Bill Text: AZ SB1437 | 2015 | Fifty-second Legislature 1st Regular | Introduced
Bill Title: Microbrewery licenses; producer limitations
Spectrum: Slight Partisan Bill (Republican 11-5)
Status: (Failed) 2015-02-09 - Senate CWD Committee action: Held [SB1437 Detail]
Download: Arizona-2015-SB1437-Introduced.html
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REFERENCE TITLE: microbrewery licenses; producer limitations |
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State of Arizona Senate Fifty-second Legislature First Regular Session 2015
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SB 1437 |
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Introduced by Senator Smith; Representatives Coleman, Mach: Senators Begay, Bradley, Contreras; Representatives Borrelli, Boyer, Cardenas, Fann, Finchem, Gray, Hale, Leach, Livingston, Pratt
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AN ACT
repealing section 4‑205.08, Arizona Revised Statutes; amending Title 4, chapter 2, article 1, Arizona Revised Statutes, by adding a new section 4‑205.08; amending section 4‑243.02, Arizona Revised Statutes; relating to liquor licenses.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Repeal
Section 4-205.08, Arizona Revised Statutes, is repealed.
Sec. 2. Title 4, chapter 2, article 1, Arizona Revised Statutes, is amended by adding a new section 4-205.08, to read:
4-205.08. Microbrewery license; report; issuance; regulatory provisions; fees
A. The director may issue a microbrewery license to any person that meets the requirements of subsection C of this section. Each location that engages in producing, manufacturing and bottling beer must obtain a separate microbrewery license. The licensee may not transfer the microbrewery license from person to person or from location to location. As provided in subsection C of this section, a microbrewery licensee may produce or manufacture not less than five thousand gallons but not more than one million two hundred forty thousand gallons of beer in a calendar year if the licensee directly or indirectly holds or controls any interest, or is affiliated with or is under the common control with any other person with any direct or indirect interest, in not more than one microbrewery license or microbrewery licensee. As provided in subsection D of this section, a microbrewery licensee may produce or manufacture not less than five thousand gallons at each location but not more than a total of four million nine hundred sixty thousand gallons of beer at all locations in a calendar year if the licensee directly or indirectly holds or controls any interest, or is affiliated with or is under the common control with any other person with any direct or indirect interest, in more than one microbrewery license or microbrewery licensee.
B. A person who holds a microbrewery license shall report annually at the end of each calendar year, at such time and in such manner as the director may prescribe, the amount of beer that is produced or manufactured by that licensee during the calendar year. In addition to any other provision of this title, if the total amount of beer that is produced or manufactured during the year exceeds the amount that is permitted annually by the license, the licensee shall apply for and, on qualification, receive a producer's license only on the surrender of all microbrewery licenses and the licensee shall have no continuing rights as a microbrewery licensee under this section.
C. Except as provided in subsection D of this section, a person may be licensed to hold not more than one microbrewery license and may lawfully sell and deliver beer only as authorized in this section and subject to the following criteria:
1. The licensed microbrewery may not produce or manufacture less than five thousand gallons of beer in each calendar year after the first year of operation.
2. The licensed microbrewery may not produce or manufacture more than one million two hundred forty thousand gallons of beer in a calendar year.
3. The licensed microbrewery may sell and deliver beer to wholesalers that are licensed to sell beer under this title.
4. The licensed microbrewery may serve beer that is produced or manufactured on the premises for the purpose of consumption on the premises and may charge for samples on the premises of the microbrewery.
5. The licensed microbrewery may sell beer that is produced or manufactured on the premises in the original container for consumption off the premises to a consumer who is physically present on the premises.
6. The licensed microbrewery may hold one or more on‑sale retail licenses. The licensed microbrewery shall purchase all other spirituous liquor for sale at the on-sale retail premises from wholesalers that are licensed in this state, except that the licensed microbrewery may sell and deliver the beer that the microbrewery manufactures or produces to affiliated or commonly controlled retail licensees.
7. A licensed microbrewery that is not affiliated with or under common control with any other microbrewery and that produces not more than one million two hundred forty thousand gallons of beer in a calendar year may sell and deliver beer that the licensed microbrewery produces to retail licensees that are under common ownership with the microbrewery in any amount and to other on‑sale and off-sale retailers in an amount not to exceed a total of ninety‑three thousand gallons of beer in any calendar year.
8. Notwithstanding section 4-244, paragraphs 3 and 7, an on-sale or off-sale retailer may purchase and accept delivery of beer from the licensed microbrewery only as permitted by paragraph 7 of this subsection.
9. The licensed microbrewery may sell beer produced or manufactured by one or more microbrewery licensees for consumption on or off the premises of a licensed special event or licensed festival held for the purpose of charitable fund-raising activities for an organization that is exempt from federal income taxes under section 501(c)(3), 501(c)(4), 501(c)(6) or 501(c)(7) of the internal revenue code and not licensed under this title, if no microbrewery receives any remuneration or payment of any kind, directly or indirectly, related to the sale of the beer other than any tax benefits that might result from the donation of the proceeds from the sale of the beer for charitable purposes.
D. A person may be licensed to hold more than one microbrewery license. A person who holds more than one microbrewery license may produce and manufacture beer and may lawfully sell and deliver beer only as authorized in this section and subject to the following criteria:
1. Each licensed microbrewery may not produce or manufacture less than five thousand gallons of beer in each calendar year after the first year of operation.
2. In total, the licensed microbreweries may not produce or manufacture more than four million nine hundred sixty thousand gallons of beer in a calendar year.
3. The licensed microbreweries may sell and deliver beer to wholesalers that are licensed to sell beer under this title.
4. The licensed microbreweries may serve beer that is produced or manufactured on the premises for the purpose of consumption on the premises and may charge for samples on the premises of the microbrewery.
5. The licensed microbreweries may sell beer that is produced or manufactured on the premises in the original container for consumption off the premises to a consumer who is physically present on the premises.
6. The licensed microbreweries may hold one or more on‑sale retail licenses and shall purchase all other spirituous liquor for sale at the on‑sale retail premises from wholesalers that are licensed in this state.
7. The licensed microbreweries may sell and deliver beer that they have produced or manufactured in any amount to retail licensees that are affiliated with or under common ownership with the microbreweries that are on or adjacent to the premises authorized pursuant to this subsection.
8. The licensed microbreweries may sell beer produced or manufactured by one or more microbrewery licensees for consumption on or off the premises of a licensed special event or licensed festival held for the purpose of charitable fund-raising activities for an organization that is exempt from federal income taxes under section 501(c)(3), 501(c)(4), 501(c)(6) or 501(c)(7) of the internal revenue code and not licensed under this title, if no microbrewery receives any remuneration or payment of any kind, directly or indirectly, related to the sale of the beer other than any tax benefits that might result from the donation of the proceeds from the sale of the beer for charitable purposes.
E. A licensed microbrewery that sells or delivers beer pursuant to this section shall:
1. Pay to the department of revenue all luxury taxes that are imposed pursuant to title 42, chapter 3 and all transaction privilege or use taxes that are imposed pursuant to title 42, chapter 5.
2. File all returns or reports that are required by law.
F. A delivery of beer by a licensed microbrewery to a purchaser in this state is a transaction deemed to have occurred in this state.
G. A person who holds one or more microbrewery licenses may apply for and receive beer festival licenses as follows:
1. The director, subject to the approval of the board of supervisors for events to be held in an unincorporated area or the governing body of a city or town for events to be held in a city or town, may issue up to twenty‑five beer festival licenses for each calendar year to any person who holds one or more microbrewery licenses, for up to a total of seventy-five calendar days, authorizing sampling of beer products on the microbrewery festival premises, the sale of the products for consumption on the microbrewery festival premises and the sale of the products in original containers for consumption off the microbrewery festival premises. The director may establish a daily fee for each event for a microbrewery festival license.
2. With the permission of the state fair organizers or county fair organizers, any licensed microbrewery is authorized to allow sampling of its beer on the fair premises, the sale of its beer for consumption on the fair premises and the sale of its beer in original containers for consumption off of the fair premises at any sanctioned county or state fair. The director may establish a daily fee for each event for a microbrewery fair license.
3. Section 4-201 does not apply to the licenses prescribed by this subsection.
H. A person who holds a microbrewery LICENSE that meets the requirements of this section and who is not also engaged in the business of a distiller, vintner, brewer, rectifier, blender or any other producer of spirituous liquor in any jurisdiction may hold other on‑sale licenses. Except as provided in subsection C, paragraph 6 of this section and subsection D, paragraph 7 of this section, the person shall PURCHASE all SPIRITUOUS liquor for sale at the other on‑sale retail premises from wholesalers that are licensed in this state.
I. The director may adopt rules in order to carry out the purposes of this section.
Sec. 3. Section 4-243.02, Arizona Revised Statutes, is amended to read:
4-243.02. Sale of spirituous liquor by producer; limitations
A. A person who holds a producer's license may sell beer spirituous liquor produced by the producer through the producer's own on‑sale retail premises if:
1. The producer also holds an on‑sale retail license.
2. The retail sale of the beer spirituous liquor is on or adjacent to the premises of the producer.
B. A person who holds a producer's license may sell wine or distilled spirits produced by the producer at the producer's licensed premises.
Sec. 4. Applicability
A. This act does not affect the rights of any person who currently holds a retail, microbrewery or producer license granted by the department of liquor licenses and control on or before July 1, 2015, except as specifically provided in this section.
B. A person who holds any interest in any microbrewery license issued by the department of liquor licenses and control on or before July 1, 2015 and any interest in any retail licenses issued by the department of liquor licenses and control may continue to hold each retail license, if both of the following apply:
1. Each retail license continues to be held only by that person.
2. Each license remains in active use at the location where it was issued on July 1, 2015.
C. A person who holds any interest in any microbrewery license issued by the department of liquor licenses and control on or before July 1, 2015 and any interest in any producer license or out-of-state producer license issued by the department of liquor licenses and control on or before July 1, 2015, and who also holds any retail licenses issued by the department of liquor licenses and control, may continue to hold each retail license, if both of the following apply:
1. Each retail license continues to be held only by that person.
2. Each license remains in active use at the location where it was issued on July 1, 2015.
D. A person who holds any microbrewery licenses issued by the department of liquor licenses and control on or before July 1, 2015 and who also holds or controls any interest in any state producer or out-of-state producer licenses on or before July 1, 2015 may continue to hold or control the microbrewery licenses and producer licenses.
E. Existing microbrewery licenses issued pursuant to former section 4‑205.08, Arizona Revised Statutes, as repealed by this act, remain valid and in effect after the effective date of this act and shall be subject to section 4-205.08, Arizona Revised Statutes, as added by this act.
Sec. 5. Statement of purpose and intent
A. The purpose of this act is to conform Arizona laws regarding the intrastate and interstate sales and deliveries of spirituous liquor, including beer, and to ensure that Arizona law continues to conform to the commerce clause requirements articulated by the United States supreme court in Granholm v. Heald, 544 U.S. 460, 125 S.Ct. 1885 (2005), as confirmed by the ruling of the 9th circuit in Black Star Farms LLC v. Oliver, 600 F.3d 1225 (9th Cir. 2010), by adopting nondiscriminatory laws governing the production, sale and delivery of beer. This act is intended to provide for a method to regulate the sale and delivery of beer produced or manufactured by microbreweries, other than the specific exceptions established by existing law and this act. Therefore, it is the intent of the legislature and the purpose of this act to establish, maintain and retain the current three-tier method of regulating the sale and delivery of spirituous liquor, to promote temperance, to promote access to spirituous liquor by retailers in conformance with established policy against commercial coercion and bribery and to support and maintain the efficient revenue collection and enforcement law provided for by the three-tier system.
B. It is the intent of the legislature that no person who holds or controls, either directly or indirectly, any interest in any microbrewery license may be issued, hold or control any producer license without first surrendering all microbrewery licenses.
