Under current law, a brewer’s permit issued by DOR authorizes the brewer to, among other activities, manufacture beer and, if the brewer manufactures 300,000 or fewer barrels of beer per year, self-distribute its beer directly to retailers. A brewer’s permit also authorizes the brewer to sell at retail, without a retail license, at the brewery premises and at one off-site retail outlet 1) the brewer’s own beer, for consumption on or off the premises; 2) certain other Wisconsin-made beer, for consumption on or off the premises, if the brewer purchases the beer from a wholesaler or another brewer; and 3) intoxicating liquor, for consumption on the premises, if the brewer held a retail intoxicating liquor license on June 1, 2011, and if the brewer purchases the intoxicating liquor from a wholesaler. The brewer may also provide free taste samples at the brewery premises and the brewer’s off-site retail outlet. A brewer may not hold a retail beer license. A brewer may not operate a restaurant except at the brewery premises and the brewer’s off-site retail outlet.
Under current law, a winery permit issued by DOR authorizes the winery to, among other activities, manufacture wine and provide taste samples of its wine on the winery premises. A winery may also hold one retail license—either a “Class A” or “Class B” license—which may be issued for the winery premises or another location, but the winery may not hold other specified retail interests. A “Class B” license issued to a winery is limited compared to other “Class B” licenses because it authorizes the retail sale of wine for consumption on or off the premises but does not authorize the retail sale of distilled spirits. A “Class B” license may be issued to a winery only if the winery is capable of producing at least 5,000 gallons of wine per year in no more than two locations. If a retail license is issued to a winery, the winery may provide wine made by the winery directly to its own retail premises, without the wine first passing through a wholesaler.
Under current law, a manufacturer’s permit or rectifier’s permit issued by DOR authorizes the permittee to, respectively, manufacture or rectify intoxicating liquor. Current law prohibits a manufacturer or rectifier from holding an interest in a retail liquor license, but a manufacturer’s permit or rectifier’s permit authorizes the manufacturer or rectifier to make retail sales, without a retail license, of intoxicating liquor manufactured or rectified on the manufacturer’s or rectifier’s premises, for consumption on or off the premises. Subject to limitations, a manufacturer or rectifier may also provide free taste samples of intoxicating liquor manufactured or rectified on the premises, for consumption on the premises.
The bill eliminates most current law provisions relating to retail sales authority for brewers, wineries, manufacturers, and rectifiers and replaces them with provisions creating a more uniform standard of retail sales authority for these producers. Under the bill, a brewer, winery, manufacturer, or rectifier (producer) may, under its division-issued permit, make retail sales on the production premises and establish full-service retail outlets depending on the producer’s production volume. The bill authorizes a producer to make retail sales of its own products on the production premises, for on-premises or off-premises consumption. If the producer meets specified production thresholds, the bill also allows the producer to engage in full-service retail sales on the production premises and to establish from one to three full-service retail outlets away from the production premises at which full-service retail sales may be made. “Full-service retail sales” are sales of beer and intoxicating liquor, for on-premises or off-premises consumption, and the provision of taste samples. Alcohol beverages not produced by the producer must be purchased from a wholesaler or other person authorized to distribute the alcohol beverages under current law. To operate a full-service retail outlet, a producer must obtain approval from the division, which the division must grant unless the producer has violated a provision of law related to full-service retail outlets. In addition, a producer may not commence sales of alcohol beverages at a full-service retail outlet unless, prior to commencing such sales, the producer receives approval from the municipality in which the retail outlet is located. Applications for a municipality’s approval must be made on a form prescribed by the division. A municipality’s approval must be based on the same standards and criteria that the municipality has established by ordinance for the evaluation and approval of retail license applications. A municipality may limit the scope of alcohol beverages offered for sale at a full-service retail outlet only with respect to alcohol beverages that are not of the same type as those produced by the producer. Retail sales on the production premises and at full-service retail outlets must be supervised by the permit holder or a person holding an operator’s license or operator’s permit (discussed further below). A producer may operate a restaurant at any full-service retail outlet and on the production premises.
Under the bill, if a brewer is not eligible to establish a full-service retail outlet, the brewer maintains the current-law authorization to establish an off-site retail outlet at which it may sell its own beer for on-premises or off-premises consumption. In addition, if the brewer held a retail intoxicating liquor license on June 1, 2011, for its brewery premises or an off-site retail outlet, the brewer may make retail sales of intoxicating liquor for on-premises consumption at this formerly licensed location.
The bill eliminates the authorization for a winery to hold a retail license, which authorization is replaced with the retail sales authority described above. The bill also eliminates the prohibition against a brewer operating a restaurant in a location other than the brewery premises and the brewer’s off-site retail outlet.
Closing hours for retail sales by brewers, wineries, manufacturers, and rectifiers
Under current law, with limited exceptions, a retailer operating under a Class “B” or “Class B” license may not remain open between the hours of 2 a.m. and 6 a.m. on weekdays or between 2:30 a.m. and 6 a.m. on Saturday and Sunday, and a municipality may not impose different closing hours by ordinance. The hours during which a Class “B” licensed retailer may make sales for off-premises consumption are more limited, with these sales prohibited from midnight to 6 a.m., although a municipality may, by ordinance, impose more restrictive hours for these sales. Current law does not specify closing hours or permissible hours of sale for retail sales by brewers, manufacturers, or rectifiers.
Under the bill, a full-service retail outlet of a producer is subject to the same closing hours, and restrictions on the hours in which sales for off-premises consumption may be made, that are applicable to a Class “B” licensee in the same municipality with respect to all alcohol beverages sold at the retail outlet. These limitations also apply to the producer’s production premises, except that the production premises are not required to be closed for nonretail activities. The bill also specifies that no member of the public or invited guests may be present on the production premises during the closing hours applicable to a Class “B” licensee.
Under current law, a winery operating under a “Class B” license may not remain open for retail sales of wine between the hours of 9 p.m. and 8 a.m.
The bill eliminates this earlier closing hour for a winery.
Other authorized activities of brewers, wineries, manufacturers, and rectifiers
Under the bill, the permit of a brewer, winery, manufacturer, or rectifier also authorizes the following activities:
1. The transportation by the producer of its alcohol beverages between the production premises and any depot, warehouse, or full-service retail outlet maintained by the producer or other premises for which the producer holds a permit.
2. The sale, shipment, transportation, and delivery, or the sale or transfer, of the producer’s alcohol beverages, in bulk or in any state of packaging, to another producer holding a permit that allows production of the same type of alcohol beverages.
Producers providing taste samples on retail premises
Current law allows Class “A” and “Class A” licensees to provide free taste samples to customers for consumption on the licensed premises, subject to various restrictions such as the size and number of taste samples and hours during which they may be provided. As part of their retail sales authority, Class “B,” “Class B,” and “Class C” licensees may also provide taste samples for consumption on the premises.
Under current law, a brewer may provide free taste samples on Class “A” licensed premises for consumption on the premises, subject to the same limitations applicable to the Class “A” licensee in providing taste samples, including hours and size and number of samples. In addition, the brewer must purchase from the Class “A” licensee the beer that the brewer provides as taste samples.
The bill creates additional authority, and modifies existing authority, for a brewer, winery, manufacturer, or rectifier to provide taste samples on retail licensed premises with the consent of the retail licensee. Under the bill, a winery, manufacturer, or rectifier may provide free taste samples of intoxicating liquor on “Class A,” “Class B,” or “Class C” premises, not exceeding two 3-ounce samples of wine per day per person and one 0.5-ounce sample of distilled spirits per day per person. A brewer may provide free taste samples of beer on Class “A” or Class “B” premises, not exceeding two 3-ounce samples of beer per day per person. A brewer, winery, manufacturer, or rectifier may provide the taste samples to any person who has attained the legal drinking age for consumption on the premises between the hours of 11 a.m. and 7 p.m. The taste samples must be either 1) purchased by the brewer, winery, manufacturer, or rectifier from the retail licensee or 2) produced by the brewer, winery, manufacturer, or rectifier and brought to the retail premises. However, a brewer, winery, manufacturer, or rectifier may not leave at the retail premises any unused alcohol beverages not purchased from the retail licensee.
The bill also eliminates a provision under which a municipality may prohibit a “Class A” licensee from offering free taste samples of wine on its licensed premises.
Brewpubs
Under current law, a person is eligible for a brewpub permit issued by DOR if the person meets certain requirements, including that 1) the person manufactures not more than 10,000 barrels of beer per year and 2) the person operates on the brewpub premises a restaurant for which a retail license is issued and in which the brewpub sells, in addition to its own beer, the beer of another brewer. A brewpub permit authorizes, among other activities, 1) the manufacture of up to 10,000 barrels of beer per year, but the entire manufacturing process must occur on brewpub premises; 2) the retail sale of alcohol beverages through retail licenses issued for the brewpub’s restaurant; and 3) the annual distribution of up to 1,000 barrels of the brewpub’s beer to retailers.
The bill increases, from 10,000 to 20,000 barrels per year, the amount of beer that a brewpub may manufacture and eliminates the requirement that the entire manufacturing process occur on brewpub premises. The bill also authorizes a brewpub to annually distribute up to 2,000 barrels of the brewpub’s beer to retailers. Also under the bill, to meet the requirement that it sell beer other than its own in its restaurant, a brewpub may sell beer manufactured by another brewpub rather than a brewer.
The bill also authorizes a brewpub to sell, ship, transport, and deliver, in bulk or in any state of packaging, beer manufactured by the brewpub to another brewpub.
Interest restrictions
Current law imposes restrictions on the issuance of alcohol beverage licenses and permits and the interests that such licensees or permittees may hold in other licensees or permittees. For example, a Class “B” license may not be issued to a brewer or a beer wholesaler, and a beer wholesaler’s permit may not be issued to a brewer or Class “B” licensee. As another example, a manufacturer, rectifier, or winery may not hold any direct or indirect interest in any wholesale permit or establishment. Current law includes many similar provisions, which generally prohibit one type of licensee or permittee from having a direct or indirect interest in specified other types of licensees or permittees. DOR has promulgated a rule used to implement some of these statutory interest restrictions, which include definitions and examples of direct and indirect interests.
The bill modifies these existing interest restriction provisions. In general, the bill expands these provisions to explicitly apply to “cross-tier” interests, such as a beer wholesaler’s interest in a winery permit or a winery’s interest in a retail beer license. The bill also standardizes language among the various interest restriction provisions, partly by adopting the phrase “an interest in” rather than “a direct or indirect interest in” or “a direct or indirect ownership interest in” and partly by explicitly stating whether the interest restriction applies to retail licensees, retail permittees, beer wholesalers, liquor wholesalers, brewers, brewpubs, wineries, manufacturers and rectifiers, out-of-state beer shippers, and out-of-state liquor shippers. The bill also incorporates the new interest restriction exceptions discussed below. The bill further repeals the DOR rule that guides determinations relating to interest restrictions.
In addition to these changes to existing interest restriction provisions, the bill creates new provisions relating to interest restrictions and creates exceptions to interest restrictions. The bill specifies all of the following:
1. No production permittee may hold any interest in any distribution permittee or in any retail licensee or permittee, except as authorized under current law for a brewpub.
2. No distribution permittee may hold any interest in any retail licensee or permittee or any interest in any production permittee, with an exception for a beer wholesaler holding an interest in a brewer on July 1, 2011.
3. No retail licensee or permittee may hold any interest in any distribution permittee or in any production permittee, except as authorized under current law for a brewpub.
For purposes of these provisions, employment in a nonmanagerial capacity for an alcohol beverage licensee or permittee is not an interest in that licensee or permittee.
The bill defines a “production permittee” as a person holding a permit issued to a brewer, brewpub, manufacturer, rectifier, or winery; a brewer in another state that holds an out-of-state beer shipper’s permit; a manufacturer, rectifier, or winery in another state that holds an out-of-state liquor shipper’s permit; or a restricted individual of any such person. A “restricted individual” is an individual who 1) is identified on a manager’s license or who works or acts in a managerial capacity for an alcohol beverage permittee or licensee; 2) serves as an officer, director, member, manager, or agent of a corporation or limited liability company that holds an alcohol beverage permit or license; or 3) holds more than a 10 percent ownership interest in an alcohol beverage permittee or licensee. The bill defines a “distribution permittee” as a person holding a beer or liquor wholesaler’s permit or a restricted individual of such a person. The bill defines a “retail licensee or permittee” as a person holding 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 (discussed further below), or a restricted individual of any such person. The bill also defines a “restricted entity” as an entity holding more than a 10 percent ownership interest in an alcohol beverage permittee or licensee. The bill defines a “restricted investor” as a restricted individual or restricted entity.
The bill also specifies the following three situations, applicable to both new and existing interest restriction provisions under the bill, in which interests are explicitly authorized:
1. An alcohol beverage licensee or permittee may be owned in part by, or grant an ownership interest to, a restricted investor in a different tier if specified requirements are satisfied, including that no restricted investor holds more than a 10 percent ownership interest or is involved in day-to-day operations and the aggregate amount of ownership held by all restricted investors does not exceed 49 percent. Each restricted investor must execute an affidavit swearing to a lack of involvement in the day-to-day operations of the licensee or permittee. A restricted investor who materially violates a representation in the affidavit may be required to forfeit not more than $1,000.
2. An alcohol beverage 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 specified requirements are satisfied, including that the landlord has no control over or day-to-day involvement in the business of the tenant.
3. A spouse may have an interest in the alcohol beverage license or permit of the other spouse if specified requirements are satisfied, including that the marriage is governed by a marital property agreement or prenuptial agreement and both spouses execute an affidavit swearing to a lack of involvement in the day-to-day operations of each respective business. A spouse who materially violates a representation in the affidavit may be required to forfeit not more than $1,000.
As discussed above, the bill also eliminates the authority of a winery to hold a retail license and provisions allowing this common interest.
Tied house restrictions
Current law prohibits a brewer, brewpub, or beer wholesaler from furnishing anything of value to a Class “B” licensee, but there are numerous exceptions to this prohibition.
The bill creates an exception under which a brewer, brewpub, or beer wholesaler may enter into a landlordtenant relationship with a Class “B” licensee if the same requirements are satisfied that are referenced in item 2, above, relating to interest restrictions and landlord-tenant relationships.
Production agreements
The bill specifies authority for a brewer, brewpub, winery, manufacturer, or rectifier (producer) to produce alcohol beverages by means of contract production, alternating proprietorship, or licensing agreement and further specifies certain requirements for and consequences of such an arrangement. These arrangements must be established by written agreement, which generally may be entered into only by producers holding the same type of producer’s permit.
The bill defines “contract production” as a contract, agreement, or business arrangement 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. In a contract production arrangement, the “contract producer” manufactures, bottles, or labels the alcohol beverages, which are purchased from the contract producer by the “recipe producer” or “out-of-state recipe supplier.” A recipe producer, with an exception, holds the same type of Wisconsin permit as the contract producer, while an out-of-state recipe supplier is a person located in another state that produces alcohol beverages in that state.
The bill specifies that alcohol beverages produced under a contract production arrangement between a contract producer and recipe producer count toward the production volume of the recipe producer, except they may not be considered for purposes of determining a producer’s retail sales authority (discussed above). The recipe producer is considered the producer for purposes of taxation and reporting to the division.
The bill defines an “alternating proprietorship” as 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. In this arrangement, a “host producer” provides its production facility to a “guest producer” for the guest producer to use to produce the guest producer’s alcohol beverages. The bill specifies that alcohol beverages produced under an alternating proprietorship count toward the production volume of the guest producer, and the guest producer is considered the producer for purposes of taxation and reporting to the division.
The bill defines a “licensing agreement” as an agreement between a licensor and a producer for the production of alcohol beverages containing the name, symbol, or mark of the licensor. A producer may enter into a written licensing agreement with a licensor authorizing the producer-licensee to use the licensor’s trademark or name if the producer-licensee is entirely responsible for producing the alcohol beverages and for all related processing steps and regulatory requirements.
The bill also specifies that a producer entering into a contract production arrangement, alternating proprietorship arrangement, or licensing agreement does not act as an agent for or in the employ of another with respect to certain provisions of current law.
Common carrier shipments
The bill prohibits a common carrier from transporting or delivering alcohol beverages into or within this state, other than to an alcohol beverage licensee or permittee, unless the common carrier first obtains a permit from the division. This permit authorizes a common carrier only to transport or deliver into or within this state wine on behalf of a person holding a Wisconsin direct wine shipper’s permit, which generally may be an in-state or out-of-state winery, or on behalf of a person holding a fulfillment house permit (discussed below). A common carrier must pay an annual permit fee of $1,000. A common carrier that fails to obtain a permit prior to commencing delivery of alcohol beverages in this state is subject to a fine of not more than $10,000. A common carrier that ships alcohol beverages other than wine obtained from a direct wine shipper permittee or fulfillment house permittee is subject to a forfeiture of not more than $2,000, and the division must revoke the common carrier’s permit if the common carrier violates this prohibition in more than one month during a calendar year.
The bill also requires a common carrier that holds a common carrier permit to submit a monthly report to the division that includes all of the following information for each shipment of alcohol beverages during the preceding month: 1) the name and address of the manufacturer of the alcohol beverages; 2) the name and address of the consignor of the shipment, if different from the manufacturer; 3) the name and address of the consignee of the shipment; 4) the date of the shipment; 5) the type and quantity of alcohol beverages shipped to the consignee, as reported to the common carrier; and 6) the parcel tracking number for the shipment. The division must keep confidential the name and address of the consignee and the parcel tracking number, but other information in the reports is not confidential and is subject to the public records law. A common carrier required to submit reports under the bill must maintain for three years all records related to the reports. A common carrier that fails to submit a required report is subject to a forfeiture of not more than $2,000.
Fulfillment houses and direct wine shipping
Under current law, DOR may issue a direct wine shipper’s permit to any person that manufactures and bottles wine on premises covered by a winery permit, manufacturer’s permit, or rectifier’s permit issued by DOR; a winery license issued by another state; or a federal winery permit. A direct wine shipper’s permit issued by DOR authorizes the permittee to ship wine directly to an individual in this state who is of the legal drinking age, who acknowledges receipt of the wine shipped, and who is not intoxicated at the time of delivery.
Current law, with limited exceptions, prohibits a person from shipping alcohol beverages into this state unless the person holds an out-of-state shipper’s permit issued by DOR and the alcohol beverages are shipped to an in-state wholesaler. However, one exception allows an out-of-state winery to ship wine directly to a consumer in this state if the winery holds a direct wine shipper’s permit.
The bill requires a person operating a fulfillment house to obtain from the division a fulfillment house permit for each location that is involved in the process of shipping wine to Wisconsin residents. A “fulfillment house” is defined as any entity, whether located in this state or elsewhere, that handles logistics, including warehousing, packaging, order fulfillment, or shipping services, on behalf of a direct wine shipper permittee for wine that is eligible to be shipped to individuals in this state. A person holding a fulfillment house permit may provide services only for the warehousing, packaging, order fulfillment, and shipment of alcohol beverages produced by and belonging to a direct wine shipper permittee.
Under the bill, a fulfillment house permittee must ensure that all containers of wine shipped directly to an individual in this state are labeled with all of the following information: 1) the words “CONTAINS ALCOHOL: SIGNATURE OF PERSON AGE 21 OR OLDER REQUIRED FOR DELIVERY”; 2) the name, address, and permit number of the fulfillment house permittee; and 3) the name, address, and permit number of the direct wine shipper permittee on whose behalf the wine is shipped.
The bill prohibits a fulfillment house permittee from shipping into this state wine from any person not holding a direct wine shipper’s permit. A fulfillment house permittee may ship wine into this state only by using a common carrier that holds a common carrier permit issued by the division. Prior to shipping wine to an individual in this state, a fulfillment house permittee must verify the validity of the direct wine shipper’s permit and common carrier permit associated with the direct-to-consumer shipment. A fulfillment house that fails to obtain a required fulfillment house permit is subject to a fine of not more than $10,000. A fulfillment house that ships alcohol beverages other than wine obtained from a direct wine shipper permittee is subject to a forfeiture of not more than $2,000. The division must revoke the permit of a fulfillment house that violates this prohibition in more than one month during a calendar year.
The bill requires a fulfillment house permittee to submit a monthly report to the division that includes all of the following information for each shipment of alcohol beverages during the preceding month: 1) the name and address of the manufacturer of the alcohol beverages; 2) the name and address of the consignor of the shipment, if different from the manufacturer; 3) the name and address of the consignee of the shipment; 4) the date of the shipment; 5) the type and quantity of alcohol beverages shipped to the consignee; and 6) the parcel tracking number for the shipment. The division must keep confidential the name and address of the consignee and the parcel tracking number, but other information in the reports is not confidential and is subject to the public records law. A fulfillment house required to submit reports under the bill must maintain for three years all records related to the reports. A fulfillment house that fails to submit a required report is subject to a forfeiture of not more than $2,000.
The bill allows a direct wine shipper permittee (including a Wisconsin winery holding such a permit) to arrange with a fulfillment house to ship wine on the direct wine shipper permittee’s behalf only if the fulfillment house holds a fulfillment house permit. The bill also requires a direct wine shipper permittee to use a common carrier holding a common carrier permit in shipping any container of wine directly to an individual in this state.
The bill also creates a fulfillment house exception to the current law provision that generally prohibits any person from shipping alcohol beverages into this state unless the person holds an out-of-state shipper’s permit issued by DOR and the alcohol beverages are shipped to an in-state wholesaler.
The bill also specifies that a direct wine shipper permittee may ship directly to an individual in this state only wine manufactured or bottled by the permittee.
Jurisdiction over out-of-state permittees; violation of another state’s law
Current law provides for the issuance of the following alcohol beverage permits to persons located outside this state: 1) an out-of-state beer shipper’s permit; 2) an out-of-state liquor shipper’s permit; and 3) a direct wine shipper’s permit. Subject to various restrictions, an out-of-state beer shipper’s permit authorizes a person located outside this state to ship beer into this state to a person holding a beer wholesaler’s permit. An out-of-state liquor shipper’s permit, subject to various restrictions, authorizes a person located outside this state to ship intoxicating liquor into this state to a person holding a liquor wholesaler’s permit, a manufacturer’s or rectifier’s permit, or a winery permit. As discussed more fully above, a direct wine shipper’s permit authorizes direct-to-consumer wine shipments from in-state or out-of-state wineries to individuals in this state.
The bill requires holders of out-of-state beer shippers’ permits, out-of-state liquor shippers’ permits, and direct wine shippers’ permits who are located outside of this state to consent to jurisdiction in this state for proceedings to enforce this state’s alcohol beverage laws. These permittees must also accept service of process for proceedings in this state to enforce this state’s alcohol beverage laws. To this end, these permittees must satisfy specified requirements relating to appointing and maintaining in this state an agent for service of process. The bill also includes other provisions relating to requirements imposed on these permittees.
The bill also authorizes the division to revoke or suspend an alcohol beverage license or permit if the licensee or permittee ships alcohol beverages into another state in violation of that state’s law.
Consumption of alcohol beverages in a public place
Under current law, an owner or other person in charge of a public place may not permit the consumption of alcohol beverages on the premises of the public place unless the person has an appropriate retail license. Current law does not define “public place” for purposes of this provision, but current law defines “premises” as the area described in an alcohol beverage license or permit. There are various exceptions to this prohibition, including for county parks, athletic fields and stadiums, and churches, and also for municipalities and clubs.
The bill specifies that, for purposes of this prohibition, a “public place” includes a venue, location, open space, room, or establishment that is 1) accessible and available to the public to rent for an event or social gathering; 2) held out for rent to the public for an event or social gathering; or 3) made available for rent to a member of the public for an event or social gathering. However, a public place does not include any of the following: 1) a room in a hotel, motel, or bed and breakfast that is used for overnight accommodations; 2) vacation rental property, or other property of temporary lodging, that is used for overnight accommodations if the property is furnished with sufficient beds for all adult guests to sleep; 3) a campsite on a campground; 4) a parking lot, driveway, or yard where vehicles may be parked on the same day as a professional or collegiate sporting event or other ticketed event open to the public; or 5) property within a local professional football stadium or baseball park district if the property is used in connection with, and on the same day as, a professional football or baseball game, or other ticketed event open to the public, held at the football stadium or baseball park.
The bill also allows an owner or other person in charge of a public place to permit the consumption of alcohol beverages if the person has obtained a no-sale event venue permit issued by the division (discussed below). The bill further clarifies that the public place prohibition discussed above applies on all property, not just on licensed premises.
No-sale event venue permit
The bill creates a no-sale event venue permit issued by the division to property owners authorizing the permittee to rent or lease real property for use as an event venue at which beer and wine are consumed on no more than six days per year and one day per month. A permittee may not sell or otherwise provide alcohol beverages to the renter or lessee of the event venue or a guest or attendee of the event, nor may the permittee allow any person to possess distilled spirits on the event venue when the event venue is being used by a renter or lessee. Subject to certain restrictions, a no-sale event venue permit authorizes the permittee to do any of the following: 1) allow the renter or lessee of the event venue to bring the renter’s or lessee’s own beer and wine onto the event venue and serve it to guests without charge; 2) allow the guests of the renter or lessee to bring beer and wine onto the event venue to be consumed by the guests without charge; 3) allow the renter or lessee to obtain temporary Class “B” and “Class B” licenses for an event held on the event venue and sell beer and wine under the temporary licenses on the event venue; or 4) allow the renter or lessee to contract with a licensed caterer for the caterer to provide beer and wine to the renter or lessee and guests without charge on the event venue. If the renter or lessee contracts with a caterer, the renter or lessee and guests may not bring alcohol beverages onto the event venue. The renter or lessee must first purchase the beer and wine in a face-to-face transaction on the caterer’s retail licensed premises. The caterer may then deliver and serve the alcohol beverages at the event venue, but service must be performed by licensed bartenders.
Under the bill, the lessee or renter of an event venue may not sell any alcohol beverages to guests or attendees of an event on the event venue, including charging admission for an event at which alcohol beverages are served, unless the lessee or renter has obtained a temporary retail license. The lessee or renter may not allow any person to possess distilled spirits on the event venue. If there are 20 or more people on the event venue, service of beer and wine must be performed by a licensed bartender.
A no-sale event venue permit may be issued to a person who holds a retail license but may not be issued to a person who holds a permit as a brewer, brewpub, winery, manufacturer or rectifier, beer wholesaler, liquor wholesaler, out-of-state beer shipper, or out-of-state liquor shipper.
Quota exception for certain persons opting out of no-sale event venue permit
Current law imposes a quota on the number of “Class B” licenses that a municipality may issue. This quota is generally determined by a formula based on the number of licenses previously issued by the municipality and the municipality’s population. Current law also provides a limited number of quota exceptions.
The bill creates a quota exception for an event venue that the division has certified as meeting specified criteria. Under the bill, a “qualifying event venue” is defined as real property that is rented or leased for use as an event venue for private events, and, under the definition, in the prior 12-month period, there must have been at least five events held at the venue at which at least 50 invited guests attended and the venue owner must have received at least $20,000 in revenue from renting or leasing the venue for these events. Upon application, the division must certify an owner of a qualifying event venue as eligible for the quota exception if 1) the venue is and has been in operation for the 12-month period preceding the application; 2) the venue has not been a retail licensed premises during this 12-month period; 3) the venue owner has not applied for a no-sale event venue permit; 4) the venue owner provides documentation that the municipality in which the venue is located has reached its liquor license quota; 5) the venue owner provides documentation showing, and the division confirms, that the venue meets the definition of a qualifying event venue and has been in operation as described in item 1 above; and 6) the venue owner provides notice to the division within 60 days after the bill’s effective date that the owner is applying for a “Class B” license and is not seeking a no-sale event venue permit. The division must act on an application for certification within 30 days of the application. A municipality may issue for a certified venue an above-quota “Class B” license under this quota exception only if the license application is received by approximately six months after the bill’s effective date. In general, if a “Class B” license issued under this quota exception is revoked or not renewed, the municipality may not reissue the license. However, the municipality may reissue the license under certain circumstances if the event venue property or business is sold.
“Class C” retail licenses
Under current law, a “Class C” license may be issued for a restaurant in which the sale of alcohol beverages accounts for less than 50 percent of gross receipts and that either does not have a barroom or has a barroom in which wine is the only intoxicating liquor sold. A “Class C” license authorizes the retail sale of wine by the glass or in an opened original container for consumption on the retail premises. A “Class C” license may not be issued to a foreign corporation or a foreign limited liability company.
The bill eliminates the limitation that a “Class C” license may be issued only for a restaurant. The bill also removes the prohibition on issuing a “Class C” license to a foreign corporation or foreign LLC.
Retailer purchases of beer from nonwholesaler
Under current law, with exceptions for certain sales of beer by brewers and brewpubs, a retail licensee may not purchase alcohol beverages from, or possess alcohol beverages purchased from, any person other than a wholesaler. If a retail licensee purchases or possesses beer in violation of this prohibition, the penalty that may be imposed is a fine of not more than $10,000 or imprisonment for not more than nine months or both.
The bill changes this penalty. If a retail licensee purchases or possesses beer in violation of the prohibition, the penalty that may be imposed (or must be imposed if item 3, below, applies) is one of the following:
1. If a Class “B” licensee purchases beer from a Class “A” licensee for resale or possesses beer purchased from a Class “A” licensee for resale, a fine of not more than $100.
2. If item 1 does not apply and the total volume of beer purchased or possessed in one month is 4,320 fluid ounces (15 cases) or less, a forfeiture of not more than $100.
3. If neither item 1 nor item 2 applies, a fine of not more than $10,000 or imprisonment for not more than nine months or both.
Cooperative wholesalers
Under current law, between October 1 and December 31, 2008, DOR was authorized to issue liquor wholesalers’ permits to small winery cooperatives (cooperative wholesalers). DOR was limited to issuing a total of six such permits. Only wineries certified by DOR as small wineries can be members of a cooperative wholesaler. A “small winery” is defined as a winery that produces and bottles less than 25,000 gallons of wine in a calendar year. The only alcohol beverage product a cooperative wholesaler can sell and distribute is the wine of its members, and this wine can be sold or distributed only to retailers or other wholesalers.
The bill changes the definition of a small winery so that a winery that produces and bottles in a calendar year less than 50,000 gallons of wine, rather than 25,000 gallons, may be a member of a cooperative wholesaler.
The bill also allows manufacturers and rectifiers that produce and bottle less than 50,000 gallons of intoxicating liquor in a calendar year to be members of a cooperative wholesaler. The cooperative wholesaler may sell and distribute the intoxicating liquor of its members. The bill allows for the formation of new cooperative wholesalers for approximately six months after the bill’s effective date, but the division may not issue new wholesalers’ permits that cause the total number of wholesalers’ permits issued to cooperative wholesalers to exceed six.
