COVID-19 (CORONAVIRUS) MANDATES AND PRECAUTIONS FOR ALCOHOL INDUSTRY LICENSEES Current as of 3:30 P.M. EDT, March 17, 2020 COVID-19 (coronavirus) continues to invade nations, societies and industries at an alarming rate. As the pandemic spreads, lawmakers and business leaders are working to address the disease’s consequences – quarantined populations, disrupted supply chains and a consumer population under increasing pressure to conform to “social distancing” and stay home. The consequences of COVID-19 are especially hard on America’s hospitality industry generally, and the on-premises segment of the industry in particular. Public venues such as Walt Disney World and Universal Studios have closed their theme parks. Professional sports leagues such as the National Basketball Association and the National Hockey League have suspended their seasons. Key data points for the dine-in restaurant trade already reflect alarming downward trends. GAUGING THE IMPACT OF COVID-19 ON AMERICA’S ALCOHOL INDUSTRY The impact of COVID-19 on the commercialization of alcohol beverages, as with almost all aspects of alcohol regulation in America, varies from state to state. In a growing number of states, the government has ordered mandatory closings for bars, restaurants, nightclubs, theaters, arenas and similar venues. But in other states, the restrictions are limited to the number of patrons permitted on the premises at one time. And in a few states, the government has decided to impose no restrictions at all, relying instead on suggested guidance regarding social distancing and taking a wait-and-see attitude. GrayRobinson’s Nationwide Alcohol Industry Team prepared this analysis to inform industry members regarding the current status of COVID-19 restrictions on alcohol commerce, and to offer alcohol regulators the opportunity to compare and contrast the positions – and often creative solutions – developed by states to address the pandemic’s challenges. For example, it is noteworthy that state government leaders from Connecticut, New Jersey and New York coordinated their actions to produce a uniform approach to address COVID-19’s impact of the hospitality industry regionally. Likewise, the survey reflects a very non-traditional step that several states have taken – allowing on-premises licensees to sell alcohol off-premises in order to ameliorate the substantial losses that will occur from mandated restrictions and social distancing. CAVEATS As you review the 50-state summaries (plus D.C.), please bear in mind the following caveats: 1. Summaries not Legal Advice: These summaries reflect the status of state restrictions and pronouncements as of 9:00 A.M. on March 17, 2020, as described by government agencies or officials. The contents of these summaries should not be construed as legal advice. 2. Rapid Changes: Because of rapidly changing developments associated with COVID-19 containment, any future actions considering these summaries should be based on updated information. 3. Local Mandates: The summaries below primarily focus on state actions, e.g., emergency declarations from state governors, limits on public gatherings, mandated closures, etc. However, as noted in select examples, local restrictions imposed through municipal ordinances or local police powers not only exist, but in numerous cases impose stricter restrictions than their state counterparts. Any future actions should take into account both state and local mandates. 4. Common Sense: As reflected by this analysis, states are all over the board in how they are reacting to the COVID-19 challenge. Some state, and especially local, actions are predicated on an abundance of caution. Others seem to be politically-driven, based on community attitudes. In this environment, several nationwide brands such as Chick-fil-A and Starbucks restaurants have voluntarily taken additional protective steps, e.g., limiting in-store seating to promote social distancing. Because government mandates (or lack thereof) represent the minimum threshold, industry members should exercise independent judgement regarding whether precautions greater than those mandated are appropriate to best protect the health and safety of both patrons and employees alike. COVID-19 DIRECTIVES BY JURISDICTION Federal: Guidance Warning Against Mass Gathering in Excess of 50 People: On March 15, 2020, the U.S. Centers for Disease Control and Prevention advised that large events and mass gatherings can contribute to the spread of COVID-19 in the United States via travelers who attend these events and introduce the virus to new communities. Examples of large events and mass gatherings include conferences, festivals, parades, concerts, sporting events, weddings, and other types of assemblies. These events can be planned not only by organizations and communities but also by individuals. 2 CDC, in accordance with its guidance for large events and mass gatherings, recommends that for the next 8 weeks, organizers (whether groups or individuals) cancel or postpone in-person events that consist of 50 people or more throughout the United States. Events of any size should only be continued if they can be carried out with adherence to guidelines for protecting vulnerable populations, hand hygiene, and social distancing. When feasible, organizers could modify events to be virtual. CDC’s recommendation does not apply to the day to day operation of organizations such as schools, institutes of higher learning, or businesses. This recommendation is made in an attempt to reduce introduction of the virus into new communities and to slow the spread of infection in communities already affected by the virus. This recommendation is not intended to supersede the advice of local public health officials. Relaxation of Consignment Sale Prohibition during COVID-19-related Cancellations: Given the unexpected and widespread nature of the concerns involving COVID-19, the U.S. Alcohol and Tobacco Tax and Trade Bureau (TTB) announced that it 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. 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. NOTE: Even though such returns are lawful, a producer or wholesaler is not required to accept returns of such products. Any questions concerning federal consignment sales rules can be directed to TTB at [email protected] or to GrayRobinson at [email protected] Alabama: Declaration of Statewide Health Emergency: On March 13, 2020, Governor Ivey signed a proclamation declaring a state of emergency regarding coronavirus in Alabama. The emergency order provided for closing public schools and state government offices as needed, but makes no provision for closing of public hospitality and entertainment venues. As of March 16, 2020, the Alabama ABC has issued no statements regarding COVID-19. Alaska: Declaration of Statewide Health Emergency Mandate: On March 13, 2020, Alaska Governor Dunleavy, with the Alaska Department of Health and Social Services (DHSS) issued the State of Alaska’s first COVID-19 Health Mandate. The mandate suspends and limits general public 3 visitation to the following state institutions until otherwise rescinded by DHSS and the Office of the Governor: Suspended Visitation Department of Corrections (DOC) Facilities Division of Juvenile Justice Facilities Alaska Military Youth Academy Alaska Psychiatric Institute Limited Visitation Alaska Pioneer Homes Additionally, public school days between March 16, 2020 and March 30, 2020 will be non-student contact days in which students will not be attending school and all after school activities will be suspended. Alaska as of March 16, 2020, has made no provision for closing of public hospitality and entertainment venues, and the Alaska Alcohol & Marijuana Control Office has issued no statements regarding COVID-19. Arizona: Declaration of Statewide Health Emergency: On March 11, 2020, Governor Ducey issued a Declaration of Emergency and an Executive Order. The declaration: (i) establishes the Arizona Department of Health Services (ADHS) as the entity responsible for coordinating all matters pertaining to the public health emergency response of the State; (ii) allows ADHS to waive licensing requirements to provide healthcare officials with assistance in delivering services during times of heightened demand; (iii) allows the state to access $500,000 in emergency funds to aid in measures and resources to protect public health; and (iv) provides the state with emergency procurement authority to procure goods and services as needed to protect public health. The executive order: (a) requires insurance companies and health plans to cover out of network providers, including out