More Red Flags In Regulatory Relief

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In response to the ongoing COVID-19 pandemic, the California Department of Alcoholic Beverage Control (ABC) has been relaxing alcohol regulations in California. Alcohol Justice finds this strategy concerning for public health, both in terms of encouraging excessive drinking and in terms of increasing alcohol-related susceptibility to the coronavirus. Despite our concerns, ABC has continued to issue these reliefs without asking for input from community or public health advocates. Below is Alcohol Justice's attempt to push back against the newest wave of industry-friendly deregulation. Our first response letter is archived here. 

June 8, 2020

Jacob Appelsmith, Director
California Department of Alcoholic Beverage Control
3927 Lennane Drive, Suite 100
Sacramento, CA 95834

Re: Alcohol Justice response to Notices of Regulatory Relief 3, 4 and 5

Dear Director Appelsmith,

We are writing in response to the Third, Fourth, and Fifth Notices of Regulatory Relief issued by the California Department of Alcoholic Beverage Control (ABC). As the leading alcohol industry watchdog, we continue to have serious concerns about the deregulatory policies ABC is adopting in the name of supporting the industry, which unfortunately mean promoting alcohol sales.

While we recognize that alcohol sales are a significant part of the California economy and that alcohol retailers employ a significant workforce, we believe that efforts to relieve the economic pressures from the COVID-19 shelter-in-place order on these outlets should be done with utmost caution. As we have stated previously, ABC has a role not just to administer alcohol licensing, but to discourage underage drinking and mitigate the burden of alcohol harm from overconsumption. Secondarily, relief policies should not substantially advantage large corporations that derive significant revenue from alcohol sales. These corporations are, for the most part, national if not international, possessing of substantial cash reserves, and better able to access financial relief from the state and federal government.

Already we are seeing other states looking to make permanent the deregulation intended to provide short-term alleviation of the burden of shelter-in-place. The first two rounds of relief opened the door for similar agitation in California. The Third, Fourth, and Fifth similarly set precedents that are worrisome in light of the rapid uptick in at-home drinking and the decades-long increase in alcohol consumption and alcohol harm in the United States.

This comes to a head when regulatory relief seems to have been put into place with significant consultation from the industry but without consultation from community, public health, or public safety groups. Not only must the decision-making be transparent, but there should be a demonstrated benefit to the most vulnerable workers within the alcohol industry. With all that in mind, our concerns are outlined as follows:

1) The Third Notice of Regulatory Relief allows for “virtual wine tastings.” There is no coherent reason why wine should be privileged with the delivery of free samples over other alcohols. Therefore, we foresee strong pressure to allow breweries and distilleries to follow suit should this policy continue.

Moreover, these “free samples” create a norm through which drinking alone becomes an ostensibly dignified activity, which, combined with convenience, threatens to raise overall individual consumption and the health and safety consequences therefrom. This is exacerbated by the removal of restrictions on the size of “tastings,” a relief that seems absolutely gratuitous. Even if the samples are restricted to an existing wine purchase—and it is not clear if “a sale of wine products” allows for the purchase of a tasting alone—they are, by definition, consumption of alcohol for the express purpose of encouraging the purchase of more alcohol.

Lastly, it is not clear how “virtual tastings” protect the livelihoods of any economically vulnerable winery workers, unless it is indirectly by encouraging the purchase and consumption of larger quantities of wine than the customer would normally be inclined to purchase and consume.

2) The Fourth Notice of Regulatory relief gives on-sale restaurant licensees the option of “expanding their footprint,” i.e. making use of expansion into neighboring buildings, patios, sidewalks, parking lots, or adjacent open space to serve alcohol. This is presumably intended to facilitate alcohol sales and service as regulations around dining are relaxed to allow outside seating and social distancing. Nonetheless, it raises a number of concerns. First and foremost, it seems to imply that some space can be shared between multiple licensees. This makes it extraordinarily difficult to observe responsible beverage service practices, and creates chaos if either licensee or licensee’s servers violate the conditions of their license or the laws around over-service or service to underage patrons, essentially making enforcement impossible.

In some cases, it may actually allow a licensee to be serving alcohol to more patrons than it did before lockdown, increasing the overall alcohol burden on the community. No clear definition for “controlled” is given to these extended spaces, which in some cases seem to be noncontiguous with the actual premises owned by the licensee. (It also makes it easier for patrons to smuggle in outside alcohol.)

The automatic granting of a license footprint expansion with a $100 fee and the filling out paperwork is an abdication of prevention, investigation, and enforcement by ABC. It is objectionable that licensing is granted automatically under this regulatory relief and that the community and local government must play catch up with through an ill-defined complaint process.

The process completely short circuits any community or local government notification, participation, or challenge. The immediate result will be uncontrolled and uninvestigated expansion of licensee service into outdoor spaces that were never before envisioned in the granting of the original license. In over-concentrated areas (which are in much of the state), we can expect a festival or party area atmosphere that would not be tolerated in a normal hearing process. This is not a scenario for helping licensees serve patrons at the original pre-pandemic capacity, it is rather a scenario for unregulated, highly visible, and public consumption of alcohol in outdoor areas far beyond the capacity of original licensing.

Lastly, it is not clear if a licensee making use of this expanded footprint is required to surrender their right to serve prepackaged drinks for delivery and takeout. By allowing alcohol to be served on site and delivered, ABC would be creating policies that emphatically increase the saturation of alcohol in the community compared to pre-shelter-in-place service.

3) The regulatory relief for clubs with type 50, 51, and 52 licenses carries the same threats as all alcohol delivery: it increases the ease and convenience of alcohol access and therefore the total amount of alcohol consumed in the community, and makes it extraordinarily simple for underage customers to access alcohol. With clubs, however, the existence of membership makes it virtually impossible for ABC to conduct enforcement.

4) The Fifth Notice of Regulatory Relief, in an effort to provide access to customers for on-sale licensees without kitchens, allows these bars to partner with other kitchens, whether or not those kitchens have their own licenses. Though ABC claims this is to reinforce the idea that alcohol is safest when included in a meal, this is a wildly exploitable policy.

There seem to be no contingencies to make bars participating in this system engage in it in good faith. Nothing seems to stop a bar from purchasing a small order of French fries from McDonald’s and sending it along with four pitchers of margaritas to a customer. We pick McDonald’s as an example deliberately, as well; many bars that seek only to move as much alcohol as possible will do so in conjunction with the cheapest food providers they can find, which will largely be fast food chains—chains that are the least in need of friendly delivery policy. Thus, this regulatory relief continues to siphon money away from vulnerable local restaurants. Moreover, it allows fast food companies, which themselves often market directly to children and families and that have largely (though with notable, and condemnable, exceptions) not been privileged with liquor licenses, to suddenly become full-bar restaurants by partnering with local bars. This, essentially, turns local businesses into production arms of multinational franchises, which threatens to result in more alcohol sales and the competitive destruction of locally owned restaurants.

5) As we have stated before, the extension of regulatory relief and the new opportunities it provides to sell alcohol in an increasingly unregulated manner means that ABC absolutely must be diversifying and increasing monitoring, decoy, and sting operations. The message sent by deregulation is that everything is allowable (as seen, for instance, in a national increase in drinking on the street). If the public health and safety communities are to take ABC’s avowal that these measures are solely to alleviate economic pressure in extraordinarily challenging times, ABC must be making that message clear to licensees.

The economic landscape of California is rapidly changing as the COVID-19 crisis continues. We understand that ABC must react to the re-opening of the state in real time. However, we fear that many of these decisions carry a cost in human life, health, and safety, and threaten to run afoul of ABC’s own mission to encourage moderation and self-control in alcohol consumption.

The regulatory relief process in the five notices by ABC have so far shown no willingness to consult with public health organizations or community organizations in advance of your pronouncements. Nor have we seen any publicly available comment by state public health or social service leaders that show any analysis or even consideration of the deregulation implicit in these temporary measures. We have no idea as a society how long these “temporary measures” will be in place. We fully expect the lobbyists and trade associations that have communicated these deregulation requests to you to try to make them permanent through the legislature. We therefore conclude that ABC is erring far too much on the side of deregulation and expanded on-sale sales, on-sale areas of consumption, and the blurring of on-sale and off-sale licenses. We beg ABC to seriously consider our concerns now and both a) tighten up or rescind some of your regulatory relief orders and b) consult with CAPA member organizations and Alcohol Justice before issuing further orders.

We hope to see more transparency and open dialogue going forward, and would be happy to discuss all the regulatory relief policies with you at your convenience.

Wishing you and your staff good health,

Bruce Lee Livingston, MPP
Executive Director/CEO
Alcohol Justice
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