Relying on guidance from California, New York and Texas alcohol regulations and licensing boards, the District of Columbia today determined that liquor delivery websites and apps do not necessarily have to obtain a liquor license to serve DC residents.
In June, we reported about local governments’ efforts to regulate enterprising Startups that use the Internet or mobile apps to circumvent licensing requirements. DC Liquor delivery company Ultra was among those companies as the city had asked it to cease operations in the city because it didn’t have a license.
But today, Ultra, and similar desktop and mobile apps have come up on top seemingly.
The District of Columbia’s Alcohol Beverage Control Board and the Alcoholic Beverage Regulation Administration issued guidelines Thursday, August 14, determining that websites and smartphone applications that provide alcohol delivery services in the District can continue to operate so long as they do not do certain things:
- In sum, so long as the third party website or app is only serving as an intermediary between a purchaser and a legally licensed liquor store or distributor in the city, they can continue to operate and serve DC consumers;
- The good news is the new guidance clarifies that the District is not per se “regulating” these start ups, but are essentially expressing their conclusion that the companies that create the apps and websites can continue to operate so long as they do not package, fill, ship or charge the customer for the liquor;
- The licensed liquor distributor or store is responsible for confirming the age of the purchaser, and is the only party permitted to store, deliver and collect the funds from the purchaser; and
- The guidelines also talk to monetization: The language prohibits apps and websites from collecting a fee as a percentage of each sale, but permits them to collect a monthly fee from licensees.
Sounds like a win/win!
“We are very happy to see ABRA moving fast to provide guidance for online and app delivery services. We worked closely with ABRA to provide them with information, including relevant regulations in Texas and California to formulate their opinion,” Ultra’s CEO Aniket Shah, in a statement. “This is a great news for DC consumers. Ultra received great response from DC consumers the first time around and look forward to serving them again.”
This news is also great for two companies what would be coming in to compete with Ultra, but had actually applied for permission from the the Board prior to today’s guidelines: Klink and Boston-based Drizly‘s.
“We encourage businesses that facilitate the sale of alcoholic beverages to contact the agency before starting any new operations in the District,” ABRA Director Fred Moosally stated in a statement. “This will allow us to ensure operations are compliant with the law before they begin.”
Klink’s CEO Jeffrey Nadel chimed in, telling In the Capital, “Klink has always been committed to providing services in a 100 percent legal and compliant way, and our approach has certainly been vindicated today. Our customers have spoken loud and clear, and we’re thrilled to be operating in full force in one of the most exciting cities in the country.”
In the Capital also noted that Drizly was planning to come to DC previously, and will expedite its decision to come to DC, because of these new guidelines.
“We are thrilled to announce D.C. as our sixth market, and will be making a follow up announcement in the coming days with more details as we officially begin service.”said Nick Rellas, Drizly’s CEO in a statement.
