In response to the devastating economic effects of Coronavirus related shutdowns and even cancellations, the Colorado Liquor Enforcement Division (“LED”) and TTB issued statements that they would permit alcohol suppliers to accept returns of alcohol products purchased for events cancelled due to Coronavirus (COVID-19).
“The Federal consignment sales rules generally prohibit the sale or purchase of alcohol beverage products with the privilege of return. See 27 CFR 11.21. Returns for ordinary and usual commercial reasons arising after the product has been sold are not prohibited, but the return or exchange of a product because it is overstocked or slow-moving does not constitute a return for ordinary and commercial reasons. See 27 CFR 11.45.
Local officials and event organizers have begun announcing cancellations of widely-attended events such as parades, festivals, fairs, concerts, and sporting events based on concerns about COVID-19. These announcements may be made after wholesalers and retailers purchased large quantities of products to sell during those events.
Given the unexpected and widespread nature of the concerns involving COVID-19, TTB will not consider returns of alcohol beverage products purchased to sell during such cancelled events to violate Federal consignment sales rules provided the products were not initially purchased or sold with the privilege of return. Even though such returns are lawful, a producer or wholesaler is not required to accept returns of such products.”
Colorado LED’s Statement was similar to TTB’s and stated more generally that:
“The cancellation of events due to an unforeseeable public health crisis is a perfectly legitimate reason to allow product that had initially been earmarked for those events, and will no longer be needed at same, to be returned to the Wholesaler so that it may be re-distributed to Retail clients where it could potentially be old prior to its expiration.” You can read the entire Colorado LED CORONAVIRUS BULLETIN 20-02 HERE.
While each state has its own trade practice laws and rules, we assume most, if not all states will follow the TTB’s lead and permit returns of alcohol under the circumstances. With many sporting events, weddings, conferences, etc. cancelled and liquor licensed businesses shuttered due to Cornoavirus (COVID-19) concerns, we expect to see additional rulings, orders and clarifications aimed as lessening the devastating economic effects of Coronavirus. If you are a retailer of alcohol facing shutdown due to Coronavirus, returning unusable alcohol is an option to consider – so long as the supplier is willing to accept the reurn.