Private Events and Private Functions—Craft Distilleries (Type 74)
The Department has received a number of inquiries from Type 74 (craft distillery) licensees regarding what constitutes a “private event or private function” for purposes of serving beer, wine, and distilled spirits for consumption on the licensed premises.
This Industry Advisory supplements the recently designated Precedential Decision 19-07-E (viewable on our website here) that addresses violations of the private event/private function privilege by a craft distillery. (Prec. Dec. 19-07-E.) This Industry Advisory endeavors to address several of the key issues and provide guidance. However, this is not a comprehensive review or analysis of the law or the privileges of the Type 74 license, and any craft distillery wishing to engage in the types of activities discussed should obtain independent legal advice.
As a general rule, the Type 74 license authorizes the craft distiller to give or sell no more than 1.5 oz (per individual per day) of distilled spirits manufactured or produced by the licensee to a consumer for tasting on the licensed premises. (Business and Professions Code Section 23363.1(c).) There are exceptions to this limitation, including Business and Professions Code Section 23508(a) which provides that, “A licensed craft distiller may also have upon its licensed premises all beers, wines, and distilled spirits, regardless of source, for sale or service only to guests during private events or private functions not open to the general public.”
1. What is a “private event or private function”?
Private events or private functions may take many forms, such as, for example: meetings of social clubs and professional associations, office parties, birthday parties, wedding receptions, school reunions, and similar events or functions whereby a defined, pre-arranged group of people are invited to attend, and the organizer is independent of the licensee. While a craft distiller may advertise or otherwise solicit the availability of the licensed premises for the holding of private events or private functions, they may not invite or otherwise solicit the attendance of the public to attend a private event or private function.
In addition, the statute specifically provides that private events and private functions shall not be open to the general public. In determining whether an event or function is open to the general public, the Department will consider the totality of the circumstances, including the nature of the event or function, restrictions on access to the event or function, and how an attendee was invited or otherwise able to participate.
A private event or private function does not include one to which members of the general public may invite themselves, or for which the licensee solicits invitations from members of the general public. (Prec. Dec. 19-07-E, pp. 8-10.) For example, a licensee’s creation of a reservation system in which members of the general public can make a “reservation” before patronizing the licensed premises does not create a private event or private function. Similarly, an event or function hosted by the licensee for members of its own established patron-club or other type of customer-membership group is not a private event or private function given that the licensee permits members of the general public to join such a club and attend the event.
2. Does there need to be a defined area for the event or function?
To be considered a “private” event or “private” function from which the general public is excluded, the event or function should be held in an area of the licensed premises that the general public cannot access for the duration of the event or function. This could be accomplished by closing the licensed premises to the general public during the private event or private function, or by designating a physically separate area of the licensed premises that the general public is prohibited from entering during the private event or private function. Such physical separation may be by way of either a permanent or temporary barrier. If the event or function is held in an area in which the general public is also permitted, and the licensee simply uses some form of identifier that attendees of the event wear or possess (such as, for example, a wristband), then the event or function is no longer, by definition, a private event or private function. (Prec. Dec. 19-07-E, pp. 8-10).
3. Is there a minimum number of guests that must be in attendance?
Although there is no statutory minimum or maximum number of guests required to qualify as a private event or private function, in looking at the totality of circumstances, the Department may take the number of attendees into consideration in evaluating whether or not it is indeed a bona fide private event or private function.
4. Is there a limit on the number of private events or private functions that may be held?
There is no limitation on the number of private events or private functions that may be held at a craft distiller’s licensed premises. Further, there is no limitation on the number of private events or private functions that may held simultaneously. Each of the events or functions must independently meet all of the requirements of a private event or private function.
5. Licensee as host.
As indicated above, a craft distiller cannot create a private event or private function itself merely by inviting members of the general public to the event or function. However, the licensee may host a private event or private function for their own personal purposes. Examples of such events or functions that may qualify would be an owner’s birthday party or a company party for the licensee’s employees and families. The Department would consider the same factors detailed in this Industry Advisory in evaluating whether the event or function is “private” and conducted in a bona fide manner. Personal private events or private functions may not be used as a subterfuge to exceed manufacturing and tasting privileges of the license and should not have a commercial purpose.
6. Are there requirements on how alcohol may be sold at private events or private functions?
The licensee may sell alcohol to guests at a private event or private function either directly to each guest or by way of a single payment by the host of the private event or private function (or any combination thereof).