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View Full Version : The Woes of a Liquor Entrepreneur: Or why liquor laws suck hard.



LiveFromLou
04-24-2013, 13:52
So I've had it in my mind for a while now to start an online e-commerce business selling bourbon. I'm located here in Louisville and I know I'd be able to have first pick of the bourbons as the became available. While there are many existing online sources for bourbon, there is not yet a site that specializes it in (or if there is, they aren't on the first page of Google results and that's all that matters).

I figured this would be straightforward, as I already know that The Party Source (https://www.thepartysource.com/) is based in Kentucky and ships liquor to all states that allow it. So I contacted the KY ABC board and inquired as to what license I would need to have in order to do that. They responded that it's not legal whatsoever for a public retail store to advertise or ship liquor from Kentucky no matter where it was going. This is according to state law KRS 244.350.

What? So Party Source can do it and they just look the other way? I'm trying to do a business very similar to theirs but just focusing on a particular niche. Given that the law says it's not possible, yet it is, means something's not right here...

P&MLiquorsEric
04-24-2013, 14:03
So I've had it in my mind for a while now to start an online e-commerce business selling bourbon. I'm located here in Louisville and I know I'd be able to have first pick of the bourbons as the became available. While there are many existing online sources for bourbon, there is not yet a site that specializes it in (or if there is, they aren't on the first page of Google results and that's all that matters).

I figured this would be straightforward, as I already know that The Party Source (https://www.thepartysource.com/) is based in Kentucky and ships liquor to all states that allow it. So I contacted the KY ABC board and inquired as to what license I would need to have in order to do that. They responded that it's not legal whatsoever for a public retail store to advertise or ship liquor from Kentucky no matter where it was going. This is according to state law KRS 244.350.

What? So Party Source can do it and they just look the other way? I'm trying to do a business very similar to theirs but just focusing on a particular niche. Given that the law says it's not possible, yet it is, means something's not right here...

The guy that owns TPS has always been known to push the boundaries of the laws here in Kentucky. They started online sales under a different ABC administrator. You might be getting info based on the new administrators opinion.

squire
04-24-2013, 14:04
Get the name of their lawyer and hire him.

sku
04-24-2013, 14:06
According to the Party Source, they don't ship. They transact sales in KY. If you wish to have someone, say FedEx, pick up the booze for you, that person is your agent.

See the first paragraph of this link: https://www.thepartysource.com/express/shopShipInfo.php

Alden
04-24-2013, 14:14
I'm not a lawyer, just an English professor, but the language there is pretty clear.


you authorize us to have your alcohol beverages or other purchases shipped on your behalf by a common carrier for delivery as requested by you. You understand that this carrier is acting as your agent as the owner of the alcohol beverages or other products.

LiveFromLou
04-24-2013, 14:15
So, it sounds legally dubious at best. If their legal disclaimer actually does hold water, then they are shifting the blame from themselves to either FedEx or the recipient. I imagine FedEx is ignorant of the fact that they are party to breaking KY law.

AaronWF
04-24-2013, 14:24
So I've had it in my mind for a while now to start an online e-commerce business selling bourbon. I'm located here in Louisville and I know I'd be able to have first pick of the bourbons as the became available.

First pick of bourbons available where? Available to retail from the distributor or available at retail?

ramblinman
04-24-2013, 14:28
TPS... wow thats some insane shipping charges. Have never bought from there but was about to jump on the AAA 10yr to try it out since that seems nonexistent outside of KY, but shipping was more than the bottle. I'd have to be making a massive purchase for that to ever work out.

As for the legality though, Im no lawyer but it makes sense. They sell it to you, then you can have someone pick it up for you, in this case Fedex. Skirting the spirit of the law a bit, but the law is terrible anyway, so cheers to them.

Alden
04-24-2013, 14:28
So, it sounds legally dubious at best. If their legal disclaimer actually does hold water, then they are shifting the blame from themselves to either FedEx or the recipient. I imagine FedEx is ignorant of the fact that they are party to breaking KY law.

According to the language on their site, they do not ship, they "transfer ownership" to someone else who ships.

White Dog
04-24-2013, 14:29
I was wondering about that statement. Producers and wholesalers don't allow cherry picking, so you'd be at the back of the line for allocated products.

LiveFromLou
04-24-2013, 14:41
First pick of bourbons available where? Available to retail from the distributor or available at retail?

I just meant that often bourbons are available in Kentucky before they are available elsewhere. Case in point, the Russel's Reserve Single Barrel was on the shelves here months before it hit most other places. So I don't believe I'd get any special treatment, just that being physically located in Kentucky would afford me the same benefits of all Kentucky liquor stores with regards to those release schedules that put things out in Kentucky first.


Skirting the spirit of the law a bit, but the law is terrible anyway, so cheers to them.

You're right, the law is terrible...but I'm not willing to risk breaking it as the foundation of my proposed business venture. Just wouldn't be prudent.

MyOldKyDram
04-24-2013, 15:32
I've heard wind that TPS may not be able to do this for much longer. Nothing concrete, but it is out there.

P&MLiquorsEric
04-24-2013, 16:24
I've heard wind that TPS may not be able to do this for much longer. Nothing concrete, but it is out there.

I know it is something the new ABC administrator wants to look at.

bourbonandbacon
04-24-2013, 19:13
I know it is something the new ABC administrator wants to look at.
whose political campaign can i donate to in KY to ensure this new ABC administrator has as short a term as possible?...

savagehenry
04-24-2013, 19:16
whose political campaign can i donate to in KY to ensure this new ABC administrator has as short a term as possible?...

Seriously, I can't have my VOB pipeline cut off.

squire
04-24-2013, 19:19
There is no certainty in life gentlemen, all we can do is stock up.

MyOldKyDram
04-24-2013, 19:21
Selfishly I wouldn't mind having less outside competition. :P

Seriously though, it should be opened to all liquor stores or none. And we sould be able to order from outside the state as well.

Meruck
04-24-2013, 19:36
I imagine FedEx is ignorant of the fact that they are party to breaking KY law.

Oh yeah, a small startup like FedEx is likely ignorant of the complexities of things like "shipping laws". That makes perfect sense

they don't ship out of KY. The warehouse in Indiana is the demarcation location.

squire
04-24-2013, 20:33
So it's not actually transported out of Kentucky?

LiveFromLou
04-25-2013, 03:35
Oh yeah, a small startup like FedEx is likely ignorant of the complexities of things like "shipping laws". That makes perfect sense

they don't ship out of KY. The warehouse in Indiana is the demarcation location.

Sarcasm noted.

And that is plan B, see if Indiana is any more amenable to my business plan.

petrel800
04-25-2013, 05:15
TPS... wow thats some insane shipping charges. Have never bought from there but was about to jump on the AAA 10yr to try it out since that seems nonexistent outside of KY, but shipping was more than the bottle. I'd have to be making a massive purchase for that to ever work out.


Their shipping gets better with additional bottles. I think you need to order a minimum of 6 to make it worthwhile unless it's a bottle you just have to have. Their handling is pretty impressive. They pack their stuff in very thick cardboard and surround each bottle with a ton of bubble wrap. They do a good job.

CaptainQ
04-25-2013, 08:16
So it's not actually transported out of Kentucky?

That is correct.

squire
04-25-2013, 08:34
Rats, I must've lost the second half of that post. What I meant to say was: So it's not actually transported out of Kentucky? Well then other State or Federal laws apply.

LiveFromLou
04-25-2013, 09:13
Rats, I must've lost the second half of that post. What I meant to say was: So it's not actually transported out of Kentucky? Well then other State or Federal laws apply.
Correct, and it is plenty legal under other states' laws. But the very state where we produce most of America's native spirit is stuck in the dark ages of alcohol regulation. And it's not just with distribution and shipping. Distillers get hit hard with taxes and fees that are unique to Kentucky.

Ejmharris
04-25-2013, 09:27
I know it is something the new ABC administrator wants to look at.

Damn good thing I live 10 minutes away!!


Mike

P&MLiquorsEric
04-25-2013, 10:53
Correct, and it is plenty legal under other states' laws. But the very state where we produce most of America's native spirit is stuck in the dark ages of alcohol regulation. And it's not just with distribution and shipping. Distillers get hit hard with taxes and fees that are unique to Kentucky.

Pulled this from website. So they are shipping from indiana but saying the transaction happened in the state of Kentucky? So they must be transporting the bottles to Indiana for shipping? Or they could simply be putting an Indiana return address in case they come back since shipping to KY is illegal.



T​he Party Source, a licensed retailer in the State of Kentucky, transfers ownership of your alcohol beverage products, and any other products that you purchase, to you immediately at the time you place your order. All purchases are being transacted in the State of Kentucky. If this purchase is for delivery outside of the State of Kentucky, you authorize us to have your alcohol beverages or other purchases shipped on your behalf by a common carrier for delivery as requested by you. You understand that this carrier is acting as your agent as the owner of the alcohol beverages or other products.

MauiSon
04-25-2013, 14:29
Let's not nag a workhorse to death. I've had a good amount of locally unavailable whiskey sent from there to here and don't want anyone to entice curtailment of the practice.

TheOakMonster
04-25-2013, 15:16
Their shipping gets better with additional bottles. I think you need to order a minimum of 6 to make it worthwhile unless it's a bottle you just have to have. Their handling is pretty impressive. They pack their stuff in very thick cardboard and surround each bottle with a ton of bubble wrap. They do a good job.

I'll also add, that Party Source is hardly making extra money off their shipping charges. As someone who handles shipping orders at a liquor store, i'll point out the UPS fees are greater for alcohol than a standard package. Alcohol requires "over 21 delivery confirmation" which adds $7-8 before even weighing a bottle. Factor in liquid-filled glass bottles and heavy-duty packaging and the shipping costs climb.

I think amazon.com and similar online vendors have spoiled us, because they absorb some shipping costs and negotiate cheap rates with carriers. But smaller stores can't do that. I mean, if our store charged $10 flat shipping or similar we'd lose so much money it would be pointless to sell online or ship.

P&MLiquorsEric
04-26-2013, 07:53
I'll also add, that Party Source is hardly making extra money off their shipping charges. As someone who handles shipping orders at a liquor store, i'll point out the UPS fees are greater for alcohol than a standard package. Alcohol requires "over 21 delivery confirmation" which adds $7-8 before even weighing a bottle. Factor in liquid-filled glass bottles and heavy-duty packaging and the shipping costs climb.

I think amazon.com and similar online vendors have spoiled us, because they absorb some shipping costs and negotiate cheap rates with carriers. But smaller stores can't do that. I mean, if our store charged $10 flat shipping or similar we'd lose so much money it would be pointless to sell online or ship.

Not to mention Amazon fills up a UPS semi truck trailer and delivers to the local UPS sorting facility themselves, effectively cutting out an entire step in the shipping process.

ramblinman
04-26-2013, 11:37
Yeah, its true. I've been Amazon prime member as long as they've offered it and I'm very spoiled.

Their scales are nuts, my boss has a side business that deals with mail order and he says due to how much business they do they can send next day cheaper than normal biz can do ground.