Bill Text: AZ HB2876 | 2020 | Fifty-fourth Legislature 2nd Regular | Introduced
Bill Title: Farm wineries; production
Spectrum: Slight Partisan Bill (Republican 14-5)
Status: (Introduced - Dead) 2020-02-26 - House minority caucus: Do pass [HB2876 Detail]
Download: Arizona-2020-HB2876-Introduced.html
|
REFERENCE TITLE: farm wineries; production |
|
State of Arizona House of Representatives Fifty-fourth Legislature Second Regular Session 2020
|
|
HB 2876 |
|
|
|
Introduced by Representatives Weninger: Allen J, Biasiucci, Bolick, Chávez, Cobb, Espinoza, Finchem, Grantham, Griffin, Hernandez D, Kavanagh, Meza, Nutt, Pierce, Rivero, Sierra, Thorpe, Toma
|
AN ACT
amending sections 4-203.04, 4-205.04 and 4-243.01, arizona revised statutes; relating to farm wineries.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 4-203.4, Arizona Revised Statutes, is amended to read:
4-203.04. Direct shipment license; issuance; fee; requirements; renewal; civil penalties; limitations; duties; violation; classification; applicability
A. The director may issue a direct shipment license to any winery that holds a federal basic permit issued by the United States alcohol and tobacco tax and trade bureau and a current license to produce wine issued by this state or any other state. A farm winery licensed pursuant to section 4‑205.04 and a winery holding a producer's license or a limited producer's license issued by this state may also hold a direct shipment license.
B. A person shall apply for a direct shipment license on a form prescribed and provided by the director. The director may charge an application issuance fee to be used for administrative costs associated with the direct shipment license. An application for a direct shipment license shall include:
1. The address of the premises where the applicant's principal place of business is located.
2. The name, address and telephone number of an officer of the applicant or an individual who is authorized to represent the applicant before the director.
3. A complete and full disclosure by the applicant and by any officer, director, administrator or controlling person of the applicant of any criminal convictions in any state or foreign jurisdiction within the five years immediately preceding the application.
4. The applicant's farm winery license, producer's license or limited producer's license number or, for a winery that is not currently licensed by this state, a copy of the winery's federal basic permit issued by the United States alcohol and tobacco tax and trade bureau and a copy of that winery's current license to produce wine that is issued by another state.
5. The applicant's transaction privilege tax number issued by the department of revenue for the payment of transaction privilege taxes and luxury taxes on wine that is sold to purchasers in this state under the license.
C. The director may refuse to issue a direct shipment license for good cause. The director may not issue a direct shipment license to any person who:
1. Has had a direct shipment license or any other license to deal in spirituous liquor revoked in this state or any other state within one year preceding the application.
2. Has been convicted of a felony in this state or any other state or has been convicted of an offense in another state that would be a felony if convicted in this state within five years immediately preceding the application.
D. A direct shipment license is valid for one year. Direct shipment licenses may not be transferred. A person that holds a direct shipment license may apply for a renewal before the expiration of the person's current license. The director may charge a license renewal fee to be used for administrative costs associated with the direct shipment license, auditing and enforcement.
E. After notice and a hearing pursuant to title 41, chapter 6, article 10, the director may suspend, revoke or refuse to renew a direct shipment license for any violation of this section or for good cause. Any act or omission of a person who makes a sale or delivery of wine for a licensee under subsection F of this section is deemed to be an act or omission of the licensee for the purposes of section 4‑210, subsection A, paragraph 9. In lieu of suspension, revocation or refusal to renew a license, the director may impose a civil penalty pursuant to section 4‑210.01 against a licensee for each violation of this section. The licensee may appeal the finding or decision of the director to the board. The board may affirm, modify or reverse the finding or decision of the director.
F. Notwithstanding any other law, a licensee annually may sell and ship nine-liter cases of wine that is produced by the licensee directly to a purchaser in this state pursuant to all of the following:
1. The licensee may sell and ship:
(a) Until December 31, 2017, up to six nine‑liter cases of wine.
(b) Beginning January 1, 2018 and until December 31, 2018, up to nine nine‑liter cases of wine.
(c) Beginning January 1, 2019 and for each year thereafter, up to twelve nine‑liter cases of wine.
2. The wine may be ordered by any means, including telephone, mail, fax or the internet.
3. The wine is for personal use only and not for resale.
4. Before shipping the wine, the licensee shall verify the age of the purchaser who is placing the order by obtaining a copy of the purchaser's valid photo identification as prescribed in section 4‑241, subsection K demonstrating that the person is at least twenty‑one years of age or by using an age verification service.
5. The wine may be shipped to a residential or business address but not to a premises licensed pursuant to this title.
6. All containers of wine shipped pursuant to this subsection shall be conspicuously labeled with the words "contains alcohol, signature of person age 21 or older required for delivery".
7. The licensee may not sell or ship wine to a purchaser pursuant to this subsection unless the purchaser could have carried the wine lawfully into or within this state.
8. The delivery must be made by a person who is at least twenty-one years of age.
9. The delivery must be made only during the hours of lawful service of spirituous liquor to a person who is at least twenty‑one years of age.
10. The delivery must be made only after inspection of the valid photo identification as prescribed in section 4‑241, subsection K of the person accepting delivery that demonstrates that the person is at least twenty‑one years of age.
11. Payment for the price of the wine must be collected by the licensee not later than at the time of delivery.
G. A licensee shall:
1. Not later than January 31 of each year, file a report regarding the wine shipped to purchasers in this state during the preceding calendar year that includes the information required in paragraph 2 of this subsection.
2. Complete a record of each shipment at the time of shipment. The licensee shall ensure that the record provides the following information:
(a) The name of the licensee making the shipment.
(b) The address of the licensee making the shipment.
(c) The license number.
(d) The date of shipment.
(e) The address at which delivery is to be made.
(f) The amount shipped.
3. On request, allow the director or the department of revenue to perform an audit of the records of wine shipped to purchasers in this state. The director may request the licensee submit records to demonstrate compliance with this section. The licensee shall maintain records of each shipment of wine made to purchasers in this state for two years.
4. Be deemed to have consented to the jurisdiction of the department, any other agency of this state, the courts of this state and all related laws, rules or regulations.
5. Pay the department of revenue all transaction privilege taxes and luxury taxes on sales of wine under the direct shipment license to purchasers in this state. For transaction privilege tax and luxury tax purposes, all wine sold pursuant to this section shall be deemed to be sold in this state.
6. Ship not more than the total number of nine-liter cases of wine authorized under subsection F, paragraph 1 of this section to any purchaser in this state in any calendar year for personal use.
H. A person who knowingly sells and ships wine directly to a purchaser in this state shall be deemed to have consented to the jurisdiction of the department, any other agency of this state, the courts of this state and all related laws, rules or regulations. A person who knowingly sells and ships wine directly to a purchaser in this state is guilty of a class 2 misdemeanor if either:
1. The person does not possess a current direct shipment license.
2. The person does not possess a current farm winery license for a winery that produces twenty thousand gallons or less of wine in the previous calendar year.
I. Section 4‑201 does not apply to licenses issued pursuant to this section.
J. Common carriers, other than railroads as defined in section 40‑201, that transport wine into and within this state shall:
1. Keep records of wine shipped to purchasers in this state, including the direct shipment licensee's name and address, the recipient's name and address, the shipment and delivery dates and the weight of wine shipped.
2. Remit the records kept pursuant to paragraph 1 of this subsection on request of the department.
K. Farm winery licensees under section 4‑205.04 that produced twenty thousand gallons of wine or less in the preceding calendar year may ship wine directly to purchasers in this state pursuant to section 4‑205.04 and are exempt from the requirements of this section, including the case limitations prescribed in subsection F of this section.
L. The director shall begin issuing direct shipment licenses pursuant to this section not later than January 1, 2017.
Sec. 2. Section 4-205.04, Arizona Revised Statutes, is amended to read:
4-205.04. Farm winery license; issuance; regulatory provisions; retail site; fee
A. The director may issue a farm winery license to any person who meets the requirements of subsection C of this section. Each location that engages in producing or manufacturing these products must obtain a separate farm winery license. The licensee may not transfer the farm winery license from person to person or from location to location.
B. An applicant for a farm winery license, at the time of filing the application for the license, shall accompany the application with the license fee. A person who holds a farm winery license shall report annually at the end of each calendar year, at the time and in the manner as the director prescribes, the amount of wine produced or manufactured by the licensee during the calendar year. In addition to any provision of this title, if the total amount of wine produced or manufactured during the year exceeds the amount permitted annually by the license, the licensee shall apply for and receive a producer's license only on surrender of the farm winery license or licenses.
C. A person may be licensed as a farm winery to sell wine produced or manufactured if in a calendar year it produces at least two hundred gallons and not more than forty thousand gallons of wine and if the winery either holds a winery permit issued by the United States alcohol and tobacco tax and trade bureau or has a contract pursuant to subsection E of this section for the production or manufacturing of wine from grapes or other fruit grown on at least five producing acres of land owned or controlled by the applicant and the land has been devoted to fruit growing for at least three consecutive calendar years. A licensed farm winery or remote tasting room may make sales and deliveries of wine only as specifically provided in this section and as follows:
1. A licensed farm winery or remote tasting room may make sales and deliveries of wine to wholesalers licensed to sell wine under this title.
2. A licensed farm winery or remote tasting room may serve wine produced or manufactured on the premises for the purpose of sampling the wine. The wine may include wine produced pursuant to subsections D and E of this section.
3. A representative of the licensed farm winery or remote tasting room may consume small amounts of the products of the licensed farm winery on the premises for the purpose of sampling the wine. The wine may include wine produced pursuant to subsections D and E of this section.
4. A licensed farm winery or remote tasting room may sell to a consumer physically present on the premises wine produced or manufactured on the premises in the original container for consumption on or off the premises. The wine may include wine produced pursuant to subsections D and E of this section.
5. A licensed farm winery or remote tasting room may purchase and sell wine produced, packaged and labeled by another licensed farm winery for sampling and consumption on or off the premises only if the retail sale is to a consumer physically present on the premises of the farm winery, except that the sales of wine produced, packaged and labeled by another winery may not exceed twenty percent of the farm winery's sales by volume. The percentage limitation shall not apply to wine produced pursuant to subsections D and E of this section.
6. If the licensed farm winery or remote tasting room is not otherwise engaged in the business of a distiller, vintner, brewer, rectifier, blender or other producer of spirituous liquor in any jurisdiction, the licensed farm winery or remote tasting room may hold additional retail licenses prescribed in section 4‑209, subsection B, paragraph paragraphs 7 and 12 on the licensed farm winery premises or other retail premises. Except as provided in paragraph 5 of this subsection, the licensed farm winery shall purchase all other spirituous liquor for sale at the on-sale retail premises from wholesalers that are licensed in this state, except that a licensed farm winery may:
(a) Purchase wine from other farm wineries pursuant to paragraph 7 of this subsection.
(b) Make deliveries of the wine that the farm winery produces to the farm winery's own commonly controlled retail licensed premises.
7. A licensed farm winery that produces not more than twenty thousand gallons of wine in a calendar year or remote tasting room may make sales and deliveries of the wine that the licensed farm winery produces to on-sale and off‑sale retailers.
8. Notwithstanding section 4‑244, paragraphs 3 and 7, an on-sale or off‑sale retailer may purchase and accept delivery of wine from a licensed farm winery or remote tasting room pursuant to paragraph 7 of this subsection.
9. A licensed farm winery that produces not more than twenty thousand gallons of wine in a calendar year or remote tasting room may make sales and deliveries of wine that the licensed farm winery produces to consumers off of the licensed premises and that is ordered by telephone, mail, fax or catalogue, through the internet or by other means if all of the following apply:
(a) The purchaser of the wine provided the licensed farm winery with verification of the purchaser's legal age to purchase alcohol.
(b) The shipping container in which the wine is shipped is marked to require the signature on delivery of an adult who is of legal age to purchase alcohol and delivery confirmation.
(c) The wine is for personal use only and not for resale.
(d) The wine is delivered by the licensed farm winery or shipped by the licensed farm winery by a common carrier to a residential or business address other than a premises licensed pursuant to this title.
(e) The purchaser could have carried the wine lawfully into or within this state.
(f) The delivery is made by a person who is at least twenty-one years of age.
(g) The farm winery collects payment for the price of the spirituous liquor no not later than at the time of delivery.
10. A licensed farm winery or remote tasting room may make sales and deliveries as expressly permitted allowed by sections 4‑203.03, 4‑203.04 and 4‑244.04.
D. On application by one or more persons, the director may approve applications for grouping two or more farm winery licenses at one location under a plan of alternating proprietorships if a licensed winery has received approval of the alternating proprietorship by the United States alcohol and tobacco tax and trade bureau and the participating wineries operate under the regulations and guidelines that are issued by the United States alcohol and tobacco tax and trade bureau. Each participating winery is responsible for filing all reports that relate to its wine production or manufacturing with the United States alcohol and tobacco tax and trade bureau and the department.
E. A person otherwise qualified to receive a farm winery license may enter into a custom crush arrangement where a licensed winery produces or manufactures wine from grapes or other fruit supplied by the person. The winery receiving the fruit shall be licensed by the United States alcohol and tobacco tax and trade bureau and the department and is responsible for filing all reports that relate to its wine production or manufacturing with the United States alcohol and tobacco tax and trade bureau and the department. Each person supplying the grapes or other fruit shall first apply for and receive a farm winery license and shall report to the department all volumes of wine from its custom crush arrangements, which shall not be allocated to the gallonage of the receiving farm winery if the supplying farm winery has an active basic permit issued by the United States alcohol and tobacco tax and trade bureau.
F. On application by a farm winery licensee, the director may authorize a farm winery licensee to operate up to two remote tasting and retail premises if:
1. The wine sold at the premises is limited to wine produced or manufactured by the licensed farm winery and wines produced or manufactured by other licensed farm wineries, including wines produced or manufactured pursuant to subsections D and E of this section. The farm winery may sell wine to a consumer physically present on the premises consumers for consumption on or off the premises. Sales of wines not produced or manufactured by the farm winery are limited to no not more than twenty percent of the total sales by volume at that location. The percentage limitation shall not apply to wine produced pursuant to subsections D and E of this section.
2. The farm winery licensee:
(a) Remains responsible for the premises.
(b) Obtains approval for the premises from the local governing body before submitting an application to the department. A copy of an order from the local governing body recommending approval of the premises must be filed with the department as part of the application.
(c) Does not sublease the premises.
(d) Has an agent who is a natural person who meets the qualifications of licensure in this state.
(e) Meets the qualifications for a license pursuant to section 4‑203, subsection A.
G. A farm winery licensee may hold a craft distiller license issued pursuant to section 4‑205.10. The farm winery and craft distiller licensee is subject to all other requirements of this section and section 4‑205.10. The farm winery may provide sampling and sales of the distilled spirits pursuant to section 4‑205.10, subsection C, paragraphs 2 and 3 on the same premises as the wine sampling and retail sales.
H. The farm winery is liable for any violation committed in connection with any sale or delivery of the wine. The rules adopted by the director pursuant to section 4‑203, subsection J apply to the delivery of wine under subsection C, paragraph 9 of this section. An act or omission of any person who makes a sale or delivery of wine for a licensee under subsection C, paragraph 9 of this section is deemed to be an act or omission of the licensee for the purposes of section 4‑210, subsection A, paragraph 9.
I. A farm winery that sells or delivers wine pursuant to this section shall:
1. Pay to the department of revenue all luxury taxes imposed pursuant to title 42, chapter 3 and all transaction privilege or use taxes imposed pursuant to title 42, chapter 5.
2. File all returns or reports required by law.
J. A delivery of wine by a farm winery to a purchaser in this state is a transaction deemed to have occurred in this state.
K. The director shall adopt rules in order to administer this section.
L. The director may charge an additional farm winery license fee adopted pursuant to section 4‑209 for the issuance of licenses, authorizations or approvals pursuant to subsections D, E and F of this section.
M. The farm winery licensee that operates primarily as a remote tasting room premises may exchange the farm winery license for a remote tasting room license without an additional fee, not later than December 31, 2018. The new remote tasting room license must be connected to a farm winery license, with common ownership, that complies with all requirements for a farm winery license pursuant to subsections C and F of this section.
N. Production and storage space of the farm winery is excluded from the licensed farm winery premises and is not the public area unless that space is also used for the sale of wine to the public or consumption of or sampling of wine by the public or to provide other services to the public. Pursuant to section 4‑118, the director, the director's agents or any peace officer may inspect spaces excluded by this subsection. For the purposes of this subsection, "public area" means a place within a farm winery that is accessible to the public and in which the farm winery authorizes the presence of members of the public.
Sec. 3. Section 4-243.01, Arizona Revised Statutes, is amended to read:
4-243.01. Purchasing from other than primary source of supply unlawful; definitions
A. It is unlawful:
1. For any supplier to solicit, accept or fill any order for any spirituous liquor from any wholesaler in this state unless the supplier is the primary source of supply for the brand of spirituous liquor sold or sought to be sold and is duly licensed by the board.
2. For any wholesaler or any other licensee in this state to order, purchase or receive any spirituous liquor from any supplier unless the supplier is the primary source of supply for the brand ordered, purchased or received.
3. Except as provided by section 4‑243.02 for a retailer to order, purchase or receive any spirituous liquor from any source other than any of the following:
(a) A wholesaler that has purchased the brand from the primary source of supply.
(b) A wholesaler that is the designated representative of the primary source of supply in this state and that has purchased such spirituous liquor from the designated representative of the primary source of supply within or without this state.
(c) A registered retail agent pursuant to section 4‑101.
(d) A farm winery licensed under section 4‑205.04 and subject to the limitations prescribed in section 4‑205.04, subsection C, paragraph 7.
(e) A licensed microbrewery licensed under section 4‑205.08.
B. All spirituous liquor shipped into this state shall be invoiced to the wholesaler by the primary source of supply. All spirituous liquor shall be unloaded and remain at the wholesaler's premises for at least twenty‑four hours. A copy of each invoice shall be transmitted by the wholesaler and the primary source of supply to the department of revenue.
C. The director may suspend for a period of one year the license of any wholesaler or retailer who violates this section.
D. Upon on determination by the department of revenue that a primary source of supply has violated this section, no a wholesaler may not accept any shipment of spirituous liquor from such primary source of supply for a period of one year.
E. For the purposes of this section:
1. "Primary source of supply" means the distiller, producer, owner of the commodity at the time it becomes a marketable product, bottler or exclusive agent of any such distributor or owner. In the case of imported products, the primary source of supply means either the foreign producer, owner, bottler or agent or the prime importer from, or the exclusive agent in, the United States of the foreign distiller, producer, bottler or owner.
2. "Wholesaler" means any person, firm or corporation that is licensed in this state to sell to retailers and that is engaged in the business of warehousing and distributing brands of various suppliers to retailers generally in the marketing area in which the wholesaler is located.
