Pummeled by the pandemic, but still standing, Arizona’s hospitality industry received a legislative boost on Monday, May 17, 2021, when the state legislature passed HB 2773, allowing Arizona restaurants and bars to sell alcohol to go. The bill essentially codifies Governor Ducey’s executive actions via Executive Order 2020-09 taken at the onset of the pandemic last spring, which allowed certain Series 12 licensees (typically restaurants) that otherwise were prohibited from off-premise sales, to engage in such sales.
As the to-go food order business soared in the spring and summer timeframes, so too did the off-premise sale of beer, wine, and spiritous liquor. Although seen as a lifeline by many businesses, not all viewed it the same. In particular, holders of Series 6 licenses – already permitted to sell off-premise, but for a time not permitted to be open at all for lack of selling food, felt inequitably treated. That the Series 6 license is substantially more expensive than the Series 12 license did not help.
Feeling aggrieved, a group of such license holders (in total, 130 bar owners) sought injunctive relief, claiming in part that EO 2020-09 deprived them of their exclusive ability to sell alcohol for consumption off premises. In a November 4, 2020 decision from the Maricopa County Superior Court, portions of EO 2020-09 relating to off-premise sales were enjoined and no appeal ensued. Undoubtedly, some of the same concerns from those Series 6 plaintiffs will present with this new legislation expected to be signed into law by Governor Ducey shortly.
The new law when signed would take effect on September 30, 2021, though some provisions would have a retroactive effective date of July 1, 2020. The bill allows a bar or restaurant licensee to take orders for the sale and delivery of spirituous liquor off the licensed premises by telephone, mail, fax or catalog, through a third-party facilitator or the internet or other means as follows:
a) Spirituous liquor for a bar includes beer, wine, distilled spirits or mixed cocktails.
b) Spirituous liquor for a restaurant includes:
i) Mixed cocktails, with the sale of food, if the licensee holds a permit allowing for the sale of mixed cocktails for off-premises consumption; and
ii) Beer, if the licensee holds a permit allowing for the sale of beer for off-premises consumption.
Though HB 2773 revisits some of the latitude allowed by EO 2020-09, the limits of that latitude have been tightened. For example, for restaurants holding a Series 12 license, the bill requires that the sale of mixed cocktails for consumption off the licensed premises must be accompanied by the sale of food. In addition, a permit allowing for such sale must be obtained and only after the state Department of Liquor Licenses and Control has determined the convenience and interest of the community will be substantially served by the issuance of such permit. A number of other measures impacting the sale, licensing, and conditions of off-premise alcohol sales are also included.
One thing seems certain, to-go alcohol sales will be much more liberally permitted in Arizona when compared with pre-pandemic restriction. If signed by Governor Ducey, Arizona will join more than 10 other states that now allow to-go alcohol sales, many only allowing such sales since the pandemic.