Download TPP - NABCA

Licensing and Regulating Internet
Retailing:
Perspective of the Unlicensed Marketer
Kristen Techel
[email protected]
strikeandtechel.com
One type of “TPP”:
unlicensed marketer
Where Did TPPs Come From?
Bridging Direct Shippers and E-Commerce
Granholm starts to quickly open new sales opportunities, but wineries need help.
TPPs start modest and quickly become full-service.
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Create a website for a winery
Consult on strategy for winery website, including featured products and pricing
promotions
Host a website for a winery and manage payment processing on behalf winery
Host a stand-alone website that combines offers from more than one winery, but
links out to winery websites
Host a stand-alone website that combines offers from more than one winery and
manages all payments
Why use a
Full-Service
TPP?
 Data indicates direct to consumer sales
are increasing
 TPPs can connect sellers to customers
they wouldn’t otherwise reach
 TPPs can make the transaction easy.
+ Ecommerce issues (merchant account
rates, fraud protection, privacy)
+ Technology to Manage complexities
(interface with compliance software,
reporting tax collection)
 TPP as a modern form of advertising?
Topics from
Regulators on TPPs
1. You need a license to sell alcohol
2. An alcoholic beverage license is a personal right (no “availing”)
3. Licensees have to know the rules and comply with them
4. Lack of familiarity with ecommerce
Regulatory Topic: Licensing
You need a license to sell alcohol
• State definition of sale
• Types of licenses: Home state, direct shipper, delivery-related, internet
marketing portal (VA)
• TPP Approaches:
• TPP restricts activity to avoid making sale, as defined in state
• TPP makes sure there is a licensee who is authorized to make sale
• Sellers select states
• Sellers verify licenses
• TPP checks licenses
Regulatory Topic: Availing
A license is a personal right
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TPP Approaches:
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CONTROL for licensee
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TPP Compensation
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Flow of Funds
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No “blinds”
Regulatory Topic: Compliance
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There are many state-specific rules to manage
TPP approaches: Learn rules, interface with compliance programs and
professionals, give licensee control and help them stay compliant
• Licensing
• Volume caps
• Production requirements
• Package markings
• Discounting/Promotions
• Signature Collection
• Reporting
Licensees Must Know and Follow
Rules of MY STATE
Iowa
• “Fermented on winery premises”
• No volume limit
• TPPs?
Illinois
• “Wine made by licensee”
• 12 cases per year to a resident
• TPPs?
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Oregon
No Production specification
No more than two 9L cases per month
to a resident
Retailers can also direct ship
TPPs?
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Colorado
“Produced or bottled by permittee”
Register labels
No volume limit
TPPs?
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Regulatory Topic: Understanding Ecommerce
What exactly
is happening
here?
There are too
many models to
investigate them
all
I sense that TPPs
are doing too
much and
licensees too little
I have no jurisdiction
over unlicensed
parties- how do I stop
bad actors?
The landscape
is changing too
quickly to keep
up
This feels too
virtual
How do we
regulate this?
Do we need to
regulate it at
all?
Best Practices for TPPs
• Only work with compliant licensed sellers with the right license to make a sale
• Learn the rules, help your sellers comply
• Leave control with the seller, especially the ability to reject an order
• Find a way to give the seller control over the funds
• Ensure fees are reasonable given the services provided, be thoughtful with % fees
• Don’t act as a go-between for suppliers and retailers
• Have a contract that your sellers can provide to a liquor regulator without putting
their license in danger
• Don’t be a bad actor. Anyone can start a TPP with very little start-up capital. If
you have no license in a state, it isn’t easy for the state alcohol regulators to stop
you. Resist the temptation to act without understanding the legal positioning for
your action. Taking uneducated risks will tighten the market for everyone else.
Questions?
Kristen Techel
[email protected]
strikeandtechel.com
Disclaimer: This presentation is provided for educational and informational purposes only and is not intended and should not be construed
as legal advice.