Is it time to party again?! Liquor law update – Important Bulletin on BYOB events
Does your community association allow the consumption of alcohol on its premises as part of a Bring Your Own Bottle (“BYOB”) policy? If so, then we have some important and exciting news for you!
As you may know, the Arizona liquor laws (at Title 4 of the Arizona Revised Statutes) are not written with community associations in mind. A.R.S. 4-244.05 is the relevant statute to follow when it comes to unlicensed establishments (i.e. businesses without a liquor license) allowing consumption of liquor on its premises. This statute prohibits an unlicensed business from allowing consumption on its premises if food or beverages are sold, entertainment is provided, a membership/cover charge is imposed, or a rental requirement/minimum purchase is charged. Based on the lack of clarity in the statute and the past enforcement of the statute, there has always been some risk in allowing BYOB events on community association premises. While there is always risk in allowing the consumption of liquor on any premises, the risks relating to compliance with A.R.S. 4-244.05 may have just significantly decreased based on recent guidance issued by the Department of Liquor Licenses and Control (“Department”), which is the department that enforces Title 4 of the Arizona Revised Statutes on behalf of the State of Arizona.
Our firm recently met with representatives of the Department to address the BYOB issues encountered by many of our community association clients. During our meeting, we discussed the fact that common areas and common elements within community associations are simply an extension of the community and that these areas are not “business premises” or “business establishments” as that term is used in A.R.S. 4-244.05. Accordingly, it was our position that A.R.S. 4-244.05 should not apply to most community associations. The representatives of the Department agreed with our analysis and, after meeting with us, have agreed to take the position within the Department that community associations may generally allow BYOB on common areas/common elements so long as: (1) the Association is an Arizona nonprofit corporation and (2) the Association is not selling or providing alcohol at the event. This is great news as there has been some ambiguity surrounding this issue over the years based on a variety of factors, including some staffing changes at the Department. The Department has ensured our firm that it will instruct its investigators to follow the above principles when enforcing Title 4 of the Arizona Revised Statutes (i.e. the liquor laws) with respect to community associations.
What does this mean for your community association? While the above guidance is not codified in the Arizona Revised Statutes (and you should always obtain legal advice prior to engaging in any event where liquor is consumed at your premises), many community associations may allow BYOB events without a significant risk of violating Arizona law. While our firm has generally taken this position over the past several years, this position is, once again, approved by the Department. This also means that community associations can hold BYOB events without the need to obtain an Unlicensed Business Exemption (i.e. “BYOB Exemption”). This is important because BYOB Exemptions come with many restrictions and there is no guarantee that an association will even be issued a BYOB exemption.
If your association wishes to sell alcohol in any way, it will need to obtain a license to do so (either temporary or permanent) and you should contact the association’s attorney to determine the best way to proceed.
Please feel free to contact Mark Sahl, Esq. with any questions regarding BYOB issues or any other liquor law issues encountered by your community association.
4-244.05. Unlicensed business establishment or premises; unlawful consumption of spirituous liquor; civil penalty; seizure and forfeiture of property
A. A person owning, operating, leasing, managing or controlling a business establishment or business premises which are not properly licensed pursuant to this title and in which any of the following occur shall not allow the consumption of spirituous liquor in the establishment or on the premises:
- Food or beverages are sold.
- Entertainment is provided.
- A membership fee or a cover charge for admission is charged.
- A minimum purchase or rental requirement for goods or services is charged.
The information contained in this article is not intended to be legal advice and is provided for educational purposes only.