Do alcohol-delivery apps (like Drizly) need an Arizona liquor license, and how do delivery and after-hours rules apply when an unlicensed app is the front end?

Plain-English summary

Arizona Department of Liquor Licenses and Control Director John Cocca asked the AG five questions about how Arizona's liquor licensing rules apply to alcohol-delivery apps (Drizly, Saucey, and similar). The business model: an unlicensed entity (the app) takes orders from consumers, contracts with licensed liquor retailers to source the alcohol, and arranges delivery. Sometimes the app's own employees deliver; sometimes the app contracts with a third-party delivery company. Sometimes consumers pay the retailer directly through the app interface; sometimes consumers pay the app, which forwards 100% of the alcohol price to the retailer.

The AG's answers, walking through each question:

Question 1: After-hours order acceptance. A.R.S. § 4-244(15) bans on-sale and off-sale retailers from selling, disposing of, delivering, or giving liquor between 2:00 a.m. and 6:00 a.m. The definition of "sell" in A.R.S. § 4-101(32) includes "soliciting or receiving an order for" liquor. So accepting orders between 2:00 a.m. and 6:00 a.m. is itself a sale, even if the consumer's account is not debited and the alcohol is not delivered until lawful hours. If the app qualifies as an on-sale or off-sale retailer, it violates § 4-244(15) by taking 2:00 a.m. to 6:00 a.m. orders. Separately and more broadly: A.R.S. § 4-244(1) makes it illegal for any person at any time to sell alcohol without a license, except as permitted under A.R.S. § 4-203(J). So the app's after-hours order-taking may be illegal regardless of the time-of-day rule.

Question 2: Multiple parties in one transaction. When different people order, pay for, and receive delivery in a single transaction, the licensee "sells" to all three. The definition of "sell" includes "soliciting or receiving an order for" (the orderer), "directly or indirectly delivering for value" (which the AG read to include receiving payment, since "for value" implies payment), and the actual delivery (the recipient). Each person triggers a separate aspect of the sale.

Question 3: "Reason to question" a buyer's age. A.R.S. § 4-241(A) requires a licensee with "reason to question" a purchaser's age to follow age-verification procedures. Whether an app has reason to question someone it can't see is a fact-intensive question that the AG declined to resolve as a matter of law. The opinion noted that selling to someone the seller cannot see "certainly raises a question," but also noted A.R.S. § 41-193(A)(7) limits AG opinion authority to legal questions, not factual ones.

Question 4: Third-party delivery contractors. A.R.S. § 4-203(J) treats independent contractors of a licensee as the licensee's employees for delivery purposes. But this only works for direct contracts: the delivery service has to be the licensee's independent contractor, not the unlicensed app's. If the unlicensed app contracts with a delivery service, and there is no contract between the licensee and the delivery service, the delivery service is NOT treated as the licensee's employee. The text of § 4-203(J) says "an independent contractor or the employee of an independent contractor"—it doesn't extend to "an independent contractor of an independent contractor." That contraction matters because of the liability allocation in § 4-203(J): the licensee is liable for delivery violations, and the AG was unwilling to extend that liability to subcontractors with no direct relationship to the licensee.

Question 5: Direct vs. indirect payment. It is legally significant who the consumer pays. "Sell" includes receiving payment for liquor. If the unlicensed app receives the consumer's payment, the app is "selling" alcohol regardless of whether it ultimately remits 100% to the licensed retailer. The licensing requirement is not about who profits; it is about who interacts with the consumer in the transaction.

Together, these answers paint a tight box for alcohol-delivery apps in Arizona. To operate cleanly, an app needs to either (a) get its own liquor license (with all that entails) or (b) structure as a pure technology platform where the licensed retailer is the actual seller, the consumer pays the retailer directly, and the delivery is performed by the retailer's own employees or by a delivery service that contracts directly with the retailer. The apps' typical business model (where the app intermediates the order, the payment, and the delivery contract) does not fit cleanly under Arizona law without additional licensing.

Currency note

This opinion was issued in 2018. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Arizona's Title 4 (alcoholic beverages) has been amended multiple times since 2018, and the alcohol-delivery industry has matured significantly. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, threshold, or procedure mentioned here.

Historical context: what the opinion meant in 2018

For alcohol-delivery app companies

The opinion was a serious operational warning. The business model many apps had been running (unlicensed app receives orders and payment, contracts with retailers and delivery services, ships alcohol) was, on the AG's reading, multiple violations of Arizona liquor law. To operate legally, apps had to restructure: either become licensed retailers themselves, or convert to a pure technology layer with the licensee as the actual transactional party.

For licensees partnering with apps

The opinion put licensees on notice that the app's compliance issues could become their own. Under § 4-203(J), the licensee is liable for delivery violations. If a licensee was using an app's delivery service indirectly (no direct contract with the delivery service), the AG's reading meant the delivery service was not the licensee's employee, complicating the licensee's compliance assurance.

For third-party delivery drivers

The opinion clarified an ambiguity in their legal status: a delivery driver working for an app, with no contract with the actual liquor retailer, was not deemed an employee of the retailer for liquor delivery purposes. Practical implication: that driver was operating in a legal gray zone, possibly illegally selling alcohol if the relationship was not restructured.

For Arizona DLC enforcement

The opinion gave DLC a roadmap for enforcement. The five answers identified specific failure modes (unlicensed selling, after-hours order-taking, ambiguous payment routing, indirect delivery contracting) that DLC could focus on. Subsequent enforcement actions could rely on the AG's textual reading of "sell."

For consumers ordering alcohol via apps

Consumers were not the direct subject of the opinion (the licensee, not the consumer, is the regulated party in most of these provisions). But the opinion's tightening of the rules meant the apps consumers used would have to either become more compliant or stop operating in Arizona, with potential service disruption.

Common questions

Q: What does "sell" mean under Arizona liquor law?
A: A.R.S. § 4-101(32) defines "sell" expansively: it "includes soliciting or receiving an order for, keeping or exposing for sale, directly or indirectly delivering for value, peddling, keeping with intent to sell and trafficking in." The use of "includes" makes the definition non-exhaustive, so receiving payment was read into the definition too.

Q: Why does receiving an order between 2:00 a.m. and 6:00 a.m. count as a "sale"?
A: Because the definition of "sell" expressly includes "receiving an order." If you receive an order, you are selling. § 4-244(15) prohibits the sale of liquor between 2:00 a.m. and 6:00 a.m. So receiving an order during those hours is a violation, even if the actual liquor handoff happens later.

Q: What is the difference between on-sale and off-sale retailers?
A: A.R.S. § 4-101(24) defines on-sale retailers (consumed on premises, e.g., bars and restaurants). § 4-101(25) defines off-sale retailers (consumed off premises, e.g., liquor stores, grocery stores with liquor). Both have service-hour restrictions under § 4-244(15).

Q: Could an app operate as a licensed off-sale retailer?
A: In theory yes. If the app obtained its own off-sale license, it could lawfully sell liquor. But that would require complying with all the licensing requirements (premises requirements, taxes, training, audits, etc.), which most apps had been trying to avoid.

Q: Why doesn't the consumer paying the app (instead of the retailer) work, even if the app forwards 100% to the retailer?
A: Because § 4-101(32) defines "sell" by reference to who interacts with the consumer, not who profits. Receiving payment is part of selling. An unlicensed entity that receives consumer payment for liquor is selling liquor without a license, regardless of how it later distributes the funds.

Q: How does the third-party delivery question interact with the licensee's liability?
A: A.R.S. § 4-203(J) says the licensee is "liable for any violation committed in connection with any sale or delivery of spirituous liquor." If the delivery service is the licensee's contractor, that liability flows naturally. But the AG was unwilling to read § 4-203(J) to make the licensee liable for actions of a contractor of a different unlicensed entity, especially where there was no direct contract between the licensee and the delivery service.

Q: What about the "employee" definition in § 4-101(15)?
A: That definition reaches anyone who performs services on licensed premises with the licensee's consent. But § 4-203(J) deals with off-premises delivery, so § 4-101(15) does not directly resolve the third-party delivery question.

Q: Why couldn't the AG answer the underage-purchaser question definitively?
A: A.R.S. § 41-193(A)(7) limits AG opinion authority to "questions of law." Whether someone has "reason to question" a buyer's age in any given transaction is fact-intensive (per Verduzco v. Am. Valet, 240 Ariz. 221 (Ct. App. 2016)) and requires examining the specific circumstances. The AG could not resolve a question that depends on facts not yet in the record.

Background and statutory framework

Arizona's liquor licensing requirement

A.R.S. § 4-244(1) makes it unlawful for any person to "sell or deal in" liquor without a license. § 4-203(B) says licensees may sell only "at the place and in the manner provided in the license." Violation of § 4-244(1) is punishable, and the act of selling without a license is broadly defined.

Off-sale privileges and contracted delivery

A.R.S. § 4-203(J) lets a retail licensee with off-sale privileges deliver liquor off the licensed premises and contract with an independent contractor for that delivery. The independent contractor (and its employees) is "deemed to be an employee of the licensee when making a sale or delivery of spirituous liquor for the licensee." That deeming is a statutory shortcut to make the licensee responsible for the contractor's compliance and to bring the contractor under the licensee's regulatory umbrella.

The licensee is "liable for any violation committed in connection with any sale or delivery of spirituous liquor." § 4-203(J). That liability is the reason the AG read the deeming provision narrowly: extending it to subcontractors of unlicensed entities would massively expand licensee liability beyond what § 4-203(J)'s text supports.

Service-hour restrictions

A.R.S. § 4-244(15) makes it unlawful "[f]or an on-sale or off-sale retailer or an employee of such retailer to sell, dispose of, deliver or give spirituous liquor to a person between the hours of 2:00 a.m. and 6:00 a.m."

Underage purchase verification

A.R.S. § 4-241(A) requires licensees who "question[] or [have] reason to question" whether a purchaser is under legal drinking age to follow specific verification procedures. Whether someone has "reason to question" is generally a fact question. Verduzco v. Am. Valet, 240 Ariz. 221, 225 (Ct. App. 2016); Plowman v. Arizona State Liquor Bd., 152 Ariz. 331, 336 (Ct. App. 1986).

AG opinion authority

A.R.S. § 41-193(A)(7) limits the AG's opinion authority to "questions of law." Fact-intensive questions or questions requiring resolution of disputed facts are outside the AG's opinion jurisdiction. State ex rel. Morrison v. Anway, 87 Ariz. 206 (1960), and Sw. Iron & Steel Indus., Inc. v. State, 123 Ariz. 78 (1979), are cited for related interpretive principles (statutes are not enlarged beyond their express terms; expression of one item implies exclusion of others).

Citations and references

Statutes:
- A.R.S. § 4-101(15) (employee definition)
- A.R.S. § 4-101(24), (25) (on-sale and off-sale retailer)
- A.R.S. § 4-101(32) (sell definition)
- A.R.S. § 4-203(B), (J) (license-restricted sales; off-sale privileges)
- A.R.S. § 4-241(A) (reason to question legal drinking age)
- A.R.S. § 4-244(1) (license required)
- A.R.S. § 4-244(15) (2:00 a.m. to 6:00 a.m. sale ban)
- A.R.S. § 41-193(A)(7) (AG opinion authority)

Cases:
- Bilke v. State, 206 Ariz. 462 (2003) (plain-language interpretation)
- Verduzco v. Am. Valet, 240 Ariz. 221 (Ct. App. 2016) ("reason to know" as fact question)
- Plowman v. Arizona State Liquor Bd., 152 Ariz. 331 (Ct. App. 1986) (factual finding on licensee's age knowledge)
- Sw. Iron & Steel Indus., Inc. v. State, 123 Ariz. 78 (1979) (expression of one implies exclusion of others)
- Se. Ariz. Med. Ctr. v. Ariz. Health Care Cost Containment Sys. Admin., 188 Ariz. 276 (Ct. App. 1996) (independent contractor definition)
- State ex rel. Morrison v. Anway, 87 Ariz. 206 (1960) (no enlarging of statutes beyond express terms)

Source

• Landing page: https://www.azag.gov/opinions/i18-008-r17-016
• Original PDF: https://www.azag.gov/sites/default/files/2025-06/I18-008.pdf

Original opinion text

To:

John Cocca, Director

Arizona Department of Liquor Licenses and Control

Questions Presented

Does an unlicensed mobile device application "sell" spirituous liquor, as that term is defined in Ariz. Rev. Stat. ("A.R.S.") § 4-101(32), in violation of the service hour restrictions in A.R.S. § 4-244(15), when a consumer can visit the application twenty-four hours a day and order alcohol and delivery services, but the consumer's account is not debited and the alcohol is not delivered until lawful service hours?

Assuming that in one transaction, different persons order, pay for, and receive delivery of the alcohol, does a licensee "sell" alcohol, as that term is defined in A.R.S. § 4 101(32), to all three individuals?

Does a business operating a mobile device application have "reason to question" whether someone is under legal drinking age pursuant to A.R.S. § 4-241(A), given that the business cannot see the individual?

Is a delivery service that is an independent contractor of the unlicensed entity that runs a mobile device application treated as an employee of the licensed retailer pursuant to A.R.S. § 4-203(J), even if the delivery service has no contract directly with the licensed retailer?

Is it of any legal import whether a consumer pays the retailer directly or through the unlicensed entity that runs a mobile device application, if the retailer receives one hundred percent of the price of the alcohol?

Summary Answer

To the extent that a mobile device application qualifies as an "on-sale retailer" or an "off-sale retailer," it violates A.R.S. § 4-244(15) when it "sells" spirituous liquor between 2:00 a.m. and 6:00 a.m. by receiving an order during this time, even if it does not debit the consumer account or deliver alcohol during those hours.

Yes. If, in a single alcohol purchase transaction, a business receives an order from, receives payment from, and delivers to different people, the business "sells" alcohol to each of them.

Whether a business has "reason to question" if someone is under legal drinking age pursuant to A.R.S. § 4-241(A) is a factual question that the Attorney General is unable to resolve as a matter of law on the current record.

No. A delivery service which is an independent contractor of an unlicensed entity, but which has no contractual relationship with a licensed retailer, is not treated as an employee of a licensed retailer with off-sale privileges under A.R.S. § 4-203(J).

Yes. It is legally significant whether a consumer pays a retailer directly or pays an unlicensed entity for spirituous liquor—even if the retailer ultimately receives one hundred percent of the sell price.

Background

As described in the request for this opinion,[1] certain businesses, without a liquor license, operate websites or mobile device applications through which a consumer can purchase alcohol ("Unlicensed Entities"). Licensed retailers then supply the alcohol available for purchase through the Unlicensed Entities. In some instances, the Unlicensed Entity itself provides the delivery service from the licensed retailer's establishment to the consumer's home. In other instances, the Unlicensed Entity contracts with a third-party service to deliver the alcohol ordered.

The method of purchase also varies. Sometimes a consumer's payment for the alcohol purchase goes directly to the licensed retailer and the Unlicensed Entity charges and collects a separate delivery charge. Other times the consumer pays both the cost of the alcohol and the delivery charge to the Unlicensed Entity. The Unlicensed Entity then remits one hundred percent of the price of the alcohol to the licensed retailer.

None of the Unlicensed Entities at issue store alcohol for retailers or keep it in their possession longer than necessary for delivery. The Unlicensed Entities also deliver alcohol only between the lawful service hours of 6:00 a.m. to 2:00 a.m. The Unlicensed Entity may, however, remain live and accept orders twenty-four hours a day. Some Unlicensed Entities debit consumer accounts when they receive the order, regardless of the time of day. Other Unlicensed Entities collect payment information at the time of the order, but only debit consumer accounts during lawful service hours.

Analysis

Principles of statutory interpretation guide the analysis into spirituous liquor licensing requirements. The first place to look is the language of the statute itself. Bilke v. State, 206 Ariz. 462, 464 ¶ 11 (2003). The plain language of a statute must be applied "without resorting to other methods of statutory interpretation, unless application of the plain meaning would lead to impossible or absurd results." Id. (quotes and citation omitted).

Arizona Revised Statute § 4-244(1) makes it unlawful for a person to "sell or deal in" spirituous liquors without a license. The term "sell" is defined to "include[] soliciting or receiving an order for, keeping or exposing for sale, directly or indirectly delivering for value, peddling, keeping with intent to sell and trafficking in." A.R.S. § 4-101(32).

Generally, Arizona law permits licensees to "sell or deal in spirituous liquors only at the place and in the manner provided in the license." A.R.S. § 4-203(B). But, if a retail licensee has "off-sale privileges," then the licensee can "deliver spirituous liquor off of the licensed premises in connection with the sale of spirituous liquor." A.R.S. § 4-203(J). A licensee with off-sale privileges can deliver the spirituous liquor itself or it can contract with an independent contractor to make the delivery. Id. If the licensee contracts with a third-party to make deliveries, the independent contractor (including its employees) "is deemed to be an employee of the licensee when making a sale or delivery of spirituous liquor for the licensee." Id. Regardless of whether a licensee maintains its own delivery service or contracts with an independent contractor, the licensee is "liable for any violation committed in connection with any sale or delivery of spirituous liquor." Id.

Licensees must comply with numerous regulations and may face discipline for noncompliance. For example, A.R.S. § 4-244(15) makes it unlawful for a retailer or its employees to "sell, dispose of, deliver, or give spirituous liquor" between 2:00 a.m. and 6:00 a.m. As another example, A.R.S. § 4-241(A) requires a licensee to follow certain procedures when it "has reason to question" that a person ordering, purchasing, or attempting to purchase spirituous liquor is under the legal drinking age.

I. Question #1: Does an Unlicensed Entity "sell" spirituous liquor, as that term is defined in A.R.S. § 4-101(32), in violation of the service hour restrictions in A.R.S. § 4-244(15), when a consumer can visit the entity's website or application twenty-four hours a day and order alcohol and delivery services, but the consumer's account is not debited and the alcohol is not delivered until lawful service hours?

Arizona Revised Statute § 4-244(15) makes it unlawful "[f]or an on-sale or off-sale retailer or an employee of such retailer to sell, dispose of, deliver or give spirituous liquor to a person between the hours of 2:00 a.m. and 6:00 a.m." The critical issue presented by this question is whether a business "sells" alcohol by "receiving an order." A.R.S. § 4-101(32) expressly answers this question.

Under A.R.S. § 4-101(32), the definition of "sell" not only includes "directly or indirectly delivering for value," it also expressly includes "soliciting or receiving an order." Nothing in the phrase "soliciting or receiving an order" requires that the licensee simultaneously debit a consumer's account to fall within the broad definition of "sell" in A.R.S. § 4-101(32). Thus, a business (whether licensed or unlicensed) "sells" spirituous liquor as defined under A.R.S. § 4-101(32) when it receives an order for spirituous liquor—even if the business does not debit a consumer's account or deliver the alcohol at that time. As such, assuming that the Unlicensed Entity qualifies as an "on-sale retailer" or an "off-sale retailer," see A.R.S. § 4-101(24)–(25), it violates A.R.S. § 4-244(15) by receiving orders for spirituous liquor between 2:00 a.m. and 6:00 a.m. In any event, whether or not A.R.S. § 4-244(15) applies, A.R.S. § 4 244(1) makes it illegal at any time, for any person, to sell alcohol without a license, except as permitted under A.R.S. § 4-203(J).

II. Question #2: Assuming that in one transaction, different persons order, pay for, and receive delivery of the alcohol, does a licensee "sell" alcohol, as that term is defined in A.R.S. § 4-101(32), to all three individuals?

A business "sells" alcohol when its conduct falls within the definition of A.R.S. § 4 101(32). This definition "includes" a broad range of activities rather than a single culminating transactional event. As such, a business may "sell" to different people in a single transaction.

The statute expressly answers two parts of the question. The term "sell" expressly includes a business's conduct in "receiving an order for" and "delivering" spirituous liquor. A.R.S. § 4-101(32) ("sell" includes "receiving an order" and "delivering for value").

The statute, however, does not expressly include "receiving payment" within the definition of "sell." A.R.S. § 4-101(32). This omission is not dispositive of the question asked. The definition of "sell" does not purport to be exhaustive. Id. (stating that the definition of sell "includes soliciting or receiving an order for, keeping or exposing for sale, directly or indirectly delivering for value, peddling, keeping with intent to sell and trafficking in") (emphasis added). Although the definition in A.R.S. § 4-101(32) does not expressly mention "receiving payment for" alcohol, receiving a method of payment is implicitly included within the statutory phrase "delivering for value." A.R.S. § 4-101(32) (emphasis added). Further, receiving payment is a normal part of "receiving an order." See also Webster's Third New International Dictionary 2061 (1993) (defining "sell" as "to give up (property) to another for money or other valuable consideration") (emphasis added). Thus, the definition of "sell" in A.R.S. § 4-101(32) also encompasses "receiving payment for" spirituous liquor.

Accordingly, if in one transaction, a business receives an order from, receives payment from, and delivers to different people, the business "sells" alcohol to all three individuals.

III. Question #3: Does a business have "reason to question" whether someone is under legal drinking age pursuant to A.R.S. § 4-241(A), if the business cannot see the individual?

A.R.S. § 4-241 provides that if a seller "questions or has reason to question" whether a purchaser of alcohol is under the legal drinking age, the seller must follow certain procedures. Whether a person has "reason to question" something is generally a fact question. See Verduzco v. Am. Valet, 240 Ariz. 221, 225, ¶¶ 11–12 (Ct. App. 2016) ("Whether a person has 'reason to know' something is a fact question . . . ."); Plowman v. Arizona State Liquor Bd., 152 Ariz. 331, 336 (Ct. App. 1986) (court bound by factual finding about whether licensee should have known person was under legal drinking age).

If a business operating a website or mobile application sells alcohol to someone the business cannot see, it certainly raises a question under A.R.S. § 4-241(A). Nevertheless, the Attorney General's authority to issue opinions is generally limited to questions of law. A.R.S. § 41-193(A)(7) (department of law shall, "[u]pon demand by the legislature, or either house or any member thereof, any public officer of the state or a county attorney, render a written opinion upon any question of law relating to their offices") (emphasis added). Here, the limited factual record, as well as the inherently factual nature of the inquiry, preclude the Attorney General from offering an opinion about whether a business has "reason to question" the legal drinking age of a purchaser anytime that the purchaser is not physically present.

IV. Question #4: Is a delivery service that is an independent contractor of the unlicensed entity that runs a mobile device application treated as an employee of the licensed retailer pursuant to A.R.S. § 4-203(J), even though the delivery service has no contract directly with the licensed retailer?

A delivery service that is an independent contractor of an Unlicensed Entity, but that has no contractual relationship with a licensed retailer, is not treated as an employee of a licensed retailer with off-sale privileges under A.R.S. § 4-203(J).[2] This section provides in part: "For purposes of this subsection, an independent contractor or the employee of an independent contractor is deemed to be an employee of the licensee when making a sale or delivery of spirituous liquor for the licensee." To qualify as an employee of the licensee under this sentence, a third-party delivery service must be an independent contractor of the licensee. This is evident from the language requiring the sale or delivery to be made "for the licensee"—rather than "for" some other business or person.

Consistently, A.R.S. § 4-203(J) treats only "an independent contractor or the employee of an independent contractor" as an employee of the licensee. (Emphasis added). It does not go one step further and state that any independent contractor of an independent contractor is also treated as an employee of the licensee.[3] See Sw. Iron & Steel Indus., Inc. v. State, 123 Ariz. 78, 79 (1979) ("[T]he expression of one or more items of a class and the exclusion of other items of the same class implies the legislative intent to exclude those items not so included."). Further, it is contrary to the plain meaning of A.R.S. § 4-203(J) to find that a third-party is an independent contractor of a licensee when the licensee has no contractual relationship with the third-party. Some kind of contractual relationship is inherent in the meaning of the term "independent contractor," which is defined as one "'who contracts with another to do something for [the other] but who is not controlled by the other nor subject to the other's right to control with respect to [the] physical conduct in the performance of the undertaking.'" Se. Ariz. Med. Ctr. v. Ariz. Health Care Cost Containment Sys. Admin., 188 Ariz. 276, 282 (Ct. App. 1996) (quoting Restatement (Second) of Agency § 2(3) (1958) (alterations in original)).

Finally, licensees are liable under A.R.S. § 4-203(J) for violations of their employees. To find, contrary to the language of the statute, that a delivery service is an employee of a licensed retailer even when the delivery service has no contractual relationship with the licensed retailer could improperly expand the scope of the licensed retailer's liabilities. See State ex rel. Morrison v. Anway, 87 Ariz. 206, 209 (1960) (courts "will not enlarge, stretch, expand, or extend a statute to matters not falling within its express provisions"). Further, A.R.S. § 4-203(J) is an exception to the general rule in A.R.S. § 4-244(1) prohibiting persons without a license from selling or dealing in spirituous liquors. Treating all subcontractors (no matter how remote the relationship) as an "employee" of licensees could improperly expand the scope of those exempted from regulation under Arizona's liquor licensing laws, potentially allowing the narrow exception in A.R.S. § 4-203(J) to swallow the general rule.

V. Question #5: Is it of any legal import whether a consumer pays the retailer directly or through the unlicensed entity that runs the app, if the retailer receives one hundred percent of the price of the alcohol?

It is legally significant who a consumer pays for spirituous liquor. As set forth in response to Question 2 above, "selling" includes receiving payment for spirituous liquor. To be authorized to "sell" liquor—and therefore, to receive payment for liquor—an entity must be properly licensed or fall within the exception in A.R.S. § 4-203(J). Arizona law contains no additional provision allowing an entity to "sell" liquor without a license as long as it distributes one hundred percent of the proceeds to the licensee. The term "sell" is defined in A.R.S. § 4 101(32) by how a business interacts with the consumer, not by which business profits from the transaction.

Conclusion

A.R.S. § 4-244(1) makes it unlawful for a person to "sell or deal in" spirituous liquors without a license. This law requires all businesses that sell spirituous liquor, including those operating websites and/or mobile device applications, to be properly licensed, except as provided in A.R.S. § 4-203(J).

Mark Brnovich

Attorney General

[1] The facts described herein are derived from the opinion request.

[2] This opinion assumes that the independent contractor of the Unlicensed Entity does not otherwise qualify as an employee of either (1) the licensee or (2) the licensee's independent contractor. This opinion also does not address the factual question about when a person is an employee rather than an independent contractor.

[3] "[U]nless the context otherwise requires," A.R.S. § 4-101(15) defines "employee" to mean "any person who performs any service on licensed premises on a full-time, part-time or contract basis with consent of the licensee, whether or not the person is denominated an employee, independent contractor or otherwise." (Emphasis added). This definition does not make an independent contractor of an independent contractor an employee of a licensee for purposes of A.R.S. § 4-203(J). By its terms, A.R.S. § 4-203(J) applies to the delivery of "spirituous liquor off of the licensed premises," (emphasis added), making the definition of employee under A.R.S. § 4-101(15) inapplicable to the extent the independent contractor of an independent contractor performs services off the licensed premises or without the consent of the licensee. Further showing that the use of "employee" in A.R.S. § 4-203(J) is context specific, A.R.S. § 4 203(J) expressly delineates "[f]or the purposes of this subsection" when someone "is deemed to be an employee of the licensee."