Wal-Mart’s Wine Kiosk Move Raises An Oak Barrel Full Of Legal Nightmares

Written by Mark Rasch
March 30th, 2011

Attorney Mark D. Rasch is the former head of the U.S. Justice Department’s computer crime unit and today serves as Director of Cybersecurity and Privacy Consulting at CSC in Virginia.

With Wal-Mart now pushing wine kiosks on its customers, thanks to a favorable decision by the Pennsylvania Liquor Control Board, retailers that had been only casually thinking about it are preparing to move into the space. As a retail lawyer, I say, “Wait!”

Of the hundreds of types of kiosks out there today, none has anywhere near the legal liability issues that a wine kiosk does. Just a few of the issues include: age verification, determining whether the customer is already intoxicated, drunk-driving issues (what happens if in-store video captures someone buying and drinking wine and then the parking lot cameras see him driving away?) and records retention, along with some deliciously arcane laws involving alcohol sales in some states.

Wal-Mart’s initial move will include 23 Pennsylvania stores, using the state’s own self-serve wine kiosks. These kiosks have had mixed results, with some wine enthusiasts pushing back against the machines. But those are not legal issues and, believe me, these machines offer enough such issues to keep entire law firms gainfully employed.

Several legal issues relate to the sale of alcohol in the United States—whether by Joe the bartender, the liquor store, the grocery store, the retail outlet, the vending machine or, for that matter, the average suburban dad. Generally, these can be broken down into: (1) licensing, (2) liability for drunks and (3) legal age. How these issues shake out when it comes to booze kiosks depends, to a great extent, on how the program is implemented.

In every U.S. jurisdiction, to sell alcohol, you have to have an appropriate authorization from the state. And in this sense, I mean the state as in the State of New York, the State of New Jersey, the State of California, etc. In some jurisdictions, like the Commonwealths of Pennsylvania, Massachusetts and Virginia, for example, most alcohol sales are reserved for state-operated stores that are run by state employees, with taxes and revenues (including profits) from the sales going to the state.

In most other jurisdictions, the entity selling the alcohol must have an appropriate license from the state, with fees and liquor taxes going to the state. The licensing laws are frequently different for hard liquor (distilled spirits) than for beer or beer and wine. They also differ if alcoholic drinks are sold by the bottle or by the glass, and whether food is served or not. Suffice it to say, liquor sales laws are complicated.

In Pennsylvania, the only state where such kiosks are currently operating, only the commonwealth is permitted to distribute wine and spirits through a state-run store. Typically, the commonwealth will lease a storefront and use state employees to sell wine and spirits. The kiosk operates as a mini state store.

Although customers think they are going to Wal-Mart or Wegmans or the corner grocery store to pick up a bottle of Chardonnay, they are really going to a state-operated robo-store. The state leases the floor space from the retailer, the vending-machine manufacturer is paid a fee, and the state and the vending-machine manufacturer are responsible for running and maintaining the virtual store.

In other jurisdictions, your mileage may vary. If the law is interpreted to require the retailer to have a liquor-distribution license to keep the kiosk in the store, then the retailer might just as well sell the wine or spirits directly. Kiosks provide little advantage beyond customer convenience (assuming the machines work properly—those in Pennsylvania failed in December and had to be shut down.)


2 Comments | Read Wal-Mart’s Wine Kiosk Move Raises An Oak Barrel Full Of Legal Nightmares

  1. Albert Brooks Says:

    With luck enough people will sue the PLCB to make them get rid of those stupid machines. They are insulting to the citizens of PA,

  2. A reader Says:

    If industry awaited legal opinions before innovating, we’d be afraid of moving from the trees into the caves, much less creating fire.

    Will there be there legal issues? Sure. And who better to work them out than the largest retailer on the planet, and the vast legal team they can obviously afford?

    I’m glad it’s them. They can work out those problems on their dime.


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