What You Can and Cannot Give: The Tied House Rules Every Licensee Should Know

Tied house laws are a core part of California’s three tier system, and they exist to keep the alcohol market competitive and fair. The main rule is simple. Suppliers cannot give money, gifts, premiums, or any thing of value to retailers in connection with the sale or distribution of alcohol unless the law specifically allows it. Retailers cannot accept these benefits either.

Under Business and Professions Code sections 25500 and 25502, suppliers cannot hold ownership in retail licenses, and they cannot furnish or lend money to retailers. The prohibition extends to anything of value, even if offered indirectly through a third party. While the law includes some exceptions, such as limited advertising activities, joint events, or supplier provided signs, each exception is narrow and must be followed exactly. If it is not clearly authorized, it is prohibited. Cash payments, pay to play arrangements, and slotting fees are never allowed.

Section 25600 creates another important limitation by prohibiting alcoholic beverage licensees from offering premiums, gifts, or free goods linked to alcohol sales. Some exceptions exist, such as certain refunds or contests, but they also come with specific conditions.

In short, suppliers cannot pay retailers, cannot offer anything of value, and cannot influence purchasing or sales decisions through gifts or incentives. Retailers cannot accept them. Only exceptions written directly into law apply, and each must be followed to the letter. Staying within these boundaries protects fair competition, supports responsible sales practices, and ensures the integrity of California’s three tier system.

Should you have any questions about what those exceptions might be, feel free to reach out to us at support@certifiedalcoholtraining.com!