ADMINISTRATIVE PROCEDURE

Purchase and Handling of Alcoholic Beverages at Licensed Venues

These requirements and procedures apply to the purchase and handling of distilled spirits (hard liquor), wine, beer and malt beverages (together, "alcoholic beverages").

Overall Requirements

Buyer's Card

Each Licensed Venue will be issued a Retailer's ID Card (Buyer's Card) for the wholesale purchase of alcoholic beverages to be sold at the designated location.

The Buyer's Card expires one year after the date of issuance and will automatically be re-issued upon the renewal of the liquor license for the Licensed Venue.

The Minnesota Commissioner of Public Safety has the authority to revoke a Buyer's Card if there is evidence of a violation by a Licensed Venue.

Purchase from Licensed Wholesaler

Licensed Venues must purchase alcoholic beverages for resale from a manufacturer, brewer or wholesaler duly licensed in Minnesota.

Wholesaler Duties and Restrictions

University Licensed Venues must not accept discounts from wholesalers. A wholesaler is prohibited from offering or granting "discounts, rebates, free goods, allowances, or other concessions in wholesale prices unless the same terms are offered uniformly to each retailer in the wholesaler's or manufacturer's trade territory."

Joint Purchases of Wine and Distilled Spirits; Limit on Quantity Discounts

Two or more Licensed Venues can make joint purchases in order to take advantage of volume discounts. However, wine may not be offered in original or assorted cases with distilled spirits or vice versa, and any quantity discount may not exceed 300 bottles of quarts or smaller bottles, or exceed 25 cases.

Retention of Records

The Licensed Venues must maintain records in accordance with University Policy: Retention of University Records and the University Wide Records Retention Schedule. Licensed Venues must keep in their licensed premises for a period of three and one-half years the records and invoices of all purchases and sales of two cases or more of alcoholic beverages. The invoices must state the date, name of wholesaler, the quantity, the brand name, size of containers, and price.

Retail Resale Prohibited

A Licensed Venue is not permitted to sell alcoholic beverages to any person for the purpose of resale.

Storage of Alcoholic Beverages

A Licensed Venue may not store excess stock of alcoholic beverages for a specific venue in places other than that specific Licensed Venue.

Neither the University nor the Food and Beverage (F&B) Vendor may store alcoholic beverages in a centralized location. All alcoholic beverages ordered for a Licensed Venue must be stored on the premises of that Licensed Venue.

Payment Deadlines for Alcoholic Beverages

Payment for beer must be received by vendor on the day of delivery. Payment can be made by either a pre-established imprest account or a pre-established Electronic Funds Transfer (EFT) account.

Payment for wine and spirits must be received by vendor within 30 days of delivery. Wine and spirits may be paid by EFT or accounts payable.

Procedures

Establishing Account Numbers
  1. Prior to placing orders or making payment, each Licensed Venue must establish account(s) with wholesalers for the specific purchase of alcoholic beverages.
  2. Purchasing beer requires payment to be received by the vendor on the day of delivery. A Licensed Venue may elect to either:
    1. Establish imprest or prepaid accounts with beer wholesalers for debit from the prepaid account upon delivery. (see Prepaid Account Example at the end of this procedure)
      1. The prepaid account agreement must indicate that the wholesaler will notify the Licensed Venue Designated Representative when the prepaid account needs replenishment.
      2. The initial payment to the distributor for the prepaid account must be made using account 130102 (other prepaids) with the Licensed Venue's fund, DeptID and program.
    2. Set up an EFT process. (See EFT example at the end of this procedure)
  3. Wine and spirits may be paid by EFT or accounts payable
  4. Each Licensed Venue is responsible for its own accounts payable.
  5. Licensed Venues will be responsible for the process of ordering products, arranging for delivery, maintaining financial records, payment of invoices and payment of state and local sales taxes as well as the liquor gross receipts tax. Liquor gross receipts tax is due to the State of MN by the 20th day of the following month.
Ordering and Payment Methods for Alcoholic Beverages
  1. The Licensed Venue will determine the type and quantity needed, and place an order for alcohol or will work with the appropriate F&B Vendor to place the order.
  2. Each order must include the name of the Licensed Venue, the delivery date, the appropriate account number, the location for delivery, the name of the event for which the liquor is being ordered, and the name of the person placing the order.
    1. Wine or Spirits: Upon taking delivery of an order for wine or spirits, F&B Vendor will submit the invoice to the Licensed Venue Designated Representative who will pay the Licensed Wholesaler according to University accounts payable regulations.
    2. Beer: Upon taking delivery of an order for beer, F&B Vendor will submit the delivery ticket to the Licensed Venue Designated Representative who will apply the appropriate payment method to ensure that the beer wholesaler receives payment on the day of delivery.
  3. The orders must be made for the accounts of the specific Licensed Venue. Licensed Venues cannot "swap" items of different orders. For example, if the Arboretum orders twenty cases of wine and needs only 18, the Arboretum must take delivery of the 20 cases. Neither the F&B Vendor nor the Arboretum can decide that the two extra cases can be given or sold to Northrop, even if Northrop is short on wine. In most cases, the Arboretum could return the extra cases of wine to the distributor for credit.
Alcohol Receiving and Storage

Each Licensed Venue must follow pre-established delivery and receiving and security protocol.

  1. The distributer must deliver the alcohol to the designated Licensed Venue for which the order was placed.
  2. A designated University or agency employee of at least 21 years of age (receiver) must receive the alcohol. This assigned individual must accompany and admit the alcohol delivery person to each of the delivery locations within the Licensed Venue.
  3. All alcoholic beverages ordered for/by a Licensed Venue must be stored on the premises of that Licensed Venue.
  4. The distributor must provide an invoice (or delivery ticket in the case of beer) upon delivery.
  5. The receiver must verify the product delivery and/or credit by signing the invoice(s)/delivery ticket(s). Signed invoices/delivery tickets must be given to the Licensed Venue Designated Representative.
  6. The receiver must re-secure the location once the delivery has been completed.
  7. After the fact, the Licensed Venue Designated Representative will, when applicable, differentiate those products purchased for service by a party other than the F&B Vendor.
  8. Those products for service by a party other than the F&B Vendor agency employee or a University employee must be stored and secured in a place other than the F&B Vendor's secure storage area. If products are served by the University, but not resold, use tax must be remitted by the Licensed Venue Designated Representative equal to the sales tax and liquor gross receipts tax.
  9. University procured alcohol may only be accessed or served by either the F&B Vendor or by designated University employees.
Accounting and Commissions for Alcohol for Resale

Each Licensed Venue must follow established accounting procedures.

  1. The F&B Vendor will collect all sales proceeds from the sale of alcohol.
  2. The F&B Vendor will remit to the Licensed Venue Designated Representative, through University Contract Administration, from the sales proceeds:
    • the cost of alcoholic goods sold, which will be calculated based upon empty, missing, or fully consumed containers (each bottle of beer or wine, once opened, is considered consumed);
    • the requisite sales tax and liquor gross receipts tax component of gross alcohol sales; and
    • the negotiated commission rate for net alcohol sales.
  3. The F&B Vendor, as an agency employee, will record a running inventory of unused product in each Licensed Venue. Inventory must be done a minimum of every other week, and will be made available to University Contract Administration or Designated Representative upon request. The beginning inventory will be of purchases made with the Buyer's card, and will not contain old stock purchased or stored before this policy goes into effect.
  4. Excess inventory will be stored in a secure location in each Licensed Venue, with access given by the Designated Representative to a limited number of approved personnel. Licensed Venues must document the processes for approval of personnel with access to the secured location.
  5. University Contract Administration or Designated Representative must deposit payments of commissions, sales and liquor gross receipts tax proceeds, and product reimbursement received from the F&B Vendor into the appropriate enterprise financial system account on a monthly basis by the 15th day of the following month.
  6. Each Licensed Venue Designated Representative is responsible for the payment of collected sales and liquor gross receipts tax to the State of Minnesota by the 20th day of the following month.
  7. Each Licensed Venue Designated Representative is responsible for the payment of any delivery or shipping charges.
  8. Payments on wholesaler invoices must come directly from University funds, not from the F&B Vendor's funds.
    1. Beer purchases paid using a prepaid or imprest account will utilize the following steps. (See also Prepaid Example at the end of this document)
      1. To apply the monthly invoices to the prepaid account balance the department would need to process a general ledger journal entry to debit the alcohol expense (720702) and credit the asset account for the amount applied.
      2. A payment to the distributor would then be made using the asset account (130102) to replenish the prepaid account.
  9. Alcohol purchases for units licensed for resale must be recorded to the appropriate Fund. The Fund is determined based on the alcohol use. Units licensed for alcohol resale may use Fund 1026 or Fund 1100, depending upon the Unit. Accounting Services will determine the correct Fund to be used for the Licensed Venue. This applies to alcohol purchases for resale only.
  10. Alcohol purchased that is to be provided at University events (no sales) should record purchases to non-sponsored private funds as per Administrative Policy: Hospitality and Other Special Expenses. The Licensed Venue Designated Representative is responsible for remitting use tax equal to the sales tax and liquor gross receipts tax on the alcohol served but not resold.
Authorized Use of Buyer's Card

The F&B Vendor's role in the ordering of alcoholic beverages for each Licensed Venue will be decided by University Contract Administration and the manager/operator of the Licensed Venue. If the Licensed Venue delegates the ordering responsibility to the F&B Vendor, the following must be strictly adhered to:

  • Each Licensed Venue must assign a University of Minnesota employee to be the Designated Representative for the Licensed Venue. This employee will be the Licensed Venue point of contact for the F&B Vendor when policy, procedure, accounting, authorization or other alcohol related issues need to be resolved for that Licensed Venue.
  • The F&B Vendor must submit in writing to University Contract Administration and each Licensed Venue Designated Representative, the names of no more than 3 of its employees who will be authorized to order alcohol using the Licensed Venue's Buyer's Card. This list of names will be updated annually, or whenever the employment status of the F&B Vendor employees changes. All agency employees must abide by the University's Code of Ethics for Departmental Purchases.
  • The authorized F&B Vendor employee(s) must be familiar with and strictly adhere to the University's established "Guidelines and Procedures for the Purchase of Alcoholic Beverages".
  • The Buyer's Card number and related enterprise financial system account numbers must not be shared, disseminated, or given to any unauthorized party.
  • The authorized F&B vendor employee(s) will not be unduly restricted by the University in the purchase of alcoholic beverages using the Buyer's Card if it is in the legitimate pursuit of the F&B Vendor's role as University vendor.
Definitions for this Procedure
  • Net sales are all sales revenues resulting from alcohol sales less sales tax and liquor gross receipts tax.
  • Gross sales are all sales revenues resulting from alcohol sales including sales tax and liquor gross receipts tax.
  • Designated Representative is a University of Minnesota point of contact at each Licensed Venue who has the positional authority, and working knowledge of the Administrative Policy: Alcoholic Beverage Sales and Service and Liquor License and associated procedures. This employee is responsible to resolve issues of policy, procedure, accounting, tax remittance, purchase authorization or other alcohol related issues for that Licensed Venue. This person is also charged with the responsibility of assuring all policies and procedures related to alcohol at a Licensed Venue are being followed.
  • Receiver is a University employee, or agency employee, 21 years of age or older, responsible for the verifying the accuracy and count, accepting, storing, and securing of alcohol products delivered by the Licensed Wholesaler. The receiver is also responsible for signing the invoice/delivery ticket, and delivering the signed invoice/delivery ticket to the Designated Representative or approved designee.
  • F&B Vendor a Management Company under contract to the University to operate food and beverages. F&B Vendors are contracted following normal University purchasing contract processes through University Contract Administration and University Purchasing Services. (On the Twin Cities campus athletic venues and Arboretum this will be ARAMARK during the term of their contract with the University.)

Prepaid Account Example

Initial Setup

Check is cut to the vendor.

Check should be enough to cover one month's purchases.

Debit Credit
Prepaids
13102
Accounts Payable
200100
Vendor delivers product

Relieve the prepaid account and recognize the expense by journal entry.

Debit Credit
Alcohol Exp
720702
Prepaids
130102
Monthly Replenishment

Replenish the prepaid account to its original level by cutting a check to vendor for the amount of the beer invoices submitted that month.

Accounting Services prefers this to be only once a month; the Designated Representative must ensure there are sufficient funds in the account to carry through the month.

Debit Credit
Prepaids
130102
Accounts Payable
200100

EFT Example

Initial Setup

Contact disbursement services to set up an EFT with the vendor.

Set up departmental processes to ensure vendor receives payment in accordance with deadlines described in Overall Requirements.

Vendor delivers product

Voucher is processed. Debit Account 720702 (Alcohol Exp).

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