UPDATE: Illinois allows beer returns during COVID-19 Epidemic following TTB authorization of returns of alcoholic beverages purchased for events and gatherings cancelled due to COVID-19.
UPDATE: A portion of the issues originally described in this post have been addressed by the Illinois Liquor Control Commission’s policy on returns during the COVID epidemic. You can read that here. (Beer can be returned, but spirits are apparently not addressed).
In short, returns (called “EO 2020-07 Returns” in the guidance) are allowed under these conditions:
1. EO 2020-07 Returns apply to Beer as defined by 235 ILCS 5/1-3.04. Such returns do not apply to wine and spirits products.
2. EO 2020-07 Returns apply to beer in the original package and untapped Beer only.
3. EO 2020-07 Returns apply to Beer previously sold and delivered by licensed distributors and licensed manufacturers/non-resident dealers with self-distribution privileges (“Distributors”) to license holders authorized to conduct retail sales for consumption on the licensed premises (“Retailers”).
4. EO 2020-07 Returns apply to Retailers authorized to conduct on-premises sales and for beer intended to be consumed on-premises.
5. EO 2020-07 Returns do not apply to returns from off-premises only retailers or for beer originally intended to be sold for off-premises consumption.
6. Beer may be returned for cash or credit against outstanding indebtedness to be determined by agreement between Distributors and Retailers.
7. Beer may be exchanged for the same volume of identical product at the risk of a Retailer being unable to sell the Beer by the Beer code date or near code date.
8. Beer delivered or exchanged after March 23, 2020 is subject to the Product Return Rules established in 235 ILCS 5/6-5.5 and 11 Ill. Admin. Code 100.245.
9. This return policy shall not be construed to create a mandatory obligation by the Distributor to accept an EO 2020-07 Return.
10. If a Distributor engages in EO 2020-07 Returns, the Distributor shall apply such return policy to all similarly situated Retailers.
11. All EO 2020-07 Returns shall be documented by a notation on a credit invoice as an “Executive Order 2020-07 Return” or as a substantially similar notation. All such records shall be maintained according to all State Commission records retention and records availability rules (e.g. retailer 90-day invoice requirement; three years records retention schedule).
Here is our our prior piece on the issue:
Last week the Illinois Liquor Control Commission announced the allowance of buybacks for beer and the allowance of returns for liquor and wine pending TTB authorization for cancelled St. Patrick’s Day Parade events but did not then extend that authorization beyond those cancelled parades to other events and gatherings cancelled on account of COVID-19 and then appeared to double-down in prohibiting shuttered or strangled restaurants and bars from returns based on COVID-19 loss of business unrelated to the parades in its recent Q&A .
Q: Are we allowed to receive liquor deliveries during the two weeks we are closed? A: Yes, but all requirements for product returns are still in effect.
But the Federal Government has allowed such returns for all COVID-19 cancellations. In it’s weekly update on Friday, the TTB granted that authorization and announced that it would relax the restrictions on retailers looking to return alcoholic beverages which would normally be an infraction by way of consignment sales under the Code of Federal Regulations.
The thing that’s being relaxed is the CFR applying the Federal Alcohol Administration Act 27 C.F.R., Part 11, Subpart D (27 C.F.R. § 11.31) which states “it is unlawful to sell, offer to sell, or contract to sell products with the privilege of return for any reason, other than those considered to be ‘ordinary and usual commercial reasons’ arising after the product has been sold.” The provisions following § 11.31 detail the “ordinary and usual commercial reasons” which include:
- Exchanges and Returns for Ordinary and Usual Commercial Reasons (§§ 11.32 – 11.39)
- Exchanges and Returns for Reasons Not Considered Ordinary and Usual (§§ 11.45 – 11.46)
Normally, overstocked or slow moving products and seasonals don’t fall into to the category of “ordinary and usual” reasons that allow for return.
In the TTB’s weekly update allowing returns referenced the wide-spread cancellation of events and gatherings due to due to concerns about COVID-19 and issues related to Section 11.45 discussing “overstocked or slow-moving” stating “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.”
Here’s the TTB’s full statement:
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.
If you have any questions concerning our consignment sales rules, you may send them to tradepractices@ttb.gov.
