Guidance Statement on Third- Party Providers
The DCP believes that liquor permit holders and "third party providers" can
form business relationships that facilitate lawful transactions over the Internet and
other advertising platforms. For purposes of this correspondence, "third- party
providers" refers to unlicensed entities (no liquor permit) that are involved with the
promotion, marketing, and facilitation of sales of alcoholic beverages by liquor
permit holders over the Internet or other advertising platforms.
Third- party providers may be involved in one or more of the steps in the transfer of title of
alcoholic beverage from a permit holder ( also known as the backer) to a consumer,
such as placement of advertising, making recommendations to consumers,
directing consumers to permit holders, receiving orders and passing them on to
permit holders, processing payments, and assisting with shipping arrangements.
However, all sales transactions involving third party providers must ultimately be
conducted and be under the control of the holder of the liquor permit. This includes
decisions concerning selection of alcoholic beverages to advertise or offer for sale,
the pricing of those beverages, and the ultimate acceptance and fulfillment of the
A permit holder working with a third-party provider is ultimately responsible for
any activities undertaken by the third-party provider on the permit holder's behalf.
Orders for alcoholic beverages solicited by permit holders utilizing third party
providers should be transmitted by the third-party provider to the permit holder.
The permit holder responsible for the sale must be clearly identified and
must ultimately control the transaction, including any decisions concerning
acceptance or rejection of such orders.
The control of funds from a transaction involving the sale of alcoholic beverages
constitutes a significant degree of control over a permitted premise. Accordingly,
while a third party provider may act as an agent for the permit holder in the
collection of funds (such as receiving credit card information and securing
payment authorization), the full amount collected must be handled in a manner that
gives the permit holder control over the ultimate distribution of funds. In short,
this means that the third-party provider cannot independently collect the funds,
retain its fees, and pass the balance on to the permit holder. The third-party
provider should pass all funds collected from the consumer to the permit holder
conducting he sale, and the permit holder should thereafter pay the third party
provider for services rendered.
In any business relationship between a permit holder and third-party providers, it is
understood that third party provider may receive compensation for services
provided. Such compensation must be reasonable, and any compensation structure
utilized may not result in any actual or de facto control over the permit holder, in
whole or in part, by the third-party provider.
In evaluating the intent and impact of any particular compensation structure, the department will look at the totality of circumstances as it relates to the operations and relationships between the parties to determine whether a third party provider is in fact exercising licensing privileges, or otherwise engaging in activities for which a liquor permit is required
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