the current membership level is easier to calculate, verify, and enforce than the average membership in the preceding 12 months. And, in the case of a new club with less than 12 months in existence, the enforcement is particularly problematic.

Similarly, removing subject's height from identification requirements would be beneficial as it is problematic to enforce. The board states height is not a good indicator of age, and some forms of identification accepted by the board do not contain height information. Of the proposed editorial changes, some would remove text that the board states is redundant of the Code of Virginia. This would reduce the length of the regulatory text but would also remove the convenience of identifying relevant law requirements from the regulation itself. Although the laws of the Commonwealth are presumed to be known by all citizens, a decrease in information about statutory requirements may reduce compliance for those persons who rely upon the regulation instead of consulting the Code of Virginia. Although the board notes that the laws could change over time, and that outdated statutory requirements would remain in the regulation until the regulation is updated, to the degree that compliance is decreased the time and effort to update the regulation may be beneficial to the board and to citizens and consumers. The other editorial changes would remove language that is no longer applicable since the implementation of alcoholic beverage control license reform.

Businesses and Other Entities Affected. There are 20,892 licensees that are subject to this regulation. The Code of Virginia requires DPB to assess whether an adverse impact may result from the proposed regulation.² An adverse impact is indicated if there is any increase in net cost or reduction in net benefit for any entity, even if the benefits exceed the costs for all entities combined.³ As noted, repealing the current exemption allowing licensees to sell wine and beer up to one hour past midnight in the City of Danville would remove the convenience of purchasing such drinks and may reduce store sales. Thus, an adverse impact on licensees and consumers in the City of Danville is indicated.

Small Businesses⁴ Affected.⁵ It is more than likely that some of the licensees who are poised to lose some wine and beer sales in the City of Danville are small businesses. Thus, that proposed amendment does appear to adversely affect small businesses.

Types and Estimated Number of Small Businesses Affected: The board states that it does not have the capability to determine how many of its licensees meet the definition of a small business.

Costs and Other Effects: The costs and other effects on licensees in the City of Danville who are small businesses are the same as discussed for all licensees.

Alternative Method that Minimizes Adverse Impact: There are no clear alternative methods that both reduce adverse impact and meet the intended policy goals.

Localities⁶ Affected.⁷ The proposed change eliminating the extended hours in which beer and wine can be purchased for off-premises consumption in the City of Danville particularly applies to consumers and licensees in that locality. However, this change is not likely to introduce costs for the City of Danville. In fact, ending wine and beer sales early in that locality may provide some relief to the local law enforcement to the degree that ceasing sales earlier may also shorten the length of time that law enforcement would need to monitor such purchases for compliance with laws and regulations. Thus, no adverse impact on the City of Danville is indicated. The remaining proposed changes apply statewide, but they do not appear to introduce any costs for the localities.

Projected Impact on Employment. Some of the proposed amendments have the potential to reduce alcoholic beverage sales while some others could increase sales. A significant revenue impact on licensed establishments would affect their demand for labor in one way or the other. However, there is insufficient data to estimate the net impact on sales revenues, demand for labor, and consequently on employment.

Effects on the Use and Value of Private Property. Similarly, a significant revenue increase or decrease may affect revenues, profitability of licensed establishments, and their asset values. However, there is insufficient data to estimate the net impact on sales revenues, profitability, and consequently the impact on asset values of affected licensees. No impact is expected on the use of private property nor on real estate development costs.

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¹Section 2.2-4007.04 of the Code of Virginia requires that such economic impact analyses determine the public benefits and costs of the proposed amendments. Further the analysis should include but not be limited to: (1) the projected number of businesses or other entities to whom the proposed regulatory action would apply, (2) the identity of any localities and types of businesses or other entities particularly affected, (3) the projected number of persons and employment positions to be affected, (4) the projected costs to affected businesses or entities to implement or comply with the regulation, and (5) the impact on the use and value of private property.

² Pursuant to § 2.2-4007.04 D: In the event this economic impact analysis reveals that the proposed regulation would have an adverse economic impact on businesses or would impose a significant adverse economic impact on a locality, business, or entity particularly affected, the Department of Planning and Budget shall advise the Joint Commission on Administrative Rules, the House Committee on Appropriations, and the Senate Committee on Finance. Statute does not define "adverse impact," state whether only Virginia entities should be considered, nor indicate whether an adverse impact results from regulatory requirements mandated by legislation.

³ Statute does not define "adverse impact," state whether only Virginia entities should be considered, nor indicate whether an adverse impact results from regulatory requirements mandated by legislation. As a result, DPB has adopted a definition of adverse impact that assesses changes in net costs and benefits for each affected Virginia entity that directly results from discretionary changes to the regulation.

⁴ Pursuant to § 2.2-4007.04, small business is defined as "a business entity, including its affiliates, that (i) is independently owned and operated and (ii) employs fewer than 500 full-time employees or has gross annual sales of less than $6 million."

⁵ If the proposed regulatory action may have an adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include: (1) an identification and estimate of the number of small businesses subject to the proposed regulation, (2) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the proposed regulation, including the type of professional skills necessary for preparing required reports and other documents, (3) a statement of the probable effect of the proposed regulation on affected small businesses, and (4) a description of any less intrusive or less costly alternative methods of achieving the purpose of the proposed regulation. Additionally, pursuant to § 2.2-4007.1 of the Code of Virginia, if there is a finding that a proposed regulation may have an adverse impact on small business, the Joint Commission on Administrative Rules shall be notified.

⁶ "Locality" can refer to either local governments or the locations in the Commonwealth where the activities relevant to the regulatory change are most likely to occur.

⁷ Section 2.2-4007.04 defines "particularly affected" as bearing disproportionate material impact.

Agency's Response to Economic Impact Analysis: The Virginia Alcoholic Beverage Control Authority concurs with the economic impact analysis prepared by the Department of Planning and Budget.

Summary:

The proposed amendments (i) allow licensees to serve an entire container of spirits if the container contains 16 ounces or less and the alcohol by value content is 15% or less; (ii) add the word "grain" before "alcohol"; (iii) add limitations on mixed beverage licensees that serve flights of samples so that the licensees are limited to no more than five mixed beverages, and each shall contain no more than one ounce of distilled spirits; (iv) create a subsection that limits the number of times a nonmember may frequent a club, requires nonmembers to be accompanied by club members, and makes it a violation if the club occupancy consists of a number of nonmembers that exceeds the number of club members; (v) include a provision that a nonmember attending a member-sponsored private function is not to be counted as a guest with respect to the club guest restrictions; (vi) clarify language; and (vii) remove redundant or duplicative language.

3VAC5-50-10. Restrictions upon sale and consumption of alcoholic beverages.

A. Except as may be otherwise permitted under subdivision 7 of § 4.1-200 of the Code of Virginia, no licensee shall sell to or allow the consumption of any alcoholic beverage to a on the licensed premises by any person whom he shall know, the licensee knows or have has reason at the time to believe, is:

1. Under the age of Younger than 21 years of age;

2. Intoxicated; or

3. An interdicted person.

B. No licensee shall allow the consumption of any alcoholic beverage upon his licensed premises by any person to whom such alcoholic beverage may not lawfully be sold under this section.

3VAC5-50-20. Determination of legal age of purchaser.

A. In determining whether a licensee, or his the licensee's employee or agent, has reason to believe that a purchaser is not of legal age, the board Virginia Alcoholic Beverage Control Authority will consider, but is not limited to, the following factors:

1. Whether an ordinary and prudent person would have reason to doubt that the purchaser is of legal age based on the general appearance, facial characteristics, behavior, and manner of the purchaser; and

2. Whether the seller demanded, was shown, and acted in good faith in reliance upon bona fide evidence of legal age, as defined herein in subsection B of this section, and that evidence contained a photograph and physical description consistent with the appearance of the purchaser.

B. Such bona fide evidence of legal age shall include a valid motor vehicle driver's license issued by any state of the United States or the District of Columbia, armed forces identification card, United States passport or foreign government visa, valid special identification card issued by the Virginia Department of Motor Vehicles, or any valid identification issued by any other federal or state government agency, excluding student university and college identification cards, provided such identification shall contain a photograph and signature of the subject, with the subject's height and the subject's date of birth.

C. It shall be incumbent upon the licensee, or his the licensee's employee or agent, to scrutinize carefully the identification, if presented, and determine it to be authentic and in proper order. Identification which that has been altered so as to be apparent to observation or has expired shall be deemed not in proper order.

3VAC5-50-30. Restricted hours; exceptions.

A. The hours during which licensees shall not sell or permit to be consumed upon their licensed premises any wine, beer, or mixed beverages shall be as follows:

1. In localities where the sale of mixed beverages has been authorized:

a. For on-premises sale and consumption: 2 a.m. to 6 a.m.

b. For off-premises sale: 12 a.m. to 6 a.m.

2. In all other localities: 12 a.m. to 6 a.m. for on-premises sales and consumption and off-premises sales, except that on New Year's Eve the licensees shall have an additional hour in which to exercise the on-premises privileges of their licenses.

B. Exceptions to restricted hours are:

1. Club licensees: No restrictions at any time;

2. Individual licensees whose hours have been more stringently restricted by the board Virginia Alcoholic Beverage Control Authority shall comply with such requirements; and

3. Licensees in the City of Danville are prohibited from selling wine and beer for off-premises consumption between the hours of 1 a.m. and 6 a.m. Mixed beverage casino licensees.

3VAC5-50-40. Designated managers of licensees; appointment generally; disapproval by board the authority; restrictions upon employment.

A. Each retail licensee, except a licensed individual who is on the premises, shall have a designated manager able to understand and communicate in the English language in a reasonably satisfactory manner present and in actual charge of the business being conducted under the license at any time the licensed establishment is kept open for business, whether or not the privileges of the license are being exercised. The designated manager must be able to understand and communicate in the English language in a reasonably satisfactory manner. The name of the retail licensee's designated manager of every retail licensee shall be kept posted in a conspicuous place in the establishment, in letters not less than one inch in size, during the time he the designated manager is in charge.

The posting of the name of a designated manager shall qualify such person to act in that capacity until disapproved by the board Virginia Alcoholic Beverage Control Authority (authority).

B. The board authority reserves the right to disapprove any person as a designated manager if it shall have reasonable cause to believe that any cause condition exists which that would justify the board authority in refusing to issue such person a license, or in suspending or revoking a license granted to that such person has committed any act that would justify the board in suspending or revoking a license.

Before disapproving a designated manager, the board authority shall accord him such designated manager the same notice, and opportunity to be heard, and follow the same administrative procedures accorded a licensee cited for a violation of Title 4.1 of the Code of Virginia.

C. No licensee of the board authority shall knowingly permit a person under younger than 21 years of age, nor one who has been disapproved by the board authority within the preceding 12 months, to act as designated manager of his the licensee's business.

D. Notwithstanding the provisions of § 4.1-225 (1) (i) A 1 h of the Code of Virginia, the board authority will not take action to suspend or revoke a retail license if a licensee knowingly employs a person who has been convicted in any court of a felony or of any crime or offense involving moral turpitude, except in the following two categories:

1. The board authority may suspend or revoke a license if a licensee knowingly employs in the business conducted under such license, as agent, servant, or employee, in a position that is involved in the selling or serving of alcoholic beverages to customers, any person who has been convicted of a felony violation of the laws of the Commonwealth prohibiting the manufacture, sale, distribution, use, or possession of controlled substances, imitation controlled substances, counterfeit controlled substances, marijuana cannabis, or synthetic cannabinoids; driving under the influence of alcohol or other self-administered intoxicants; or a similar offense under the laws of any state, or the United States; or

2. The board authority may suspend or revoke a license if a licensee knowingly employs in the business conducted under such license, as agent, servant, or employee, in a position that is involved in the creation or maintenance of records required to be kept by the licensee under the provisions of Title 4.1 of the Code of Virginia or board authority regulations, or in the preparation or filing of any tax return or report required under Title 4.1 or Title 58.1 of the Code of Virginia or board authority regulations, any person who has been convicted of a felony violation of the laws of the Commonwealth prohibiting robbery, burglary, larceny, embezzlement, computer crimes, forgery, false pretenses, issuing bad checks, false representations to obtain property or credit, credit card forgery or fraud, or money laundering, or a similar offense under the laws of any state, or the United States.

E. If a retail licensee wishes to employ a person whose employment would be covered by subdivision D 1 or D 2 of this section, or who has violated the laws of the Commonwealth, of any other state, or of the United States, applicable to the manufacture, transportation, possession, use, or sale of alcoholic beverages, the licensee may (i) immediately employ the individual if the offenses occurred more than five years preceding the date of employment or (ii) apply to the board authority for approval of such employment if the offense occurred within five years preceding the date of employment. The board authority will cause the Bureau of Law Enforcement Operations to conduct an investigation into the suitability of the person for employment and recommend approval or disapproval. Before disapproving the employment of a person, the board authority shall accord him the person the same notice, opportunity to be heard, and follow the same administrative procedures accorded a licensee cited for a violation of Title 4.1 of the Code of Virginia.

3VAC5-50-50. Restrictions upon employment of minors.

No person licensed to sell alcoholic beverages at retail shall permit any employee under the age of younger than 18 years of age to sell, serve, or dispense in any manner any alcoholic beverage in his the licensed establishment for on-premises consumption, nor shall such person permit any employee under the age of younger than 21 years of age to prepare or mix alcoholic beverages in the capacity of a bartender. "Bartender" is defined as a person who sells, serves, or dispenses alcoholic beverages for on-premises consumption at a counter, as defined in 3VAC5-50-110, and does not include a person employed to serve food and drink to patrons at tables as defined in that section. However, a person who is 18 years of age or older may sell or serve beer for on-premises consumption at a counter in an establishment that sells beer only, or may sell or serve wine for on-premises consumption in an establishment that sells wine only.

3VAC5-50-60. Mixed beverage licensees generally; sales of spirits in closed containers; suspension of purchase privileges.

A. No mixed beverage restaurant or carrier licensee shall:

1. Serve as one drink the entire contents of a container of spirits in its original container for on-premises or off-premises consumption except (i) as provided by subsections C, D, and E of this section; or (ii) if the container of spirits contains 16 ounces or less and the alcohol by volume content is 15% or less.

2. Sell any mixed beverage to which grain alcohol has been added.

B. No mixed beverage restaurant licensee shall:

1. Allow to be kept upon the licensed premises any container of alcoholic beverages of a type authorized to be purchased under his the license that does not bear the required mixed beverage stamp imprinted with his the license number and purchase report number to be kept on the licensed premises.

2. Use in the preparation of a mixed beverage any alcoholic beverage not purchased from the board Virginia Alcoholic Beverage Control Authority (authority) or a wholesale wine licensee.

3. Fail to obliterate the mixed beverage stamp immediately when any container of spirits is emptied.

4. Allow any patron to possess more than two drinks of mixed beverages at any one time, except that a mixed beverage licensee may sell to a patron who may lawfully purchase mixed beverages a flight of (i) distilled spirits products consisting of samples of not more than five different spirits products or (ii) no more than five mixed beverages. Each distilled spirits product shall contain no more than one-half ounce of distilled spirits and each mixed beverage shall contain no more than one ounce of distilled spirits.

C. If a restaurant for which a mixed beverage restaurant license has been issued under § 4.1-206.3 of the Code of Virginia is located on the premises of a hotel or motel, whether the hotel or motel be under the same or different ownership, sales of mixed beverages, including sales of spirits packaged in original closed containers purchased from the board, as well as authority and other alcoholic beverages, for consumption in bedrooms and private rooms of such hotel or motel, may be made by the licensee subject to the following conditions in addition to other applicable laws:

1. Spirits sold by the drink as mixed beverages or in original closed containers must have been purchased under the mixed beverage restaurant license upon purchase forms provided by the board authority;

2. Delivery of sales of mixed beverages and spirits in original closed containers shall be made only in to the bedroom of the registered guest or to the sponsoring group in the private room of a scheduled function. This section shall not be construed to prohibit a licensee catering a scheduled private function from delivering mixed beverage drinks to guests in attendance at such function;

3. Receipts from the sale of mixed beverages and spirits sold in original closed containers, as well as other alcoholic beverages, shall be included in the gross receipts from sales of all such merchandise made by the licensee; and

4. Complete and accurate records of sales of mixed beverages and sales of spirits in original closed containers to registered guests in bedrooms and to sponsors of scheduled private functions in private rooms shall be kept separate and apart from records of all mixed beverage sales.

D. Carrier licensees may serve miniatures not in excess of two fluid ounces or 50 milliliters, in their original containers, for on-premises consumption.

E. A mixed beverage restaurant may serve as one drink the entire contents of a container of soju in its original container for on-premises consumption under the following conditions:

1. The container may be no larger than 375 milliliters.

2. Each container of soju served must be served for consumption by at least two patrons legally eligible to consume alcoholic beverages.

F. A mixed beverage restaurant licensee may infuse, store, and sell flavored distilled spirits under the following circumstances:

1. If infused in the original spirits container, the mixed beverage stamp must remain affixed to the bottle.

2. If infused in a container other than the original spirits container, the substitute container, which shall not exceed 20 liters in volume, will be labeled with the following information:

a. Date of infusion;

b. Brand of spirits; and

c. Amount of spirits used.

3. Accurate records must be kept by the mixed beverage licensee as to the spirits used in any spirits infusion process.

4. Licensees infusing distilled spirits shall comply with all applicable state and federal food safety regulations.

G. Mixed beverage licensees may premix containers of sangria and other mixed beverages and serve such alcoholic beverages in pitchers subject to the following limitations:

1. Pitchers of mixed beverages may only be sold in containers with a maximum capacity of 32 fluid ounces or one liter if the container is in metric size containing a spirits product mixed with nonalcoholic beverages.

2. A pitcher of mixed beverages may only be served to two or more patrons. A licensee shall not allow any two patrons to possess more than one pitcher at any one time.

3. Containers of premixed sangria and other mixed beverages must be labeled as to the type of mixed beverage and the quantities of the products used to produce the mixed beverage.

4. Containers of premixed mixed beverages to be served by tapping equipment may not contain more than 20 liters in volume and must be labeled as to the type of mixed beverage and the brand and quantities of the spirits products used to produce the mixed beverage.

H. The board authority may suspend the privilege of a mixed beverage licensee to purchase spirits from the board authority upon such licensee's failure to submit any records or other documents necessary to verify the licensee's compliance with applicable minimum food sale requirements within 30 days of the date such records or documents are due.

3VAC5-50-70. Restrictions on construction, arrangement and lighting of licensed premises; inspections; obstruction; "reasonable hours".

A. The construction, arrangement, and illumination of the dining areas and designated areas and the seating arrangements therein of a licensed establishment shall be such as to permit ready access and reasonable observation by law-enforcement officers and by special agents of the board Virginia Alcoholic Beverage Control Authority (authority). The interior lighting shall be sufficient to permit ready discernment of the appearance and conduct of patrons in all portions of such areas.

B. The board authority and its special agents shall be allowed free access during reasonable hours to every place in the Commonwealth where alcoholic beverages are manufactured, bottled, stored, offered for sale, or sold, for the purpose of examining and inspecting such place.

C. In addition to special agents, other law-enforcement officers in the performance of their official duties shall be allowed free access to any retail licensed establishment for the purpose of observation of activities on those licensed premises during reasonable hours.

D. Any person who by use of threats, force, or intimidation or otherwise impedes or obstructs any special agent or other law-enforcement officer in the performance of his the agent's or officer's official duties from entering or remaining upon any licensed establishment shall be guilty of a violation of this regulation and shall be subject to the penalty prescribed by § 4.1-349 of the Code of Virginia.

E. For the purposes of this regulation, the term "reasonable hours" shall be deemed to include all business hours of operation and any other time at which there exists any indication of activity upon the licensed premises.

3VAC5-50-80. Entreating, urging, or enticing patrons to purchase overconsume prohibited.

No retail licensee shall entreat, urge, or entice any patron of his the establishment to purchase overconsume any alcoholic beverage;, nor shall such licensee allow any other person to so entreat, urge, or entice a patron upon his the licensed premises. Entreating, urging or enticing shall include, but not be limited to, placing alcoholic beverages in containers of ice which are visible, located in public display areas and available to patrons of retail establishments for off-premises sales, except for farm winery licensees operating at a remote location in connection with a wine festival. Knowledge by a manager or employee of the licensee of a violation of this section shall be imputed to the licensee.

This section shall not be construed to prohibit the taking of orders in the regular course of business, the purchase of a drink by one patron for another patron as a matter of normal social intercourse, nor advertising in accordance with regulations of the board Virginia Alcoholic Beverage Control Authority.

3VAC5-50-90. Storage of alcoholic beverages generally; permits for storage; exception.

A. Alcoholic beverages shall not be stored at any premises other than those described in the license, except upon a permit issued by the board Virginia Alcoholic Beverage Control Authority.

B. The licensee shall maintain at all times as a part of the records required by 3VAC5-70-90, an accurate inventory reflecting additions to and withdrawals of stock. Withdrawals shall specify:

1. The name of the person making the withdrawal who shall be the licensee or his the licensee's duly authorized agent or servant;

2. The amount withdrawn; and

3. The place to which transferred.

C. Draft beer may be stored without permit by a wholesaler at a place licensed to do a warehousing business in the Commonwealth.

3VAC5-50-100. Definitions and qualifications for retail off-premises wine and beer licenses and off-premises beer....

A. Retail off-premises wine and beer licenses as described in § 4.1-206.3 C 1 of the Code of Virginia, excluding gourmet shops, may be issued to persons operating the following types of those establishments, provided the total monthly sales and inventory (cost) of the required commodities listed in the definitions are not less than those shown:

1. "Delicatessen." An establishment which sells a variety of prepared foods or foods requiring little preparation such as cheeses, salads, cooked meats and related condiments:

Monthly sales......................................................... $2,000

Inventory (cost)....................................................... $2,000

2. "Drugstore." An establishment selling medicines prepared by a licensed pharmacist according to prescription and other medicines and articles of home and general use:

Monthly sales.......................................................... $2,000

Inventory (cost)....................................................... $2,000

3. "Grocery store." An establishment that sells food and other items intended for human consumption, including a variety of ingredients commonly used in the preparation of meals:

Monthly sales.......................................................... $2,000

Inventory (cost)....................................................... $2,000

4. "Convenience grocery store." An establishment that has an enclosed room in a permanent structure where stock is displayed and offered for sale, and maintains an inventory of edible items intended for human consumption, consisting of a variety of such items of the type normally sold in grocery stores:

Monthly sales.......................................................... $2,000

Inventory (cost)....................................................... $2,000

In regard to both grocery stores and convenience grocery stores, "edible items" shall mean such items normally used in the preparation of meals, including liquids.

5. B. "Gourmet shop." An establishment provided with adequate inventory, shelving, and storage facilities where, in consideration of payment, substantial amounts of domestic and imported wines and beers of various types and sizes and related products, such as cheese and gourmet foods, are habitually furnished to persons:

Monthly sales.......................................................... $1,000

Inventory (cost)....................................................... $1,000

B. C. The board Virginia Alcoholic Beverage Control Authority (authority) may grant a license to an establishment not meeting the qualifying figures in subsections A and B of this section, provided it affirmatively appears that there is a substantial public demand for such an establishment and that public convenience will be promoted by the issuance of the license.

C. The board in D. When determining the eligibility of an establishment for a license, the authority shall give consideration to, but shall not be limited to, the following:

1. The extent to which sales of required commodities are secondary or merely incidental to sales of all products sold in such establishment;

2. The extent to which a variety of edible items of the types normally found in grocery stores are sold; and

3. The extent to which such establishment is constructed, arranged, or illuminated to allow reasonable observation of the age and sobriety of purchasers of alcoholic beverages.

D. E. Notwithstanding the above subsections A through D of this section, the board authority may issue a temporary license for any of the above retail operations licenses listed in § 4.1-206.3 C 1 of the Code of Virginia. Such licenses may be issued only after application has been filed in accordance with § 4.1-230 of the Code of Virginia and in cases where the sole objection to issuance of a license is that the establishment will not be qualified in terms of the sale of food or edible items. If a temporary license is issued, the board authority shall conduct an audit of the business after a reasonable period of operation not to exceed 180 days. Should the business be qualified, the license applied for may be issued. If the business is not qualified, the application will become the subject of a hearing if the applicant so desires. No further temporary license shall be issued to the applicant or to any other person with respect to that establishment for a period of one year from the expiration and, once the application becomes the subject of a hearing, no temporary license may be issued.

3VAC5-50-110. Definitions and qualifications for retail on-premises and on-premises and off-premises licenses generally; mixed beverage licensee requirements; exceptions; temporary licenses.

A. The following definitions shall apply to retail licensees with on-premises consumption privileges and mixed beverage licensees where appropriate:

1. "Bona fide, full-service restaurant" means an established place of business where meals are regularly sold to persons and that has adequate facilities and sufficient employees for cooking, preparing, and serving such meals for consumption at tables in dining areas on the premises.

2. "Counter" means a long, narrow surface with stools or chairs along one side for the patrons, behind which refreshments or meals are prepared and served.

3. "Designated area" means a room or an area in which a licensee may exercise the privilege of his the license, the location, equipment, and facilities of which room or area have been approved by the board Virginia Alcoholic Beverage Control Authority (authority). The facilities shall be such that patrons may purchase food prepared on the premises for consumption on the premises at substantially all times that alcoholic beverages are offered for sale therein.

4. "Dining area" means a public room or area in which meals are regularly sold at substantially all hours that alcoholic beverages are offered for sale therein.

5. "Meal" means a selection of foods for one individual, served and eaten especially at one of the customary, regular occasions for taking food during the day, such as breakfast, lunch, or dinner, that consists of at least one main dish of meat, fish, poultry, legumes, nuts, seeds, eggs, or other protein sources, accompanied by vegetable, fruit, grain, or starch products.

6. "Table" means an article of furniture supported by one or more vertical legs or similar supports and having a flat horizontal surface suitable for the service of meals, not immediately adjacent to the area where refreshments or meals are prepared.

B. Wine and beer. Retail on-premises or on-premises and off-premises licenses may be granted to persons operating the following types of establishments, provided that meals or other foods are regularly sold at substantially all hours that wine and beer are offered for sale and the total monthly food sales for consumption in dining areas and other designated areas on the premises are not less than those shown:

1. "Boat" (on premises only). A common carrier of passengers for which a certificate as a sight-seeing carrier by boat, or a special or charter party by boat has been issued by the State Corporation Commission, habitually serving food on the boat:

Monthly sales..........................................................$2,000

2. "Restaurant." A bona fide dining establishment with special space and accommodation where, in consideration of payment, meals with entrees or other foods prepared on the premises are regularly sold:

Monthly sales..........................................................$2,000

3. "Hotel." Any duly licensed establishment, provided with special space and accommodation, where, in consideration of payment, meals and other food prepared on the premises and lodging are habitually furnished to persons and which has four or more bedrooms:

Monthly sales..........................................................$2,000

In regard to both restaurants and hotels, at least $1,000 of the required monthly sales must be in the form of meals.

4. "Gourmet Oyster House." Any duly licensed establishment, located on the premises of a commercial marina and permitted by the Department of Health to serve oysters and other fresh seafood for consumption on the premises, where the licensee also offers to the public events for the purpose of featuring oysters and other seafood products:

Monthly sales of oysters and other seafood….....$1,000 $2,000

C. Mixed beverage licenses. Mixed beverage restaurant licenses may be granted to persons operating bona fide, full-service restaurants.

1. Service of food in a bona fide, full-service restaurant shall consist of serving the food to the table on plates or appropriate dinnerware, accompanied by appropriate tableware. The board authority may approve the issuance of a mixed beverage restaurant license to a buffet restaurant if (i) both alcoholic and nonalcoholic beverage service is provided at the table and (ii) actual sales show that the requirements of subdivision D 2 of this section subsection are met.

2. Monthly sales of food prepared on the premises of a mixed beverage restaurant licensee shall not be less than $4,000, of which at least $2,000 shall be in the form of meals.

3. A mixed beverage restaurant licensee must have at least as many seats at tables as at counters.

4. A mixed beverage restaurant licensee shall have food, cooked or prepared on the licensed premises, available for on-premises consumption until at least 30 minutes prior to an establishment's closing. Such food shall be available in all areas of the licensed premises in which spirits are sold or served. This provision shall not apply to mixed beverage casino licensees.

D. The board authority may grant a license to an establishment not meeting the qualifying figures in this section, provided that the establishment otherwise is qualified under the applicable provisions of the Code of Virginia and this section, if it affirmatively appears that there is a substantial public demand for such an establishment and that the public convenience will be promoted by the issuance of the license.

E. Notwithstanding subsections A through D of this section, the board authority may issue a temporary license for any of the retail operations in subsections A through D of this section. Such licenses may be issued only after application has been filed in accordance with § 4.1-230 of the Code of Virginia, and in cases where the sole objection to issuance of a license is that the establishment will not be qualified in terms of the sale of food or edible items. If a temporary license is issued, the board authority shall conduct an audit of the business after a reasonable period of operation not to exceed 180 days. Should the business be qualified, the license applied for may be issued. If the business is not qualified, the application will become the subject of a hearing if the applicant so desires. No further temporary license shall be issued to the applicant or to any other person with respect to the establishment for a period of one year from expiration and, once the application becomes the subject of a hearing, no temporary license may be issued.

F. An outside terrace or patio, the location, equipment, and facilities of which have been approved by the board authority, may be approved as a "dining area" or as a "designated area" in the discretion of the board authority.

G. Limited mixed beverage licenses may be granted to persons operating restaurants as defined in § 4.1-100 of the Code of Virginia, provided that food is regularly sold at substantially all hours that alcoholic beverages are offered for sale, and the total monthly food sales of food cooked or prepared on the premises for consumption in dining areas and other designated areas on the premises are not less than $2,000.

H. Wine may be served for on-premises consumption in carafes or decanters not exceeding 52 fluid ounces (1.5 liters) in capacity. Beer may be served for on-premises consumption in pitchers not exceeding 80 fluid ounces in capacity.

3VAC5-50-130. Clubs; applications; qualifications; reciprocal arrangements; changes; financial statements.

A. Each applicant for a club license shall furnish the following information:

1. A certified copy of the charter, articles of association, or constitution;

2. A copy of the bylaws;

3. A list of the officers and directors showing names, addresses, ages, and business employment;

4. The average current number of members for the preceding 12 months. Only natural persons may be members of clubs; and

5. A financial statement for the latest calendar or fiscal year of the club, and a brief summary of the financial condition as of the end of the month next preceding the date of application.

B. In determining whether an applicant qualifies under the statutory definition of a club, as well as whether a club license should be suspended or revoked, the board Virginia Alcoholic Beverage Control Authority (authority) will consider, but is not limited to, the following factors:

1. The club's purposes and its compliance with the purposes;

2. The club's qualification for tax exempt tax-exempt status from federal and state income taxes; and

3. The club's permitted use of club premises by nonmembers, including reciprocal arrangements.

C. The club shall limit nonmember use of club premises according to this section and shall notify the board authority each time the club premises are used in accordance with subdivision 1 of this subsection. The notice shall be received by the board authority at least two business days in advance of any such event.

1. A licensed club may (i) hold public events at the licensed premises, such events allowing nonmembers to attend and participate in the event at the licensed premises; or (ii) allow its premises to be used by organizations or groups who obtain banquet or banquet special events licenses. The total number of such events in both categories may not exceed 24 per calendar year.

2. The number of times a nonmember may patronize a club as a guest of any member during any given period of time should be stipulated in the bylaws of the club. The licensee shall limit the number of times a nonmember may visit the club and require the nonmember to be accompanied by a club member. If at any time club occupancy consists of more nonmembers than club members, it shall be deemed a violation of this chapter unless it is a public event pursuant to this section. In the case of a homeowner's association, unlimited guest visitations may be allowed as long as the guest is accompanied by an association member.

3. A member of a licensed club may sponsor private functions on club premises for an organization or group of which he the club member is also a member, such attendees being guests of the sponsoring club member. A nonmember attending a member-sponsored private function shall not be counted as a guest with respect to the club's guest restrictions.

3. Additionally, there 4. There shall be no limitation on the numbers of times a licensed club may allow its premises to be used by organizations or groups if alcoholic beverages are not served at such functions.

D. Persons who are resident members of other clubs located at least 100 miles from the club licensed by the board authority (the "host club") and who are accorded privileges in the host club by reason of bona fide, prearranged reciprocal arrangements between the host club and such clubs shall be considered guests of the host club and deemed to have members' member privileges with respect to the use of its facilities. The reciprocal arrangements shall be set out in a written agreement and approved by the board authority prior to the exercise of the privileges thereunder of the agreement.

The mileage limitations of this subsection notwithstanding, members of private, nonprofit clubs or private clubs operated for profit located in separate cities which that are licensed by the board authority to operate mixed beverage restaurants on their respective premises and which that have written agreements approved by the board authority for reciprocal dining privileges may be considered guests of the host club and deemed to have members' member privileges with respect to its dining facilities.

E. Any change in the officers and directors of a club shall be reported to the board authority within 30 days, and a certified copy of any change in the charter, articles of association, or by-laws bylaws shall be furnished to the board authority within 30 days thereafter.

F. Each club licensee shall prepare and sign an annual financial statement on forms prescribed by the board authority. The statement may be on a calendar year or fiscal year basis, but shall be consistent with any established tax year of the club. The statement must be prepared and available for inspection on the club premises no later than 120 days next following the last day of the respective calendar or fiscal year, and each such statement must be maintained on the premises for a period of three consecutive years. In addition, each club holding a mixed beverage license shall be required to prepare and timely submit the mixed beverage annual review report required by 3VAC5-70-90 D.

3VAC5-50-140. Prohibited conduct on licensed premises.

A. The following conduct upon any licensed premises is prohibited:

1. The real or simulated display of any portion of the genitals, pubic hair, or buttocks, or any portion of the breast below the top of the areola, by any employee, or by any other person;, except that when entertainers are on a platform or stage and reasonably separated from the patrons of the establishment, they shall be in conformity with subdivision 2 of this subsection;

2. The real or simulated display of any portion of the genitals, pubic hair, or anus by an entertainer, or any portion of the areola of the breast of a female entertainer. When not on a platform or stage and reasonably separate from the patrons of the establishment, entertainers shall be in conformity with subdivision 1 of this subsection;

3. Any real or simulated act of sexual intercourse, sodomy, masturbation, flagellation, or any other sexual act prohibited by law, by any person, whether an entertainer or not; or

4. The fondling or caressing by any person, whether an entertainer or not, of his the person's own or of another's breast, genitals, or buttocks.

As used in this section, the term "reasonably separated" shall mean that no portion of the body of an entertainer may come in contact with any portion of the body of a patron.

B. No mixed beverage licensee shall permit any person connected with the licensed business in any capacity to enter or remain on the premises with less than a fully-opaque fully opaque covering of the genitals, pubic hair, or buttocks, or any portion of the breast below the top of the areola. For the purposes of this subsection, "connected with the licensed business" shall mean: (i) any owner, partner, member, manager, agent, or employee of the licensed business; (ii) any entertainer or other contractor with the licensed business; or (iii) any participant in any contest, display, or other event conducted by or at the invitation of the licensed business.

C. The provisions of this section shall not apply to persons operating theaters, concert halls, art centers, museums, or similar establishments that are primarily devoted to the arts or theatrical performances, when the performances that are presented are expressing matters of serious literary, artistic, scientific, or political value.

3VAC5-50-150. Off-premises deliveries on licensed retail premises; "drive through" establishments.

No person holding a license which that authorizes the licensee to sell wine or beer at retail for consumption off the premises shall deliver such wine or beer to a person on the licensed premises other than in the licensed establishment. Deliveries of such merchandise to persons through windows, apertures, or similar openings at "drive through" or similar establishments, whether the persons are in vehicles or otherwise, shall not be construed to have been made in the establishments. No sale or delivery of such merchandise shall be made to a person who is seated in a vehicle. Notwithstanding any provision of law to the contrary, such deliveries may be made to (i) a person's vehicle if located in a designated parking area of the licensee's premises where such person has electronically ordered beer, wine, or farm wine in advance of the delivery; or (ii) such other locations as may be permitted by board Virginia Alcoholic Beverage Control Authority regulation.

3VAC5-50-170. Caterer's license; qualifications; privileges; restrictions and conditions.

A. Pursuant to § 4.1-206.3 A 2 of the Code of Virginia, the board Virginia Alcoholic Beverage Control Authority (authority) may grant a caterer's license to any person:

1. Engaged on a regular basis in the business of providing food and beverages to persons for service at private gatherings, or at special events as defined in § 4.1-100 of the Code of Virginia or as provided in § 4.1-206.3 A 3 of the Code of Virginia, and

2. With an established place of business with catering gross sales average of averaging at least $4,000 per month and who has complied with the requirements of the local governing body concerning sanitation, health, construction, or equipment and who has obtained all local permits or licenses which that may be required to conduct such a catering business.

B. The license authorizes the following privileges:

1. The purchase of spirits, vermouth, and wine produced by farm wineries from the board authority;

2. The purchase of wine and cider from licensed wholesalers or farm wineries or the purchase of beer from licensed wholesalers;

3. The retail sale of alcoholic beverages to persons who sponsor the private gatherings or special events described in subsection A of this section or directly to persons in attendance at such events. No banquet or mixed beverage special events license is required in either case; and

4. The storage of alcoholic beverages purchased by the caterer at the established and approved place of business.

C. In addition to other applicable statutes and regulations of the board authority, the following restrictions and conditions apply to persons licensed as caterers:

1. Alcoholic beverages may be sold only for on-premises consumption to persons in attendance at the gathering or event;

2. The records required to be kept by 3VAC5-70-90 shall be maintained by caterers. If the caterer also holds other alcoholic beverage licenses, he the caterer shall maintain the records relating to his the caterer's business separately from the records relating to any other license. Additionally, the records shall include the date, time, and place of the event and the name and address of the sponsoring person or group of each event catered;

3. The annual gross receipts from the sale of food cooked and prepared for service at gatherings and events referred to in this regulation chapter, and nonalcoholic beverages served there shall amount to at least 45% of the gross receipts from the sale of mixed beverages and food;

4. The caterer shall notify the board authority in writing at least 24 hours in advance of any events to be catered under his the license. For events to be catered on Saturday, Sunday, or holidays on which the board's authority's offices are closed, such notice shall be given by close of the last business day prior to the event. The notice shall include the date, time, location, and address of the event and the name of the sponsoring person, group, corporation, or association;

5. Persons in attendance at a private event at which alcoholic beverages are served but not sold under the caterer's license may keep and consume their own lawfully acquired alcoholic beverages;

6. The private gathering referred to in subsection A above of this section shall be a social function which that is attended only by persons who are specifically and individually invited by the sponsoring person or organization, not by the caterer;

7. The licensee shall insure ensure that all functions at which alcoholic beverages are sold are ones which that qualify for a banquet license, for a special event license, or a mixed beverage special events license. Licensees are entitled to all services and equipment now available under a banquet license from wholesalers;

8. A photocopy of the caterer's license must be present at all events at which the privileges of the license are exercised; and

9. The caterer's license shall be considered a retail license for purposes of § 4.1-216 of the Code of Virginia.

3VAC5-50-180. Volunteer fire departments or volunteer rescue squads; banquet facility licenses; restrictions and conditions.

A. Pursuant to § 4.1-206.3 D 2 b of the Code of Virginia, the board Virginia Alcoholic Beverage Control Authority (authority) may grant banquet facility licenses to volunteer fire departments and volunteer rescue squads:

1. Providing volunteer fire or rescue squad services;

2. Having as its premises a fire or rescue squad station regularly occupied by such fire department or rescue squad; and

3. Being duly recognized by the governing body of the city, county, or town in which it is located.

B. The license authorizes the following privileges:

The consumption of legally acquired alcoholic beverages on the premises of the licensee or on premises other than such fire or rescue squad station which are occupied and under the control of the licensee while the privilege of its license is being exercised, by any person, association, corporation or other entity, including the fire department or rescue squad, and bona fide members and guests thereof, otherwise eligible for a banquet license and entitled to such privilege for a private affair or special event.

C. B. In addition to other applicable statutes and regulations of the board authority, the following restrictions and conditions apply to persons holding such banquet facility licenses:

1. Alcoholic beverages cannot be sold or purchased by the licensee;

2. Alcoholic beverages cannot be sold or charged for in any way by the person, association, corporation or other entity permitted to use the premises;

3. The private affair referred to in subsection B shall be a social function which is attended only by persons who are members of the association, corporation or other entity, including the fire department or rescue squad, and their bona fide guests;

4. 1. The volunteer fire department or rescue squad shall notify the board authority in writing at least two calendar days in advance of any affair or event at which the license will be used away from the fire department or rescue squad station. The notice shall include the date, time, location, and address of the event and the identity of the group, and the affair or event. Such records of off-site affairs and events should be maintained at the fire department or rescue squad station for a period of two years;

5. 2. A photocopy of the banquet facility license shall be present at all affairs or events at which the privileges of the license are exercised away from the fire or rescue squad station; and

6. 3. The fire department or rescue squad shall comply with the requirements of the local governing body concerning sanitation, health, construction, or equipment and shall obtain all local permits or licenses which that may be required to exercise the privilege privileges of its license.

3VAC5-50-190. Bed and breakfast licenses; restrictions and conditions.

A. Pursuant to § 4.1-206.3 A 9 of the Code of Virginia, the board may grant a bed and breakfast license to any person who operates an establishment consisting of:

1. No more than 15 bedrooms available for rent;

2. Offering to the public, for compensation, transitory lodging or sleeping accommodations; and

3. Offering at least one meal per day, which may but need not be breakfast, to each person to whom overnight lodging is provided.

B. In addition to other applicable statutes and regulations of the board Virginia Alcoholic Beverage Control Authority, the following restrictions and conditions apply to persons licensed as bed and breakfast establishments:

1. Alcoholic beverages served under the privileges conferred by the license must be purchased from a government store, wine or beer wholesaler, or farm winery;

2. Alcoholic beverages may be served for on-premises consumption to persons who are registered, overnight guests and are of legal age to consume alcoholic beverages;

3. Lodging, meals, and service of alcoholic beverages shall be provided at one general price and no additional charges, premiums, or surcharges shall be exacted for the service of alcoholic beverages;

4. Alcoholic beverages may be served in dining areas, private guest rooms, and other designated areas, including outside terraces or patios;

5. The bed and breakfast establishment, upon request or order of lodgers making overnight reservations, may purchase and have available for the lodger upon arrival, any alcoholic beverages so ordered, provided that no premium or surcharge above the purchase price of the alcoholic beverages may be exacted from the consumer for this accommodation purchase;

6. Alcoholic beverages purchased under the license may not be commingled or stored with the private stock of alcoholic beverages belonging to owners of the bed and breakfast establishment; and

7. The bed and breakfast establishment shall maintain complete and accurate records of the purchases of alcoholic beverages and provide sufficient evidence that at least one meal per day is offered to persons to whom overnight lodging is provided.

3VAC5-50-200. Gift shops; wine and beer off-premises licenses; conditions; records; inspections.

A. Pursuant to § 4.1-206.3 C 1 of the Code of Virginia, the board may grant retail wine and beer off-premises licenses to gift shops. Such gift shop may be located (i) on the premises or grounds of a government registered national, state or local historic building or site or (ii) within the premises of a museum.

B. The following restrictions and conditions apply to gift shop licensees:

1. A gift shop shall be defined as any bona fide retail store selling, predominately, (i) floral arrangements or handmade arts and crafts, which may include a combination of gifts, books, souvenirs, specialty items, collectibles, or other original and handmade products; and (ii) which is open to the public on a regular basis in a permanent structure where stock is displayed and offered for sale and which has facilities to properly secure any stock of wine or beer.

2. The board shall consider the purpose, characteristics, nature, and operation of the applicant establishment in determining whether it shall be considered a gift shop within the meaning of this section.

3. 1. Gift shop licenses, pursuant to this regulation, shall be granted only to persons who have places of business which that have been in operation for no less than 12 continuous months next preceding the filing of the application.

4. 2. Gift shop licenses shall authorize the licensees to sell wine and beer, which that have been purchased from and received at the establishment from farm winery or wholesale licensees, to sell such alcoholic beverages unchilled only within the interior premises of the gift shop in closed containers for off-premises consumption, and to deliver or ship the same to purchasers thereof in accordance with Title 4.1 of the Code of Virginia and regulations of the board Virginia Alcoholic Beverage Control Authority (authority).

5. 3. In granting licenses under this regulation chapter, the board authority may impose restrictions and conditions upon purchases and sales of wine and beer in accordance with this regulation chapter or as may be deemed reasonable by the board authority to ensure that the distribution of alcoholic beverages is orderly, and lawful and only incidental to the principal business of the licensee. In no event may the sale of such alcoholic beverages exceed 25% of total annual gross sales at the establishment.

6. 4. Every person licensed to sell alcoholic beverages under this regulation chapter shall comply with 3VAC5-70-90.

3VAC5-50-210. Manner of compensation of employees of retail licensees.

Employees of a retail licensee shall not receive compensation based directly, in whole or in part, upon the volume of alcoholic beverages sales only; provided, however, that in the case of retail wine and beer or beer only licensees, nothing in this section shall be construed to prohibit a bona fide compensation plan based upon the total volume of sales of the business, including receipts from the sale of alcoholic beverages.

3VAC5-50-220. Interests in the businesses of licensees.

Persons to whom licenses have been issued shall not allow any other person to receive a percentage of the income of the licensed business or have any beneficial interest in such business; provided, however, that nothing in this section shall be construed to prohibit:

1. The payment by the licensee of a franchise fee based in whole or in part upon a percentage of the entire gross receipts of the business conducted upon the licensed premises, where such is reasonable as compared to prevailing franchise fees of similar businesses;

2. Where the licensed business is conducted upon leased premises, and the lease when construed as a whole does not constitute a shift or device to evade the requirements of this section:

a. The payment of rent based in whole or in part upon a percentage of the entire gross receipts of the business, where such rent is reasonable as compared to prevailing rentals of similar businesses; and

b. The landlord from imposing standards relating to the conduct of the business upon the leased premises, where such standards are reasonable as compared to prevailing standards in leases of similar businesses and do not unreasonably restrict the control of the licensee over the sale and consumption of alcoholic beverages; or

3. The payment by the licensee of a management fee based in whole or in part upon a percentage of the entire gross receipts of the business conducted under the license where the licensee has contracted with a management company or promoter to perform operational duties on behalf of the licensee, provided that:

a. All payments to any management company or promoter are less than 10% in aggregate of the gross receipts of the business conducted under the license; and

b. The licensee provides the Virginia Alcoholic Beverage Control Authority (authority) a copy of the contract between the licensee and the management company or promoter that identifies the management company or promoter as an agent of the licensee for the purposes of exercising the privileges of the license and holds the licensee liable for any violations of the Alcoholic Beverage Control Act (§ 4.1-100 of the Code of Virginia) or authority regulation committed by the management company or promoter.

3VAC5-50-240. Alcoholic energy drinks beverage displays.

A. "Alcoholic energy drink" means an alcoholic beverage that contains caffeine or other stimulants.

B. Any establishment licensed to sell beer or wine for off-premises consumption shall display alcoholic energy drinks for sale immediately adjacent to other alcoholic beverage products, and not immediately adjacent to any nonalcoholic beverages.

Any establishment licensed to sell beer or wine for off-premises consumption and that displays beer and wine for sale outside of a clearly discernible location reserved for alcoholic beverage products shall (i) place no such alcoholic beverages immediately adjacent to any nonalcoholic beverages containing the same or similar brand name, logo, or packaging and (ii) install additional signage on the shelving or the floor display to indicate that the product is an alcoholic beverage. Such signage shall be clearly visible to consumers and of sufficient size to notify the consumer of the alcohol contents of the product. Nothing in this section shall prohibit the sale and display of nonalcoholic beer or wine in the same display or near similarly branded alcoholic beer or wine products.

3VAC5-50-250. Confectionery; definition; restrictions; labeling.

A. "Confectionery" means baked goods and candies having an alcohol content not more than 5.0% by volume.

B. Any alcohol contained in such confectionery shall not be in liquid form at the time such confectionery is sold. Such alcohol shall be fully integrated or blended into the confectionery product.

C. Any such confectionery shall only be sold to those individuals who can lawfully consume alcohol.

D. Subsections A, B, and C of this section shall only apply to licenses issued pursuant to § 4.1-206.3 C 3 of the Code of Virginia.

E. Any establishment licensed to sell confectioneries for off-premises consumption shall properly label the product with such label, including:

1. Notice that the product contains alcohol;

2. Notice that the product can only be consumed off premises; and

3. Warning that the product should not be consumed by anyone younger than 21 years of age.

3VAC5-50-260. Marketplace license; qualifications; application.

A. The following words and terms, when used in this section, shall have the following meanings unless the context clearly indicates otherwise:

1. "Bona fide customer" means a patron of the business enterprise that is seeking to obtain the goods or services of the licensee.

2. "Personalized experience" means goods or services catered to the specifications of an individual or event.

B. The marketplace license is a retail license. A premises described in an application for a marketplace license shall be subject to any regulations and requirements that apply to licensed premises upon which alcoholic beverages may be sold at retail for on-premises consumption. The employees who are involved in the marketplace licensee's service of complimentary alcoholic beverages shall be subject to the regulations and requirements that apply to employees of licensed establishments selling wine or beer at retail. A marketplace licensee's alcoholic beverage control manager shall be subject to the same regulations and requirements as designated managers of licensed establishments selling wine or beer at retail.

C. Marketplace licensees shall be subject to all requirements of 3VAC5-70-90 that apply to licensed premises upon which beer or wine may be sold at retail. In addition, every marketplace licensee shall keep complete, accurate, and separate records of the complimentary service of alcoholic beverages. Such records shall include accurate accounts of daily service of alcoholic beverages, by the drink, showing the kinds and quantities of alcoholic beverages served.

D. In addition to the requirements in § 4.1-206.3 E of the Code of Virginia, the Board of Directors of the Virginia Alcoholic Beverage Control Authority may also consider other requirements for licensure that the Virginia Alcoholic Beverage Control Authority may deem appropriate to protect the public health, safety, and welfare based on a review of the application and determinations of the Virginia Alcoholic Beverage Control Authority, Bureau of Law Enforcement during the investigation of the applicant.

E. Any person licensed pursuant to § 4.1-206 A 9, A 11, A 12, A 14, A 18, or A 19 of the Code of Virginia prior to July 1, 2021, that wishes to maintain licensure after December 31, 2021, shall apply for a marketplace license on or before July 1, 2021. If the licensee fails to apply for a marketplace license, the licensee shall be authorized to continue to operate under such license until the expiration of its original term.

F. Any person licensed pursuant to § 4.1-206 A 9, A 11, A 12, A 14, A 18, or A 19 of the Code of Virginia prior to July 1, 2021, whose license expires prior to December 31, 2021, and wishes to renew the license, may renew the license for another year and shall be authorized to continue to operate under such license until the expiration of that term. At least 60 days prior to the expiration of that term, the licensee shall apply for a marketplace license if the licensee wishes to maintain licensure following the expiration of the renewed license.

G. Any persons not currently licensed may apply for issuance of a license pursuant to § 4.1-206 A 9, A 11, A 12, A 14, A 18, or A 19 of the Code of Virginia on or before December 31, 2021. If such license is issued, the licensee shall be authorized to continue to operate under such license until the expiration of that term. At least 60 days prior to the expiration of that term, the licensee shall apply for a marketplace license if the licensee wishes to maintain licensure following the expiration of the issued license.