Driven by the wellness movement and health-conscious consumers, non-alcoholic wine, beer, and spirits have been some of the fastest-growing categories on Drizly over the past two years and are poised to dominate beverage alcohol trends 2022.

Now more than ever, retailers should be looking to stock non-alcoholic products on their shelves, but before they do, there are several legalities to consider — and unfortunately, not every retailer will be allowed to take advantage of the category’s momentum. 

To help alcohol retailers navigate these uncharted waters, BevAlc Insights spoke with Jaci Flug, Drizly’s general counsel and SVP of industry affairs, about what retailers should consider before going all-in on non-alcoholic products, including CBD-infused beverages. 

Know the Laws in Your State

It might seem like a no-brainer that alcohol retailers can also carry non-alcoholic beer, wine, and spirits, but just like with alcohol delivery, the laws surrounding the sale of non-alcoholic beverages vary across state lines. 

“From a legal perspective, it’s just regulated totally differently. Once you make a non-alcoholic product, legally, they’re sold as you’d sell soda or anything else. It’s no longer in the world of alcoholic products,” says Flug. “So it depends on where you are.”

In California, for instance, the restrictions on alcohol retailers are looser, and carrying non-alcoholic beverages is fine. But in New York, it’s much more complicated. “The licensing structure in New York is very specific about what a liquor store can sell. It’s limited to spirits and wine, and things like corkscrews and education materials. There’s a lot of politics that go into this stuff,” says Flug, pointing to an ongoing battle in New York between liquor stores and supermarkets about what types of products each can carry (even gift bags have been a point of contention). 

As it stands, New York liquor stores can’t sell beer, sodas, or cocktail mixers, which means non-alcoholic wine, beer, and spirits aren’t allowed either. All of that goes to the supermarkets. 

But of course, there are potential loopholes, making the sale of non-alcoholic beverages all the more complicated. Some non-alcoholic products still contain a very small percentage of alcohol — up to 0.5% ABV — which technically, makes them alcoholic products. 

The line can easily get blurred, so ultimately, Flug urges alcohol retailers to closely check into their state laws before stocking up on non-alcoholic products. If the category truly begins to boom, it may even prompt states to change or update their legal language to clarify where these products can be legally sold. 

That Goes for CBD Beverages, Too

One growing subcategory in the non-alcoholic beverage space is CBD-infused beverages, but only a handful of states (like California) will currently allow the manufacturing and selling of these products. CBD products have not yet been approved by the FDA, so Flug warns retailers to be extra mindful of state laws when it comes to non-alcoholic CBD beverages. 

“CBD still comes from the cannabis plant and they haven’t done studies yet to say it’s safe for human consumption,” she says, but since states have been regulating cannabis individually, retailers in legalized states can seek a special license to sell beverages containing CBD — that is, if they’re also legally allowed to sell non-alcoholic products. 

Choose Your Delivery Partner Wisely

Delivery can add another layer of complexity to the sale of non-alcoholic products, and Flug cautions retailers to not only ensure they’re partnering with a reputable delivery platform, like Drizly, but to also do their own research. 

“There are so many entities popping up doing e-commerce, and retailers need to make sure they’re doing it appropriately. Their licenses are on the line,” she says, explaining that not all e-commerce platforms, which operate as a third party, are doing their due diligence to be compliant with ever-evolving state laws. 

For example, these platforms could theoretically assist retailers with the delivery of non-alcoholic products, even if it’s not actually legal for them to do so in their state. If caught, the retailer will be held responsible and could lose their license. A similar issue could arise when it comes to following state laws for identification upon delivery and the processing of payments. 

“Delivery of alcohol is becoming more commonplace and more frequent, but people still need to remember that it’s not the same as delivering a gallon of milk,” says Flug. “Retailers need to know that [platforms] don’t all do it the same. They need to be careful in what they’re doing and who they’re working with.”