Compliance Corner 3/17/2020
The Compliance Corner
By Mary Beth Williams
COVID – The Legalities
We are in uncharted waters, and there is much uncertainty about how the VA wine industry will be able to operate in the upcoming weeks. The most current legal parameters are below, but most importantly, within these parameters, you need to make the best decisions you can for your business, employees, customers, and communities.
Tasting Rooms and Retail Activities
A state of emergency has been imposed in Virginia, and as of Sunday, 3/15, there is a ban on events in VA for more than 100 people in a single confined space at the same time, giving room to practice social distancing. Gov. Northam said “It means events outside the normal course of daily life. It does not mean operations at….restaurants or other retail establishments.” CDC has issued guidance to reduce that number to 50, and the White House today made recommendations that no more than 10 people should be gathered together at this time, but these are not law at this point.
There are some areas of Virginia that have put bans on in-house dining in restaurants, but allow take-out ordering to continue. Farm wineries without additional food service do not currently fall within the definition of “restaurant,” but I anticipate that further restrictions may go into place in the next week that broaden the prohibitions to include farm wineries.
So what can you legally do to continue operations while protecting yourselves and your customers from COVID?
Set up well-spaced tables for consumption outside, with strong sanitation protocol.
Offer outdoor pickup. You may make sales of closed containers for off-premises consumption or take that wine to cars if they are on the portion of your property that is licensed by ABC. No sale or delivery can be made to a person who is seated in a vehicle. In theory, the sale would be made beforehand, and if you’re putting the wine in the trunk or backseat, you’re not making the delivery to a person who is seated in a vehicle. The intent is to prohibit a “Brew Thru” type of business. The safest way to handle this is to have them get out of the car.
Delivery. Look at your farm winery permits. If they say “Farm Winery – Delivery”, then you have already signed up for delivery privileges. If you don’t have access to that permit, you can go to this link https://www.abc.virginia.gov/bwcrpt/public/suppliers_importers_retailers.jsp, and enter “Farm Winery – Class A (or B, if applicable)/Delivery Permit” in the “Report Type” space, then enter at least a portion of your business name in the “Trade Name” space, and it will tell you if you have a delivery permit. If you don’t, you can submit a Delivery Permit Application, and the privilege will be added to your farm winery license within just a day or so. We’ve notified ABC that there may be a glut of these types of applications being submitted, given the COVID situation, and they’re aware of the urgency in getting them issued. There is no cost to add this privilege to your existing license. A copy of the application is attached to this Compliance Corner. The applications do have to go to the Richmond office. Williams Compliance will walk the completed applications into ABC for you, free of charge, if you email them to us.
No more than 4 cases of wine can be delivered at one time to a person without approval from the supervisor at ABC. You can charge a delivery charge, but you don’t have to.
NOTE that, once you have the permit, in any month in which you make deliveries, you must submit a report by the 15th detailing the deliveries you made in the prior month. There is no report due in months when you don’t make deliveries, but every delivery permit licensee must file a report at least once a year, regardless of whether any deliveries were made. That report has to include: quantity, brand, names and address of recipient, and price charged. You should also include all bottles delivered on your regular monthly PO, and pay taxes accordingly with your normal monthly report.
Shipping. You can ship to consumers in states where you hold the correct licenses, and it is permissible to offer reduced or free shipping.
As noted above, many events at your wineries are likely prohibited by the ban on events for at least the next 2 weeks. It hasn’t been tested yet, but I believe this probably includes both public and private events. What do you do about events that are scheduled during that time frame?
FORCE MAJEURE – Hopefully, most of your event agreements have broad “Force Majeure” or “Act of God” provisions in them. This is pretty standard boilerplate language in contracts, and a provision not generally needed, so you may not even know it’s there. It will be in the miscellaneous provisions toward the end of the contract.
Look at the language in your Force Majeure provision. The idea is that a party to the contract shouldn’t be held to the terms when the contract becomes “unfulfillable” due to something outside of the control of either party. Generally, we see these provisions invoked with fires, flooding, or some other natural disaster, but unless your Force Majeure language is specifically limited to a natural disaster, COVID will likely be covered. Are you going to have freaking out brides if you call them with this news? Probably, and I feel badly for them, but nobody anticipated this situation happening now. Hopefully, you’ll be able to reschedule once the crisis is over, and ALL venues should be cancelling these events, so you aren’t alone in being the dream crushers.
We’ll send updates as things change, and by all means, if you have questions, reach out. In the meantime, make good decisions, wash your hands, and don’t knock old ladies out of the way for toilet paper. Most importantly, be kind to one another, and STAY WELL! It’ll be bumpy for a bit, but we’ll make it through, and your 2019 wines are going to be incredible!
Mary Beth Williams is the President of Williams Compliance and Consulting Group, LLC, a compliance services and legal consulting provider based in Hanover County, Virginia. For more information, contact Mary Beth at Marybeth@williamscompliance.com or (804) 445-2924.