Friday, October 6, 2017

Sell Whiskey On the Internet and Spend Six Months in County

Whisky Advocate Magazine devoted most of its Fall 2017 issue to whiskey collecting and whiskey collectors. It is hard to collect seriously if you can only obtain whiskey through retail channels. In virtually all forms of collecting, most acquisitions come from the secondary market, either directly from other collectors, or indirectly through dealers.

But there is a problem. While secondary sale of beverage alcohol is permitted in much of the world, in the United States, with a few small exceptions, it is not. Both state and federal law prohibit the sale of any alcoholic beverage to any person unless you have the appropriate license or licenses. Penalties vary by state. In California it is a misdemeanor, punishable by a $1,000 fine and/or up to six months in county jail.

The exceptions are few. One is auctions, which only a few states allow. The owner of a collection can consign it to the auction house for sale. The auction house has a license from the state that allows it to auction the bottles, paying the proceeds to the collector, less the auction house's fee. Are those sales taxed? I'm not sure, but it's hard to imagine they're not.

Another is states that allow retail license holders to buy 'vintage spirits' from collectors for resale either by the drink or by the bottle. 'Vintage' is usually defined as a product that has not been available on the retail market for some span of years. The District of Columbia allows this. Kentucky recently passed a law to allow it but it won't take effect until January 1.

That's about it. Peer to peer sales are all illegal.

The other side of the coin is that these laws are rarely enforced against collectors. They are really aimed at bootleggers and unlicensed bars. That doesn't mean it can't happen. The laws are on the books.

The legality of buying from an unlicensed seller is less clear, but most people who buy also sell. It doesn't matter if you only trade and no money changes hands. It is the same thing.

Some people will be mad at me for writing this. They always are. Do they think I wrote those laws? Or that the people who are supposed to enforce them wouldn't know about them if I would just stop mentioning it? At the very least, if you sell alcohol without a license, you might want to ask the Google machine what the penalty is in your state.


Harry in Wash DC said...

Thank you for the reminder. Some of us spent our lives doing our duty faithfully, notwithstanding it occasionally warred with our private feelings. Now that we are retired, we sometimes share our experiences with others and are met with, "You've got to be kidding. Who'd care!!" Well, when I was working, if somebody dropped a "clear case" in front of me, I would be hard pressed to look away. Just saying: PLEASE! The excuse, "Everybody does it," is no excuse. And neither is ignorance.

Anonymous said...

Hi Chuck,

I think part of the reason for these laws is so that people who buy booze and sell it minors/kids in front of the 7-11 or liquor store can be charged with perhaps an additional crime.

Anonymous said...

Highly unlikely that these cases would ever be prosecuted. The real concern is with bootlegger/rumrunner types. Can you point to a case where the government has actually prosecuted an individual?

Chuck Cowdery said...

There was a Tennessee case a few years ago.

rarebird101 said...

I realize I'm late to the comment party, but I had some thoughts on this the other day.

So, if my brother lived next door and I gave him $50 to go down to the local and buy me a bottle of Tater Bourbon, there would be no issue legally (assuming). If that same brother lived an hour away but in-state, I'm assuming no issue there either. But what if that brother lived across state lines? Could he still pickup that bottle for me? What about four states away? What if he wasn't my brother - just an associate? What if that associate says "I already have that bottle. I'll send you mine and pickup another later?"

There's a lot of gray areas with these laws. I just don't know if one can draw hard lines. Clearly those that "flip" have a larger target on their back, but what's wrong with of-age friends helping of-age friends? And regardless of right or wrong, when does the act of helping become illegal?

I realize you didn't write the laws. But here's my two cents - maybe if gentlemen of your status would get together and meet with the folks that keep these (sometimes unreasonable) laws in force, perhaps we'd see some change. Let's start with the three-tier system. Maybe then the distilleries could make the profits they work so hard for through direct sales.

KentuckyBoy said...

Hey Chuck. check out 27 CFR 31.141.

Chuck Cowdery said...

Good point. An active collector who is buying and selling on the secondary market would be considered a dealer purchasing for resale under this statute.

rarebird101 said...

Wait ... In regards to that statute (which specifically states DC), how is the Jack Rose acquiring old bottles ... legally? I'm not trying to stir anything up. I've just heard in the past that DC was the "wild west" of alcohol laws. Doesn't seem to be the case. Or am I missing something?

Chuck Cowdery said...

D.C. has a law that makes what Jack Rose does legal. Kentucky has recently passed such a law as well but it hasn't been implemented yet.

rarebird101 said...

Thanks for the clarification, Chuck!