Under both Federal and State Law, consignment sales of beverage alcohol are illegal. Section 205 of the Alcoholic Beverage Control Law of the United States make it unlawful for a manufacturer, importer or wholesaler of distilled spirits, wine or malt beverages, to sell, offer for sale, or contract to sell to any wholesaler or retailer engaged in the sale of distilled spirits, wine, or malt beverages, or for any such wholesaler or retailer to purchase, offer to purchase, or contract to purchase, any such products on consignment or under conditional sale or with the privilege of return or on any basis otherwise than a bona fide sale. The subsection does not apply to transactions involving solely the bona fide return of merchandise for ordinary and usual commercial reasons arising after the merchandise has been sold.
Ordinary and usual commercial reasons for the return of beverage alcohol include returns because of defective products, shipping errors, a change in the law preventing the product from being sold, termination of the buyer’s business or license. It is also permissible for a wholesaler to return to the supplier any of the supplier’s products when the supplier and wholesaler’s relationship is terminated.
Generally speaking, consignments sales are also banned under New York law. The basic exceptions are outlined in Bulletin No. 251 (July 19, 1965). Where a manufacturer or Wholesaler made an error in a sale or in a delivery to a retailer, the error may be corrected without notice or application to the Authority within fourteen days of delivery and within the same calendar month. It is worth noting that the return requires a genuine error. A retailer may not return goods she ordered either because she later discovered that she could have received a better discount had she ordered a larger quantity or because she discovered she could use more of the goods and there was a quantity discount available for the additional amount. In addition, a manufacturer or wholesaler may exchange liquor or wine in the same quantity, brand, type, size or container and proof for liquor or wine, which is to be returned by the retailer, without notice to the Authority, provided it makes similar exchanges for all retailers who request them. Pursuant to Advisory 2016-8, the Authority permits a seasonal retail licensee to return unsold beer and cider to the manufacturer or wholesaler.
When a retail licensee goes out of business, surrenders its license or has its licensed revoked, it is permitted to obtain a liquidator’s permit. With such a permit, the licensee is permitted to sell its remaining inventory to the supplier or wholesaler from which it was purchased or to another retail licensee.
Except as permitted by Bulletin No. 251 and Advisory 2016-8, as a general rules a manufacturer or wholesaler may not accept the return of goods without either a court order or permission from the Liquor Authority.