Friday, April 19, 2013

How Illegal Is It to Collect Whiskey?

It's been just a week since the Bourbon Exchange on Facebook was announced. It has had a lively debut, with lots of people joining and posting, and already a couple of changes brought on by legal concerns.

There can be no doubt that it is against the law to sell alcohol without a license, but what people want to know is it against the law like jaywalking is against the law, or like robbing liquor stores is against the law.

To give a good, lawyerly answer: it depends.

For the most part, laws regarding the possession, sale, and transportation of alcoholic beverages are entirely up to the state's Alcoholic Beverage Control (ABC) agency to enforce. They have their own enforcement arms, their own investigators. Infractions of the ABC's rules are not crimes as far as the police are concerned. Police don't get involved unless the ABC asks for their help.

Someone operating an unlicensed bar or selling liquor out of the back of a minivan, or a licensed retailer selling to minors, that's what they care about. Nobody is looking to bust collectors, especially if their activity is entirely non-commercial.

That doesn't make trading, buying, and selling legal, it's still illegal, but if you're doing a deal now and then, the truth is that nobody is out there looking for you.

Inspector Javert doesn't care.

What constitutes non-commercial? I know people who have hundreds of bottles in their collections. In some instances, they have cases of specific products that are now considered rare and valuable. Most didn't think they were developing an inventory, they were following a personal passion, but now they have cases of something they bought for $50 a bottle that people are paying $500 for.

This happens in other kinds of collecting too, from stamps to automobiles. Someone who knows the market better than the average collector can make out by doing better deals. They might be able to make a living at it. They might get rich.

It depends.

As you can see, this isn't a simple matter.

Most collectors of most things engage in some buying and selling, sometimes in the form of trading. The object is to use pieces you don't need or care less about to obtain pieces you must have and care desperately about. This is a normal part of the collecting experience, millions of people do it, but if the thing you collect contains potable alcohol, that activity is prohibited by law.

Each state ABC is independent, answerable to its state legislature. Each state's laws are a little different. Each ABC has its own policies and priorities, and they don't exactly announce in advance what aspects of their laws they intend to enforce with vigor.

But if they post their enforcement actions online, you won't find among them, "Caught Suspect X trying to trade two 2006 Sazerac 18s and a 2009 Stagg for a 2007 Pappy Van 23."

As for the Facebook Bourbon Exchange, there probably isn't very much a state ABC can do about a page like that if it wants to and there is no reason to believe anyone wants to. It's also hard to imagine the ATF or TTB getting involved. It's not inconceivable, just unlikely.

At the most, some ABCs may be keeping an eye on the phenomenon to see if it develops into anything they need to concern themselves with.

What they care about is when they suspect (as happened in Tennessee with a Jack Daniel's collector site a couple of years ago) that the supposedly altruistic fellow running the thing is actually making money hand over fist. When a lot of money seems to be changing hands and no taxes are being collected, that's when government agencies pay attention, and call in the state police to help.

This isn't legal advice, it's legal information. Unfortunately, we have a situation where a lot of people want to do something, they don't see anything wrong (i.e., harmful) with what they want to do, but there is no way for them to do it legally. If the state alcohol regulators get interested, or if whiskey collecting grows in popularity to the point where they have to, let's hope that instead of treating it like a criminal problem, they look instead for ways to make this innocent hobby legal in all respects, so whiskey collectors finally can emerge from the shadows.


Anonymous said...

Gary said . . .

Great points, Chuck. I think when eBay cracked down there was a perception that "the law" was coming down on them. That may have been the case (I don't work for eBay), but I certainly got the impression that it was certain producers who engaged eBay and asked that they put an end to it. At any point in time, there were hundreds of high dollar transactions take place there - so the "where's my cut?" question could have been asked by the tax folks (although in the grand scheme of things - drops in bucket).

I think if something similar begins happening here, the same producers may try to do something about it (although fb may be less inclined - since users/traffic ARE their product that they are selling). Thus far, I don't see that - and hope the site continues to provide an avenue for collectors and enthusiasts to share offerings . . . for sipping :-)

Anonymous said...

Richnimrod says;
Personally, I don't do the internet trade/sell thing. I don't necessarily trust the privacy, and I have concerns (confirmed herein) about whether it's lawful. But.... Mainly; I obtain my Bourbon in order to DRINK IT! Much more enjoyable to me to actually imbibe rather than to invest for profit. That's just me.

Bas said...

If you keep the receipts from the bottles that are bought from a legit retailer then there is no illegal colecting, is there?

Anonymous said...

Bas, it's not the buying or the owning, that's illegal, it's the trading or selling, without a license.

That being said, does anyone know if any states have laws on how much you can possess? I know there are laws on how much you can transport.

Chuck Cowdery said...

Tennessee has a limit on how much you can possess. I believe it's five gallons.

Anonymous said...

One does have to wonder how long Facebook will permit such groups to exist on its service. Much like eBay, there were no concerns about quality or overpricing, rather, it was the fact that there was no oversight regarding who was purchasing. Kids found out it was an easy way to order up alcohol and took advantage of it. Once that became common knowledge to eBay and others they were pressured to cut off the flow. I might assume the same will be true here as well. Besides, it is not in Facebook's best interests and they are not making any money on the deal.

Chuck Cowdery said...

The difference is that eBay and Facebook are in different businesses, and in the Facebook model, no transactions are conducted on the site. Big difference.

BMc said...

Chuck, either Kentucky or Ohio explicitly states that trading of decanters, including full ones, is permitted as an exception to the general rules against selling. That's the only time I've seen trading even referenced, except for things like rules on retailers swapping inventory. The other states I've looked into just have a blanket ban on anything if you don't have a license. Of course, the Kentucky (or is it Ohio...) law doesn't exactly protect the collector, since decanters haven't been sold for 30 years.

Still, do you think this sort of law can be interpreted as permitting trading of other types of whiskey containment units?

Anonymous said...

Chuck, I completely agree with you about the ebay vs. facebook model, but I think we also need to go back to the Napster issue. Napster (music sharing), did not sell music or sell access to music. They just facilitated the sharing, and they still got nailed. I think the FaceBook group is doing something similar. And, like with Napster, it may turn out to be easier for Facebook to shut it down, rather than fight for the right to keep it up.

Anonymous said...

Gary said . . .
I think Napster is completely different, as its reason for existence was to facilitate such illegal activities. Also, I think the piracy laws are federal, where alcohol is a state issue.

Which isn't to say that facebook won't shut it down, although I don't see them breaking a sweat. I think someone would have a hard time laying the blame on facebook for allowing this to take place. If individuals are flagrantly breaking the law, they are more likely to revoke those users for breach of their terms and conditions, rather than try to close the group (since another would just pop back up).

People who want to trade with someone they know do this all the time over e-mail, a phone call, etc. Expecting that every entity involved in facilitating communication was responsible for the legality of that communication would be an undue burden.

Anonymous said...

I think the owner of the Bourbon Exchange might want to reword the "rules" of the board, to be less obvious about what they are doing. The "for sipping/for tasting" is great, but by publicly posting how they're changing the semantics slightly, they're still setting themselves up for potential problems.

I like the premise of their "rules," however, I think there's a more discreet way to get the word out.

If it were me, I would cut down the lengthy narrative about how "if you want to sell, say "For Sale, say For Sipping instead.

Rather, simply say: Selling and Trading booze is illegal, and if you explicitly post here that you are trading or selling alcohol, you will be removed from the group. Instead, if you are interesting in finding out more information about procuring a collectable item and wish to converse privately about a collectable item, (i.e., don't come right out and refere to selling booze), post "FS = For Sipping." And then let all other discussion about the item occur via private message.

JasonQ said...

Regarding eBay sales - just how many kids were really buying booze there? Not too many, I'd wager.

Mostly what it was IMO was a few TV stations looking to gin up a controversy for the 10:00 news: "See how YOUR KIDS can get alcohol, no questions asked!"

And really, if the aforementioned 19-year-old had a credit card, it'd be TRIVIAL to purchase booze at any of a thousand online wine/liquor stores.

It is NOT, however, very practical.

Lastly, the comparison to Napster is badly formed; unless the product being traded/sold is stolen at the outset, it doesn't translate.