DEPARTMENT OF REVENUE
Division of Liquor Enforcement
LIQUOR CODE
1 CCR 203-2

Regulation 47-323.  LAWFUL EXTENSION OF CREDIT
A. Definitions: For purposes of this regulation, the following definitions are applicable:
	1. “Supplying licensee” means those persons authorized pursuant to articles 46 and 47 of title 12 	to sell fermented malt beverage, malt liquor, vinous liquor, and spirituous liquors to 	licensed retailers.  
	2. “Retailer” means those persons licensed pursuant to 12-47-401(1)(h) – (t), C.R.S. and 12-46-	104(1)(c), C.R.S. to sell alcohol beverages to the end consumer. 
	3. “Cash” means United States currency.
	4. “Cash equivalent” means a financial transaction or negotiable instrument other than cash, 	including: bank drafts (business or personal check, cashier’s check, certified check) 	money order, any other type of completed electronic funds transfer, or a supplying 	licensee’s lawfully-issued credit to a retailer’s account. Nothing in this regulation shall 	require a supplying licensee to make available all of the aforementioned types of cash 	equivalent. 
	5.  “Alcohol beverage purchase” means the date upon which the alcohol beverage is delivered to 	the retailer and the retailer takes possession.
B. Transaction Requirements and Restrictions:
	1. Regarding retailers’ alcohol beverage purchases on credit, supplying licensees are prohibited 	from extending credit to any retailer for a period in excess of thirty (30) days. 
	2. A supplying licensee’s delivery of alcohol beverages to a retailer must be accompanied by a 	sales invoice that shows the name of the retailer, the place of delivery (address of the 	licensed location), the invoice date, the date of delivery, a full description of the alcohol 	beverages delivered and accepted, a full description of any items on backorder to be 	delivered on a different date, and the price and terms of sale.  
3. If there are discrepancies between the product described in the original sales invoice and the actual delivery, handwritten amendments shall be made to the invoice to reflect any corrections and shall be initialed by an authorized representative of the retailer or supplying licensee.  Invoiced product that will be delivered on another date must be re-invoiced by the supplying licensee to reflect the date upon which the actual delivery took place.
	4. Where there is lawful ownership of multiple, separately-licensed retail locations, each location 	must be considered separate and distinct with respect to alcohol beverage purchases.  	Therefore, a supplying licensee shall consider each location as separate and distinct for 	the purpose of extending credit.  For retailers holding a resort complex class of hotel and 	restaurant license, all areas within the resort complex must be considered as a single 	location for the purpose of extending credit. 
C.  Calculation of Lawful Credit Period:
	1. The lawful credit period is thirty (30) calendar days. 
	2. For the purpose of determining compliance with this regulation, the lawful credit period shall 	commence upon the alcohol beverage purchase and conclude upon full legal discharge 	from all indebtedness arising from the sales transaction related to the delivery, except as 	otherwise provided in paragraph G of this regulation. 
	3. If the final day of the lawful credit period falls on a Saturday, Sunday, or legal holiday, the final 	day shall be the next business day.
	4. For the purpose of calculating the lawful credit period only, a retailer’s acceptance of an alcohol 	beverage delivery and sales invoice verifying the delivery is a per se acceptance of the 	delivery and sales terms.
	5. Errors and refusals of delivered product must be noted on either licensee’s copy of the sales 	invoice by an authorized representative of either licensee. 
D. Required Payment During Lawful Credit Period:
	1. A retailer’s payment on a supplying licensee’s credit sale shall be recognized as the earlier of:  
	a. The date the payment is deposited by the supplying licensee, or 
	b. The date the transaction is recorded in the licensee’s accounting records, or 
	c. The date the supplying licensee or its authorized representative receives the retailer’s 	payment in person, or
	d. The date a retailer can reasonably verify, through its own books and records, tender of 	payment to a supplying licensee. In order to ensure compliance with this 	regulation, retailers must make available to the supplying licensee, upon their 	request, those records that verify the date of tender. 
	2. The following shall not be considered a lawful discharge of indebtedness for the purpose of 	advancing any additional credit to a retailer:
a. Business or personal checks that are returned to the supplying licensee as unpaid if replacement funds are not tendered within the lawful credit period.
b. Dispute claims filed by a retailer to a credit card provider for credit card advances it had previously authorized for product delivery, except as otherwise provided in paragraph G of this regulation.
c. A compromise of indebtedness between supplying licensee and retailer that is commercially unreasonable.
d. An assignment of a supplying licensee’s accounts receivable for third party collection, when the discharge of indebtedness is dependent upon collection from the retailer.
e. The supplying licensee’s temporary credit to a retailer’s account, thereby providing the appearance that a retailer is eligible for additional credit.
E. Indebtedness Beyond the Lawful Credit Period:
	1. Any supplying licensee that has not received full payment on a sales invoice on or before the 	conclusion of the 30 day credit period, as calculated pursuant to paragraph D of this 	regulation, has not engaged in a per se violation of this regulation, but is prohibited from 	extending additional credit to the indebted retailer.
2. A supplying licensee shall not advance any additional credit to the indebted retailer until the past due indebtedness is fully discharged. 
	3. A supplying licensee may continue to sell alcohol beverage products to the indebted retailer 	only if cash or cash equivalent is provided at the time of each additional delivery. 
	4. A supplying licensee’s normal and customary business practice related to the assessment of 	finance charges on credit balances that exceed 30 days is not a per se violation of this 	regulation.
F. Record Keeping Requirements for Supplying Licensees:
	1. Pursuant to 12-47-701, C.R.S. licensees shall keep and maintain business records necessary 	to fully show the business transactions of such licensee. The following additional 	minimum requirements shall be met in order to demonstrate compliance with this 	regulation. 
	a. Before a supplying licensee extends credit to a retailer, it shall review the credit status 	of the retailer’s account to determine whether any unpaid balance remains on a 	credit sale that is beyond the lawful credit period for such sale. The supplying 	licensee shall develop a procedure that documents this credit verification 	process, and shall be obligated to demonstrate compliance upon any review by 	the state licensing authority. 
	b. The supplying licensee shall maintain sufficient records that verify the commencement 	of the lawful credit period. 
	c. A supplying licensee that extends credit to retailers shall develop a method of verifying 	and documenting the date(s) of payment, and the final discharge of indebtedness 	of each sales invoice if it recognizes a payment date sooner than the date of its 	final accounting entry. This may include the retention of postmarked envelopes, 	hand written receipt ledgers, hand written acknowledgement of receipt on the 	supplying licensee’s copy of a sales invoice, or other accounting records 	developed by the supplying licensee.  
		d. A supplying licensee that extends credit to retailers shall keep a record of those 			retailers that did not discharge indebtedness within the lawful credit period, and 			evidence that subsequent sales were cash or cash equivalent on delivery until 			the indebtedness was discharged. 
2. A retailer’s records may supplement the supplying licensee’s records in determining compliance with record keeping requirements, but shall not mitigate a supplying licensee’s lack of compliance.
G. Dispute Resolution: The purpose of this section shall be solely for the purpose of determining if a supplying licensee may continue to extend credit to a retailer when transaction amounts in dispute cannot be resolved within the lawful credit period.  Nothing herein shall restrict the licensees from exercising their contractual rights in civil disputes.
	1. If there is a good faith dispute by a retailer as to the validity or reasonableness of the amount 	owed or the payment made to the supplying licensee, then the retailer shall give written 	notice to the supplying licensee prior to the close of the lawful credit period.  The retailer 	shall include the disputed amount due or payment tendered, the invoice number, and a 	detailed reason for the dispute. 
	2. Upon receipt of written notification, the supplying licensee shall determine its position and 	respond within 15 days of the retailer’s written notification. The supplying licensee may 	continue to extend 30 days credit on new purchases pending the resolution of the 	dispute, so long as the retailer has provided written notice as described in paragraph 	G.1., and has tendered payment for all amounts not in dispute.  
	3. For purposes of this regulation, the amount of a qualifying price dispute shall be calculated as 	the disputed price differential times the number of cases purchased.  For example, if the 	supplying licensee invoices a case of alcohol beverage at $11.00 per case, and the 	retailer’s records reflect a negotiated case deal of $10.00, then the amount in dispute for 	purposes of this regulation is calculated as $1.00 times the number of cases purchased.
	4. The supplying licensee is prohibited from extending 30 days credit on new purchases if the 	retailer fails to claim disputes in the manner described in this section or fails to make full 	payment of undisputed amounts on or before the end of the lawful credit period.  A 	retailer’s action to stop or delay payment on any financial transaction does not qualify as 	proper written notice to a supplying licensee of a good faith dispute.  
	5. Once a dispute is resolved, a retailer will have 30 days to pay any amount due and/or a 	supplying licensee will have the same period of time to adjust its records to reflect the 	outcome.  If the dispute resolution process is unsuccessful after good faith efforts by both 	parties, and any amount due would otherwise be placed for collection, the supplying 	licensee must cease the extension of credit to the retailer and shall conduct any future 	sale of alcohol beverages for cash or cash equivalent on delivery.   
	6. Supplying licensees and retailers shall keep sufficient records to document those disputes that 	are used as justification for the continued extension of credit, which would otherwise be 	prohibited. 
H. Unlawful Financial Assistance:
	1. Except as provided for in paragraph G of this regulation, a supplying licensee who continues to 	extend credit to a retailer who has not fully discharged indebtedness through the lawful 	means described in this regulation, or who fails to exercise due diligence with the 	requirements of this regulation, may be sanctioned by the state licensing authority for 	providing unlawful financial assistance to a retailer, as provided for in Section 12-47-	308(1)(a), C.R.S. and related regulations.  
	2. Except as provided for in paragraph G of this regulation, a retailer who fails to apy the amounts 	due to the supplying licensee after the conclusion of the lawful credit period, and who 	receives further sales on credit from that supplying licensee, may be sanctioned by the 	state licensing authority for receipt of unlawful financial assistance from the supplying 	licensee, as provided for in Section 12-47-308(3)(a) and related regulations. Unlawful 	financial assistance shall inure to the retailer after the supplying licensee has made final 	demand for payment through written correspondence or other means of commercial debt 	collection and has made subsequent sales on credit.