HB2878 EnrolledLRB100 09902 RPS 20073 b



1 AN ACT concerning liquor.


2 Be it enacted by the People of the State of Illinois,

3represented in the General Assembly:



4 Section 5. The Liquor Control Act of 1934 is amended by 
5changing Section 3-12 as follows:



6 (235 ILCS 5/3-12)



7 Sec. 3-12. Powers and duties of State Commission.

8 (a) The State commission shall have the following powers, 
9functions, and
duties:


10  (1) To receive applications and to issue licenses to 
11 manufacturers,
foreign importers, importing distributors, 
12 distributors, non-resident dealers,
on premise consumption 
13 retailers, off premise sale retailers, special event

14 retailer licensees, special use permit licenses, auction 
15 liquor licenses, brew
pubs, caterer retailers, 
16 non-beverage users, railroads, including owners and

17 lessees of sleeping, dining and cafe cars, airplanes, 
18 boats, brokers, and wine
maker's premises licensees in 
19 accordance with the provisions of this Act, and
to suspend 
20 or revoke such licenses upon the State commission's 
21 determination,
upon notice after hearing, that a licensee 
22 has violated any provision of this
Act or any rule or 
23 regulation issued pursuant thereto and in effect for 30 
 
 
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1 days
prior to such violation. Except in the case of an 
2 action taken pursuant to a
violation of Section 6-3, 6-5, 
3 or 6-9, any action by the State Commission to
suspend or 
4 revoke a licensee's license may be limited to the license 
5 for the
specific premises where the violation occurred.
An 
6 action for a violation of this Act shall be commenced by 
7 the State Commission within 2 years after the date the 
8 State Commission becomes aware of the violation. 

9  In lieu of suspending or revoking a license, the 
10 commission may impose
a fine, upon the State commission's 
11 determination and notice after hearing,
that a licensee has 
12 violated any provision of this Act or any rule or

13 regulation issued pursuant thereto and in effect for 30 
14 days prior to such
violation.
15  For the purpose of this paragraph (1), when determining 
16 multiple violations for the sale of alcohol to a person 
17 under the age of 21, a second or subsequent violation for 
18 the sale of alcohol to a person under the age of 21 shall 
19 only be considered if it was committed within 5 years after 
20 the date when a prior violation for the sale of alcohol to 
21 a person under the age of 21 was committed. 
22  The fine imposed under this paragraph may not exceed 
23 $500 for each
violation. Each day that the activity, which 
24 gave rise to the original fine,
continues is a separate 
25 violation. The maximum fine that may be levied against
any 
26 licensee, for the period of the license, shall not exceed 
 
 
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1 $20,000.
The maximum penalty that may be imposed on a 
2 licensee for selling a bottle of
alcoholic liquor with a 
3 foreign object in it or serving from a bottle of
alcoholic 
4 liquor with a foreign object in it shall be the destruction 
5 of that
bottle of alcoholic liquor for the first 10 bottles 
6 so sold or served from by
the licensee. For the eleventh 
7 bottle of alcoholic liquor and for each third
bottle 
8 thereafter sold or served from by the licensee with a 
9 foreign object in
it, the maximum penalty that may be 
10 imposed on the licensee is the destruction
of the bottle of 
11 alcoholic liquor and a fine of up to $50.


12  Any notice issued by the State Commission to a licensee 
13 for a violation of this Act or any notice with respect to 
14 settlement or offer in compromise shall include the field 
15 report, photographs, and any other supporting 
16 documentation necessary to reasonably inform the licensee 
17 of the nature and extent of the violation or the conduct 
18 alleged to have occurred. 
19  (2) To adopt such rules and regulations consistent with 
20 the
provisions of this Act which shall be necessary to 
21 carry on its
functions and duties to the end that the 
22 health, safety and welfare of
the People of the State of 
23 Illinois shall be protected and temperance in
the 
24 consumption of alcoholic liquors shall be fostered and 
25 promoted and
to distribute copies of such rules and 
26 regulations to all licensees
affected thereby.


 
 
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1  (3) To call upon other administrative departments of 
2 the State,
county and municipal governments, county and 
3 city police departments and
upon prosecuting officers for 
4 such information and assistance as it
deems necessary in 
5 the performance of its duties.


6  (4) To recommend to local commissioners rules and 
7 regulations, not
inconsistent with the law, for the 
8 distribution and sale of alcoholic
liquors throughout the 
9 State.


10  (5) To inspect, or cause to be inspected, any
premises 
11 in this State
where alcoholic liquors are manufactured, 
12 distributed, warehoused, or
sold. Nothing in this Act

13 authorizes an agent of the Commission to inspect private

14 areas within the premises without reasonable suspicion or a 
15 warrant
during an inspection. "Private areas" include, but 
16 are not limited to, safes, personal property, and closed 
17 desks.


18  (5.1) Upon receipt of a complaint or upon having 
19 knowledge that any person
is engaged in business as a 
20 manufacturer, importing distributor, distributor,
or 
21 retailer without a license or valid license, to notify the 
22 local liquor
authority, file a complaint with the State's 
23 Attorney's Office of the county
where the incident 
24 occurred, or initiate an investigation with the 
25 appropriate
law enforcement officials.


26  (5.2) To issue a cease and desist notice to persons 
 
 
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1 shipping alcoholic
liquor
into this State from a point 
2 outside of this State if the shipment is in
violation of 
3 this Act.


4  (5.3) To receive complaints from licensees, local 
5 officials, law
enforcement agencies, organizations, and 
6 persons stating that any licensee has
been or is violating 
7 any provision of this Act or the rules and regulations

8 issued pursuant to this Act. Such complaints shall be in 
9 writing, signed and
sworn to by the person making the 
10 complaint, and shall state with specificity
the facts in 
11 relation to the alleged violation. If the Commission has

12 reasonable grounds to believe that the complaint 
13 substantially alleges a
violation of this Act or rules and 
14 regulations adopted pursuant to this Act, it
shall conduct 
15 an investigation. If, after conducting an investigation, 
16 the
Commission is satisfied that the alleged violation did 
17 occur, it shall proceed
with disciplinary action against 
18 the licensee as provided in this Act.


19  (6) To hear and determine appeals from orders of a 
20 local commission
in accordance with the provisions of this 
21 Act, as hereinafter set forth.
Hearings under this 
22 subsection shall be held in Springfield or Chicago,
at 
23 whichever location is the more convenient for the majority 
24 of persons
who are parties to the hearing.


25  (7) The commission shall establish uniform systems of 
26 accounts to be
kept by all retail licensees having more 
 
 
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1 than 4 employees, and for this
purpose the commission may 
2 classify all retail licensees having more
than 4 employees 
3 and establish a uniform system of accounts for each
class 
4 and prescribe the manner in which such accounts shall be 
5 kept.
The commission may also prescribe the forms of 
6 accounts to be kept by
all retail licensees having more 
7 than 4 employees, including but not
limited to accounts of 
8 earnings and expenses and any distribution,
payment, or 
9 other distribution of earnings or assets, and any other

10 forms, records and memoranda which in the judgment of the 
11 commission may
be necessary or appropriate to carry out any 
12 of the provisions of this
Act, including but not limited to 
13 such forms, records and memoranda as
will readily and 
14 accurately disclose at all times the beneficial
ownership 
15 of such retail licensed business. The accounts, forms,

16 records and memoranda shall be available at all reasonable 
17 times for
inspection by authorized representatives of the 
18 State commission or by
any local liquor control 
19 commissioner or his or her authorized representative.
The 
20 commission, may, from time to time, alter, amend or repeal, 
21 in whole
or in part, any uniform system of accounts, or the 
22 form and manner of
keeping accounts.


23  (8) In the conduct of any hearing authorized to be held 
24 by the
commission, to appoint, at the commission's 
25 discretion, hearing officers
to conduct hearings involving 
26 complex issues or issues that will require a
protracted 
 
 
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1 period of time to resolve, to examine, or cause to be 
2 examined,
under oath, any licensee, and to examine or cause 
3 to be examined the books and
records
of such licensee; to 
4 hear testimony and take proof material for its
information 
5 in the discharge of its duties hereunder; to administer or

6 cause to be administered oaths; for any such purpose to 
7 issue
subpoena or subpoenas to require the attendance of 
8 witnesses and the
production of books, which shall be 
9 effective in any part of this State, and
to adopt rules to 
10 implement its powers under this paragraph (8).


11  Any Circuit Court may by order duly entered,
require 
12 the attendance of witnesses and the production of relevant 
13 books
subpoenaed by the State commission and the court may 
14 compel
obedience to its order by proceedings for contempt.


15  (9) To investigate the administration of laws in 
16 relation to
alcoholic liquors in this and other states and 
17 any foreign countries,
and to recommend from time to time 
18 to the Governor and through him or
her to the legislature 
19 of this State, such amendments to this Act, if any, as
it 
20 may think desirable and as will serve to further the 
21 general broad
purposes contained in Section 1-2 hereof.


22  (10) To adopt such rules and regulations consistent 
23 with the
provisions of this Act which shall be necessary 
24 for the control, sale or
disposition of alcoholic liquor 
25 damaged as a result of an accident, wreck,
flood, fire or 
26 other similar occurrence.


 
 
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1  (11) To develop industry educational programs related 
2 to responsible
serving and selling, particularly in the 
3 areas of overserving consumers and
illegal underage 
4 purchasing and consumption of alcoholic beverages.


5  (11.1) To license persons providing education and 
6 training to alcohol
beverage sellers and servers for 
7 mandatory and non-mandatory training under the
Beverage 
8 Alcohol Sellers and Servers
Education and Training 
9 (BASSET) programs and to develop and administer a public

10 awareness program in Illinois to reduce or eliminate the 
11 illegal purchase and
consumption of alcoholic beverage 
12 products by persons under the age of 21.
Application for a 
13 license shall be made on forms provided by the State

14 Commission.


15  (12) To develop and maintain a repository of license 
16 and regulatory
information.


17  (13) On or before January 15, 1994, the Commission 
18 shall issue
a written report to the Governor and General 
19 Assembly that is to be based on a
comprehensive study of 
20 the impact on and implications for the State of Illinois
of 
21 Section 1926 of the federal Federal ADAMHA Reorganization 
22 Act of 1992 (Public Law
102-321). This study shall address 
23 the extent to which Illinois currently
complies with the 
24 provisions of P.L. 102-321 and the rules promulgated 
25 pursuant
thereto.


26  As part of its report, the Commission shall provide the 
 
 
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1 following essential
information:


2   (i) the number of retail distributors of tobacco 
3 products, by type and
geographic area, in the State;


4   (ii) the number of reported citations and 
5 successful convictions,
categorized by type and 
6 location of retail distributor, for violation of the

7 Prevention of Tobacco Use by Minors and Sale and 
8 Distribution of Tobacco Products Act and the Smokeless

9 Tobacco Limitation Act;


10   (iii) the extent and nature of organized 
11 educational and governmental
activities that are 
12 intended to promote, encourage or otherwise secure

13 compliance with any Illinois laws that prohibit the 
14 sale or distribution of
tobacco products to minors; and


15   (iv) the level of access and availability of 
16 tobacco products to
individuals under the age of 18.


17  To obtain the data necessary to comply with the 
18 provisions of P.L. 102-321
and the requirements of this 
19 report, the Commission shall conduct random,
unannounced 
20 inspections of a geographically and scientifically 
21 representative
sample of the State's retail tobacco 
22 distributors.


23  The Commission shall consult with the Department of 
24 Public Health, the
Department of Human Services, the

25 Illinois State Police and any
other executive branch 
26 agency, and private organizations that may have

 
 
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1 information relevant to this report.


2  The Commission may contract with the Food and Drug 
3 Administration of the
U.S. Department of Health and Human 
4 Services to conduct unannounced
investigations of Illinois 
5 tobacco vendors to determine compliance with federal
laws 
6 relating to the illegal sale of cigarettes and smokeless 
7 tobacco products
to persons under the age of 18.


8  (14) On or before April 30, 2008 and every 2 years

9 thereafter, the Commission shall present a written
report 
10 to the Governor and the General Assembly that shall
be 
11 based on a study of the impact of Public Act 95-634 this 
12 amendatory Act of
the 95th General Assembly on the business 
13 of soliciting,
selling, and shipping wine from inside and 
14 outside of this
State directly to residents of this State. 
15 As part of its
report, the Commission shall provide all of 
16 the
following information:
17   (A) The amount of State excise and sales tax

18 revenues generated.
19   (B) The amount of licensing fees received.
20   (C) The number of cases of wine shipped from inside

21 and outside of this State directly to residents of this

22 State.
23   (D) The number of alcohol compliance operations

24 conducted.
25   (E) The number of winery shipper's licenses

26 issued.
 
 
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1   (F) The number of each of the following: reported

2 violations; cease and desist notices issued by the

3 Commission; notices of violations issued by
the 
4 Commission and to the Department of Revenue;
and 
5 notices and complaints of violations to law

6 enforcement officials, including, without limitation,

7 the Illinois Attorney General and the U.S. Department

8 of Treasury's Alcohol and Tobacco Tax and Trade Bureau.
9  (15) As a means to reduce the underage consumption of

10 alcoholic liquors, the Commission shall conduct
alcohol 
11 compliance operations to investigate whether
businesses 
12 that are soliciting, selling, and shipping wine
from inside 
13 or outside of this State directly to residents
of this 
14 State are licensed by this State or are selling or

15 attempting to sell wine to persons under 21 years of age in

16 violation of this Act.
17  (16) The Commission shall, in addition to
notifying any 
18 appropriate law enforcement agency, submit
notices of 
19 complaints or violations of Sections 6-29 and
6-29.1 by 
20 persons who do not hold a winery shipper's
license under 
21 this amendatory Act to the Illinois Attorney General and
to 
22 the U.S. Department of Treasury's Alcohol and Tobacco Tax 
23 and Trade Bureau.
24  (17) (A) A person licensed to make wine under the laws 
25 of another state who has a winery shipper's license under 
26 this amendatory Act and annually produces less than 25,000 
 
 
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1 gallons of wine or a person who has a first-class or 
2 second-class wine manufacturer's license, a first-class or 
3 second-class wine-maker's license, or a limited wine 
4 manufacturer's license under this Act and annually 
5 produces less than 25,000 gallons of wine may make 
6 application to the Commission for a self-distribution 
7 exemption to allow the sale of not more than 5,000 gallons 
8 of the exemption holder's wine to retail licensees per 
9 year.
10   (B) In the application, which shall be sworn under 
11 penalty of perjury, such person shall state (1) the 
12 date it was established; (2) its volume of production 
13 and sales for each year since its establishment; (3) 
14 its efforts to establish distributor relationships; 
15 (4) that a self-distribution exemption is necessary to 
16 facilitate the marketing of its wine; and (5) that it 
17 will comply with the liquor and revenue laws of the 
18 United States, this State, and any other state where it 
19 is licensed.
20   (C) The Commission shall approve the application 
21 for a self-distribution exemption if such person: (1) 
22 is in compliance with State revenue and liquor laws; 
23 (2) is not a member of any affiliated group that 
24 produces more than 25,000 gallons of wine per annum or 
25 produces any other alcoholic liquor; (3) will not 
26 annually produce for sale more than 25,000 gallons of 
 
 
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1 wine; and (4) will not annually sell more than 5,000 
2 gallons of its wine to retail licensees.
3   (D) A self-distribution exemption holder shall 
4 annually certify to the Commission its production of 
5 wine in the previous 12 months and its anticipated 
6 production and sales for the next 12 months. The 
7 Commission may fine, suspend, or revoke a 
8 self-distribution exemption after a hearing if it 
9 finds that the exemption holder has made a material 
10 misrepresentation in its application, violated a 
11 revenue or liquor law of Illinois, exceeded production 
12 of 25,000 gallons of wine in any calendar year, or 
13 become part of an affiliated group producing more than 
14 25,000 gallons of wine or any other alcoholic liquor.
15   (E) Except in hearings for violations of this Act 
16 or Public Act 95-634 amendatory Act or a bona fide 
17 investigation by duly sworn law enforcement officials, 
18 the Commission, or its agents, the Commission shall 
19 maintain the production and sales information of a 
20 self-distribution exemption holder as confidential and 
21 shall not release such information to any person.
22   (F) The Commission shall issue regulations 
23 governing self-distribution exemptions consistent with 
24 this Section and this Act.
25   (G) Nothing in this subsection (17) shall prohibit 
26 a self-distribution exemption holder from entering 
 
 
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1 into or simultaneously having a distribution agreement 
2 with a licensed Illinois distributor.
3   (H) It is the intent of this subsection (17) to 
4 promote and continue orderly markets. The General 
5 Assembly finds that in order to preserve Illinois' 
6 regulatory distribution system it is necessary to 
7 create an exception for smaller makers of wine as their 
8 wines are frequently adjusted in varietals, mixes, 
9 vintages, and taste to find and create market niches 
10 sometimes too small for distributor or importing 
11 distributor business strategies. Limited 
12 self-distribution rights will afford and allow smaller 
13 makers of wine access to the marketplace in order to 
14 develop a customer base without impairing the 
15 integrity of the 3-tier system.

16  (18) (A) A class 1 brewer licensee, who must also be 
17 either a licensed brewer or licensed non-resident dealer 
18 and annually manufacture less than 930,000 gallons of beer, 
19 may make application to the State Commission for a 
20 self-distribution exemption to allow the sale of not more 
21 than 232,500 gallons of the exemption holder's beer to 
22 retail licensees per year.
23   (B) In the application, which shall be sworn under 
24 penalty of perjury, the class 1 brewer licensee shall 
25 state (1) the date it was established; (2) its volume 
26 of beer manufactured and sold for each year since its 
 
 
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1 establishment; (3) its efforts to establish 
2 distributor relationships; (4) that a 
3 self-distribution exemption is necessary to facilitate 
4 the marketing of its beer; and (5) that it will comply 
5 with the alcoholic beverage and revenue laws of the 
6 United States, this State, and any other state where it 
7 is licensed.
8   (C) Any application submitted shall be posted on 
9 the State Commission's website at least 45 days prior 
10 to action by the State Commission. The State Commission 
11 shall approve the application for a self-distribution 
12 exemption if the class 1 brewer licensee: (1) is in 
13 compliance with the State, revenue, and alcoholic 
14 beverage laws; (2) is not a member of any affiliated 
15 group that manufactures manufacturers more than 
16 930,000 gallons of beer per annum or produces any other 
17 alcoholic beverages; (3) shall not annually 
18 manufacture for sale more than 930,000 gallons of beer; 
19 (4) shall not annually sell more than 232,500 gallons 
20 of its beer to retail licensees; and (5) has 
21 relinquished any brew pub license held by the licensee, 
22 including any ownership interest it held in the 
23 licensed brew pub.
24   (D) A self-distribution exemption holder shall 
25 annually certify to the State Commission its 
26 manufacture of beer during the previous 12 months and 
 
 
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1 its anticipated manufacture and sales of beer for the 
2 next 12 months. The State Commission may fine, suspend, 
3 or revoke a self-distribution exemption after a 
4 hearing if it finds that the exemption holder has made 
5 a material misrepresentation in its application, 
6 violated a revenue or alcoholic beverage law of 
7 Illinois, exceeded the manufacture of 930,000 gallons 
8 of beer in any calendar year or became part of an 
9 affiliated group manufacturing more than 930,000 
10 gallons of beer or any other alcoholic beverage.
11   (E) The State Commission shall issue rules and 
12 regulations governing self-distribution exemptions 
13 consistent with this Act.
14   (F) Nothing in this paragraph (18) shall prohibit a 
15 self-distribution exemption holder from entering into 
16 or simultaneously having a distribution agreement with 
17 a licensed Illinois importing distributor or a 
18 distributor. If a self-distribution exemption holder 
19 enters into a distribution agreement and has assigned 
20 distribution rights to an importing distributor or 
21 distributor, then the self-distribution exemption 
22 holder's distribution rights in the assigned 
23 territories shall cease in a reasonable time not to 
24 exceed 60 days.
25   (G) It is the intent of this paragraph (18) to 
26 promote and continue orderly markets. The General 
 
 
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1 Assembly finds that in order to preserve Illinois' 
2 regulatory distribution system, it is necessary to 
3 create an exception for smaller manufacturers in order 
4 to afford and allow such smaller manufacturers of beer 
5 access to the marketplace in order to develop a 
6 customer base without impairing the integrity of the 
7 3-tier system. 
8 (b) On or before April 30, 1999, the Commission shall 
9present a written
report to the Governor and the General 
10Assembly that shall be based on a study
of the impact of Public 
11Act 90-739 this amendatory Act of 1998 on the business of 
12soliciting,
selling, and shipping
alcoholic liquor from 
13outside of this State directly to residents of this
State.


14 As part of its report, the Commission shall provide the 
15following
information:


16  (i) the amount of State excise and sales tax revenues 
17 generated as a
result of Public Act 90-739 this amendatory 
18 Act of 1998;


19  (ii) the amount of licensing fees received as a result 
20 of Public Act 90-739 this amendatory
Act of 1998;


21  (iii) the number of reported violations, the number of 
22 cease and desist
notices issued by the Commission, the 
23 number of notices of violations issued
to the Department of 
24 Revenue, and the number of notices and complaints of

25 violations to law enforcement officials.


26(Source: P.A. 98-401, eff. 8-16-13; 98-939, eff. 7-1-15; 
 
 
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198-941, eff. 1-1-15; 99-78, eff. 7-20-15; 99-448, eff. 8-24-15; 
2revised 9-13-16.)


3 Section 99. Effective date. This Act takes effect upon 
4becoming law.