off-prem alcohol

Businesses with a Class C license will see a significant change to alcohol distribution laws starting January 1, 2023. Iowa’s Senate Bill 2374 will allow bars, restaurants, and other establishments with a Class C license to purchase up to five cases of either beer or RTD cocktails from an off-prem retailer.

A Class C liquor license allows commercial establishments to sell liquor, wine, and beer for on-prem consumption. Licensees are also permitted carry-out sales of liquor, wine, and beer.

This new law permits businesses to take supply shortages into their own hands by traveling to the nearest off-premise store to restock. They are allowed to purchase five cases every 24 hours. While this does not seem like much for busier establishments, it certainly helps during rushes, game days, or other events when inventory runs low.

Current law forces businesses to wait for their alcohol distributors to deliver beer to the establishment. Supply chain issues have caused delays of up to two weeks. Businesses are also experiencing situations where the product they need is not even in stock.

“This is an enormous change from before where we were totally dependent on the beer wholesalers or the beer distributors to bring us our product, and like everyone else, they have supply chain issues,” said Jessica Dunker, President and CEO of the Iowa Restaurant Association.

The Iowa Restaurant Association was lobbying for this change during the last legislative session to fight laws it considered outdated. Iowa has operated on a three-tier system, separating wine, liquor, or beer for decades. Wine is a little different, as businesses can already purchase it in limited quantities at retail stores in addition to having it delivered by their distributor.

Operators have been restricted to their suppliers’ inventory for liquor and beer, leaving them unable to look for better deals, shop locally, or find alternative brands. This new law now allows them to source other beer and RTD options. In general, the legislative session helped those in the alcohol business on numerous fronts.

“It was a great legislative session for Iowa this year! The licensing structure for retailers was streamlined and simplified, some of the licensing fees were eliminated and/or reduced, the ABV limits on a few items were expanded, and off-prem retailers are now permitted to sell small quantities of beer and wine to on-prem retailers,” said Wendy Turk, Director, Regulatory Affairs at Fintech.

SB 2374 will help Class C Licensees keep inventory stocked when needed, but Iowa Restaurant Association will continue its mission of leveling the playing field by fighting for liquor pickup options from off-premises retailers.

Have questions about regulations in your state? Contact Wendy Turk, Director of Regulatory Affairs, at [email protected].

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