73,26amSection 26am. 125.19 (1) of the statutes is amended to read: 125.19 (1) Issuance. The department division shall issue an alcohol beverage warehouse permit which authorizes the permittee to store and warehouse alcohol beverages in warehouse premises covered by the permit, subject to rules adopted by the department division. The permit does not authorize the sale of any alcohol beverages.
73,26anSection 26an. 125.20 of the statutes is created to read: 125.20 Interest restrictions. (1) Definitions. In this section:
(a) “Distribution permit” means a permit issued under s. 125.28 or 125.54.
(b) “Distribution permittee” means a person holding a distribution permit and includes a restricted individual of such a person.
(c) “Production permit” means a permit issued under s. 125.29, 125.295, 125.52, or 125.53, a permit issued under s. 125.30 to a brewer in another state, or a permit issued under s. 125.58 to a manufacturer, rectifier, or winery in another state.
(d) “Production permittee” means a person holding a production permit and includes a restricted individual of such a person.
(e) “Restricted individual” means any of the following:
1. An individual identified on a manager’s license or who works or acts in a managerial capacity for a permittee or licensee.
2. An individual serving as an officer, director, member, manager, or agent of a corporation or limited liability company holding a permit or license.
3. An individual holding more than a 10 percent ownership interest in a permittee or licensee.
(f) “Restricted entity” means an entity holding more than a 10 percent ownership interest in a permittee or licensee.
(g) “Restricted investor” means a restricted individual or restricted entity.
(h) “Retail license or permit” means a Class “A,” Class “B,” “Class A,” “Class B,” or “Class C” license, a Class “B” or “Class B” permit, or a no-sale event venue permit.
(i) “Retail licensee or permittee” means a person holding a retail license or permit and includes a restricted individual of such a person.
(2) Producers. (a) No production permittee may hold any interest in any distribution permittee.
(b) No production permittee may hold any interest in any retail licensee or permittee, except as authorized under s. 125.295.
(3) Distributors. (a) No distribution permittee may hold any interest in any retail licensee or permittee.
(b) No distribution permittee may hold any interest in any production permittee, except as provided in s. 125.28 (2) (d).
(4) Retailers. (a) No retail licensee or permittee may hold any interest in any distribution permittee.
(b) No retail licensee or permittee may hold any interest in any production permittee, except as authorized under s. 125.295.
(5) Construction of section; authorized cross-tier activity. (a) For purposes of this section and s. 125.01, permittees are categorized under the 3-tier system as follows:
1. A production permittee operates within the production tier.
2. A distribution permittee operates within the distribution tier.
3. A retail licensee or permittee operates within the retail tier.
(b) This section does not prohibit a licensee or permittee from engaging in any activity that this chapter explicitly authorizes for the type of license or permit held or that is explicitly authorized under the terms of the license or permit.
(c) To the extent there is a conflict between any provision of subs. (2) to (4) and any provision of ss. 125.25 (2) (b), 125.26 (2) (b), 125.27 (7), 125.28 (2) (b), 125.29 (2) (a), 125.295 (2) (a) 6., 125.30 (3) (c), and 125.69 (1), the provisions of ss. 125.25 (2) (b), 125.26 (2) (b), 125.27 (7), 125.28 (2) (b), 125.29 (2) (a), 125.295 (2) (a) 6., 125.30 (3) (c), and 125.69 (1) are controlling.
(d) If a license or permit may not be issued to a person under s. 125.25 (2) (b), 125.26 (2) (b), 125.27 (7), 125.28 (2) (b), 125.29 (2) (a), 125.295 (2) (a) 6., 125.30 (3) (c), or 125.69 (1), the person may not acquire an interest prohibited under s. 125.25 (2) (b), 125.26 (2) (b), 125.27 (7), 125.28 (2) (b), 125.29 (2) (a), 125.295 (2) (a) 6., 125.30 (3) (c), or 125.69 (1) after the license or permit has been issued.
(6) Permissible interests. (a) Notwithstanding subs. (2) to (4), a licensee or permittee may be owned in part by, or grant an ownership interest to, a restricted investor in a different tier if all of the following are satisfied:
1. No single restricted investor holds more than a 10 percent ownership interest in the licensee or permittee, including any passive or disregarded entity connected to the restricted investor.
2. No restricted investor serves as an officer, director, manager, operator, or agent of the licensee or permittee.
3. No restricted investor is involved in the day-to-day operations of the licensee or permittee or exerts any control over such operations beyond the person’s ability to vote as an owner.
4. The aggregate amount of ownership held by all restricted investors in the licensee or permittee does not exceed 49 percent.
5. The licensee or permittee discloses all restricted investors to the division.
6. Each restricted investor executes an affidavit, on a form prescribed by the division, swearing to a complete lack of involvement in the day-to-day operations of, and lack of control over, the licensee or permittee beyond the restricted investor’s ability to vote as an owner. If the restricted investor is a restricted entity, the affidavit shall be executed on behalf of the restricted entity by an individual who is an officer or director of the restricted entity or who otherwise has management authority over the restricted entity.
(b) A licensee or permittee, or a restricted individual of a licensee or permittee, may enter into a landlordtenant relationship with another licensee or permittee operating in a different tier if all of the following are satisfied:
1. The lease or rental agreement explicitly states that the landlord has no control over or day-to-day involvement in the business of the tenant.
2. No control or involvement in the business of the tenant by the landlord exists.
3. The landlord and tenant maintain compliance with ss. 125.33 and 125.69, as applicable and subject to s. 125.33 (2) (hr), and this requirement is set forth in the lease or rental agreement.
4. The lease or rental agreement is in writing and disclosed to the division for review.
(c) Notwithstanding subs. (2) to (4), a spouse may have an interest in the license or permit of the other spouse if all of the following are satisfied:
1. The marriage is governed by a valid marital property agreement or prenuptial agreement.
2. The marital property agreement or prenuptial agreement was disclosed on any license or permit application.
3. A copy of the marital property agreement or prenuptial agreement is provided to the municipal clerk or division prior to issuance of the license or permit.
4. Both spouses execute an affidavit, on a form prescribed by the division, swearing to a complete lack of involvement in the day-to-day operations of, and lack of control over, each respective business.
(d) For purposes of subs. (2) to (4), employment in a nonmanagerial capacity for a licensee or permittee is not an interest in the licensee or permittee.
73,26aoSection 26ao. 125.20 (5) (c) and (d) of the statutes, as created by 2023 Wisconsin Act .... (this act), are amended to read: 125.20 (5) (c) To the extent there is a conflict between any provision of subs. (2) to (4) and any provision of ss. 125.24 (3), 125.25 (2) (b), 125.26 (2) (b), 125.27 (7), 125.28 (2) (b), 125.29 (2) (a), 125.295 (2) (a) 6., 125.30 (3) (c), and 125.69 (1), the provisions of ss. 125.24 (3), 125.25 (2) (b), 125.26 (2) (b), 125.27 (7), 125.28 (2) (b), 125.29 (2) (a), 125.295 (2) (a) 6., 125.30 (3) (c), and 125.69 (1) are controlling.
(d) If a license or permit may not be issued to a person under s. 125.24 (3), 125.25 (2) (b), 125.26 (2) (b), 125.27 (7), 125.28 (2) (b), 125.29 (2) (a), 125.295 (2) (a) 6., 125.30 (3) (c), or 125.69 (1), the person may not acquire an interest prohibited under s. 125.24 (3), 125.25 (2) (b), 125.26 (2) (b), 125.27 (7), 125.28 (2) (b), 125.29 (2) (a), 125.295 (2) (a) 6., 125.30 (3) (c), or 125.69 (1) after the license or permit has been issued.
73,26apSection 26ap. 125.21 of the statutes is created to read: 125.21 Production agreements. (1) Definitions. In this section:
(a) “Alternating proprietorship” means an arrangement in which a host producer provides use of space and equipment, and may additionally provide personnel, to a guest producer for the production of alcohol beverages.
(b) “Bottling” means placing alcohol beverages into sealed finished packages, including cans, bottles, boxes, bags, kegs, barrels, or any other packaging of finished products. When “bottle” is used as a verb, it has the same meaning as “bottling.”
(c) “Contract producer” means a producer who directly manufactures, bottles, or labels alcohol beverages as an agent of a recipe producer or out-of-state recipe supplier.
(d) “Contract production” means a contract, agreement, or business arrangement described in sub. (3) (b) whereby a recipe producer or out-of-state recipe supplier provides consideration to a contract producer for the production, bottling, or labeling of alcohol beverages.
(e) “Guest producer” means a producer who enters into a contract, agreement, or business arrangement with a host producer whereby the producer has use of the host producer’s premises and equipment, and may have use of the host producer’s personnel, for the production of the guest producer’s alcohol beverages.
(f) “Host producer” means a producer who enters into a contract, agreement, or business arrangement with a guest producer whereby the guest producer has use of the producer’s premises and equipment, and may have use of the producer’s personnel, for the production of the guest producer’s alcohol beverages.
(g) “Licensing agreement” means an agreement between a licensor and a producer for the production of alcohol beverages containing the name, symbol, or mark of the licensor.
(h) “Out-of-state recipe supplier” means a person to whom all of the following applies:
1. The person is located in another state and produces alcohol beverages in that state.
2. The person does not hold a permit under this chapter, other than a permit issued under s. 125.30, 125.535, or 125.58.
3. The person purchases alcohol beverages from a producer that are manufactured consistently with a recipe provided by the person or are bottled or labeled for the person.
(i) “Producer” means a brewer holding a permit under s. 125.29, brewpub holding a permit under s. 125.295, winery holding a permit under s. 125.53, manufacturer holding a permit under s. 125.52, or rectifier holding a permit under s. 125.52.
(j) “Recipe producer” means a producer who purchases alcohol beverages from another producer that are manufactured consistently with a recipe provided by the recipe producer or are bottled or labeled for the recipe producer.
(2) Production arrangements authorized; agreements between same producer type. (a) Production arrangements under subs. (3) to (5) are authorized as provided in this section. A permittee that enters into such a production arrangement does not act as an agent for or in the employ of another under s. 125.52 (3) or 125.53 (2), and such a production arrangement is not a prohibited interest under s. 125.20.
(b) Except as provided in sub. (3) (b) 2. and 3., agreements authorized under this section may be entered into only by producers who hold permits issued under the same section of this chapter.
(3) Contract production. (a) An agreement for contract production shall comply with the requirements of this subsection.
(b) An agreement for contract production may be entered into between any of the following:
1. Two producers possessing the same type of permit.
2. A permittee under s. 125.29, as the contract producer, and a permittee under s. 125.295, as the recipe producer.
3. A producer and an out-of-state recipe supplier.
(c) All contract production activities shall occur pursuant to a written agreement between the contract producer and the recipe producer or out-of-state recipe supplier.
(d) 1. Except as provided in subd. 2., alcohol beverages produced under an agreement for contract production between a contract producer and a recipe producer shall count toward the production volume of the recipe producer and shall be considered, for this purpose, as produced on the recipe producer’s premises.
2. Alcohol beverages produced under an agreement for contract production between a contract producer and a recipe producer may not be considered in determining production volume for purposes of ss. 125.29 (7), 125.52 (4), and 125.53 (3), but shall be considered as produced by the recipe producer for other purposes under ss. 125.29 (7), 125.52 (4), and 125.53 (3).
(e) The recipe producer shall be considered the producer for purposes of filing reports under s. 139.11 (2) and taxation under ss. 139.02, 139.03, 139.05 (2), and 139.06 (1) and (2), as applicable, and shall include alcohol beverages manufactured under a contract production agreement in the report required under s. 139.11 (2). For alcohol beverages produced under an agreement for contract production between a contract producer and a recipe producer, the contract producer shall exclude the alcohol beverages from reports required under s. 139.11 (2).
(4) Alternating proprietorship. (a) An alternating proprietorship shall comply with the requirements of this subsection.
(b) All alternating proprietorships shall occur pursuant to a written agreement between the host producer and guest producer.
(c) The agreement under par. (b) shall provide that the guest producer retains the right to control the production of the alcohol beverages. If the agreement provides that the host producer and host producer’s personnel are agents of the guest producer or acting under the direction of the guest producer, the agreement shall specify the terms and compensation for the use of the host producer’s personnel.
(d) The guest producer shall be considered the producer for purposes of filing reports under s. 139.11 (2) and taxation under ss. 139.02, 139.03, 139.05 (2), and 139.06 (1) and (2), as applicable, and shall include alcohol beverages manufactured under an alternating proprietorship in the report required under s. 139.11 (2). The host producer shall exclude alcohol beverages manufactured in an alternating proprietorship from reports required under s. 139.11 (2).
(e) Alcohol beverages produced under an alternating proprietorship shall count toward the production volume of the guest producer and shall be considered, for this purpose, as produced on the guest producer’s premises.
(5) Licensing agreements. (a) A producer may enter into a licensing agreement or contract with a licensor authorizing the producer-licensee to use the licensor’s trademark or name if all of the following requirements are satisfied:
1. The licensing agreement or contract is in writing.
2. The producer-licensee is entirely responsible for producing the alcohol beverages and for all related processing steps and regulatory requirements.
(b) Alcohol beverages produced under the licensing agreement shall count toward the production volume of the producer-licensee and shall be considered, for this purpose, as produced on the producer-licensee’s premises.
73,26aqSection 26aq. 125.22 of the statutes is created to read: 125.22 Common carrier permit; shipments into state. (1) Permit. (a) No common carrier may transport into or deliver within this state any alcohol beverages unless the common carrier first obtains a permit from the division under this section. This subsection does not apply to the transportation into this state for delivery to, or delivery within this state to, a person that holds a license or permit issued under this chapter that authorizes the licensee or permittee to receive the alcohol beverages.
(b) A permit under this section authorizes only the transport into or delivery within this state of wine on behalf of a person holding a direct wine shipper’s permit under s. 125.535 or a fulfillment house permit under s. 125.23.
(c) An applicant for a permit under this section shall provide all information required by the division. The division shall require the applicant to submit information, as determined to be appropriate by the division, that is similar to the information required of an applicant for a permit under s. 125.58.
