TITLE 3. ALCOHOLIC BEVERAGE AND CANNABIS CONTROL

VIRGINIA ALCOHOLIC BEVERAGE CONTROL AUTHORITY

Proposed Regulation

Title of Regulation: 3VAC5-70. Other Provisions (amending 3VAC5-70-10 through 3VAC5-70-40, 3VAC5-70-70 through 3VAC5-70-130, 3VAC5-70-150, 3VAC5-70-160 through 3VAC5-70-250; repealing 3VAC5-70-140).

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 provides the board with the authority to adopt reasonable regulations that it deems necessary to carry out the provisions of the Title 4.1 of the Code of Virginia and to amend or repeal such regulations.

Purpose: This regulation is essential to protect the health, safety, and welfare of citizens because it provides comprehensive guidance to Virginia Alcoholic Beverage Control Authority licensees across all tiers related to rules that do not squarely fit in one of the previous chapters.

Substance: The proposed amendments (i) remove redundant and duplicative language; (ii) revise and add definitions; (iii) increase license suspension periods or civil penalties for any licensee when a first-time offender chooses to settle a violation; (iv) allow first-time offenders more time to settle; (v) no longer allow a waiver of penalties for three types of serious offenses; (vi) add new restrictions on the use of grain alcohol; (vii) extend the time period during which a winery, brewery, bottler, or importer is not allowed to increase prices following a notification to the wholesaler; (viii) require monthly rather than quarterly activity reports from wine and beer shippers and Internet retail licensees; (ix) no longer require delivery permittees or licensees with a delivery privilege to file a report of activity if no sales or deliveries were made in the preceding 12 months; (x) add language stating that records kept by all licensees must be available for inspection "any time the licensee is open to the public"; and (xi) update reference and language for clarity.

Issues: The primary advantage to the public with these revisions is to remove redundant text, more clearly define when records should be available, simplify the granting of a grain alcohol permit, and incorporate guidance regarding designer and vintage bottles. The public in general is not disadvantaged, but licensees may see higher penalties and suspension periods for violations. The Commonwealth is benefited because there is a reduction in regulatory requirements as well as more clarity to the remaining requirements, making them more accessible. There are no disadvantages to the 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) increase license suspension periods or civil penalties for any licensee when a first-time offender chooses to settle a violation; (ii) allow first-time offenders more time to settle; (iii) no longer allow a waiver of penalties for three types of serious offenses; (iv) add new restrictions on the use of grain alcohol; (v) extend the time period during which a winery, brewery, bottler, or importer is not allowed to increase prices following a notification to the wholesaler; (vi) require monthly rather than quarterly activity reports from wine and beer shippers and Internet retail licensees; (vii) no longer require delivery permittees or licensees with a delivery privilege to file a report of activity if no sales or deliveries were made in the preceding 12 months; (viii) add language stating that records kept by all licensees must be available for inspection "any time the licensee is open to the public"; and (ix) 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 catch-all rules about alcoholic beverages that do not clearly fall under other regulatory chapters of the board. These include but are not limited to transportation, shipping, delivery, warehousing, wholesale, recordkeeping, non-commercial or commercial carrier permits, handling of cider, culinary licenses, schedule of penalties, and waiver of penalty for first-offense violations.

After conducting a comprehensive review of this chapter, and to reduce regulatory requirements in response to the regulatory reduction objectives in Executive Order 19 (2022), the board proposes the changes discussed.

Estimated Benefits and Costs. Section 4.1-227 B of the Code of Virginia provides the board authority to impose a civil penalty of up to $3,000 for first violations involving either the sale of alcoholic beverages to a person who is prohibited from purchasing alcoholic beverages or allowing alcoholic beverages to be consumed by underage, intoxicated, or interdicted persons; civil penalties of up to $2,000 can also be imposed for other types of first violations. The Code of Virginia does not appear to limit the duration of the suspension period that can be imposed by the board and the board also appears to have the authority to revoke a license. In addition to any suspension or civil penalty, the board may impose a requirement that the licensee pay for the cost incurred by the board (not to exceed $25,000) in investigating the licensee and in holding the proceeding resulting in the violation. Thus, a licensee faced with a notice of hearing for a first-time violation faces a substantial risk in terms of the range of possible outcomes of such a hearing.

This regulation allows for the settlement of first-time violations (i.e., no pending charges and no substantiated charges within the preceding three years) in lieu of going to a hearing and contesting the charge. Settlement is available if the licensee agrees to either a suspension period or a civil penalty, as provided in the schedule of penalties for first-offense violations and enters into an agreement with the Virginia Alcoholic Beverage Control Authority (authority). However, according to the authority, negotiated orders may include both a suspension period as well as a monetary fine if both sides agree.

One of the proposed changes would amend the schedule of penalties contained in 3VAC5-70-210. The schedule consists of 26 types of violations for which the penalty includes either suspension of a license for a certain number of days or, in lieu of the suspension, the payment of a civil monetary charge. Additionally, four types of offenses allow for less stringent suspension periods or reduced charges if the licensee has recently completed certified training. All 26 violations would see an increase in either the suspension periods or in the monetary fines or both. The complete schedule with the proposed changes can be found in the appendix of this analysis. The increases currently proposed by the board would be in addition to increases that were made in 2019, at which time the civil monetary penalties were increased by either $250 or $500 over the amounts that were in effect prior to 2019.² The 2019 increases followed 2017 legislation that increased the maximum amounts that the board may charge.³

The changes in the appendix can be summarized as follows. For 16 types of offenses, the current suspension period of seven days would be increased to 10 days and the civil penalty would increase by an additional $250 (i.e., from $500 to $750 for one type of violation, from $750 to $1,000 for 15 types of violations). For one type of violation, the suspension period would increase from 10 days to 15 days with a corresponding increase in the charge from $1,250 to $1,500. For five types of violations, the civil charge would increase from $1,250 to $1,500 with no change in the suspension period (i.e., the suspension period would remain at 10 days for all five violations). There is no change to either suspension periods or in monetary penalties in four offenses, although these four offenses provide for less onerous penalties if the licensee has completed training recently, which are separately discussed.

ABC reports that the intent of increasing these penalties is to act as a deterrent, although no data or information has been provided to indicate why additional deterrence is needed. As a result of the proposed changes to the schedule of penalties for first offense violations, the authority projects a 20% to 25% increase in the monetary penalties collected from licensees that settle their charges before a hearing. In fiscal year 2023, the authority collected $853,429 in total from penalties (i.e., $702,500 from 302 expedited consent orders and $150,929 from 78 matters resolved through negotiations). Using these data, and assuming no change in behavior by licensees, this 20% to 25% increase corresponds to an amount between $170,686 and $213,357 in additional collections by the authority.

The proposed changes would also increase the suspension periods during which the licensee would be prohibited from selling alcohol. In cases where alcohol sales make up the majority of the revenue stream of the licensee, the licensee may close the business in its entirety. Thus, if suspension is chosen, the licensee would lose revenues for the duration of the suspension, which would be increased by an additional three or five days depending on the specific violation, and some businesses may have to temporarily furlough their employees if they are highly reliant upon alcohol sales. In fiscal year 2023, 36 consent orders (11% of all consent orders) and nine negotiated orders (11% of all negotiated orders) contained a suspension period.

In general, the opportunity to settle may incentivize some individuals because settlements often result in the imposition of reduced penalties compared to the full extent of the law. This can include lower fines, shorter license suspensions, or other consequences. Additionally, settling a violation may lead to a faster resolution of the case. This can be advantageous for businesses looking to move past the incident and continue operations without prolonged administrative proceedings. Settling a violation may also help in preserving the reputation of the business. The act of contesting a violation is public information which can be damaging to a company's image, and settling may minimize negative publicity. Moreover, a settlement provides certainty regarding the outcome. A business can better plan for the future without the uncertainty of a protracted administrative process. This is no different in the case of the violations discussed.

However, an increase in the penalties associated with settlement may change this incentive, with the result that some individuals may decide to contest the charges. The imposition of higher penalties would increase the cost of settling disputed violations depending on the type of violation. Thus, an increase in the suspension periods or the monetary penalties may lead to an increase in the number of contested cases and hearings the authority would conduct. In fiscal year 2023, there were seven initial hearings involving a single first-time violation in the schedule of penalties that had a suspension period ranging from no suspension to up to 28 days, and the licensee also paid a monetary penalty ranging from $900 to $2,650. Thus, it is unclear whether and how much this change would lead to more contested cases.

Additionally, an increase in the cost of settling a dispute may incentivize some licensees to be more careful and devote more resources to employee training or supervision to reduce the chances of a violation. Thus, it is unclear whether and how much this change would alter the number of violations or contested cases.

The regulation also identifies four violations for which the suspension periods and monetary penalties are reduced if the licensee can demonstrate that they provided the employee responsible for the violation with certified training within the preceding 12 months. The authority provides the training online free of charge, and the reduced penalties are aimed at incentivizing licensees to ensure that their employees are knowledgeable about the current rules and regulations. The suspension period with training for all four of these violations would increase from five days to 15 days. Only two of the four violations would have an increased monetary penalty, which would increase from $1,500 to $2,000, while the monetary penalty for the other two violations would remain at $1,500.

The proposed increases in suspension period or the monetary penalties for the four types of violations where the licensee has recently completed certified training would reduce the potential benefit of having completed training compared to the status quo. For example, the current suspension period is five days with the training and 25 days without the training, which provides a 20-day reduction in the suspension period for all four types of violations in this category. Because the proposal would increase the suspension period from five days to 15 days for all four violations, it would reduce the benefit of training by half: from 20 days to 10 days. Similarly, the monetary benefit of training is currently $1,000 for two of the four violations (i.e., $2,500 without training versus $1,500 with training). Under the proposal, the monetary penalty with training would increase from $1,500 to $2,000. This increase would therefore reduce the monetary benefit of training by half to $500. In short, a potentially unintended consequence of these changes would be to decrease the relative attractiveness of training in terms of the suspension period and the monetary penalty. All other things being equal, the number of licensees who require their employees to complete annual training may decline.

The relative significance of the suspension period and monetary penalty would also change, because 17 violations would see an increase in both the suspension period and civil penalty, five of the violations would see an increase in only in monetary penalty, and suspension and monetary fines would remain the same for four violations unless the licensee recently completed training. Of the four violations that offer lesser penalties (suspension or monetary) compared to those licensees without recent training, two would see an increase in both types of penalties. The authority explains that the main reason for the proposed longer suspension periods for certain violations is to increase the significance of suspension periods in conjunction with the proposed increases in civil penalties. If suspension periods were not increased, the board feels that violators would choose the suspension period and easily avoid increased monetary fines.

Another amendment to the schedule of penalties would allow a licensee more time to settle. Currently, the regulation allows the licensees 20 days from the date of notification to settle the violation. The board proposes to strike the notification language, which would have the effect of allowing the licensee to settle the violation at any point until the time of the hearing. This change would benefit licensees who could not settle the violation within 20 days, but who would have settled it if they had more time.

The regulation currently also allows penalties to be waived for licensees that have not had a violation in the preceding five years, if it appears that the violation was unintentional. The board proposes to no longer allow penalties to be waived for three of these offenses because the board has determined that the nature of the offenses is "too significant." These offenses are: allowing an intoxicated person to loiter on the premises; after-hours sales or consumption of alcoholic beverages; and sale by a wholesaler of wine or beer to unauthorized person. Under the proposed changes, licensees who may have received a waiver of the penalty for one of these violations would no longer have that option. According to the board, the penalty for one of these offenses has only been waived twice in the past eight years and there were no waivers for two other offenses in the same time period; and no waivers for any of the three violations were granted in the last fiscal year. Removing the availability of a waiver for the three violations would make the penalties more punitive and encourage licensees to take actions (e.g., training or increased supervision) that would help them avoid these serious violations.

Two of the proposed changes would add new restrictions on the use of grain alcohol. The proposal would add that grain alcohol cannot be used in the manufacture of products intended for human consumption and remove the current allowance for the commercial and culinary uses of grain alcohol. According to the board, both internal and external stakeholders were concerned about the risks involved in the current approach, which allows products containing a high alcohol proof to be sold for human consumption. Thus, the board proposes to introduce restrictions on the use of grain alcohol in manufacturing and to no longer allow the commercial and culinary uses.

Another change in the proposal includes an extension in the time that must elapse before a price increase by a winery, brewery, bottler, or importer can go into effect. The regulation currently states that a price increase from a winery, brewery, bottler, or importer to wholesalers cannot go into effect until 30 calendar days after a notice of such increase is postmarked. The proposed change would start the required 30-day notice period from the date of delivery of the price increase notice to the wholesaler, rather than the day the notice is postmarked. Since the delivery of the notice to the wholesaler would be after the notice is postmarked, the price increase would not go in effect for a longer period of time. This change would delay the ability of winery, brewery, bottler, or importer to increase their prices and would allow the wholesaler additional time to take action if they choose.

Under the proposed changes, wine and beer shippers and Internet retail licensees would be required to file activity reports more frequently and would be required to report the weight of the items shipped and delivered in the report. Currently, these entities are required to file activity reports with the authority quarterly (i.e., on or before the 15th day of January, April, July, and October). Under the proposed changes, they would be required to file activity reports on or before the 15th day of each month. According to the authority, this change is being proposed because the current quarterly reporting is not effective. The board states that if there is a violation, several months would elapse before enforcement is made aware of the violation, and then even more time would pass before it is brought to a hearing. Reporting monthly increases the likelihood that violations would be discovered sooner and addressed more quickly. However, more frequent report filing would also add to shipper and licensee administrative costs because they would collect data more often and prepare and send additional reports to the authority. As noted, the board also proposes to require the report to include the weight of the shipment. The board states that this would provide more oversight to make sure that entities are not shipping more than what is permitted by law.

Another report-related change would no longer require delivery permittees, or licensees with a delivery privilege, to file a report of activity at least once every 12 months even if no sales or deliveries were made in the preceding 12 months. Thus, affected permittees and licensees would be expected to save the administrative cost of this reporting.

The board proposes to also add language stating that records kept by all licensees must be available for inspection "any time the licensee is open to the public." Currently, the records must be available for inspection during reasonable hours and between the hours of 9 a.m. and 5 p.m., but some licensees open their business after 5 p.m. According to the board, this change clarifies that "reasonable hours" includes hours the licensee is open. The board states that there have been few instances where agents were not provided access when the businesses were open outside of the current 9 a.m. to 5 p.m. window. Therefore, this change should improve agent ability to inspect records and thereby improve compliance.

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 statutory requirements by reading 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, the time and effort to retain and then update the regulation may be beneficial to the board and to citizens and consumers to the degree that it increases compliance.

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. No entity appears to be disproportionately affected.

The Code of Virginia requires DPB to assess whether an adverse impact may result from the proposed regulation.⁴ 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.⁵ As noted, all changes except three (i.e., allowing more time to settle a first time violation; no longer requiring delivery permittees or licensees with delivery privilege to file a report of activity if there is no deliveries or sales; and the editorial changes) are expected to add to compliance costs as discussed above. The changes to schedule of penalties would make it more costly for a violator to settle the case. Thus, an adverse impact on licensees is indicated.

Small Businesses⁶ Affected.⁷ It is more than likely that some of the licensees are small businesses. Thus, the proposal 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 small business licensees are the same as discussed above 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.

Localities⁸ Affected.⁹ The proposed changes apply statewide and they do not appear to introduce any costs for the localities.

Projected Impact on Employment. The proposal to increase the suspension periods for first-time offenders if they choose to settle the violation may lead to a reduction in their demand for labor because of decreased sales or potentially the closure of some licensed premises for a several additional days if they significantly rely on alcohol sales, depending on the type of violation. This may lead to a reduction in the need for employees and negatively affect employment.

Effects on the Use and Value of Private Property. With the exception of small benefits to licensees from having more time to settle with the authority and a reduced reporting requirement, all of the remaining proposed changes are expected to add to compliance costs of licensees. An increase in compliance costs would reduce profitability, and consequently lead to a negative impact on asset values of affected licensees. No impact is expected on real estate development costs.

Violation	Suspension	Civil Charge	Suspension with Certified Training	Civil Charge with Certified Training
Sale of beer, wine, or mixed beverages to a person at least 18 but younger than 21 years of age.	25 days	$2,500	5 (15) days	$1,500 ($2,000)
Allowing consumption of beer, wine, or mixed beverages by a person at least 18 but younger than 21 years of age.	25 days	$2,500	5 (15) days	$1,500 ($2,000)
Aiding and abetting the purchase of alcoholic beverages by a person at least 18 but younger than 21 years of age.	10 (15) days	$1,250 ($1,500)
Keeping unauthorized alcoholic beverages on the premises, upon which appropriate taxes have been paid.	7 (10) days	$750 ($1,000)
Allow an intoxicated person to loiter on the premises.	7 (10) days	$750 ($1,000)
Sale to an intoxicated person.	25 days	$2,500	5 (15) days	$1,500
Allow consumption by an intoxicated person.	25 days	$2,500	5 (15) days	$1,500
After hours sales or consumption of alcoholic beverages.	10 days	$1,250 ($1,500)
No designated manager on premises.	7 (10) days	$750 ($1,000)
Invalid check to wholesaler or authority.	7 (10) days	$500 ($750)
Inadequate illumination.	7 (10) days	$750 ($1,000)
ABC license not posted.	7 (10) days	$750 ($1,000)
Not timely submitting report required by statute or regulation.	7 (10) days	$750 ($1,000)
Designated manager not posted.	7 (10) days	$750 ($1,000)
Person younger than 18 years of age serving alcoholic beverages; younger than 21 years of age acting as bartender.	7 (10) days	$750 ($1,000)
Sale of alcoholic beverages in unauthorized place or manner.	10 days	$1,250 ($1,500)
Consumption of alcoholic beverages in unauthorized area.	7 (10) days	$750 ($1,000)
Removal of alcoholic beverages from authorized area.	7 (10) days	$750 ($1,000)
Failure to obliterate mixed beverage stamps.	7 (10) days	$750 ($1,000)
Employee on duty consuming alcoholic beverages.	7 (10) days	$750 ($1,000)
Conducting illegal happy hour.	7 (10) days	$750 ($1,000)
Illegally advertising happy hour.	7 (10) days	$750 ($1,000)
Unauthorized advertising.	7 (10) days	$750 ($1,000)
Failure to remit state beer or wine tax (if deficiency has been corrected).	10 days	$1,250 ($1,500)
Wholesaler sale of beer or wine in unauthorized manner.	10 days	$1,250 ($1,500)
Wholesaler sale of beer or wine to unauthorized person.	10 days	$1,250 ($1,500)

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¹ Section 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 https://townhall.virginia.gov/L/ViewXML.cfm?textid=13595.

³ https://lis.virginia.gov/cgi-bin/legp604.exe?171+ful+CHAP0698&171+ful+CHAP0698 and https://lis.virginia.gov/ cgi-bin/legp604.exe?171+ful+CHAP0707&171+ful+CHAP0707.

⁴ 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.

⁵ 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.

⁶ 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."

⁷ 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.

⁸ "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.

⁹ 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 (authority) concurs with the majority of the Department of Planning and Budget's (DPB) economic impact analysis (EIA); however, the agency does take exception to various statements regarding the amendments made to the schedule of penalties made by the analyst that are highly speculative and fail to take into consideration specific aspects of the data provided to DPB regarding the penalties collected over the last fiscal year.

The analyst asserts that an increase in suspension periods or monetary penalties may lead to an increase in the number of contested cases and hearings the authority would conduct. The analyst notes that nine initial hearings were heard that included violations that are covered in the schedule of penalties; however, the analyst fails to mention that seven of those nine cases resulted in penalties exceeding the limits that the amendments to this chapter are proposing and would have resulted in the licensee seeing lower penalties had they settled according to the schedule of penalties. Additionally, there are various issues at play as to why matters may go to a hearing instead of settling pursuant to the schedule of penalties. The matter mentioned in the EIA that resulted in a $10,750 civil penalty and a 71-day suspension (reduced to 30 days after payment of penalty) was one matter that involved a licensee that had committed 10 different violations, including multiple incidents of selling alcohol after hours, failing to submit the annual review, prohibited purchases of alcohol, and submitting an inaccurate annual report for multiple years. The settlement process is not meant for licensees that so blatantly violate the law to such a significant extent. Other than this singular example, there were no other cases with penalties or suspensions that high. To determine an overall adverse impact across all 20,892 licensees based on the actions of one singular licensee that would not have been subject to the chapter currently being amended is faulty logic at best. Of the nine cases cited by the analyst, only one resulted in a civil penalty less than the proposed amendments in the current action and that was only by $100. It is also worth noting that the current schedule of penalties and as amended are suspensions and penalties that the licensee may voluntarily enter into; neither the authority nor the chapter mandate that the licensee must accept these penalties or suspensions. Furthermore, the licensee may also negotiate a different penalty or suspension period that may be considered based on the facts of the matter and through the offer and compromise process included in 3VAC5-10-160. If acceptance of the penalty or suspension period would adversely impact the licensee to such a degree that in the licensee's summation it is not worth it, the licensee does not have to accept either.

The analyst asserts that all but three changes are expected to add to compliance costs. But for the requirement to report monthly as opposed to reporting quarterly, there are no additional compliance requirements imposed on licensees that do not already currently exist. Even if the requirement to report monthly as opposed to quarterly results in an additional "compliance cost," said cost would be negligible because the licensee is reporting data that the licensee is already required to maintain. Also, in many cases the authority allows for this data to be submitted via email, which would avoid any postal charges. The analyst also asserts that an increase to suspension periods may lead to a reduction in need for employees. As previously mentioned, the proposed suspension periods are voluntary. There is no mandate in these amendments that the licensee must accept a suspension. Additionally, the suspension is a suspension of the licensee's alcohol privileges. The licensee may continue to engage in the non-alcohol related activities of the licensee's business (e.g., a convenience store may be prohibited from selling alcohol while the license is suspended but may continue to sell other nonalcoholic items in its inventory). Furthermore, any reduction in the need for employees would be negligible across the licensee community, considering that out of approximately 417 matters resolved through a consent settlement or negotiation in the last fiscal year, only 45 licensees chose to voluntarily accept a suspension. For the statements indicated, the authority only partially concurs with the analysis provided by DPB.

Summary:

The proposed amendments (i) remove redundant and duplicative language; (ii) revise and add definitions; (iii) increase license suspension periods or civil penalties for any licensee when a first-time offender chooses to settle a violation; (iv) allow first-time offenders more time to settle violations; (v) no longer allow a waiver of penalties for three types of serious offenses; (vi) add new restrictions on the use of grain alcohol; (vii) extend the time period during which a winery, brewery, bottler, or importer is not allowed to increase prices following a notification to the wholesaler; (viii) require monthly rather than quarterly activity reports from wine and beer shippers and Internet retail licensees; (ix) no longer require delivery permittees or licensees with a delivery privilege to file a report of activity if no sales or deliveries were made in the preceding 12 months; (x) add language stating that records kept by all licensees must be available for inspection "any time the licensee is open to the public"; and (xi) update reference and language for clarity.

3VAC5-70-10. Transportation of alcoholic beverages; noncommercial permits; commercial carrier permits; refusal, suspension or revocation of permits; exceptions; out-of-state limitation not affected.

A. The transportation within or through this the Commonwealth of alcoholic beverages lawfully purchased within this the Commonwealth is prohibited, except upon a permit issued by the board Virginia Alcoholic Beverage Control Authority (authority), when in excess of the following limits:

1. Wine and beer. No limitation.

2. Alcoholic beverages other than those described in subdivision 1 of this subsection. Three gallons.

The transportation within, into, or through this the Commonwealth of alcoholic beverages lawfully purchased outside of this the Commonwealth is prohibited, except upon a permit issued by the board authority, when in excess of the following limits:

Alcoholic beverages, including wine and beer. Three gallons.

If satisfied that the proposed transportation is otherwise lawful, the board authority shall issue a transportation permit, which shall accompany the alcoholic beverages at all times to the final destination.

B. Commercial carriers desiring to engage regularly in the transportation of alcoholic beverages within, into, or through this the Commonwealth shall, except as hereinafter noted in this subsection, obtain a transportation permit from the board authority or otherwise possess acceptable documentation as required by the following provisions.

A transportation permit may be obtained by filing an application in writing upon forms furnished by the board authority. If satisfied that the proposed transportation is otherwise lawful, the board authority shall issue a transportation permit. Such permit shall not be transferable and shall authorize the carrier to engage in the regular transportation of alcoholic beverages upon condition that there shall accompany each such transporting vehicle a bill of lading or other memorandum describing the alcoholic beverages being transported and showing the names and addresses of the consignor and consignee, who shall be lawfully entitled to make and to receive the shipment. Such a The bill of lading or other memorandum may serve as a transportation permit so long as it is made available for inspection to special agents of the board authority or any law-enforcement officer upon request.

C. The board authority may refuse, suspend, or revoke a carrier's transportation permit, including the use of a bill of lading or other memorandum as a transportation permit as provided in subsection B of this section, if it shall have reasonable cause to believe that alcoholic beverages have been illegally transported by such carrier or that such carrier has violated any condition of a permit for any reason that it may refuse to issue, suspend, or revoke a license. Before refusing, suspending, or revoking such permit, the board authority shall accord the carrier involved the same notice and opportunity to be heard and follow the same administrative procedures accorded an applicant or licensee under Title 4.1 of the Code of Virginia.

D. There shall be exempt from the requirements of this section This section shall not apply to the following:

1. Common carriers by water engaged in transporting lawfully acquired alcoholic beverages for a lawful consignor to a lawful consignee;

2. Persons transporting wine, beer, or cider, or spirits purchased from the board authority or a licensee;

3. Persons transporting alcoholic beverages that may be manufactured and sold without a license;

4. A licensee transporting lawfully acquired alcoholic beverages he the licensee is authorized to sell in a vehicle owned or leased by the licensee;

5. Persons transporting alcoholic beverages to the board authority, or to licensees, provided that a bill of lading or a complete and accurate memorandum accompanies the shipment, and provided further, in the case of the licensee, that the merchandise is such as his merchandise that the license entitles him the licensee to sell;

6. Persons transporting alcoholic beverages as a part of their official duties as federal, state, or municipal officers or employees; and

7. Persons transporting lawfully acquired alcoholic beverages in a passenger vehicle, other than those alcoholic beverages referred to in subdivisions D 2 and D 3 of this section, provided the same that the alcoholic beverages are in the possession of the bona fide owners thereof and that no occupant of the vehicle possesses any alcoholic beverages in excess of the maximum limitations set forth in subsection A of this section.

E. This section shall not be construed to alter the one-gallon (four liters if any part is in a metric-sized container) three-gallon limitation upon alcoholic beverages that may be brought into the Commonwealth pursuant to § 4.1-310 E 4.1-311 B of the Code of Virginia.

3VAC5-70-20. Procedures for handling cider; authorized licensees; containers; labels; markup; age limits.

A. The procedures established by regulations of the board Virginia Alcoholic Beverage Control Authority (authority) for the handling of wine having an alcoholic content of not more than 14% by volume shall, with the necessary change of detail, be applicable to the handling of cider, subject to the following exceptions and modifications.

B. Licensees authorized to sell beer and wine, or either, at retail are hereby approved by the board for the sale of cider and such sales shall be made only in accordance with the age limits set forth in this section.

C. Containers of cider containing less than 7.0% alcohol by volume may be sold in any containers that comply with federal regulations for wine and beer provided such containers are labeled in accordance with board regulations. Cider containing 7.0% or more alcohol by volume may be sold in any containers that comply with federal regulations for wine, provided the containers are labeled in accordance with board regulations.

D. B. If the label of the product is subject to approval by the federal government, a copy of the federal label approval shall be provided to the board authority.

E. C. The markup or profit charged by the board shall be $.08 per liter or fractional part thereof.

F. Persons must be 21 years of age or older to purchase or possess cider.

G. D. The provisions of subsection A and subdivision B 4 of 3VAC5-60-20 shall not be applicable to the sale of cider by wholesale wine licensees to retail licensees of the board authority.

3VAC5-70-30. Sacramental wine; purchase orders; permits; applications for permits; use of sacramental wine.

A. Purchase orders for sacramental wine shall be on separate order forms prescribed by the board Virginia Alcoholic Beverage Control Authority (authority) and provided at cost if supplied by the board authority.

B. Sales for sacramental purposes shall be only upon permits issued by the board authority without cost and on which the name of the wholesaler authorized to make the sale is designated.

C. Requests for permits by a religious congregation shall be in writing, and executed by an officer of the congregation, and shall designate the quantity of wine and the name of the wholesaler from whom the wine shall be purchased.

D. Wine purchased for sacramental purposes by a religious congregation shall not be used for any other purpose.

3VAC5-70-40. Alcoholic beverages for culinary purposes; permits; purchases; restrictions.

A. The board Virginia Alcoholic Beverage Control Authority (authority) may issue a culinary permit to a person operating an establishment where food is prepared on the premises. The board authority may refuse to issue or may suspend or revoke such a permit for any reason that it may refuse to issue, suspend, or revoke a license.

B. Spirits shall be purchased from government stores. Wine and beer may be purchased from retail licensees when the permittee does not hold any retail on- or off-premises licenses. A permittee possessing a retail on- or off-premises license must purchase its wine and beer from wholesale licensees. However, a permittee who only has an on- or on- and off-premises beer license may purchase its wine from a retail licensee.

C. Permittees shall keep complete and accurate records of their purchases of alcoholic beverages at the permittee's place of business for two years. The records shall be available for inspection and copying by any member of the board or its special agents during reasonable hours.

D. Alcoholic beverages purchased for culinary purposes shall not be sold or used for any other purpose. They and shall be stored at the permittee's place of business, separate and apart from all other commodities.

3VAC5-70-70. Permits for persons having alcoholic beverages distilled; limitations.

A. Any person who contracts with or engages a licensed distiller to manufacture spirits from grain fruit, fruit products, or other substances grown or lawfully produced by such person shall obtain a board Virginia Alcoholic Beverage Control Authority (authority) permit before withdrawing the spirits from the distillery's premises. The permit shall accompany the shipment at all times. The application for the permit shall include the following:

1. The name, address, and license number, if any, of the consignee;

2. The kind and quantity in gallons of alcoholic beverages; and

3. The name of the company employed to transport the shipment.

B. Permits shall be issued only for (i) spirits shipments to the board authority, (ii) sales and shipments to a lawful consignee outside the Commonwealth under a bona fide written contract, or (iii) shipments of spirits samples to the person growing or producing the substance being distilled. Samples shall be packaged in containers of 375 or 750 milliliters and the words "Sample-Not for Sale" shall be printed in letters of reasonable size on the label.

3VAC5-70-90. Records to be kept by licensees generally; additional requirements for certain retailers; "sale" and "sell" defined; gross receipts; reports.

A. All licensees shall keep complete, accurate, and separate records for a period of two years. The records shall be available for inspection and copying by any member of the board Virginia Alcoholic Beverage Control Authority (authority) or its special agents during reasonable hours. Licensees may use microfilm, microfiche, disks, or other any available technologies for the storage of their records, and may store them off site, provided the records so stored are readily subject to retrieval and made available for viewing on a screen or in hard copy by the board authority or its special agents at the licensed premises between the hours of 9 a.m. and 5 p.m. or any time the licensee is open to the public. At any other time of day, if the licensee's records are not available for inspection, the licensee shall provide the records to a special agent of the board authority within 24 hours after a request is made to inspect the records.

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 all records, invoices, and accounts therein.

"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.

B. All licensed manufacturers, bottlers, or wholesalers of alcoholic beverages shall keep a complete, accurate, and separate record of all alcoholic beverages manufactured, bottled, purchased, sold, or shipped by him the licensee. Such records shall show the quantities of all such alcoholic beverages manufactured, bottled, purchased, sold, or shipped by him the licensee; the dates of all sales, purchases, deliveries, or shipments; the names and addresses of all persons to or from whom such sales, purchases, deliveries, or shipments are made; the quantities and kinds of alcoholic beverages sold and delivered or shipped and the prices charged therefor for the alcoholic beverages, and the taxes applicable thereto to the alcoholic beverages, if any. Every manufacturer and wholesaler, at the time of delivering alcoholic beverages to any person, shall also prepare a duplicate invoice showing the date of delivery, the quantity and value of each delivery, and the name of the purchaser to whom the delivery is made.

C. Every retail licensee shall keep complete, accurate, and separate records, including invoices, of the purchases and sales of alcoholic beverages, food, and other merchandise. The records of alcoholic beverages shall be kept separate and apart from other records and shall include all purchases thereof of the alcoholic beverages, the dates of such purchases, the kinds and quantities of alcoholic beverages purchased, the prices charged therefor for the alcoholic beverages, and the names and addresses of the persons from whom purchased.

Additionally, each retail licensee shall keep accurate accounts of daily sales, showing quantities of alcoholic beverages, food, and other merchandising sold and the prices charged therefor for such items.

D. In addition to the requirements of subsections A and C of this section, mixed beverage restaurant licensees shall keep records of all alcoholic beverages purchased for sale as mixed beverages and records of all mixed beverage sales. The following actions shall also be taken:

1. On delivery of a mixed beverage restaurant license by the board authority, the licensee shall furnish to the board authority or its special agents a complete and accurate inventory of all alcoholic beverages currently held in inventory on the premises by the licensee; and

2. Once a year, each licensee shall submit on prescribed forms to the board authority an annual review report. The report is due within 30 days after the end of the mixed beverage license year and shall include:

a. A complete and accurate inventory of all alcoholic beverages purchased for sale as mixed beverages and held in inventory at the close of business at the end of the annual review period;

b. An accounting of the annual purchases of food, nonalcoholic beverages, and alcoholic beverages, including alcoholic beverages purchased for sale as mixed beverages, and miscellaneous items; and

c. An accounting of the monthly and annual sales of all merchandise specified in subdivision 2 b of this subsection.

E. The terms "sale" and "sell" shall include exchange, barter or traffic, or delivery made otherwise than gratuitously, by any means whatsoever, of mixed beverages and other alcoholic beverages, and of meals or food.

F. E. In determining "gross receipts from the sale of food" for the purposes of § 4.1-206.3 of the Code of Virginia, a licensee shall not include any receipts for food for which there was no sale, as defined in this section. Food which that is available at an unwritten, non-separate charge to patrons or employees during Happy Hours, private social gatherings, promotional events, or at any other time, shall not be included in the gross receipts. Food shall include hors d'oeuvres.

If, in conducting its review pursuant to § 4.1-114 of the Code of Virginia, the board authority determines that the licensee has failed or refused to keep complete and accurate records of the amounts of mixed beverages or other alcoholic beverages sold at regular prices, as well as at all various reduced and increased prices offered by the licensee, the board authority may calculate the number of mixed drinks and other alcoholic beverage drinks sold, as determined from purchase records, and presume that such sales were made at the highest posted menu prices for such merchandise.

G. F. Any changes in the officers, directors, or shareholders owning 10% or more of the outstanding the licensee's capital stock of a corporation if the licensee is a corporation or, if the licensee is a limited liability company, any changes in member-managers or any members owning 10% or more of the membership interest of the limited liability company shall be reported to the board authority within 30 days; provided, however, that corporations or their wholly owned subsidiaries whose corporate common stock is publicly traded and owned shall not be required to report changes in shareholders owning 10% or more of the outstanding capital stock.

H. G. All banquet and special event licensees in charge of public events shall report to the board authority the income and expenses associated with the public event on a form prescribed by the board authority when the licensee engages another person to organize, conduct, or operate the event on behalf of the licensee. Reports shall be made within 90 days after the date of each event. "Public events" shall be deemed to include any event at which alcoholic beverages are sold to the general public and not only to personally invited guests.

All applicants for banquet or special event licenses shall indicate at the time of application whether the event is open to the public and whether another person has been or will be engaged to organize, conduct, or operate the event on behalf of the licensee. If the applicant indicates that the event is open to the public and another person has been or will be engaged to organize, conduct, or operate the event on behalf of the licensee, the applicant shall attach a copy of any contract between the applicant and such other person to the license application.

3VAC5-70-95. Proration of license tax for businesses destroyed by natural disaster.

The board Virginia Alcoholic Beverage Control Authority shall make refunds of the state license tax paid pursuant to subsection A of § 4.1-231 of the Code of Virginia to licensees whose place of business designated in the license is destroyed by an act of God, including but not limited to fire, earthquake, hurricane, storm, or similar natural disaster or phenomenon, upon the following schedule:

If the destruction takes place within the first three months of the license year, 75% of the license tax shall be refunded. If the destruction takes place within the second three months of the license year, 50% of the license tax shall be refunded. If the destruction takes place within the third three months of the license year, 25% of the license tax shall be refunded. No refund shall be issued if the destruction takes place within the last three months of the license year.

3VAC5-70-100. Gifts of alcoholic beverages generally; exceptions; wine and beer tastings; taxes and records.

A. Gifts of alcoholic beverages by a licensee to any other person are prohibited except as otherwise provided in this section or as provided in §§ 4.1-119 G, 4.1-201, 4.1-201.1, 4.1-206.3, 4.1-209, 4.1-215, 4.1-325, and 4.1-325.2 of the Code of Virginia.

B. Gifts of alcoholic beverages may be made by licensees as follows:

1. Personal friends. Gifts may be made to personal friends as a matter of normal social intercourse when in no wise way a shift or device to evade the provisions of this section.

2. Samples. A representative of a wholesaler, winery, brewery, or importer may give a retail licensee a sample serving or a container not then sold by such licensee of wine or beer if (i) the licensee is licensed to sell such product, provided that in the case of containers, the container does not exceed 52 fluid ounces in size (1.5 liters if in a metric-sized container) and (ii) the label bears the word "Sample" in lettering of reasonable size. Such samples may not be sold. For good cause shown, the board Virginia Alcoholic Beverage Control Authority (authority) may authorize a larger sample container. Samples must be obtained from licensed wholesalers or purchased from retail licensees in the Commonwealth.

3. Gifts by retail licensees. An on-premises retail licensee may give a gift of one alcoholic beverage to a patron or one bottle of wine to a group of two or more patrons, provided that such gifts are made to patrons to whom such alcoholic beverages may be sold. No subsequent gift shall be provided to the same patrons within 24 hours.

4. Hospitality rooms; conventions. The following activities are permitted:

a. A brewer or vintner may give samples of his the brewer's or vintner's products to visitors to his the brewer's or vintner's winery or brewery for consumption on premises only in a hospitality room approved by the board authority, provided the donees are persons to whom such products may be lawfully sold; and

b. A manufacturer, importer, bottler, broker, or wholesaler may host an event at conventions of national, regional, or interstate associations or foundations organized and operated exclusively for religious, charitable, scientific, literary, civil affairs, educational, or national purposes upon the premises occupied by such licensee, or upon property of the licensee contiguous to such premises, or in a development contiguous to such premises, that is owned and operated by the licensee or a wholly owned subsidiary.

5. Conventions; educational programs, including alcoholic beverage tastings; research; licensee associations. Manufacturers, importers, bottlers, brokers, and wholesalers may donate alcoholic beverages to:

a. A convention, trade association, or similar gathering, composed of licensees and their guests, when the alcoholic beverages donated are intended for consumption during the convention;

b. Retail licensees attending a bona fide educational program relating to the alcoholic beverages being given away;

c. Research departments of educational institutions, or alcoholic research centers, for the purpose of scientific research on alcoholism; and

d. Official associations of alcoholic beverage industry members when conducting a bona fide educational program concerning alcoholic beverages, with no promotion of a particular brand, for members and guests of particular groups, associations, or organizations.

6. Conditions. Exceptions authorized by subdivisions 4 b and 5 of this subsection are conditioned upon the following:

a. That prior written notice of the activity be submitted to the board authority describing it and giving the date, time, and place of such activity; and

b. That the activity be conducted in a room or rooms set aside for that purpose and be adequately supervised.

C. Wine and beer wholesalers may participate in a wine or beer tasting sponsored by a gourmet shop an off-premises retail licensee enumerated in § 4.1-206.3 C 1 of the Code of Virginia for its customers and may provide educational material, oral or written, pertaining thereto, as well as participate in the pouring of such wine or beer.

D. Any gift authorized by this section shall be subject to the taxes imposed on sales by Title 4.1 of the Code of Virginia, and complete and accurate records shall be maintained.

3VAC5-70-110. Release of alcoholic beverages from customs and bonded warehouses; receipts; violations; limitation upon sales.

A. Alcoholic beverages held in a United States customs bonded warehouse may be released therefrom for delivery to:

1. The board Virginia Alcoholic Beverage Control Authority (authority);

2. A person holding a license authorizing the sale of the alcoholic beverages at wholesale;

3. Boats actually engaged in foreign trade or trade between the Atlantic and Pacific ports of the United States or trade between the United States and any of its possessions outside of the several states and the District of Columbia; or

4. Persons for shipment outside the Commonwealth to someone legally entitled to receive the same alcoholic beverages under the laws of the state of destination.

Releases to any other person shall be under a permit issued by the board authority and in accordance with the instructions therein set forth in such permit.

B. A copy of the permit, if required, shall accompany the alcoholic beverages until delivery to the consignee. The consignee, or his the consignee's duly authorized representative, shall acknowledge receipt of delivery upon a copy of the permit, which receipted copy shall be returned to the board authority by the permittee within 10 days after delivery.

C. The board authority may refuse to issue additional permits to a permittee who has previously violated any provision of this section.

D. A maximum of six imperial gallons of alcoholic beverages may be sold, released, and delivered in any 30-day period to any member of foreign armed forces personnel.

3VAC5-70-120. Approval of warehouses for storage of alcoholic beverages not under customs or internal revenue bond; segregation of merchandise; release from storage; records; exception.

A. Upon the application of a person qualified under the provisions of § 4.1-130 of the Code of Virginia, the board Virginia Alcoholic Beverage Control Authority (authority) may issue a certificate of approval permit for the operation of a warehouse for the storage of lawfully acquired alcoholic beverages not under customs bond or internal revenue bond, if satisfied that the warehouse is physically secure.

B. The alcoholic beverages of each owner shall be kept separate and apart from merchandise of any other person.

C. Alcoholic beverages shall be released for delivery to persons lawfully entitled to receive the same alcoholic beverages only upon permit issued authorization by the board, authority and in accordance with the instructions therein set forth therein. The owner of the alcoholic beverages, or the owner or operator of the approved permitted warehouse as agent of such owner, may apply for release permits, for which a charge may be made by the board enter into a memorandum of understanding with the authority for the purpose of allowing them to submit out-of-bond transfer reports via email.

D. Complete and accurate records shall be kept at the warehouse for a period of two years, which records shall be available during reasonable hours for inspection by a member of the board authority or its special agents. Such records shall include the following information as to both receipts and withdrawals:

1. Name and address of owner or consignee;

2. Date of receipt or withdrawal, as the case may be; and

3. Type and quantity of alcoholic beverage.

E. Alcoholic beverages stored by licensees pursuant to 3VAC5-50-90 are excepted from the operation of this section.

3VAC5-70-130. Special mixed beverage licenses; locations; special privileges; taxes on licenses.

A. Special mixed beverage licenses may be granted to persons by the board Virginia Alcoholic Beverage Control Authority at places primarily engaged in the sale of meals where the place to be occupied (i) is owned by the government of the United States, or any agency thereof, (ii) is located on land used as a port of entry or egress to and from the United States, and (iii) otherwise complies with the requirements of § 7.1-21.1 of the Code of Virginia, which. Such licenses shall convey all of the privileges and be subject to all of the requirements and regulations pertaining to mixed beverage restaurant licensees, except as otherwise altered or modified herein in this chapter.

B. "Meals" need not be "full meals," but shall at least constitute "light lunches," and the gross receipts from the sale of food and nonalcoholic beverages at such establishment shall be not less than 45% of the gross receipts from the sale of mixed beverages and food means the same as defined in 3VAC5-50-110 A 5.

C. The annual tax on a special mixed beverage license shall be $500 and shall not be prorated; provided, however, that if application is made for a license of shorter duration, the tax thereon on a special mixed beverage license shall be $25 per day.

3VAC5-70-140. Definitions and requirements for wine licenses; wine; wine coolers. (Repealed.)

Wherever the term "wine" appears in this chapter, it shall include "wine coolers" as defined in § 4.1-100 of the Code of Virginia. Wine coolers shall be treated as wine for the purposes of the regulations, except for purposes of taxation and shipments from points outside the Commonwealth to installations of the United States armed forces located within the Commonwealth for resale on such installations, in accordance with §§ 4.1-112 and 4.1-236 of the Code of Virginia and 3VAC5-60-70.

Any person licensed to manufacture, bottle or sell wine shall not be required to pay any additional state tax for any license to manufacture, bottle or sell, as the case may be, any wine cooler. Such person shall have the privilege to manufacture, bottle or sell any wine cooler under the provisions of Title 4.1 of the Code of Virginia as long as his license remains in full force and effect.

3VAC5-70-150. Wholesale alcoholic beverage sales; winery and brewery discounts, price-fixing; price increases; price discrimination; inducements.

A. No winery as defined in § 4.1-401 of the Code of Virginia or brewery as defined in § 4.1-500 of the Code of Virginia shall require a wholesale licensee to discount the price at which the wholesaler shall sell any alcoholic beverage to persons holding licenses authorizing sale of such merchandise at retail. No winery, brewery, bottler, or wine or beer importer shall in any other way fix or maintain the price at which a wholesaler shall sell any alcoholic beverage.

B. No winery as defined in § 4.1-401 of the Code of Virginia or brewery as defined in § 4.1-500 of the Code of Virginia shall increase the price charged to any person holding a wholesale license for alcoholic beverages, except by written notice to the wholesaler signed by an authorized officer or agent of the winery, brewery, bottler, or importer which that shall contain the amount and effective date of the increase.

No increase shall take effect prior to 30 calendar days following the date on which the notice is postmarked; delivered, provided that the board Virginia Alcoholic Beverage Control Authority (authority) may authorize such price increases to take effect with less than the aforesaid 30 calendar days' calendar-day notice if a winery, brewery, bottler, or importer so requests and demonstrates good cause therefor for such an expedited increase.

The provisions of this subsection shall not apply in any case where the importer required to provide notice of a price increase and the wholesaler to whom notice is to be provided are the same person.

C. No winery as defined in § 4.1-401 of the Code of Virginia or brewery as defined in § 4.1-500 of the Code of Virginia shall discriminate in price of alcoholic beverages between different wholesale purchasers, except where the difference in price charged by such winery or brewery is due to a bona fide difference in the cost of sale or delivery, or where a lower price was charged in good faith to meet an equally low price charged by a competing winery or brewery on a brand and package of like grade and quality. Where such difference in price charged to any such wholesaler does occur, the board authority may ask and the winery or brewery shall furnish written substantiation for the price difference.

D. No person holding a license authorizing the sale of alcoholic beverages at wholesale shall knowingly induce or receive a discrimination in price prohibited by subsection C of this section.

3VAC5-70-160. Farm wineries; percentage of Virginia products; other agricultural products; remote outlets.

A. No more than 25% of the fruits, fruit juices, or other agricultural products used by the farm winery licensee shall be grown or produced outside the Commonwealth, except upon permission of the board authority as provided in § 4.1-219 of the Code of Virginia. This 25% limitation applies to the total production of the farm winery, not individual brands or labels. The term "other agricultural products," as used in this subsection, includes wine.

B. The term "other agricultural products," as used in subsection A of this section, includes wine.

C. A farm winery license limits retail sales to the premises of the winery and to five additional retail establishments that need not be located on the premises. These B. The five additional retail outlets permitted for farm winery licenses may be moved throughout the state as long as advance board authority approval is obtained for the location, equipment, and facilities of each remote outlet.

3VAC5-70-170. Credit and debit cards.

Government stores may accept credit or debit cards from consumers and licensees for the purchase of alcoholic beverages subject to the policies of the Virginia Alcoholic Beverage Control Authority (authority). The board authority may establish policies to set purchase requirements, determine the credit or debit cards that will be accepted, provide for the collection of related fees, penalties, or service charges where appropriate, establish credit procedures for returned merchandise, and make any other decisions to carry out the purpose of this chapter.

3VAC5-70-180. Regulation of the sale of alcoholic beverages in kegs and other containers; permit and registration; other requirements.

A. The following definitions shall apply for purposes of this section:

1. "Keg." Any container capable of holding four gallons or more of beer or wine and which that is designed to dispense beer or wine directly from the container for purposes of consumption; and

2. "Registration seal." Any document, stamp, declaration, seal, decal, sticker, or device approved by the board which Virginia Alcoholic Beverage Control Authority (authority) that is designed to be affixed to kegs and which that displays a registration number and such other information as may be prescribed by the board authority.

B. 1. No person licensed to sell wine or beer at retail for off-premises consumption, or any officer, agent, or employee thereof, shall sell any such alcoholic beverage in a keg without having (i) registered the sale on a form prescribed by the board authority and (ii) affixed a registration seal on the keg at the time of sale;, provided, that if the purchaser takes possession of the keg at the premises of the wholesale licensee pursuant to subsection G, the wholesale licensee shall affix the registration seal.

2. Prior to the sale of alcoholic beverages in kegs, the keg registration declaration and receipt form provided by the board authority shall be properly completed and shall contain:

a. The name and address of the purchaser verified by valid identification as defined in 3VAC5-50-20 B;

b. The type and number of the identification presented by the purchaser;

c. A statement, signed by the purchaser, that the purchaser is 21 years of age or older, does not intend to allow persons under younger than 21 years of age to consume the alcoholic beverages purchased, and that the purchaser will not remove or obliterate the key registration tag affixed to the keg or allow its removal or obliteration; and

d. The particular address or location where the keg will be consumed, and the date or dates on which it will be consumed.

3. Where the purchaser obtains more than one keg for consumption at the same location and on the same date, only one keg registration declaration and receipt form must contain all required information. All other keg registration declaration and receipt forms for that particular transaction shall contain the registration number from the fully completed form as a reference and be signed by the purchaser. Such The keg registration declaration and receipt forms which that contain the reference number of a fully completed form and have been signed by the purchaser constitute a valid and properly completed keg registration and declaration receipt.

4. The keg registration seal affixed to the keg may serve as the purchaser's receipt. Upon receipt of a properly registered keg from a consumer, the retail licensee shall remove and obliterate the keg registration seal from the keg and note such action on the keg registration declaration and receipt form to be retained by the retail licensee on the licensed premises. Kegs made of disposable packaging do not have to be returned to the retail licensee. The retailer shall indicate on the keg declaration and receipt form that the keg was not returnable due to its disposable packaging.

C. For the purpose of tracing the kegs and purchaser responsibility, it shall be the responsibility of the seller to affix the properly completed and signed keg registration seal to all containers of four gallons or more of alcoholic beverages prior to the container leaving control of the seller.

D. Except in accordance with this section, no person shall remove, alter, deface, or obliterate the registration seal affixed to a keg pursuant to this section. Throwing away empty kegs made of disposable packaging shall not constitute obliteration of the keg registration seal. If any nonlicensee is in possession of a keg containing alcoholic beverages, and which keg that does not bear the registration seal, or upon which keg the registration seal has been altered, defaced, or obliterated, the container and its contents shall be deemed to be contraband and subject to seizure and forfeiture.

E. Licensees shall maintain a complete and accurate record of all registration forms and other documentation of the sale of kegs at the place of business designated in his the license for a period of one year. Such records shall include the registration seal for nondisposable kegs, which the retail licensee shall remove from the keg upon its return by the purchaser. Moreover, such records regarding keg sales shall during reasonable hours be open to inspection by the board authority or its special agents or other law-enforcement officers.

F. Before a purchaser may take possession of a keg at the premises of the wholesale licensee after purchasing such keg from a retail licensee, the purchaser shall be required to (i) complete the registration of the transaction at the premises of the retail licensee and (ii) deliver the registration seal to the wholesale licensee who shall affix it to the keg; however, no wholesale licensee may deliver possession of any such keg to the purchaser until the wholesale licensee has collected payment from the retail licensee pursuant to 3VAC5-30-30.

G. Except as authorized by the board authority, no person shall transfer possession of or give the registered keg or container to another person. This prohibition shall not apply, however, to the return of the registered container to the seller.

3VAC5-70-190. Waiver of banquet license tax; qualifications; restrictions and conditions; exceptions.

A. Pursuant to § 4.1-111 of the Code of Virginia, the board The Virginia Alcoholic Beverage Control Authority (authority) may waive the banquet license tax for a duly organized not-for-profit corporation or association holding a nonprofit event. A "nonprofit event" means income from the event shall not exceed expenses for the event. Fixed costs, including but not limited to staff salaries, rent, utilities, and depreciation, shall not be included as expenses.

B. 1. The applicant shall sign an affidavit certifying the not-for-profit status of the corporation or association and that the event being held is nonprofit.

2. The applicant may serve alcoholic beverages in any combination, the in an amount to be no more than that which equals no more than the total alcohol content by volume in two kegs of beer (31 gallons).

3. The granting of a waiver is limited to two events per fiscal year (July 1 - through June 30) for any qualifying corporation or association.

C. The board authority may issue a permit authorizing a variance from subdivision B 2 of this section for good cause shown.

3VAC5-70-200. Grain alcohol; permits; qualifications; records; refusal, suspension, or revocation.

A. The board Virginia Alcoholic Beverage Control Authority (authority) may issue a yearly permit authorizing the permittee to purchase grain alcohol with a proof greater than 151 at government stores for any of the following purposes:

1. Industrial use; 2. Commercial use; 3. Culinary use, not to include the manufacturing of products intended for human consumption; or

4. 2. Medical use by a federal or state board-licensed medical professional or hospital.

B. The application for such permits shall be on forms provided by the board authority.

C. Permits may be issued to legitimate businesses for any one or more of the purposes stated in subsection A of this section upon presentation of satisfactory evidence of the conduct of the business activity involved. For good cause shown, the board authority may issue a permit to an individual for any of the uses stated in subsection A of this section.

D. A person obtaining a permit shall maintain complete and accurate records of all purchases for a period of two years. The board authority and its special agents shall have free access during reasonable hours to all records required to be kept pursuant to this section.

E. The board authority may refuse to issue, suspend, or revoke a permit if the board authority has reasonable cause to believe that (i) the permittee would use, has used, or allowed to be used grain alcohol for any unlawful purpose or, (ii) any cause exists under § 4.1-222 of the Code of Virginia for which the board authority may refuse to grant the applicant any license, or (iii) the permittee has done any act for which the board authority might suspend or revoke a license under § 4.1-225 of the Code of Virginia.

3VAC5-70-210. Schedule of penalties for first-offense violations.

A. Any licensee charged with any violation of board Virginia Alcoholic Beverage Control Authority (authority) regulations or statutes listed in this subsection, if the licensee has no other pending charges and has not had any substantiated violations of regulation or statute within the three years immediately preceding the date of the violation, may accept an offer by the authority extended in writing to enter a written waiver of hearing and (i) accept the period of license suspension set forth in this subsection for the violation, or (ii) pay the civil charge set forth in this subsection for the violation in lieu of suspension. In the case of a violation involving the sale of beer, wine, or mixed beverages to a person at least 18 years of age but younger than 21 years of age, or to an intoxicated person, or allowing consumption of such beverages by such person, any retail licensee that can demonstrate that it provided alcohol seller or server training certified in advance by the board authority to the employee responsible for such violation within the 12 months immediately preceding the alleged violation may accept the lesser period of license suspension or pay the lesser civil charge listed for the violation in lieu of suspension. Any notice of hearing served on a licensee for a violation covered by this section shall contain a notice of the licensee's options under this section. Any licensee who fails to notify the board of its intent to exercise one of the options provided for under this section within 20 days after the date of mailing of the notice of hearing shall be deemed to have waived the right to exercise such options, and the case shall proceed to hearing. For good cause shown, the board may, in its discretion, allow a licensee to exercise the options provided for under this section beyond the 20-day period.

VIOLATION	SUSPENSION	CIVIL CHARGE	SUSPENSION WITH CERTIFIED TRAINING	CIVIL CHARGE WITH CERTIFIED TRAINING
Sale of beer, wine, or mixed beverages to a person at least 18 years of age but younger than 21 years of age.	25 days	$2,500	5 15 days	$1,500 $2,000
Allowing consumption of beer, wine, or mixed beverages by a person at least 18 years of age but younger than 21 years of age.	25 days	$2,500	5 15 days	$1,500 $2,000
Aiding and abetting the purchase of alcoholic beverages by a person at least 18 years of age but younger than 21 years of age.	10 15 days	$1,250 $1,500
Keeping unauthorized alcoholic beverages on the premises, upon which appropriate taxes have been paid.	7 10 days	$750 $1,000
Allow an intoxicated person to loiter on the premises.	7 10 days	$750 $1,000
Sale to an intoxicated person.	25 days	$2,500	5 15 days	$1,500
Allow consumption by an intoxicated person.	25 days	$2,500	5 15 days	$1,500
After hours sales or consumption of alcoholic beverages.	10 days	$1,250 $1,500
No designated manager on premises.	7 10 days	$750 $1,000
Invalid check to wholesaler or board authority.	7 10 days	$500 $750
Inadequate illumination.	7 10 days	$750 $1,000
ABC license not posted.	7 10 days	$750 $1,000
Not timely submitting report required by statute or regulation.	7 10 days	$750 $1,000
Designated manager not posted.	7 10 days	$750 $1,000
Person younger than 18 years of age serving alcoholic beverages; younger than 21 years of age acting as bartender.	7 10 days	$750 $1,000
Sale of alcoholic beverages in unauthorized place or manner.	10 days	$1,250 $1,500
Consumption of alcoholic beverages in unauthorized area.	7 10 days	$750 $1,000
Removal of alcoholic beverages from authorized area.	7 10 days	$750 $1,000
Failure to obliterate mixed beverage stamps.	7 10 days	$750 $1,000
Employee on duty consuming alcoholic beverages.	7 10 days	$750 $1,000
Conducting illegal happy hour.	7 10 days	$750 $1,000
Illegally advertising happy hour.	7 10 days	$750 $1,000
Unauthorized advertising.	7 10 days	$750 $1,000
Failure to remit state beer or wine tax (if deficiency has been corrected).	10 days	$1,250 $1,500
Wholesaler sale of beer or wine in unauthorized manner.	10 days	$1,250 $1,500
Wholesaler sale of beer or wine to unauthorized person.	10 days	$1,250 $1,500

B. For purposes of this section, the Virginia Alcoholic Beverage Control Authority authority will certify alcohol seller or server training courses that provide instruction on all the topics listed on the Seller/Server Seller or Server Training Evaluation form. The following steps should be completed to submit a training program for approval:

1. Complete the Alcohol Seller/Server Seller or Server Training Data Sheet and review the Seller/Server Seller or Server Training Evaluation form to make sure the program will meet the listed criteria; and

2. Submit the Alcohol Seller/Server Seller or Server Training Data Sheet and a copy of the proposed training program materials for review. Materials submitted should include copies of any lesson plans and instructional materials used in the training program.

Requests for certification of training courses should be sent to:

	Virginia Alcoholic Beverage Control Authority
	Education Section Community Health and Engagement
	P.O. Box 27491 3250
	Richmond, VA 23261 Mechanicsville, VA 23116
	Email: education@abc.virginia.gov education@virginiaabc.com

Persons in charge of any certified alcohol server training course shall maintain complete records of all training classes conducted, including the date and location of each class and the identity of all those successfully completing the course.

C. For a licensee that operates more than one retail establishment, each such establishment shall be considered a separate licensee for the purpose of this section.

3VAC5-70-220. Wine or beer shipper's licenses, Internet wine retailer licenses, and Internet beer retailer licenses; application process; common carriers; records.

A. Any person or entity qualified for a wine and beer shipper's license pursuant to § 4.1-209.1 of the Code of Virginia, or an Internet wine and beer retailer license pursuant to subdivision F 2 of - § 4.1-206.3 F 2 of the Code of Virginia, must apply for such license by submitting form 805-52, Application for the Retail License Application form. In addition to the application, each applicant shall submit as attachments a list of all brands of wine or beer sought to be shipped by the applicant, along with the board-assigned authority-assigned code numbers for each brand or a copy of the label approval by the appropriate federal agency for any brand not previously approved for sale in Virginia pursuant to 3VAC5-40-20 that will be sold only through direct shipment to consumers.

If the applicant is not also the brand owner of the brands listed in the application, the applicant shall obtain and submit with the application a dated letter identifying each brand, from the brand owner or any wholesale distributor authorized to distribute the brand, addressed to the Supervisor, Tax Management Section, Virginia Alcoholic Beverage Control Authority (authority), indicating the brand owner's or wholesale distributor's consent to the applicant's shipping the brand to Virginia consumers.

The applicant shall attach (i) a photocopy of its current license as a winery, farm winery, brewery, or alcoholic beverage retailer issued by the appropriate authority for the location from which shipments will be made and (ii) evidence of the applicant's registration with the Virginia Department of Taxation for the collection of Virginia retail sales tax.

B. Any brewery, winery, or farm winery that applies for a shipper's license or consents to the application by any other person, other than a retail off-premises licensee, for a license to ship such brewery's, winery's, or farm winery's brands of wine or beer shall notify all wholesale licensees that have been authorized to distribute such brands in Virginia that an application for a shipper's license has been filed. Such notification shall be by a dated letter to each such wholesale licensee, setting forth the brands that wholesaler has been authorized to distribute in Virginia for which a shipper's license has been applied. A copy of each such letter shall be forwarded to the Supervisor, Tax Management Section, authority by the brewery, winery, or farm winery.

C. Any holder of a wine and beer shipper's license or Internet wine and beer retailer's license may add or delete brands to be shipped by letter to the Supervisor, Tax Management Section, authority designating the brands to be added or deleted. Any letter adding brands shall be accompanied by any appropriate brand-owner consents or notices to wholesalers as required with an original application.

D. Any brand owner that consents to a holder of a wine and beer shipper's license or Internet wine and beer retailer's license shipping its brands to Virginia consumers may withdraw such consent by a dated letter to the affected wine and beer shipper's licensee or Internet wine and beer retailer's licensee. Copies of all such withdrawals shall be forwarded by the brand owner, by certified mail, return receipt requested, to the Supervisor, Tax Management Section authority. Withdrawals shall become effective upon receipt of the copy by the Tax Management Section authority, as evidenced by the postmark on the return receipt.

E. Wine and beer shipper's licensees and Internet wine and beer retailer's licensees shall maintain for two years complete and accurate records of all shipments made under the privileges of such licenses, including for each shipment:

1. Number of containers shipped;

2. Volume of each container shipped;

3. Brand of each container shipped;

4. Names and addresses of recipients; and

5. Price charged.

The records required by this subsection shall be made available for inspection and copying by any member of the board authority or its special agents upon request.

F. On or before the 15th day of each month, each wine and beer shipper's licensee or Internet wine and beer retailer's licensee shall file with the Supervisor, Tax Management Section, authority either in paper form or electronically as directed by the department authority, a report of activity for the previous calendar month. Such report shall include:

1. Whether any shipments were made during the month; and

2. If shipments were made, the following information for each shipment:

a. Number of containers shipped;

b. Volume of each container shipped;

c. Brand of each container shipped;

d. Names and addresses of recipients; and

e. Price charged.

Unless otherwise paid, payment of the appropriate beer or wine tax shall accompany each report.

G. All shipments by holders of wine and beer shipper's licenses or Internet wine and beer retailer's licenses shall be by approved common carrier only. Common carriers possessing all necessary licenses or permits to operate as common carriers in Virginia may apply for approval a permit to provide common carriage of wine or beer, or both, shipped by holders of wine and beer shipper's licenses or Internet wine and beer retailer's licenses, by dated letter to the Supervisor, Tax Management Section, requesting such approval and agreeing to perform deliveries of beer or wine shipped, maintain records, and submit reports in accordance with the requirements of this section application. The board authority may refuse, suspend, or revoke approval if it shall have reasonable cause to believe that a carrier does not possess all necessary licenses or permits, that a carrier has failed to comply with the regulations of the board authority, or that a cause exists with respect to the carrier that would authorize the board authority to refuse, suspend, or revoke a license pursuant to Title 4.1 of the Code of Virginia. Before refusing, suspending, or revoking such approval, the board authority shall follow the same administrative procedures accorded an applicant or licensee under Title 4.1 of the Code of Virginia and regulations of the board authority.

H. When attempting to deliver wine or beer shipped by a wine and beer shipper's licensee or Internet wine and beer retailer's licensee, an approved common carrier shall require:

1. The recipient to demonstrate, upon delivery, that the recipient is at least 21 years of age; and

2. The recipient to sign an electronic or paper form or other acknowledgment of receipt that allows the maintenance of the records required by this section.

The approved common carrier shall refuse delivery when the proposed recipient appears to be younger than 21 years of age and refuses to present valid identification. All licensees shipping wine or beer pursuant to this section shall affix a conspicuous notice in 16-point type or larger to the outside of each package of wine or beer shipped within or into the Commonwealth, in a conspicuous location stating: "CONTAINS ALCOHOLIC BEVERAGES; SIGNATURE OF PERSON AGED 21 YEARS OR OLDER REQUIRED FOR DELIVERY." Such notice shall also contain the wine and beer shipper's or Internet wine and beer retailer's license number of the shipping licensee. No approved common carrier shall accept for shipment any wine or beer to be shipped to anyone other than a licensee of the board authority unless the package bears the information required by this subsection.

I. Approved common carriers shall maintain for two years complete and accurate records of all shipments of wine or beer received from and delivered for wine and beer shipper's licensees or Internet wine and beer retailer's licensees including for each shipment:

1. Date of shipment and delivery;

2. Number of items shipped and delivered;

3. Weight of items shipped and delivered;

4. Acknowledgment signed by recipient; and

5. Names and addresses of shippers and recipients.

The records required by this subsection shall be made available for inspection and copying by any member of the board authority or its special agents upon request.

J. On or before the 15th day of each January, April, July, and October month, each approved common carrier shall file with the Supervisor, Tax Management Section, authority a report of activity for the previous calendar quarter month. Such report shall include:

1. Whether any shipments were delivered during the quarter; and

2. If shipments were made, the following information for each shipment:

a. Dates of each delivery; and

b. Names and address of shippers and recipients for each delivery; and

c. Weight of items shipped and delivered.

3VAC5-70-225. Delivery permits; application process; records and reports; delivery requirements.

A. Any out of state out-of-state person or entity qualified for a delivery permit pursuant to § 4.1-212.1 of the Code of Virginia must apply for such permit by submitting Form 805-52, the Retail License Application form. The applicant shall attach (i) a photocopy of its current license as an alcoholic beverage retailer that is authorized to sell wine or beer at retail for off-premises consumption, issued by the appropriate authority for the location from which deliveries will be made and (ii) evidence of the applicant's registration with the Virginia Department of Taxation for the collection of Virginia retail sales tax.

B. Delivery permittees and licensees with delivery privileges pursuant to §§ 4.1-212.1 and 4.1-212.2 of the Code of Virginia shall maintain for two years complete and accurate records of all deliveries made under the privileges of such permits, including for each delivery:

1. Number of containers delivered;

2. Volume of each container delivered;

3. Brand of each container delivered;

4. Names and addresses of recipients;

5. Signature of recipient; and

6. Price charged for the wine or beer delivered.

The records required by this subsection shall be made available for inspection and copying by any member of the board Virginia Alcoholic Beverage Control Authority (authority) or its special agents upon request.

C. On or before the 15th day of each month, each delivery permittee and licensees with delivery privileges pursuant to § 4.1-212.1 of the Code of Virginia shall file with the Supervisor, Tax Management Section, authority a report of activity for the previous calendar month, if any deliveries were made during the month for which the licensee or permittee is required to collect and remit excise taxes pursuant to § 4.1-212.1 H of the Code of Virginia. Such report shall include the following information for each delivery:

1. Number of containers delivered;

2. Volume of each container delivered;

3. Brand of each container delivered;

4. Names and addresses of recipients; and

5. Price charged for the wine or beer delivered.

Unless previously paid, payment of the appropriate beer or wine tax imposed by § 4.1-234 or 4.1-236 of the Code of Virginia shall accompany each report. If no wine or beer was sold and delivered in any month, the permittee shall not be required to submit a report for that month; however, every permittee must submit a report no less frequently than once every 12 months even if no sales or deliveries have been made in the preceding 12 months.

D. All deliveries by holders of delivery permits and licensees with delivery privileges pursuant to § 4.1-212.1 of the Code of Virginia shall be performed by the owner or any agent, officer, director, shareholder, or employee of the permittee or licensee, or third-party delivery licensee.

E. No more than four cases of wine nor more than four cases of beer may be delivered at one time to any person, except that a permittee or licensee may deliver more than four cases of wine or more than four cases of beer if he the permittee or licensee notifies the Supervisor, Tax Management Section, authority in writing at least one business day in advance of such delivery. Any notice given pursuant to this section shall include the number of containers to be delivered, the volume of each container to be delivered, the brand of each container to be delivered, and the name and address of the intended recipient.

F. When attempting to deliver wine or beer alcoholic beverages pursuant to a delivery permit or license privilege pursuant to § 4.1-212.1 of the Code of Virginia, an owner, agent, officer, director, shareholder, or employee of the permittee or licensee, or third-party delivery licensee shall require:

1. The recipient to demonstrate, upon delivery, that he the recipient is at least 21 years of age; and

2. The recipient to sign an electronic or paper form or other acknowledgment of receipt that allows the maintenance of the records required by this section; however, a signature shall not be required so long as the licensee verifies at the time of delivery that the recipient is 21 years of age or older; ensures that the recipient's bona fide identification, as described in 3VAC5-50-20 B, bears a photograph that reasonably appears to match the appearance of the recipient; and records the recipient's name and date of birth and the address to which the alcoholic beverages were delivered.

The owner, agent, officer, director, shareholder, or employee of the permittee or licensee, or third-party delivery licensee shall refuse delivery when the proposed recipient appears to be under the age of younger than 21 years of age and refuses to present valid identifications identification. All retail permittees or licensees delivering wine or beer alcoholic beverages pursuant to this section shall affix a conspicuous notice in 16-point type or larger to the outside of each package of wine or beer alcoholic beverages delivered in the Commonwealth, in a conspicuous location, stating: "CONTAINS ALCOHOLIC BEVERAGES; SIGNATURE OF RECEIPT BY PERSON AGED 21 YEARS OR OLDER REQUIRED FOR DELIVERY." Such notice shall also contain the delivery permit number of the delivering permittee or license number of the licensee and shall be affixed to the package even if the product is delivered in the manufacturer's original sealed container. Third-party delivery licensees shall not deliver any alcoholic beverages that do not bear the required label.

3VAC5-70-230. Sale of designer or vintage spirit bottles.

A. The following definitions shall apply to designer and vintage bottles of spirits:

1. Designer: A bottle of spirits manufactured specifically as a departure from the manufacturer's standard trademark, design, or packaging; originally sold in limited quantities; and with a retail value in excess of $500. Each bottle shall be accompanied by the manufacturer's certificate of designer status.

2. Vintage: A bottle of spirits wherein the product therein has been bottled for at least 20 years or has not been sold by the brand owner for a minimum of 10 years.

3. In either instance the bottle must be (i) the original manufacturer's unopened bottle; (ii) neither owned by a distillery nor sold on behalf of a distillery, manufacturer, or wholesaler; and (iii) not otherwise available for purchase from the Virginia Alcoholic Beverage Control Authority (authority).

B. Collectors of designer or vintage bottles containing distilled spirits may sell them at auction under the following conditions:

1. The seller shall notify the secretary to the board of the date, time, and place of the auction sale.

2. Any bottle sold must be unopened and the manufacturer's seals, marks, or stamps affixed to the bottles must be intact.

3. The auction must be conducted in accordance with the provisions of Chapter 6 (§ 54.1-600 et seq.) of Title 54.1 of the Code of Virginia.

4. Any purchaser at such auction must be a minimum of 21 years of age.

5. For two years from the date of sale, the auctioneer must keep records, available to the board authority upon request, of the name and address of each purchaser and a description of the alcoholic beverages purchased.

3VAC5-70-240. Marketing portal and fulfillment warehouse approval process.

A. Any holder of a wine and beer shipper's license wishing to use the services of a marketing portal or fulfillment warehouse, as defined in § 4.1-209.1 of the Code of Virginia, must use an approved marketing portal or fulfillment warehouse. Marketing portals or fulfillment warehouses licensed to perform such services by the state in which they are located may apply for approval to provide such services to holders of Virginia wine or beer shipper's licenses by letter to the Supervisor, Tax Management Section, Virginia Alcoholic Beverage Control Authority, requesting such approval Virginia Alcoholic Beverage Control Authority (authority). Each applicant shall submit as attachments copies of all licenses issued by the state in which its place of business is located that authorize the provision of the services to be provided. A marketing portal shall submit as attachments copies of documents showing that it is properly organized as an agricultural cooperative in the state where it is located. The board authority may refuse, suspend, or revoke approval if it shall have has reasonable cause to believe that a marketing portal or fulfillment warehouse is not licensed to provide such services by its home state, that it has failed to comply with the regulations of the board authority, or that a cause exists with respect to the marketing portal or fulfillment warehouse that would authorize the board authority to refuse, suspend, or revoke a license pursuant to the Alcoholic Beverage Control Act (§ 4.1-100 et seq. of Title 4.1 of the Code of Virginia). Before refusing, suspending, or revoking such approval, the board authority shall follow the same administrative procedures accorded an applicant or licensee under § 4.1-100 et seq. of Title 4.1 of the Code of Virginia the Alcoholic Beverage Control Act and regulations of the board authority.

B. Any approved marketing portal or fulfillment warehouse shall, prior to performing services for a wine and beer shipper's licensee, enter into a written contract. The contract must designate the marketing portal or fulfillment warehouse as the agent of the shipper for the purposes of complying with the provisions of this regulation and §§ 4.1-206.3 and 4.1-209.1 of the Code of Virginia. A copy of each such contract shall be submitted by the marketing portal or fulfillment warehouse to the Supervisor, Tax Management Section, Alcoholic Beverage Control Authority, authority prior to the commencement of services.

C. Approved fulfillment warehouses shall maintain for two years complete and accurate records of all shipments made on behalf of Virginia wine and beer shippers, including for each shipment:

1. Number of containers shipped;

2. Volume of each container shipped;

3. Brand of each container shipped; and

4. Names and addresses of recipients.

The records required by this subsection shall be made available for inspection and copying by any member of the board authority or its special agents upon request.

3VAC5-70-250. Waiver of penalty for certain first-time violations.

A. In accordance with subdivision E 4 of § 4.1-227 E 5 of the Code of Virginia, whenever the board Virginia Alcoholic Beverage Control Authority (authority) finds that a charge against a licensee for a violation listed in this subsection is substantiated, the licensee has had no prior violations within five years immediately preceding the date of the subject violation, and the subject violation was not willful and knowing, the board shall authority may enter an order substantiating the violation without imposing a penalty. The provisions of this subsection shall apply to the following violations:

1. Keeping unauthorized alcoholic beverages on the premises, upon which appropriate taxes have been paid;

2. Allowing an intoxicated person to loiter on the premises;

3. After hours sales or consumption of alcoholic beverages;

4. 2. No designated manager on premises;

5. 3. Invalid check to wholesaler or board authority;

6. 4. Inadequate illumination;

7. 5. Not timely submitting a report required by statute or regulation;

8. 6. Designated manager not posted;

9. 7. Person less younger than 18 years of age serving alcoholic beverages; less younger than 21 years of age acting as bartender;

10. 8. Sale of alcoholic beverages in unauthorized place or manner;

11. 9. Consumption of alcoholic beverages in unauthorized area;

12. 10. Removal of alcoholic beverages from authorized area;

13. 11. Failure to obliterate mixed beverage stamps;

14. 12. Employee on duty consuming alcoholic beverages;

15. 13. Conducting illegal happy hour;

16. 14. Illegally advertising happy hour;

17. 15. Unauthorized advertising;

18. 16. Failure to remit state beer/wine beer or wine tax (if deficiency has been corrected); and

19. 17. Wholesaler sale of wine/beer beer or wine in unauthorized manner; and

20. Wholesaler sale of wine/beer to unauthorized person.

B. Whenever any licensee who has not had any substantiated violations of regulation or statute within the previous five years is charged with a violation, the board authority, if the facts found by the board authority would justify a finding that the charge is substantiated but is not a willful and knowing violation, with the consent of the licensee, may defer further proceedings and place the licensee on probation upon terms and conditions.

As a term or condition, the board authority shall require the licensee to participate in or provide employees such board-approved seller/server authority-approved seller or server or manager training as, in the opinion of the board authority, may be best suited to the needs of the licensee based upon consideration of the nature of the violation.

As a condition of probation, the board authority shall require the licensee to (i) successfully complete the required training program and (ii) comply with all alcoholic beverage laws and regulations during the period of probation.

Upon violation of a term or condition, the board authority may enter an adjudication that the charge is substantiated and proceed as otherwise provided. Upon fulfillment of the terms and conditions, the board authority shall dismiss the proceedings against the licensee. Dismissal under this section shall be without adjudication of the charge and is a substantiated violation only for the purposes of applying this section in subsequent proceedings.

FORMS (3VAC5-70)

Retail License Application (rev. 7/2024)

Order and Permit for Transportation of Alcohol (rev. 11/2015)

Order and Permit for Transportation of Alcoholic Beverages (rev. 11/2015)

Instructions for Completion of the Mixed Beverage Annual Report and Inventory Report (rev. 6/2018)

Application for Grain Alcohol Permit, #805-75 (filed 8/2021)

Special Event License Application Addendum - Notice to Special Event Licenses Applicants, Form SE-1 (rev. 3/2019)

Statement of Income and Expenses for Special Event Licenses (with instructions), Form SE-2 (rev. 3/2019)

Alcohol Seller/Server Seller or Server Training Data Form and Evaluation Form (eff. 7/2009)