Bill Text: IN HB1191 | 2010 | Regular Session | Introduced
Bill Title: Alcoholic beverage wholesalers.
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2010-01-13 - Representative Bell added as coauthor [HB1191 Detail]
Download: Indiana-2010-HB1191-Introduced.html
Citations Affected: IC 7.1-3; IC 7.1-5.
Synopsis: Alcoholic beverage wholesalers. Allows a person to
wholesale beer, wine, and liquor. (Current law allows a person to
wholesale only wine and beer or wine and liquor.) Allows a beer
wholesaler to have a minority interest in another entity that holds a beer
wholesaler permit, if the entity: (1) is a women-owned business
enterprise or a minority owned business; and (2) the permit premises
or warehouse is located in a county that borders the Ohio River. Allows
a wine wholesaler that also holds a liquor wholesaler's permit to sell
more than 1,000,000 gallons of flavored malt beverage during a
calendar year. Requires a primary source of supply of a liquor or wine
brand to provide notice to the existing wholesaler of the brand if the
primary source of supply intends to: (1) terminate or not renew the
distribution rights of the existing wholesaler for the brand and appoint
a successor wholesaler to distribute the brand; (2) reduce the existing
wholesaler's territory for the brand and appoint a successor wholesaler
for the brand; (3) appoint a wholesaler to distribute the brand in all or
part of the existing wholesaler's territory; or (4) acquire the right to
manufacture or distribute a brand and decides not to have the existing
wholesaler continue to distribute the brand. Requires the successor
wholesaler for the brand to negotiate with the existing wholesaler for
the brand to determine the fair market value of the existing wholesaler's
distribution rights for the brand. Provides that if a settlement agreement
is not reached with a certain period of time, the matter may be
submitted to binding arbitration. Provides that the existing wholesaler
continues to distribute the brand until the existing wholesaler is
compensated for the loss in distribution rights. Repeals a provision that
prohibits the alcohol and tobacco commission from issuing a beer
wholesaler's permit to a person who holds a wine wholesaler's permit
and a liquor wholesaler's permit.
Effective: July 1, 2010.
January 7, 2010, read first time and referred to Committee on Public Policy.
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in
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A BILL FOR AN ACT to amend the Indiana Code concerning
alcohol and tobacco.
(b) Notwithstanding subsection (a), the holder of a beer wholesaler's permit may have a minority interest in another entity that holds a beer wholesaler's permit if:
(1) the entity is a:
(A) women-owned business enterprise (as defined in IC 5-16-6.5-3); or
(B) minority business enterprise (as defined in IC 4-13-16.5-1); and
(2) the entity's permit premises or warehouse is located in a county bordering the Ohio River.
(1)
(2) holds a liquor wholesaler's permit; or
(3) does not hold an alcoholic beverage wholesaler's permit, but meets the qualifications to hold either a beer or a liquor wholesaler's permit.
(b) The holder of a wine wholesaler's permit under subsection (a)(1) or (a)(2):
(1) is considered the same as a person who holds a wine wholesaler's permit under subsection (a)(3) for purposes of conducting activities and operations under the wine wholesaler's permit; and
(2) may operate the beer or liquor wholesale business independently of the wine wholesale business.
on the wholesaler's premises before the time of invoicing and delivery,
but not at retail, only to a person who holds a liquor retailer's permit,
a supplemental caterer's permit, or a liquor dealer's permit. A holder of
a wine wholesaler's permit may sell wine to the wine wholesaler's bona
fide regular employees.
(b) As used in this section, "brandy" means:
(1) any alcoholic distillate described in 27 CFR 5.22(d) as in
effect on January 1, 1983; or
(2) a beverage product that:
(A) is prepared from a liquid described in subdivision (1);
(B) is classified as a cordial or liqueur as defined in 27 CFR
5.22(h) as in effect on January 1, 1997; and
(C) meets the following requirements:
(i) At least sixty-six and two-thirds percent (66 2/3%) of the
product's alcohol content is composed of a substance
described in subdivision (1).
(ii) The product's label makes no reference to any distilled
spirit other than brandy.
(iii) The product's alcohol content is not less than sixteen
percent (16%) by volume or thirty-two (32) degrees proof.
(iv) The product contains dairy cream.
(v) The product's sugar, dextrose, or levulose content is at
least twenty percent (20%) of the product's weight.
(vi) The product contains caramel coloring.
(c) Nothing in this section allows a wine wholesaler to sell, give,
purchase, transport, or export beer (as defined in IC 7.1-1-3-6) unless
the wine wholesaler also holds a beer wholesaler's permit under
IC 7.1-3-3-1.
(d) A wine wholesaler that also holds a liquor wholesaler's permit
under IC 7.1-3-8 may not:
(1) hold a beer wholesaler's permit under IC 7.1-3-3;
(2) possess, sell, or transport beer; or
(3) sell more than one million (1,000,000) gallons of flavored
malt beverage during a calendar year.
(b) The commission shall revoke the permit of a brewer
AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2010]:
Chapter 25.5. Transfers of Liquor and Wine Brands Between
Wholesalers
Sec. 1. As used in this chapter, "brand" means a:
(1) liquor product that is publicly distinguished from other
liquor products; or
(2) wine product that is publicly distinguished from other
wine products;
and that bears a unique name. All package, size, flavor, and other
variations bearing the unique brand name are part of the brand.
Sec. 2. As used in this chapter, "existing wholesaler" means a:
(1) liquor wholesaler; or
(2) wine wholesaler;
that distributes a brand under distribution rights granted by that
brand's primary source of supply immediately before notice of the
transfer of those distribution rights to a successor wholesaler.
Sec. 3. As used in this chapter, "successor wholesaler" means
one (1) or more liquor or wine wholesalers designated by a
primary source of supply to distribute a brand in all or any part of
an existing wholesaler's territory under section 4 of this chapter.
Sec. 4. A primary source of supply and a successor wholesaler
shall comply with this chapter if:
(1) the primary source of supply wants to:
(A) terminate or not renew an existing wholesaler's
distribution rights for a brand; and
(B) appoint a successor wholesaler for the brand in the
territory to be lost by the existing wholesaler;
(2) the primary source of supply wants to:
(A) reduce the existing wholesaler's territory for a brand;
and
(B) appoint a successor wholesaler for the brand in the
territory to be lost by the existing wholesaler;
(3) the primary source of supply wants to appoint another
wholesaler for any brand distributed by an existing
wholesaler in all or any part of the existing wholesaler's
territory for the brand; or
(4) the primary source of supply acquires the right to
manufacture or distribute a brand and wants to:
(A) not reappoint the existing wholesaler to distribute the
brand in all or any part of the existing wholesaler's
territory;
(B) reduce the existing wholesaler's territory for the
brand; or
(C) terminate or not renew the distribution rights of the
existing wholesaler for the brand in all or part of the
existing wholesaler's territory;
without compensating the existing wholesaler for the fair market
value of the distribution rights for the brand lost by the existing
wholesaler.
Sec. 5. (a) The primary source of supply shall notify the existing
wholesaler of the primary source of supply's intent to take any
action under section 4 of this chapter.
(b) The primary source of supply shall give notice to the existing
wholesaler by certified mail, return receipt requested. The notice
must include the successor wholesaler's:
(1) name;
(2) address; and
(3) telephone number.
(c) The primary source of supply shall give the notice under
subsection (b) of an action taken under section 4(4) to the existing
wholesaler not later than sixty (60) days after the closing of the
transaction in which the successor primary source of supply
acquires the brand.
Sec. 6. (a) A successor wholesaler shall negotiate with the
existing wholesaler to determine the fair market value of the
existing wholesaler's distribution rights for the brand to be
acquired by the successor wholesaler.
(b) In the case of an announced loss of all of an existing
wholesaler's distribution rights for a brand, the fair market value
of the existing wholesaler's distribution rights is the value that
would have been ascribed to the existing wholesaler's distribution
rights for the brand in an arms length transaction entered into
without duress or threat of termination of the existing wholesaler's
distribution rights.
(c) In the case of the announced loss of part of the distribution
rights for a brand by:
(1) reduction in the existing wholesaler's territory;
(2) the appointment of another wholesaler to distribute a
brand in addition to the existing wholesaler; or
(3) a means other than subdivision (1) or (2);
the fair market value of the existing wholesaler's distribution
rights is the loss in value that would have been ascribed to the
existing wholesaler's distribution rights for the brand in an arms
length transaction entered into without duress or threat of
termination of the existing wholesaler's distribution rights.
Sec. 7. The existing wholesaler shall continue to distribute the
brand until payment of the compensation agreed to under section
6 of this chapter or awarded under section 11 of this chapter is
received.
Sec. 8. (a) The successor wholesaler and the existing wholesaler
shall negotiate in good faith. If the parties fail to reach an
agreement not later than thirty (30) days after the existing
wholesaler receives the notice under section 5 of this chapter, the
successor's wholesaler or the existing wholesaler may send a
written notice to the:
(1) other party;
(2) primary source of supply; and
(3) American Arbitration Association or its successor in
interest;
declaring the party's intention to proceed with final and binding
arbitration administered by the American Arbitration Association
under the American Arbitration Association's Commercial
Arbitration Rules.
(b) Notice of intent to arbitrate shall be sent under subsection
(a) not later than forty-five (45) days after the existing wholesaler
receives notice under section 5 of this chapter. The arbitration
proceedings must conclude not later than forty-five (45) days after
the date the notice of intent to arbitrate is mailed to a party, unless
extended by the arbitrator.
Sec. 9. (a) The arbitration shall be conducted in the city within
Indiana that:
(1) is closest to the existing wholesaler; and
(2) has a population of more than fifty thousand (50,000).
(b) The arbitration shall be conducted before one (1) impartial
arbitrator to be selected by the American Arbitration Association.
The arbitration shall be conducted in accordance with the rules
and procedures of the American Arbitration Association.
Sec. 10. The arbitrator's award must be monetary only and may
not enjoin or compel conduct. The arbitration is instead of all other
remedies and procedures.
Sec. 11. (a) The cost of the arbitrator and other direct costs of
the arbitration shall be equally divided by the existing wholesaler
and the successor wholesaler. All other costs shall be paid by the
party incurring them.
(b) The arbitrator shall render a decision not later than thirty
(30) days after the conclusion of the arbitration unless this period
is extended by mutual agreement of the parties or by the
arbitrator. The decision of the arbitrator is final and binding on
the parties. Under no circumstances may the parties appeal the
decision of the arbitrator.
(c) A party who fails to participate in the arbitration hearings
waives all rights the party would have had in the arbitration and
is considered to have consented to the determination of the
arbitrator.
Sec. 12. If the existing wholesaler does not receive payment of
the compensation under section 6 or 11 of this chapter not later
than thirty (30) days after the date of the settlement or arbitration
award:
(1) the existing wholesaler shall remain the distributor of the
brand in the existing wholesaler's territory to at least the
same extent that the existing wholesaler distributed the brand
immediately before the announcement of any of the actions
described in section 4 of this chapter;
(2) the successor wholesaler shall not have any rights to
distribute the brand in the existing wholesaler's territory; and
(3) the existing wholesaler is not entitled to the settlement or
arbitration award.
Sec. 13. This chapter may not be construed to limit or prohibit
good faith settlements voluntarily entered into by the parties.
Sec. 14. This chapter may not be construed to give an existing
wholesaler any right to compensation, if the primary source of
supply establishes that the primary source of supply legally
terminated or did not renew the distribution rights of the existing
wholesaler. A primary source of supply may legally terminate or
not renew the distribution rights if:
(1) the termination or nonrenewal is in accordance with
IC 7.1-5-5-9;
(2) the:
(A) existing wholesaler fails to comply substantially with a
material provision that is essential, fair, and reasonable, in
an agreement to distribute a brand;
(B) primary source of supply provides written notice to the
existing wholesaler describing in reasonable detail the
wholesaler's failure to comply; and
(C) existing wholesaler fails to substantially correct the
deficiency not later than ninety (90) days after the date of
receiving the notice; or
(3) the:
(A) existing wholesaler fails to comply substantially with a
material provision that is essential, fair, and reasonable, in
an agreement to distribute a brand; and
(B) it is impossible for the existing wholesaler to correct
the deficiency;
the primary source of supply may terminate or not renew the
agreement without providing the existing wholesaler with
notice or an opportunity to correct the deficiency.
(b) It is unlawful for a permittee to knowingly or intentionally coerce, or attempt to coerce, or persuade another permittee to enter into an agreement, or to take an action, which would violate a provision of this title or of the rules and regulations of the commission.
(c) It is unlawful for a beer wholesaler or a primary source of supply to cancel or terminate an agreement or contract between a beer wholesaler and a primary source of supply for the sale of beer, unfairly and without due regard for the equities of the other party.
(d) Except as provided in IC 7.1-3-25.5, it is unlawful for a primary source of supply to terminate or not renew an agreement or contract between:
(1) the primary source of supply; and
(2) the:
(A) wine wholesaler for the sale of wine; or
(B) liquor wholesaler for the sale of liquor;
unfairly and without due regard for the equities of the other party.
(b) It is unlawful for the holder of a brewer's
(1) A permit to manufacture or to sell at retail alcoholic beverages of any kind.