The New York State Liquor Authority would prohibits a licensed establishment from transferring the financial interest in its business to an unlicensed third-party. This is done to prevent those who otherwise would not qualify for a license from benefiting financially under someone else's liquor license. At the request of Groupon, the New York State Liquor Authority issued a declaratory ruling as to whether Groupon’s proposed coupons would be in violation of the Alcohol Beverage Control Law.
The SLA described the proposal as a third-party provider desiring to sell coupons on its website to be redeemed for discounted food and alcohol at bars and restaurants. The questions before the SLA were: (1) whether the agreement between Groupon and a licensed retailer would be deemed an illegal availing of the license, and (2) whether the promotion constitutes a prohibited unlimited drinks offering.
Section 111 of the Alcohol Beverage Control Law prohibits an establishment from making its license available to a person who is not been approved by the SLA. The SLA determined that Groupon, through its coupons, would be entitled to a relatively insignificant percentage of the establishment’s income from the sale of alcoholic beverages and therefore its proposal would not constitute a violation of Section 111. Section 117–a of the Alcohol Beverage Control Law prohibits establishments from offering unlimited drinks to their patrons during a set period for a fixed price, and the authority has adopted an informal standard that any promotion in which drinks are offered at less than half the retailer’s regular price will be deemed a violation of Section 117–a. The SLA determined that since Groupon would agree to not give customers more than a 50% discount off the establishment’s prices its coupon proposal would not violate Section 117–a.
James DiPasquale, Attorney at Law
DIPASQUALE LAW GROUP
Restaurant Law New York
Like us on Facebook
Connect with us on Linkedin