TITLE 3. ALCOHOLIC BEVERAGES
Title of Regulation: 3VAC5-50. Retail Operations (amending 3VAC5-50-160).
Statutory Authority: §§ 4.1-103 and 4.1-111 of the Code
of Virginia.
Public Hearing Information: No public hearings are
scheduled.
Public Comment Deadline: June 29, 2016.
Effective Date: July 15, 2016.
Agency Contact: Shawn Walker, Director of Law
Enforcement, Department of Alcoholic Beverage Control, 2901 Hermitage Road,
Richmond, VA 23220, telephone (804) 213-4569, FAX (804) 213-4411, or email
shawn.walker@abc.virginia.gov.
Basis: Subdivision B 15 of § 4.1-111 of the Code of
Virginia requires the Alcoholic Beverage Control Board to promulgate
regulations that permit a mixed beverage licensee to advertise the products
featured during a happy hour promotion and to serve pitchers and flights of
mixed beverages to patrons. Section 4.1-111 also provides the board with broad
authority to promulgate reasonable regulations necessary to carry out the
provisions of Title 4.1 of the Code of Virginia.
Subdivisions 13 and 18 of § 4.1-103 of the Code of Virginia
authorize the board to promulgate regulations and to do all acts necessary to
carry out the provisions of Title 4.1 of the Code of Virginia.
Purpose: These amendments respond to specific statutory
requirements. The amendments enhance public safety by placing limitations on
the outlined practices in order to prevent overconsumption by consumers.
Rationale for Using Fast-Track Rulemaking Process: The
rulemaking process is expected to be noncontroversial because the proposed
amendments closely follow the statutory requirements. The agency has
minimal discretion.
Substance: The proposed amendment provides for retail
on-premises licensees to have the option of listing the alcoholic beverage
products featured during a happy hour promotion in any lawful
advertisement. In addition, retail on-premises licensees may serve a
flight of five samples of wine or beer to a patron. Mixed beverage licensees
may also serve a flight of five mixed beverage samples and pitchers of mixed
beverages to patrons during a happy hour in accordance with the regulations of
the board.
Issues: The primary advantage to the public is
accomplishing the legislature's stated goal to permit certain activities. The
amendments include safeguards to prevent overconsumption by placing limitations
on the amounts of alcoholic beverages that can be served. There are no
disadvantages to the public or the Commonwealth.
Department of Planning and Budget's Economic Impact
Analysis:
Summary of the Proposed Amendments to Regulation. Pursuant to
Chapter 404 of the 2015 Acts of Assembly, the Alcoholic Beverage Control Board
(Board) proposes to relax the limitations on happy hour promotions.
Result of Analysis. The benefits likely exceed the costs for
all proposed changes.
Estimated Economic Impact. Chapter 404 of the 2015 Acts of
Assembly amended Virginia Code section 4.1-111(B)(15) requiring the Board to
prescribe the limitations for happy hour promotions. In addition, Chapter 826
of the 2006 Acts of Assembly amended Virginia Code section 4.1-201(A)(11) and
(14) to allow flights of wine and beer to be sold subject to certain
restrictions. Currently, a person is not allowed more than two drinks at any
one time during a happy hour. The Board now proposes to allow mixed beverage
retail licensees: 1) to permit patrons to possess a flight of wine, beer or
mixed beverages consisting of no more than five sample products provided each
sample of distilled spirits contains no more than one half ounce of spirits, 2)
to sell pitchers of mixed beverages during a happy hour in accordance with
limitations established by the Board, and 3) to list the alcoholic beverage
products featured during a happy hour in any lawful advertisement. Thus, the
proposed regulation will allow in general more flexibility to the licensees in
the sale and promotion of alcoholic beverages during a happy hour. The proposed
changes will likely increase the sales of mixed beverages during happy hour.
Businesses and Entities Affected. The proposed regulation
applies to approximately 6,000 retail licensees authorized to sell for on-premises
consumption.
Localities Particularly Affected. The proposed changes apply
statewide.
Projected Impact on Employment. The proposed amendments could
be expected to increase sales of mixed beverages during happy hours and demand
for labor employed in production and sales.
Effects on the Use and Value of Private Property. Allowing more
flexibility in the sale and promotion of alcoholic beverages during a happy
hour may have a positive revenue impact on affected licensees and their asset
values.
Real Estate Development Costs. No impact on real estate
development costs is expected.
Small Businesses:
Definition. Pursuant to § 2.2-4007.04 of the Code of Virginia,
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."
Costs and Other Effects. Approximately 75 percent of the 6,000
retail licensees are estimated to be small businesses. The proposed regulation
does not impose costs on them. The effects on small businesses are the same as
discussed above.
Alternative Method that Minimizes Adverse Impact. No adverse
impact on small businesses is expected.
Adverse Impacts:
Businesses. The proposed regulation does not have an adverse
impact on non-small businesses.
Localities. The proposed regulation will not adversely affect
localities.
Other Entities. The proposed regulation will not adversely
affect other entities.
Agency's Response to Economic Impact Analysis: The
Department of Alcoholic Beverage Control concurs.
Summary:
The amendments permit (i) retail on-premises licensees to
list the alcoholic beverage products featured during a happy hour promotion in
any lawful advertisement and serve flights of five samples of wine or beer to a
patron and (ii) mixed beverage licensees to serve flights of five mixed
beverage samples and pitchers of mixed beverages to patrons during a happy
hour.
3VAC5-50-160. Happy hour and related promotions; definitions;
exceptions.
A. Definitions:. The following words and
terms when used in this section shall have the following meanings unless the
context clearly indicates otherwise:
1. "Happy Hour." A hour" means a
specified period of time during which alcoholic beverages are sold at prices
reduced from the customary price established by a retail licensee.
2. "Drink." Any " means any
beverage containing the amount of alcoholic beverages customarily served to a
patron as a single serving by a retail licensee.
B. No retail licensee shall engage in any of the following
practices:
1. Conducting a happy hour between 9 p.m. of each day and 2
a.m. of the following day;
2. Allowing a person to possess more than two drinks at any
one time during a happy hour, with the exception of flights of wine and beer
consisting of samples of not more than five different wines or beers or samples
of five different distilled spirits products provided each distilled spirits
sample contains no more than one-half ounce of distilled spirits;
3. Increasing the volume of alcoholic beverages contained in a
drink without increasing proportionately the customary or established retail
price charged for such drink;
4. Selling two or more drinks for one price, such as "two
for one" or "three for one";
5. Selling pitchers of mixed beverages except in accordance
with 3VAC5-50-60;
6. Giving away drinks;
7. Selling an unlimited number of drinks for one price, such
as "all you can drink for $5.00";
8. Advertising happy hour anywhere other than within the interior
of the licensed premises, except that a licensee may use the term "Happy
Hour" or "Drink Specials," and, a list of the
alcoholic beverage products featured during a happy hour as well as the
time period within which alcoholic beverages are being sold at reduced prices
in any otherwise lawful advertisement; or
9. Establishing a customary retail price for any drink at a
markup over cost significantly less than that applied to other beverages of
similar type, quality, or volume.
C. This regulation shall not apply to prearranged private
parties, functions, or events, not open to the public, where the guests thereof
are served in a room or rooms designated and used exclusively for private
parties, functions or events.
VA.R. Doc. No. R16-4586; Filed May 11, 2016, 9:40 a.m.