& POP UPS


OPTION I

FROM THE INDUSTRY ADVISORY ISSUED BY THE ABC CONCERNING THIRD PARTY PROVIDERS ON OCTOBER 11, 2011

The Department believes that licensees and Third Party Providers can form business relationships that facilitate lawful transactions for sales of alcoholic beverages over the Internet. Accordingly, the Department now issues the following advisory guidelines to assist licensees and unlicensed Third Party Providers in complying with California law:


For the purposes of this advisory, the term “Third Party Provider” refers to unlicensed entities that are involved with the promotion, marketing, and facilitation of sales of alcoholic beverages by licensees over the Internet.


Third Party Providers are involved in one or more of the steps in the transfer of title of an alcoholic beverage from a licensee to a consumer, such as placement of advertising, making recommendations to consumers, directing consumers to licensees, receiving orders and passing them on to licensees, processing payments, and assisting with shipping arrangements.


Given that only licensees may engage in activities for which a license is required, all sales transactions involving Third Party Providers must ultimately be conducted by and under the control of a licensee.  This includes decisions concerning the selection of alcoholic beverages to advertise or offer for sale, the pricing of those beverages, and the ultimate acceptance and fulfillment of the sales transaction.


A licensee working with a Third Party Provider is ultimately responsible for any activities undertaken by the Third Party Provider on the licensee’s behalf.  Orders for alcoholic beverages solicited by licensees utilizing Third Party Providers must be transmitted by the Third Party Provider to the licensee involved.  The licensee responsible for the sale must be clearly identified and must ultimately control the transaction, including any decisions concerning  acceptance or rejection of such orders.  Licensees must also be responsible for,  and must control, the fulfillment of orders and the shipment of alcoholic beverages from the licensees’ licensed premises or other authorized shipping point (such as a licensed public warehouse).


The control of funds from a transaction involving the sale of alcoholic beverages constitutes a significant degree of control over a licensed business. As such, while a Third Party Provider may act as an agent for the licensee in the collection of funds (such as receiving credit card information and securing payment authorization), the full amount collected must be handled in a manner that gives the licensee control over the ultimate distribution of funds.  This means that the Third Party Provider cannot independently collect the funds, retain its fee, and pass the balance on to the licensee.  The Third Party Provider should pass all funds collected from the consumer to the licensee conducting the sale, and that licensee should thereafter pay the Third Party Provider for services rendered.  


Alternatively, the parties may utilize an escrow account, or similar instrument, that disburses the funds upon the instructions of the licensee.  So, for example, a Third Party Provider may accept consumer credit card information, debit the card, deposit the funds in an account under the licensee’s ultimate control, and, upon the licensee’s acceptance of the order and direction to the account holder, receive a fee from the account.  Given the nature of Internet transactions, the Department recognizes that such collection, acceptance, and disbursement of funds will often times be accomplished solely through computer-generated means.



OPTION II


December 22, 2011

INDUSTRY ADVISORY


Limited Off-Sale Wine License (Type 85)


Recently enacted legislation (Assembly Bill 623, Statutes 2011, effective January 1, 2012) created Business and Professions Code section 23393.5 and amended Business and Professions Code sections 23661.7, 24045.18, 25503.56 and 25503.9. In addition to providing for a new license (limited off-sale wine license), Section 23393.5 includes specific exceptions to standard retail licensing investigation requirements for this license type. This license is designated as “Type 85” by the Department.


The use of on-line ordering of alcoholic beverages has significantly increased with the proliferation of the internet in the past decade. California statutes have not kept pace with the changing needs for licensees who desire to conduct their business by on-line computer, telephone, or direct mail. Prior to this statute, a licensee who wanted to make sales of wine directly to the consumer via the internet was required to make application for an off-sale beer and wine license, together with a beer and wine wholesaler license. This combination, most commonly referred to as a 17/20, required the licensee to maintain a bona fide wholesale business (Business and Professions Code section 23779). This new license will enable a licensee to make direct sales of wine to consumers via the internet, direct mail, or telephone from a premises not open to the public, without the requirement to also hold a wholesaler license.


The Type 85 is identified as an “off-sale retail” license and most provisions related to investigating retail license types are applicable unless specifically exempted by the statute. Tied-house prohibitions for off-sale licensees are applicable to this license type unless specifically exempted


Application procedures for a Type 85 are similar to those for other retail licenses, although some ABC Act provisions such as those related to number limitations within counties and establishing public convenience or necessity do not apply.


An application for the Type 85 license should be prepared using forms required for an original retail license (available on the Department’s website at www.abc.ca.gov) and submitted to the appropriate ABC District Office.


Applicants will be able to apply for the limited off-sale wine license beginning Tuesday, January 3, 2012, and applications shall be subject to a $100 original fee and $242 annual fee.


This new license does not replace the 17/20 combinations for those who wish to operate as a wholesaler in addition to selling wine to consumers. The Department will continue to accept and investigate applications for 17/20 licenses.


The following highlights some of the privileges and restrictions associated with the Type 85 license. The full text of the chaptered bill and detailed legislative analysis is available at www.leginfo.ca.gov.


All sales of wine must be conducted via direct mail, telephone, or the internet.

The Type 85 license prohibits the licensee from conducting sales directly to the consumer from a premises open to public.


The Type 85 licensee is able to assist a non-profit organization holding a temporary wine license in conducting a winetasting, but this privilege shall only apply to wine produced for the Type 85 under a brand they own exclusively and have donated or sold to the licensee for the event.


The Type 85 licensee is able to give or sell wine to a non-profit organization.

The Type 85 licensee is not authorized to conduct an instructional tasting event for consumers pursuant to a Type 86 license.



The California Alcoholic Beverage Control Code sections affecting sale of wines for off site consumption:


24045.6.  (a) The department may issue a special temporary

on sale or off-sale wine license to any nonprofit corporation that is exempt from payment of income taxes under Section 23701d or 23701e of the Revenue and Taxation Code and Section 501(c)(3) or 501(c)(6) of the Internal Revenue Code of 1986. An applicant for this license shall accompany the application with a fee of one hundred dollars ($100).

  (b) This special license shall only entitle the licensee to sell

wine bought by, or donated to, the licensee to a consumer and to any

person holding a license authorizing the sale of wine.


Notwithstanding any other provision of this division, a licensee may

donate or sell wine to a nonprofit corporation that obtains a special

temporary on-sale or off-sale license under this section....


  (c) This special license shall be for a period not exceeding 15

days. In the event the license under this section is issued for a

period exceeding two days, it shall be used solely for retail sales

in conjunction with an identifiable fundraising event sponsored or

conducted by the licensee and all bottles of wine sold under this

license shall bear a label prominently identifying the event. Only

three special licenses authorized by this section shall be issued to

any corporation in a calendar year.


25503.9.  (a) Nothing in this division prohibits a winegrower or a

beer and wine wholesaler that also holds an off-sale beer and wine

retail license and only sells wine from giving or selling wine, a

beer manufacturer from giving or selling beer, a distilled spirits

manufacturer or a distilled spirits manufacturer's agent from giving

or selling distilled spirits, or an importer general licensee from

giving or selling beer, wine, or distilled spirits at prices other

than those contained in schedules filed with the department, to any

of the following:

  (1) A nonprofit charitable corporation or association exempt from

payment of income taxes under the provisions of the Internal Revenue

Code of the United States and Chapter 4 (commencing with Section

23701) of Part 11 of Division 2 of the Revenue and Taxation Code


The cost of the permit for temporary sales of wine by a non profit  is $100 and is valid for 15 days



Winetasting rules are set by the California Code of Regulations~Business


DIVISION 1. DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL

ARTICLE 9. SAMPLES


§ 53. Samples Used in Winetastings.


A winetasting is a presentation of samples of one or more wines, representing one or more wineries or industry labels, to a group of consumers for the purpose of acquainting the tasters with the characteristics of the wine or wines tasted.


(g)(2) A [non profit] organization holding a temporary wine license may accept donations, charge admissions, and otherwise make charges for wine to be served at a winetasting, and may advertise such events, which may be open to the public. A winegrower or California winegrower's agent may give wine to such a temporary licensee only if such temporary licensee is a nonprofit corporation or association exempt from the payment of income taxes under the provisions of the Internal Revenue Code of 1954 of the United States.


See also


24045.18.  Notwithstanding any other provision of this division, a

beer and wine wholesaler that also holds an off-sale beer and wine retail license and only sells wine may assist a nonprofit organization holding a temporary wine license in conducting a winetasting. The privilege granted under this section for a beer and wine wholesaler that also holds an off-sale beer and wine retail license and only sells wine shall apply only to wine produced for the donating licensee that is labeled with a brand owned exclusively by the donating licensee and shall include in the tasting only wine donated by the licensee to the event..


The cost of a daily on premise tasting permit is $25 per day

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Fiscal sponsorship


[With the creation of the Type 85 License seeking out a Fiscal sponsor may no longer be necessary]

·

We are also exploring the pros and cons of forging a link with a Fiscal Sponsor.

Fiscal sponsorship refers to the practice of non-profit organizations offering their legal and tax-exempt status to groups engaged in activities related to the organization's missions. It typically involves a fee-based contractual arrangement between a project and an established non-profit.

Fiscal sponsorship can enable projects to share a common administrative platform with a larger organization, thus increasing efficiency. In addition to legal status, sponsors can provide payroll, employee benefits, office space, publicity, fundraising assistance, and training services, sparing projects the necessity of developing these resources and allowing them to focus on programmatic activities..

Projects may seek fiscal sponsorship for various reasons: an anticipated short lifespan, improved access to funding, increased credibility, and low-cost financial and administrative services. Fiscal sponsors can also assist nascent projects in developing the necessary organizational capabilities to eventually spin off as independent non-profits.

Two examples:

Fiscal sponsorship is an activity by which a public charity, tax-exempt under Section 501(c)(3) of the Internal Revenue Code, provides financial and programmatic oversight of unincorporated nonprofit projects that allows those fiscally sponsored projects to receive grants and tax-exempt donations from government, foundations, and individuals.

Most fiscal sponsors provide a suite of supportive services. Ours include financial, human resources, grants management, and insurance.

Community Initiatives is an independently incorporated 501(c)(3) fiscal sponsor. We provide a vehicle for emerging ideas, public-private partnerships, funder collaboratives, and temporary or limited-duration activities that benefit the community. We are the fiscal sponsor for approximately 90 projects with a total of $20 million (FY08) in annual revenue.

Locating with a fiscal sponsor such as Community Initiatives frees projects to pursue what they do best: identify and creatively address important needs in their communities.

Community Initiatives believes in the power of community groups to develop fresh, exciting ideas that are of real-time public benefit, and our services can support these efforts in crucial ways. Among other advantages, our services:

Permit new efforts to explore viability without needing to invest in infrastructure from the start

Help funders pool resources for collaborative grant-making

Allow limited-duration efforts to succeed without establishing and then dismantling administrative capacity

Our logo describes our philosophy: Community Initiatives works in service of great ideas.

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Right Time for Fiscal Sponsorship


1. The explosion of available information shrinks the world and brings the need for social change into sharper relief than ever.

Over the past 5 years, the sheer quantity and detail of information about individuals, communities, movements, new ideas, etc. available online has multiplied exponentially. Access to the widest array of media, blogs, and social networking sites brings important and constant exposure to challenges and needs locally and around the world as well as the opportunity to see what others are doing to innovate and solve those challenges.

2. The increasing celebration of entrepreneurs--including social entrepreneurs--as 'culture heroes' motivates more people than ever to innovate and tackle social challenges.

Simply increasing people's exposure to the lives and challenges of other people and communities locally and around the world doesn't necessarily lead to action. In fact, it can lead to emotional and spiritual paralysis in the face of so much need.

That's why the intensifying focus on entrepreneurs--including social entrepreneurs--as culture heroes is so crucial and important.

At precisely the same time we've all become more aware of the challenges people face locally and around the world, we 've chosen to celebrate entrepreneurs of various types more deeply than ever.

What we're really celebrating are the values associated with being an entrepreneur: the willingness to take risks, the ability to innovate, the vision to see an opportunity in what may look to others like a problem or an obstacle, an eagerness to tackle new challenges, the discipline and cleverness to create a lot of value out of few initial resources, and the nimbleness to respond quickly to changing circumstances.

When you combine a much greater awareness of challenges with a culture that celebrates social entrepreneurship, you end up with lots of folks that want to make a difference by creating new projects and nonprofits.


3. The end of the era of seemingly limitless resources underscores the value of fiscal sponsorship.

Not long ago it seemed as if anyone with a good idea--and even a lot of people with bad ideas--could get whatever financing they needed.

Obviously, those days are over. We believe the 'Great Recession' is bringing about a fundamental generational shift in attitudes about the scarcity of financial resources and the value of approaches that use those resources most efficiently.

In other words, we think that even as the economy recovers, people are going to keep a much closer watch on the bottom line. Frugality, efficiency, and making a dollar go a long way will be become more significant cultural values.

As a result, many of those social entrepreneurs and change agents who want to make a difference will be attracted to fiscal sponsorship as a model for social change.

Why? Fiscal sponsors like Visions Made Viable save a lot of money because we sponsor many projects simultaneously, thus allowing many efforts for social change to operate under a single efficient administrative system. No need to waste precious resources on reduplicating administrative structures.

In addition, through our consulting services, we can help new projects avoid costly mistakes that often set new efforts back financially.

Where do those savings go?


Right back into making a difference for people and communities.

Projects that don't have to spend major time and money on administrative structures can invest those savings into getting their mission done.

The low overhead we charge for our services is also plowed directly into creating services for new projects for social change.

It's a virtuous cycle that stretches dollars and euros and yuan and allows those monies to make the greatest impact on the people they were intended to help.

If you want to explore fiscal sponsorship, or if you have a project you want sponsored, get in touch with us. We'd love to talk.

And if you like what you see on our website and you know of friends, family or colleagues that you think might be interested in our services, let 'em know about our work. In order to better serve our projects we spend very little on 'marketing,' so we rely on folks like you to spread the word.