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| Public Act 098-0021
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| HB2606 Enrolled | LRB098 09027 MGM 39163 b |
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AN ACT concerning liquor.
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Be it enacted by the People of the State of Illinois,
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represented in the General Assembly:
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Section 5. The Liquor Control Act of 1934 is amended by |
changing Section 6-2 and by adding Sections 6-1.5 and 6-4.5 as |
follows:
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(235 ILCS 5/6-1.5 new) |
Sec. 6-1.5. Three-tier regulatory system; public policy |
and rule of statutory construction. The General Assembly hereby |
restates that it is the policy of this State that the primary |
purpose of this Act is to protect the health, safety, and |
welfare of this State through the sound and careful control and |
regulation of the manufacture, distribution, and sale of |
alcoholic liquor through a 3-tier regulatory system. To ensure |
and maintain a 3-tier regulatory system, the General Assembly |
finds that it is the obligation and duty of the State |
Commission to construe the provisions of this Act in a manner |
that conforms to State policy and this Act's primary purpose as |
articulated in this Section and to exercise its statutory |
authority in a manner consistent with that purpose whether or |
not the provisions of this Act are unambiguous or capable of |
one or more reasonable constructions.
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(235 ILCS 5/6-2) (from Ch. 43, par. 120)
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Sec. 6-2. Issuance of licenses to certain persons |
prohibited.
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(a) Except as otherwise provided in subsection (b) of this |
Section and in paragraph (1) of subsection (a) of Section 3-12, |
no license
of any kind issued by the State Commission or any |
local
commission shall be issued to:
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(1) A person who is not a resident of any city, village |
or county in
which the premises covered by the license are |
located; except in case of
railroad or boat licenses.
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(2) A person who is not of good character and |
reputation in the
community in which he resides.
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(3) A person who is not a citizen of the United States.
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(4) A person who has been convicted of a felony under |
any Federal or
State law, unless the Commission determines |
that such
person has been sufficiently rehabilitated to |
warrant the public trust
after considering matters set |
forth in such person's application and the
Commission's |
investigation. The burden of proof of sufficient
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rehabilitation shall be on the applicant.
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(5) A person who has been convicted of keeping a place |
of prostitution or keeping a place of juvenile |
prostitution, promoting prostitution that involves keeping |
a place of prostitution, or promoting juvenile |
prostitution that involves keeping a place of juvenile |
prostitution.
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(6) A person who has been convicted of pandering or |
other crime or
misdemeanor opposed to decency and morality.
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(7) A person whose license issued under this Act has |
been revoked for
cause.
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(8) A person who at the time of application for renewal |
of any license
issued hereunder would not be eligible for |
such license upon a first
application.
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(9) A copartnership, if any general partnership |
thereof, or any
limited partnership thereof, owning more |
than 5% of the aggregate limited
partner interest in such |
copartnership would not be eligible to receive a
license |
hereunder for any reason other than residence within the |
political
subdivision, unless residency is required by |
local ordinance.
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(10) A corporation or limited liability company, if any |
member, officer, manager or director thereof, or
any |
stockholder or stockholders owning in the aggregate more |
than 5% of the
stock of such corporation, would not be |
eligible to receive a license
hereunder for any reason |
other than citizenship and residence within the
political |
subdivision.
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(10a) A corporation or limited liability company |
unless it is incorporated or organized in Illinois, or |
unless it
is a foreign corporation or foreign limited |
liability company which is qualified under the Business
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Corporation Act of 1983 or the Limited Liability Company |
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Act to transact business in Illinois. The Commission shall |
permit and accept from an applicant for a license under |
this Act proof prepared from the Secretary of State's |
website that the corporation or limited liability company |
is in good standing and is qualified under the Business
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Corporation Act of 1983 or the Limited Liability Company |
Act to transact business in Illinois.
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(11) A person whose place of business is conducted by a |
manager or agent
unless the manager or agent possesses the |
same qualifications required by
the licensee.
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(12) A person who has been convicted of a violation of |
any Federal or
State law concerning the manufacture, |
possession or sale of alcoholic
liquor, subsequent to the |
passage of this Act or has forfeited his bond to
appear in |
court to answer charges for any such violation.
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(13) A person who does not beneficially own the |
premises for which a
license is sought, or does not have a |
lease thereon for the full period for
which the license is |
to be issued.
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(14) Any law enforcing public official, including |
members
of local liquor control commissions,
any mayor, |
alderman, or member of the
city council or commission, any |
president of the village board of trustees,
any member of a |
village board of trustees, or any president or member of a
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county board; and no such official shall have a direct |
interest in the
manufacture, sale, or distribution of |
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alcoholic liquor, except that a
license
may be granted to |
such official in relation to premises that are
not
located |
within the territory subject to the jurisdiction of that |
official
if the issuance of such license is approved by the |
State Liquor Control
Commission
and except that a license |
may be granted, in a city or village with a
population of |
50,000 or less, to any alderman, member of a city council, |
or
member of a village board of trustees in relation to |
premises that are located
within the territory
subject to |
the jurisdiction of that official if (i) the sale of |
alcoholic
liquor pursuant to the license is incidental to |
the selling of food, (ii) the
issuance of the license is |
approved by the State Commission, (iii) the
issuance of the |
license is in accordance with all applicable local |
ordinances
in effect where the premises are located, and |
(iv) the official granted a
license does not vote on |
alcoholic liquor issues pending before the board or
council |
to which the license holder is elected. Notwithstanding any |
provision of this paragraph (14) to the contrary, an |
alderman or member of a city council or commission, a |
member of a village board of trustees other than the |
president of the village board of trustees, or a member of |
a county board other than the president of a county board |
may have a direct interest in the manufacture, sale, or |
distribution of alcoholic liquor as long as he or she is |
not a law enforcing public official, a mayor, a village |
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board president, or president of a county board. To prevent |
any conflict of interest, the elected official with the |
direct interest in the manufacture, sale, or distribution |
of alcoholic liquor shall not participate in any meetings, |
hearings, or decisions on matters impacting the |
manufacture, sale, or distribution of alcoholic liquor. |
Furthermore, the mayor of a city with a population of |
50,000 or less or the president of a village with a |
population of 50,000 or less may have an interest in the |
manufacture, sale, or distribution of alcoholic liquor as |
long as the council or board over which he or she presides |
has made a local liquor control commissioner appointment |
that complies with the requirements of Section 4-2 of this |
Act.
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(15) A person who is not a beneficial owner of the |
business to be
operated by the licensee.
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(16) A person who has been convicted of a gambling |
offense as
proscribed by any of subsections (a) (3) through |
(a)
(11) of
Section 28-1 of, or as
proscribed by Section |
28-1.1 or 28-3 of, the Criminal Code of
1961 or the |
Criminal Code of 2012, or as proscribed by a
statute
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replaced by any of the aforesaid statutory provisions.
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(17) A person or entity to whom a federal wagering |
stamp has been
issued by the
federal government, unless the |
person or entity is eligible to be issued a
license under |
the Raffles Act or the Illinois Pull Tabs and Jar Games |
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Act.
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(18) A person who intends to sell alcoholic liquors for |
use or
consumption on his or her licensed retail premises |
who does not have liquor
liability insurance coverage for |
that premises in an amount that is at least
equal to the |
maximum liability amounts set out in subsection (a) of |
Section
6-21.
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(19) A person who is licensed by any licensing |
authority as a manufacturer of beer, or any partnership, |
corporation, limited liability company, or trust or any |
subsidiary, affiliate, or agent thereof, or any other form |
of business enterprise licensed as a manufacturer of beer, |
having any legal, equitable, or beneficial interest, |
directly or indirectly, in a person licensed in this State |
as a distributor or importing distributor. For purposes of |
this paragraph (19), a person who is licensed by any |
licensing authority as a "manufacturer of beer" shall also |
mean a brewer and a non-resident dealer who is also a |
manufacturer of beer, including a partnership, |
corporation, limited liability company, or trust or any |
subsidiary, affiliate, or agent thereof, or any other form |
of business enterprise licensed as a manufacturer of beer. |
(20) A person who is licensed in this State as a |
distributor or importing distributor, or any partnership, |
corporation, limited liability company, or trust or any |
subsidiary, affiliate, or agent thereof, or any other form |
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of business enterprise licensed in this State as a |
distributor or importing distributor having any legal, |
equitable, or beneficial interest, directly or indirectly, |
in a person licensed as a manufacturer of beer by any |
licensing authority, or any partnership, corporation, |
limited liability company, or trust or any subsidiary, |
affiliate, or agent thereof, or any other form of business |
enterprise, except for a person who owns, on or after the |
effective date of this amendatory Act of the 98th General |
Assembly, no more than 5% of the outstanding shares of a |
manufacturer of beer whose shares are publicly traded on an |
exchange within the meaning of the Securities Exchange Act |
of 1934. For the purposes of this paragraph (20), a person |
who is licensed by any licensing authority as a |
"manufacturer of beer" shall also mean a brewer and a |
non-resident dealer who is also a manufacturer of beer, |
including a partnership, corporation, limited liability |
company, or trust or any subsidiary, affiliate, or agent |
thereof, or any other form of business enterprise licensed |
as a manufacturer of beer. |
(b) A criminal conviction of a corporation is not grounds |
for the
denial, suspension, or revocation of a license applied |
for or held by the
corporation if the criminal conviction was |
not the result of a violation of any
federal or State law |
concerning the manufacture, possession or sale of
alcoholic |
liquor, the offense that led to the conviction did not result |
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in any
financial gain to the corporation and the corporation |
has terminated its
relationship with each director, officer, |
employee, or controlling shareholder
whose actions directly |
contributed to the conviction of the corporation. The
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Commission shall determine if all provisions of this subsection |
(b) have been
met before any action on the corporation's |
license is initiated.
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(Source: P.A. 96-1551, eff. 7-1-11; 97-1059, eff. 8-24-12; |
97-1150, eff. 1-25-13.)
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(235 ILCS 5/6-4.5 new) |
Sec. 6-4.5. Prohibited ownership interests in a |
distributor, importing distributor, manufacturer of beer, or |
non-resident dealer. |
(a) The General Assembly finds, consistent with Section |
6-1.5, that the 3-tier regulatory system is designed to prevent |
a manufacturer of beer as described in paragraph (19) of |
subsection (a) of Section 6-2 from exercising vertical |
integration between a manufacturer of beer and a distributor or |
importing distributor through any ownership interest, or |
through control of the distributor or importing distributor. |
The General Assembly further finds, consistent with Section |
6-1.5, that the 3-tier regulatory system is designed to prevent |
a distributor or importing distributor as described in |
paragraph (20) of subsection (a) of Section 6-2 from having any |
ownership interest in a manufacturer of beer as described in |
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paragraph (20) of subsection (a) of Section 6-2 except for the |
ownership of no more than 5% of the outstanding shares of a |
manufacturer of beer whose shares are publicly traded on an |
exchange within the meaning of the Securities Exchange Act of |
1934. The General Assembly further finds that it is necessary |
to have the State Commission undertake an expedited |
investigation, in accordance with procedural due process, to |
determine whether any existing manufacturer of beer described |
in paragraph (19) of subsection (a) of Section 6-2 or any |
existing distributor or importing distributor described in |
paragraph (20) of subsection (a) of Section 6-2 owns a |
prohibited ownership interest, and an orderly process by which |
an existing manufacturer of beer, distributor, or importing |
distributor may divest itself of or sever the prohibited |
ownership interest by no later than January 1, 2015. |
(b) Notwithstanding any provision of this Act to the |
contrary, no person licensed as a manufacturer of beer as |
described in paragraph (19) of subsection (a) of Section 6-2 |
shall have any prohibited ownership interest, directly or |
indirectly, in a person licensed as a distributor or importing |
distributor. Any person who holds a prohibited ownership |
interest in a person licensed as a distributor or importing |
distributor prior to this amendatory Act of the 98th General |
Assembly shall, in accordance with paragraph (19) of subsection |
(a) of Section 6-2, be ineligible to receive or hold any |
license issued by the State Commission, unless that person |
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complies with the provisions of this Section. |
(c) Notwithstanding any provision of this Act to the |
contrary, no person licensed in this State as a distributor or |
importing distributor as described in paragraph (20) of |
subsection (a) of Section 6-2 shall have any prohibited |
ownership interest, directly or indirectly, in a person |
licensed as a manufacturer of beer as described in paragraph |
(20) of subsection (a) of Section 6-2. Any person who holds an |
interest in a person licensed as a distributor or importing |
distributor in this State prior to this amendatory Act of the |
98th General Assembly shall, in accordance with paragraph (20) |
of subsection (a) of Section 6-2, be ineligible to receive or |
hold a license by the State Commission, unless the person |
complies with the provisions of this Section. This subsection |
(c) shall not apply to a person who owns, on or after the |
effective date of this amendatory Act of the 98th General |
Assembly, no more than 5% of the outstanding shares of a |
manufacturer of beer whose shares are publicly traded on an |
exchange within the meaning of the Securities Exchange Act of |
1934. |
(d) Within 30 days after the effective date of this |
amendatory Act of the 98th General Assembly, the State |
Commission shall notify in writing all persons licensed by the |
State Commission as a manufacturer of beer, as described in |
paragraph (19) of subsection (a) of Section 6-2 of the |
prohibited ownership interest provision set forth in |
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subsection (b) of this Section and paragraph (19) of subsection |
(a) of Section 6-2. Also within 30 days after the effective |
date of this amendatory Act of the 98th General Assembly, the |
State Commission shall notify in writing all persons licensed |
by the State Commission as a distributor or importing |
distributor of the prohibited ownership interest provision set |
forth in subsection (c) of this Section and paragraph (20) of |
subsection (a) of Section 6-2. The notice provided by the State |
Commission shall also state for a manufacturer of beer, as |
described in paragraph (19) of subsection (a) of Section 6-2, |
that it is required to disclose in writing any ownership |
interest it directly or indirectly possesses in a distributor |
or importing distributor, as described in paragraph (20) of |
subsection (a) of Section 6-2, the type and amount of ownership |
interest possessed by it, the length of time the manufacturer |
of beer has held the ownership interest in the distributor or |
importing distributor, and any other information specified by |
the State Commission in its written notice. The notice provided |
by the State Commission shall also state for a distributor or |
importing distributor, as described in paragraph (20) of |
subsection (a) of Section 6-2, that it is required to disclose |
in writing any ownership interest it directly or indirectly |
possesses in a manufacturer of beer, as described in paragraph |
(19) of subsection (a) of Section 6-2, the type and amount of |
ownership interest possessed by it, the length of time the |
manufacturer of beer has held the ownership interest in the |
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distributor or importing distributor, and any other |
information specified by the State Commission in its written |
notice. |
(e) Within 60 days after the effective date of this |
amendatory Act of the 98th General Assembly, each manufacturer |
of beer, distributor, or importing distributor subject to |
notification under subsection (d) of this Section shall |
disclose in writing and under oath the relevant ownership |
interest and other required information specified in the |
notification provided by the State Commission pursuant to that |
subsection. The written disclosure shall, as a mandatory |
obligation, be tendered to the State Commission by either |
personal service or via certified or registered mail at the |
State Commission's Springfield or Chicago office on or before |
the 60th day during regular business hours. Failure to tender |
the required written disclosure shall result in the immediate |
entry of an order by the State Commission suspending the |
licensee's license within 5 days after the 60th day, and the |
initiation of proceedings by the State Commission to enter an |
order to permanently revoke the licensee's license no later |
than 45 days after providing the licensee with notice and an |
opportunity for a hearing. Whenever the State Commission has |
reason to believe that a person has failed to comply with the |
Commission notice under this Section, it shall notify the |
Department of Revenue and the Attorney General, and shall file |
a complaint with the State's Attorney of the county where the |
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alcoholic liquor was delivered or with appropriate law |
enforcement officials. Failure to make the written disclosure |
required under this subsection shall constitute a business |
offense for which the person shall be fined not more than |
$5,000 for a first offense, not more than $10,000 for a second |
offense, and not more than $15,000 for a third or subsequent |
offense. |
(f) Within 180 days after the effective date of this |
amendatory Act of the 98th General Assembly, the State |
Commission shall review each of the disclosures tendered to the |
State Commission by licensees pursuant to subsection (e) and |
enter an order determining whether or not each licensee is in |
compliance with subsection (b) or (c) of this Section, |
whichever is applicable, after providing each licensee with |
notice and an opportunity for a hearing. As part of making its |
determination, the State Commission shall also consider any |
information otherwise admissible under Section 10-40 of the |
Illinois Administrative Procedure Act. |
(g) If the State Commission determines, based on a |
preponderance of record evidence, that a manufacturer of beer, |
distributor, or importing distributor has no prohibited |
ownership interest in a licensee in violation of subsection (b) |
or (c) of this Section, then the State Commission shall enter |
an order finding that the manufacturer of beer, distributor, or |
importing distributor is in compliance with this Section, |
record the matter as closed, and serve a copy of the order of |
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compliance on the licensee and each person with an ownership |
interest in the licensee. |
If the State Commission determines, based on a |
preponderance of record evidence, that a manufacturer of beer, |
as described in paragraph (19) of subsection (a) of Section |
6-2, has a prohibited ownership interest as set forth in |
subsection (b) of this Section, then the State Commission shall |
enter an order finding that the manufacturer of beer is not in |
compliance with this Section and that the manufacturer of beer |
shall divest itself of that interest on or before January 1, |
2015, subject to the State Commission's approval of the |
successive owner pursuant to the State Commission's authority |
provided in this Act. In addition, the State Commission shall |
find that the relevant distributor or importing distributor is |
not in compliance with this Section and that the distributor or |
importing distributor is required to sever the prohibited |
ownership interest possessed by the relevant manufacturer of |
beer on or before January 1, 2015, subject to the State |
Commission's approval of the successive owner pursuant to the |
State Commission's authority provided in this Act. |
If the State Commission determines, based on a |
preponderance of record evidence, that a distributor or |
importing distributor, as described in paragraph (20) of |
subsection (a) of Section 6-2, has a prohibited ownership |
interest as set forth in subsection (c) of this Section, then |
the State Commission shall enter an order finding that the |
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relevant distributor or importing distributor is not in |
compliance with this Section and that the relevant distributor |
or importing distributor shall divest itself of that interest |
on or before January 1, 2015, subject to the State Commission's |
approval of the successive owner pursuant to the State |
Commission's authority provided in this Act. In addition, the |
State Commission shall find that the manufacturer of beer is |
not in compliance with this Section and that the manufacturer |
of beer shall sever the prohibited ownership interest possessed |
by the distributor or importing distributor on or before |
January 1, 2015, subject to the State Commission's approval of |
the successive owner pursuant to the State Commission's |
authority provided in this Act. |
The State Commission's order shall further find that the |
continued ownership of the prohibited ownership interest |
beyond January 1, 2015 by the manufacturer of beer, |
distributor, or importing distributor is against the public |
interest and a violation of this Section and Section 6-1.5 of |
the Act. |
The State Commission's order shall further find for a |
manufacturer of beer, as described in paragraph (19) of |
subsection (a) of Section 6-2, found in non-compliance with |
subsection (b) of this Section that its license is revoked on |
January 16, 2015 as to the transport, transfer, or sale of any |
alcoholic liquor to the relevant distributor or importing |
distributor that the manufacturer of beer has a prohibited |
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ownership interest in if that interest is not properly divested |
on January 1, 2015, subject to the State Commission's approval |
of the successive owner pursuant to the State Commission's |
authority provided in this Act. In addition, the State |
Commission shall find that the license of a distributor or |
importing distributor that is subject to the prohibited |
ownership interest of the manufacturer of beer is revoked on |
January 16, 2015 as to the transport, transfer, or sale of |
alcoholic liquor from the relevant manufacturer of beer to any |
retailer if that ownership interest is not properly severed on |
January 1, 2015, subject to the State Commission's approval of |
the successive owner pursuant to the State Commission's |
authority provided in this Act. |
The State Commission's order shall further find for a |
distributor or importing distributor, as described in |
paragraph (20) of subsection (a) of Section 6-2, found in |
non-compliance with subsection (c) of this Section, that its |
license is revoked on January 16, 2015 as to the transport, |
transfer, or sale of any alcoholic liquor from the relevant |
manufacturer of beer to any retailer if that prohibited |
ownership interest in the manufacturer of beer is not properly |
divested on January 1, 2015, subject to the State Commission's |
approval of the successive owner pursuant to the State |
Commission's authority provided in this Act. In addition, the |
State Commission shall find that the license of the |
manufacturer of beer that is subject to the prohibited |
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ownership interest of a distributor or importing distributor is |
revoked on January 16, 2015 as to the transport, transfer, or |
sale of alcoholic liquor to the distributor or importing |
distributor if that ownership interest is not properly severed |
on January 1, 2015, subject to the State Commission's approval |
of the successive owner pursuant to the State Commission's |
authority provided in this Act. |
The State Commission shall serve a copy of the order of |
non-compliance on the licensee and each person with an |
ownership interest in the licensee. |
(h) If a person with a prohibited ownership interest in a |
licensee under subsection (b) or (c) of this Section succeeds |
in divesting itself of or severing that interest and obtains |
the State Commission's approval of the successive owner |
pursuant to its authority provided in this Act on or before |
January 1, 2015, then the State Commission shall enter an order |
finding that the licensee is in compliance, record the matter |
as closed, and serve a copy of the order of compliance on the |
licensee and each person with an ownership interest in the |
licensee. |
If a person with a prohibited ownership interest in |
violation of subsection (b) or (c) of this Section fails to |
divest itself of or sever that interest and obtain the State |
Commission's approval of the successive owner pursuant to the |
State Commission's authority provided in this Act on or before |
January 1, 2015, then the State Commission shall, after notice |
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and an opportunity for a hearing, revoke each licensee's |
license as specified in subsection (g) of this Section on |
January 16, 2015. The State Commission, when entering the |
order, shall give notice to the person by certified mail to |
cease and desist all shipments of alcoholic liquor into or |
within this State and to withdraw from this State within 5 |
working days after receipt of the notice all shipments of |
alcoholic liquor in transit. Whenever the State Commission has |
reason to believe that a person has failed to comply with the |
State Commission's notice under this Section, it shall notify |
the Department of Revenue and the Attorney General, and shall |
file a complaint with the State's Attorney of the county where |
the alcoholic liquor was delivered, or with appropriate law |
enforcement officials. Failure to comply with the notice issued |
by the State Commission under this Section is against the |
public interest and constitutes a business offense for which |
the person shall be fined not more than $5,000 for a first |
offense, not more than $10,000 for a second offense, and not |
more than $15,000 for a third or subsequent offense. Each |
shipment or transfer of alcoholic liquor in violation of the |
cease and desist notice shall constitute a separate offense. |
(i) The power and authority granted to the State Commission |
under this Section is in addition to any existing power or |
authority the State Commission has under this Act and its |
exercise shall be accorded precedence on the State Commission's |
meeting agenda so as to fully accommodate the schedule for any |
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proceeding under the provisions of this Section. Nothing in |
this Act shall be construed as limiting or otherwise impairing |
the ability of the State Commission to conduct future |
investigations and proceedings sua sponte or pursuant to a |
complaint to ensure compliance with this Section or paragraph |
(19) or (20) of subsection (a) of Section 6-2 of this Act. Any |
future investigations and proceedings shall be conducted by the |
State Commission on an expedited basis and pursuant to an |
initiating order entered by the State Commission. The State |
Commission shall enter its initiating order within 30 days |
after the receipt of a complaint. The initiating order shall |
set forth a schedule by which the required notices, |
disclosures, determinations, or orders specified in |
subsections (d), (e), (f), (g), and (h) shall be made or |
entered, and the period of time by which a licensee shall |
divest itself of or sever a prohibited ownership interest, |
which shall be no later than 540 days after the entry of the |
initiating order. |
(j) Any association or non-profit corporation representing |
beer distributors in this State shall have standing to |
intervene and otherwise participate as a party in any |
proceeding undertaken by the State Commission under this |
Section to review and determine compliance or non-compliance |
with this Section. |
(k) For purposes of this Section, the term "ownership |
interest" means a legal, equitable, or beneficial interest |
