Amazon Does Bare Minimum to Meet California Law

A week after Wine-Searcher reported that Amazon was flouting California law at its north Los Angeles warehouse, the company has taken steps at some of its other locations to comply with the terms of its liquor licenses.

That said, Amazon is making a mockery of California law by doing the bare minimum to comply. And some owners of dedicated brick-and-mortar liquor stores are not happy about it.

Amazon, doing business as Prime Now, has seven nearly identical liquor licenses for stores adjacent to Amazon warehouses in California. There are two in Los Angeles (including the one I visited for last week’s story) along with “stores” in Irvine, Redondo Beach, Sacramento, San Diego and Sunnyvale. The company has applied for a license for a similar “store” in San Francisco.

California has a law requiring companies that deliver wine and spirits to have a brick-and-mortar store. The purpose of the law would seem to be to prevent a big company from dominating the liquor delivery market by operating delivery-only warehouses without the expense of a store open to the public.

That is what Amazon appears to be doing in its Prime Now liquor “stores” adjacent to Amazon warehouses in Sacramento and Sunnyvale that I visited last week.

I was able to buy a bottle of rosé wine in both places. But I was offered a choice of only three wines in Sacramento, and four wines in Sunnyvale. And I was not offered the opportunity to buy any whiskey at all, though I could buy a 1.75 liter bottle of a single brand of vodka in Sunnyvale. There were no spirits offered at the “store” in Sacramento.

In contrast, the warehouses offer hundreds of wines and spirits for delivery. In the same zip code as the Sacramento warehouse, Amazon offers 230 wines and 82 whiskies (not counting other spirits) for delivery from Amazon, not including wine and spirits from Whole Foods. In the same zip code as the Sunnyvale warehouse, Amazon offers 220 wines and 70 whiskies for delivery. This does not include wine and spirits from Whole Foods or Sousa’s Wine Beer Spirits.

Prime Now’s liquor license for both “stores” says, “The alcoholic beverages offered for sale to in-person visitors can be a curated selection and need not include all alcoholic beverages in petitioner/licensee’s inventory.”

When I asked Amazon why it offers only three wines for sale in person from a warehouse that delivers hundreds, an Amazon spokesperson replied, “We are not required to offer the full selection for sale in person. We are in compliance with the law.”

Several wine and spirits retailers contacted Wine-Searcher after our story last week, expressing dismay that Amazon has skirted the intent of California’s law. But – all retailers being afraid of the California Department of Alcoholic Beverage Control (ABC) – none wanted to speak on the record. One retail shop owner did ask me to ask the ABC if it has a definition of “store.”

It is a good question. In both Sacramento and Sunnyvale, Prime Now’s setup wasn’t what most people would recognize as a store.

The front door of both buildings says “Prime Now.” Upon entering, there is no stock on display or any indication at all that retail liquor sales are available, though the Sacramento location has an unstaffed “E-Swag Store” sign over a glass cabinet that contains Amazon and Prime t-shirts.

Prime Now does offer everything but only online.

© W. Blake Gray/Wine-Searcher | Prime Now does offer everything but only online.

A button over a plain wooden table in both locations reads, “Press here for assistance.” There is no sign whatsoever announcing that wine and spirits are for sale.

I pressed the button. In both Sacramento and Sunnyvale, somebody swiftly came out, and I said, “I want to buy a bottle of whiskey.” Both times I was told they didn’t have whiskey but they would show me the liquor they do sell. The employee opened a computer tablet and showed me what I could buy.

In Sacramento, there were four items for sale: Apothic Red wine, Barefoot Chardonnay, Charles & Charles rosé and a 6-pack of Lagunitas IPA. No whiskey. This from a warehouse that offers 230 wines and 82 whiskies for delivery.

In Sunnyvale, there were four wines offered – Apothic Red wine, Barefoot Chardonnay, Charles & Charles rosé and Nobilo Sauvignon Blanc. That “store” also offered a 6-pack of Lagunitas IPA, a 12-pack of Corona Extra and a 1.75-liter bottle of Platinum 7X vodka. No whiskey. This from a warehouse that offers 220 wines and 70 whiskies for delivery.

They had different stories on why I couldn’t buy whiskey. One store employee told me that the meager list of products displayed on the tablet were all the liquors currently in the warehouse. The other said, when I asked if there was any whiskey for sale, “You have to order that online. We have some things in the warehouse that we don’t sell here, only by delivery.” In my continuing attempt not to get low-level people fired, I am not going to say which store employee said which.

The availability on the Sacramento site of any wine and spirits for sale at all – which is required by Prime Now’s license – appeared to happen in response to Wine-Searcher’s story published August 18, and didn’t happen immediately. On August 20, an acquaintance of mine visited the Sacramento store and reported that no wines were for sale. I went myself to check it out on August 22, and was offered the three wines and one 6-pack of beer shown in the photo, after I pressed the button.

John Carr, public information officer for the California ABC, told Wine-Searcher that he was aware of an investigation into one of Prime Now’s Los Angeles locations, but was not aware of anything else about Amazon’s wine delivery business in California. When asked if Amazon is skirting the intent of the law requiring a brick-and-mortar store for each delivery location, Carr said he would check with ABC’s lawyers and get back to me.

Later Carr sent me a one-sentence e-mail: “It is OK for them to curate their selection with fewer items than they have in stock per their condition.”

Carr told me Prime Now has a type 21 license. The definition from ABC’s website is very short: “(Package Store) Authorizes the sale of beer, wine and distilled spirits for consumption off the premises where sold. Minors are allowed on the premises.” So Prime Now is operating (Package Stores.) The parentheses in ABC’s definition seem appropriate.

I bought a bottle of Charles & Charles rosé from both the Sacramento and Sunnyvale Prime Now stores. Neither location accepted cash, so I paid with my credit card for both. (I’m a longtime Amazon customer online, and generally a satisfied one, so they have my credit card number already.) So Amazon might be following the letter of the law.

A longtime wine retailer who did not want to be identified explained that ABC is a reactive agency. It doesn’t create license restrictions for stores; instead, prospective retailers explain what they want to do, and ABC approves it or not. In this case, what Prime Now proposed is a new arrangement in a fast-changing business. ABC approved it, as it appears to comply with California law requiring companies that deliver wine and spirits to have a brick-and-mortar store.

What I saw in Sacramento and Sunnyvale – an unstaffed table, a button to push for assistance, and fewer than eight products for sale, none of them physically on display – is not what most people would call a “store.”

But these (Package Stores) may be the future of the wine and spirits retail business.


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