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New Jersey Division of Alcoholic Beverage Control Adapts to COVID-19 Realities

New Jersey Division of Alcoholic Beverage Control Adapts to COVID-19 Realities with Special Ruling Relaxations

While other states, such as Pennsylvania (which has essentially reverted back to Prohibition) have significantly curtailed activities in the alcoholic beverage industry, New Jersey has amended a number of if its strict regulations in an effort to support alcohol beverage operations in our state. This past week, as the COVID-19 pandemic surges on, a number of governmental rulings were promulgated providing further guidance concerning the conduct of alcoholic beverage industry members in New Jersey as they manage the “new normal” of a COVID-19 marketplace.

Special Ruling Relaxing Signature Requirement, Product Returns, Credit, Notices of Obligation, and Bill and Hold

At the bequest of industry members at both the wholesale and retail levels, on April 7, 2020, the Director of the New Jersey Division of Alcoholic Beverage Control (“ABC”) issued a special ruling relaxing a number of regulations:

  1. Signatures on Invoices. New Jersey regulations, like many other states, require that a delivery slip, invoice, waybill, or similar document be signed at the time any alcoholic beverage is delivered by a manufacturer or wholesaler. To reduce in-person contact and consistent with social distancing protocol during the COVID-19 crisis, the ABC is permitting alternate means to acknowledge receipt of a delivery. Acceptable alternate methods include a retailer sending an e-mail or text message to the wholesaler contemporaneously acknowledging receipt of the delivery and allowing a retailer to photograph the invoice and send an electronic acknowledgment to the wholesaler.
  2. Returns. Similar to federal law, New Jersey allows returns only under a limited set of circumstances, such as product defect, breakage, incorrect product delivered, and delivery of a product likely to spoil. Citing the unanticipated significant reduction of on-premise retail sales, the ABC is permitting wholesalers to accept returns from retail consumption licensees (on-premise licenses) only for purchases made between February 23 and March 16, 2020. Wholesalers are not required to accept returns, but if they do, the return policy must be applied on a non-discriminatory basis. This relaxation does not apply to retail distribution licensees (off-premise licenses), who the ABC has found have not been hit as hard by COVID-19 (in fact, we reports have shown that many Pennsylvania residents have been crossing the river to purchase alcohol in New Jersey liquor stores).
  3. Extension of Credit. In New Jersey, wholesalers may generally extend 30-day credit terms to retailers. With regard to purchases made between February 23 and March 16, 2020, wholesalers may extend credit through May 15, 2020. Extensions of credit must be applied on a non-discriminatory basis. Like the relaxation of the return regulation above, the foregoing extension of credit may be offered to retail consumption licensees (on-premise licenses).
  4. Notice of Obligation. Ordinarily, if a retailer does not pay in accordance with the prescribed credit terms must send a Notice of Obligation (“NOO”)to the retailer personally or by first class mail. During the COVID-19 crisis, the New Jersey wholesaler may deliver the NOO via email.
  5. Bill and Hold. Wholesalers are permitted to sell products to retailers and hold them, for a fee, in the wholesaler’s warehouse for up to 75 days before the retailer must accept delivery. The ABC is permitting wholesalers to store products that are already on a “bill and hold” arrangement to store products for an additional 30 days, provided they do so on a non-discriminatory basis.

Special Ruling Relaxing Transit Insignias

Pursuant to prior Executive Orders, retail consumption licensees were permitted to remain open during normal business hours, but could only sell food and alcoholic beverages in original sealed containers for pick-up or delivery. Liquor stores were deemed essential businesses and permitted to remain open. Retailers wishing to deliver products are required to do so in vehicles that have obtained a “transit insignia” from the ABC which are to be affixed to the vehicle.

As a result of the COVID-19 crisis, the ABC received a very high volume of applications for new transit insignias and licensees would not receive the insignias in a timely fashion. Accordingly, pursuant to a Special Ruling relaxing transit insignias, the ABC is permitting retailers, until they receive the transit insignia, to instead keep a copy of their receipt for the transit insignia in the vehicle to satisfy the applicable regulation. This special ruling reminds retailers that it is the duty of the delivery person to determine that the customer signing the delivery receipt is of the legal age to purchase and consume alcohol.

Special Ruling Suspending Enforcement of Violations Against New Jersey Distilleries Producing Hand Sanitizer to Fight COVID-19

In an effort to help fight against COVID-19, we have seen distillers throughout the country, including some here in New Jersey, manufacture ethanol-based hand sanitizers. Although such activities are beyond the scope of the privileges afforded to craft distillery licenses in New Jersey, pursuant to another Special Ruling, the ABC is suspending enforcement against those making hand sanitizer so long as the federal Tax and Trade Bureau guidance permitting such conduct remains in effect. Those who do manufacture hand sanitizer must so notify the ABC.

COVID-19 Executive Order No. 122 and Additional Restrictions for New Jersey Essential Businesses

On April 8, 2020, Governor Murphy issued Executive Order No. 122, adding new social mitigation requirements on essential businesses that are permitted to remain open. Recall that liquor stores were deemed “essential.” Pursuant to Executive Order No. 122, liquor stores can continue in-person operations, but will be subject to the following:

  1. Occupancy is limited 50% of the stated maximum store capacity, if applicable, at one time;
  2. Where possible, establish hours permitting access solely to high-risk individuals;
  3. Install a physical barrier, such as a shield guard, between customers and cashiers or otherwise ensure six feet of distance between those individuals, except at the moment of payment and/or exchange of goods;
  4. Require infection control practices, such as regular hand washing, coughing and sneezing etiquette, and proper tissue usage and disposal;
  5. Provide employees adequate breaks for repeated handwashing throughout the workday;
  6. Arrange for contactless pay options, pickup, and/or delivery of goods wherever feasible (and consider populations that do not have access to internet service);
  7. Provide sanitization materials, such as hand sanitizer and sanitizing wipes, to staff and customers;
  8. Require frequent sanitization of high-touch areas such as restrooms, credit card machines, keypads, counters, and shopping carts;
  9. Place conspicuous signage alerting staff and customers to the required six feet of physical distance;
  10. Demarcate six feet of spacing in check-out lines for social distancing; and
  11. Require workers and customers to wear cloth face coverings (or better) while on the premises, (with some limited exceptions), and require workers to wear gloves when in contact with customers or goods. These items must be provided at the employer’s expense.
  12. If a customer refuses to wear a cloth face covering for non-medical reasons and if such covering cannot be provided to the individual by the business at the point of entry, then the business must decline entry to the individual.

It is good to see that New Jersey is exercising a flexible, but health-conscious, approach to limit the impact of COVID-19 on the alcoholic beverage industry while maintaining customer and employee safety.

For information regarding national and state liquor law matters or general manufacturing and distribution advice, please contact our Liquor Law, Licensing, Manufacturing, and Distribution Practice Group: Liquor Law Department Chair Theodore J. Zeller III, Esquire (tzeller@norris-law.com); David C. Berger, Esquire (dberger@norris-law.com) for Pennsylvania and New Jersey retail and manufacturing licensing; or contact our offices at 610-391-1800.

The information contained in this post may not reflect the most current developments, as the subject matter is extremely fluid and constantly changing. Please continue to monitor this site for ongoing developments. Readers are also cautioned against taking any action based on information contained herein without first seeking advice from professional legal counsel.

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