© W. Blake Gray/Wine-Searcher

California liquor authorities are considering their options after we revealed an apparent breach of the law by Amazon.

State liquor authorities are to investigate whether Amazon is sticking to the conditions of its liquor license.

The California Department of Alcoholic Beverage Control (ABC) will open an investigation of Amazon after a story by Wine-Searcher revealed Amazon is flouting the conditions of its liquor license in Los Angeles.

Matthew Hydar, supervising agent for California Department of Alcoholic Beverage Control, told Wine-Searcher he forwarded the story to the lead investigator for the Los Angeles region and also to his supervisor in Sacramento.

"The cat's out of the bag and I imagine that the people at Amazon are scrambling right now, saying: ' We don't want the ABC on us'," Hydar said. "They could have some plausible explanation, giving them the benefit of the doubt. Or, there could be even more egregious violations. Such as, as you pointed out, knowingly filing an application with false information."

But Hydar cautioned that any enforcement action must come as a result of an ABC investigation, not a report by a journalist.

"We are a complaint-driven agency," Hydar said. "We go out and gather evidence."

Amazon, doing business as Prime Now, was issued a license on February 4 for a liquor store in Los Angeles at 3334 N San Fernando Rd Unit 101. The brick-and-mortar store is a necessity under California law for a company that wants to make liquor deliveries. The address is that of a corner office in an enormous warehouse in Los Angeles from which Amazon makes deliveries of all kinds.

In order to deliver wine and spirits from the warehouse, Prime Now must fulfill the license operating restrictions of the store that is supposed to be at Unit 101. Those conditions include being open to the public for half the hours that the warehouse makes deliveries, and posting the opening hours of the store at the entrance.

I visited last week and discovered that Amazon is not following any of the first four operating restrictions of its license, because there is no liquor store there.

Hydar said ABC has access to books and records, and said it was possible that investigators could ask to see records of sales of alcohol online during the time I visited for the story.

ABC could also ask to look at sales records of wine and spirits sold from the brick-and-mortar "store", to see if the store has ever been open at all.

I asked Hydar if the violations of the license, if proven by ABC, are egregious enough for ABC to take away Amazon's liquor license.

"I just don't know," Hydar said. "If it was just the one day and they had an excuse, we could say, we understand."

Hydar said that an option for Amazon might be to surrender its liquor license until it actually creates the brick-and-mortar store it is required to have. Amazon would not be allowed to deliver wine and spirits from the warehouse until it activates its license again.

"We do have the ability for a licensee to surrender their license, if they're not operating for a longer period of time," Hydar said. "Their license is held in limbo. As long as they pay their renewal fees, they can keep their license in a surrender mode for a year."

If the license is not surrendered, the next step is for ABC attorneys, if the evidence appears to show violations, to levy an administrative accusation against Prime Now. If that happens, the case goes before an administrative law judge who is an employee of ABC. ABC attorneys act more or less as prosecutors (to be clear: it's not expected to be a criminal charge.) Amazon can use an army of attorneys of its own.

"The department and the licensee have the ability to subpoena witnesses," Hydar said. "They also have the ability to cross-examine witnesses. Then the administrative law judge will make a determination whether the department has substantiated the counts in the accusation. They have the ability to suspend and revoke [the liquor license]."

There's also an appeals board within ABC, Hydar said. But, he said: "The director [of ABC] has a lot of power to overturn even decisions from the administrative law judges."

As of Monday afternoon, Amazon was still offering wine and spirits from the warehouse. If I were still in Los Angeles, I could get that rye whiskey after all! But only if I had it delivered.