Wholesaler Credit Regulations
Under New Jersey law, if an alcoholic beverage wholesaler establishes credit terms for retailers, those credit terms must be offered equally to the entire retail trade. The only exception to this is if different terms are justified by the financial or credit history of a particular account. These credit terms are required to be filed monthly in the wholesaler’s Current Price List (CPL) with the Division of Alcoholic Beverage Control. If you violated regulations or practice discriminatory credit terms, your wholesaler’s license may face financial penalty, suspension, or possible revocation. For more information on New Jersey wholesaler credit system and the Division of Alcoholic Beverage Control call 732-858-5857. Firm Partner, William C. Fay, IV, is former ABC Deputy Attorney General who can assist any New Jersey Wholesaler with compliance under New Jersey’s Alcoholic Beverage regulatory system.
Wholesaler Credit and Notice of Obligation
While not required, a wholesaler may extend credit to a retailer. However, the wholesaler may only extend credit to a retailer up to a maximum of 30 days. If the wholesaler has not been paid within the established credit period, the wholesaler must issue the retailer a “Notice of Obligation.” This Notice of Obligation must inform the retailer in writing of amount due, the date delinquency occurred and the consequences of non-payment (C.O.D.).
Notice of Delinquency
If still not paid within three (3) more business days, the wholesaler must transmit a “Notice of Delinquency” to all wholesalers of alcoholic beverages in New Jersey and the the retailer. This Notice of Delinquency prevents any New Jersey wholesaler from selling alcoholic beverages to the delinquent retailer on credit terms. This puts the retailer on “C.O.D. Status”. Any wholesaler who violates this provisions and extends the retailer credit terms will be in violation of these regulations and subject to license suspension and civil penalty.
Removal from C.O.D.
Until the delinquency is paid and satisfied, the retailer will remain on C.O.D. However, once satisfied, a Notice of Satisfaction will be issued and transmitted to all other wholesalers within three (3) days thereof. In addition to the sanctions described above, the wholesaler must also charge any interest or penalties that were set forth in its C.P.L. and which appeared in the terms set forth on the invoice for the alcoholic beverages for which payment was not made on time.
How is COD Status Removed?
In most instances, licensees can have their C.O.D. status removed only by paying the amount of the unpaid invoice together with interest and penalties. However, a licensee may be taken off C.O.D. status by the Director if the licensee submits a written petition with notice to all creditor wholesalers in such instances where:
(1) the licensee and wholesalers to whom money is owed have executed among themselves a written repayment plan; or
(2) the license has been the subject of a formal debt liquidation plan pursuant to federal or State insolvency proceedings where notice of the proceedings was given to all the creditor wholesalers or
(3) the licensee has received a transfer of the license from the issuing authority pursuant to a sale approved under
(a) federal or State insolvency proceedings,
(b) State receives HIP action,
(c) New Jersey Division of Taxation seizure of the license or
(d) IRS seizure of the license where the petitioner is not connected to the old licensee who incurred the debts.
In all other instances, the C.O.D. status will follow the license through subsequent person-to-person transfers. See N.J.A.C. 13:2-24.4.
NJ ABC Wholesaler Attorneys
For representation in your ABC matter, call the liquor licensing attorneys at Proetta, Oliver & Fay. We offer our clients industry insight coupled with creative solutions. Call today for your consultation.