Bitcoin Boulevard US – Ohio Liquor License Issue

Discussions with lawyers of the State Liquor Control of Ohio, The Ohio Department of Public Safety, and the federal TTB have been initiated to determine if Bitcoin may lawfully be accepted as payment for alcohol. This presents a pioneering (and welcomed) discussion with state and federal, regulatory and enforcement agencies regarding the use of digital currencies as a form of payment for businesses operating under certain regulatory licensing. According to these agencies, no one has ever asked them about this before. We have had positive communications with these agencies, but with varying results. The Ohio Department of Liquor Control changed their stance from “No” to “No Position” after productive discussions with their board lawyers. The Federal TTB gave the green light, stating that this was a private business matter and “we don’t care as long as we receive our tax money”.

The Ohio Department of Public Safety, however, originally ruled “No”, and this complicated our efforts. Here was their official response:

“The state of Ohio has not taken a position regarding the use of bitcoins.  Rather, in keeping with guidance from the IRS that bitcoins are a form of “property” and not “currency” for tax purposes, the Ohio Investigative Unit may investigate the use of bitcoins as monetary payment for alcohol.  If the Investigative Unit issues a citation out of such an investigation, a liquor permit holder may challenge the citation, and ultimately the Ohio Liquor Control Commission, and possibly an Ohio court, will determine whether the use was permissible.  These comments are limited to the monetary payment for alcohol, and the Investigative Unit cannot speak to any to any other risks or legal consequences of accepting or using bit coins.

Thank you for your time.
 
Agent in Charge Eric W. Wolf
Ohio Investigative Unit – Administration
(614) 728-1369”

After many attempts to engage in cooperative dialog to help them better understand our project and this new commerce technology, we are delivered this same canned response, which indicated to us they are no longer interested in discussing this issue. We then reached out to the Ohio Governor’s office, who promptly seemed to encourage the ODPS legal council to offer a response. This time, ODPS changed from “No” to “No Position”. While a step in the right direction, it is not enough to encourage Ohio liquor license holders to accept Bitcoin. Furthermore, we read their letter to be a challenge to small business owners to break the law in order to move this forward. This goes against the ethic of our Bitcoin Boulevard US project, and we believe it to be an irresponsible request from the ODPS. Ohio liquor laws are not to be interpreted, and “No Position” should not be interpreted as a “Yes”.

In essence, the ODPS used the IRS ruling as their guide. They could have use the FinCEN ruling, or have created a contemporary ruling of their own based on the intended use of Bitcoin at the merchant locations.

Further efforts to attain a position have not been successful. We asked the ODPS for a proactive investigation, working with us, rather than a reactive investigation after a complaint has been filed and citations issued towards one of our small business owners. The ODPS has not responded to our request. We seek new methods in finding a resolution that maintains lawfulness, provides digital currency legitimacy for other businesses of this type in Ohio, and supports the innovative spirit of Ohio small business. We hope Ohio can participate in the leadership of states like California and Texas, whose public agencies are embracing the innovation occurring in this space.

In the meantime, while unable to accept Bitcoin for alcohol, some businesses along Bitcoin Boulevard US remain welcoming Bitcoin-friendly places for digital currency discussion. Some will stop Bitcoin processing altogether until this is sorted out. Others will offer delicious locally crafted non-alcohol refreshments for Bitcoin, and simply not yet allow the sale of alcohol. Until then, cash and credit card only please but let them know you came because of Bitcoin Boulevard!

Here is the ODPS letter explaining their current “No Position” stance: Bitcoins 7.17.14

Here is our final response and attempt at a collaborative approach to resolve this issue: Bitcoins_State_Of_Ohio

We are now planning a strategy to be launched after the mid-term elections, and wish to find lobbyists, local and state representatives, community leaders, business owners, and other subject matter experts to help us. Our (subject to change) goals today are:

1. Have Bitcoin be considered as money throughout Ohio, much like the State of California has accomplished. This would absolve the issue.

2. Have a clause added to current Ohio liquor laws to address digital currencies. We see Bitcoin customers no different than customers using foreign credit cards to purchase alcohol.

3. Allow for barter in current Ohio liquor laws. This should be a private business decision, which is the position of the Federal TTB.

Please feel free to share your advice with me as we arrange our new strategy to approach this situation.

Nikhil Chand