Bill Text: MI HB5602 | 2013-2014 | 97th Legislature | Introduced

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Bill Title: Liquor; authorized distribution agents; record keeping and reporting requirements and taxation of samples; provide for. Amends secs. 205 & 1027 of 1998 PA 58 (MCL 436.1205 & 436.2027).

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2014-05-28 - Printed Bill Filed 05/28/2014 [HB5602 Detail]

Download: Michigan-2013-HB5602-Introduced.html

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HOUSE BILL No. 5602

 

May 27, 2014, Introduced by Rep. Forlini and referred to the Committee on Regulatory Reform.

 

     A bill to amend 1998 PA 58, entitled

 

"Michigan liquor control code of 1998,"

 

by amending sections 205 and 1027 (MCL 436.1205 and 436.2027),

 

section 205 as amended by 2010 PA 213 and section 1027 as amended

 

by 2011 PA 219.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 205. (1) The commission shall, as provided in section

 

203(1), by order appoint authorized distribution agents to engage

 

in the warehousing and delivery of warehouse and deliver spirits in

 

this state so as to ensure that all retail licensees continue to be

 

are properly serviced with spirits. An authorized distribution

 

agent is subject to uniform requirements, including business

 

operating procedures, that the commission may prescribe by rule,

 

subject to this section.

 

     (2) A person is eligible for appointment by the commission as

 

an authorized distribution agent if the following circumstances

 

exist:

 

     (a) The person satisfies all applicable commission rules

 

prescribing qualifications for licensure promulgated under section

 

215.

 

     (b) The person has entered into a written agreement or

 

contract with a supplier of spirits for the purposes of warehousing

 

and delivering to warehouse and deliver a brand or brands of

 

spirits of that supplier of spirits.

 

     (c) The person has an adequate warehousing facility located in

 

this state for the storing of to store spirits from which all

 

delivery of spirits to retail licensees shall be made.

 

     (3) An authorized distribution agent shall not have a direct

 

or indirect interest in a supplier of spirits or in a retailer. A

 

supplier of spirits or a retailer shall not have a direct or

 

indirect interest in an authorized distribution agent. An

 

authorized distribution agent shall not hold title to spirits.

 

     (4) An authorized distribution agent shall deliver to each

 

retailer located in its assigned distribution area on at least a

 

weekly basis if the order meets the minimum requirements. Except

 

that in those weeks that accompany a state holiday, the commission

 

may order a modified delivery schedule provided that a retailer

 

waits not longer than 9 days between deliveries due to a modified

 

delivery schedule. The commission shall provide for an integrated

 

on-line ordering system for spirits and shall require the

 

continuance of any ordering system in existence on the activation

 

date of the system established under section 206. The minimum

 

requirements shall be set by the commission and shall be a

 

sufficient number of bottles to comprise not more than 2 cases. A

 

retailer may pick up the product at the authorized distribution

 

agent's warehouse. To avoid occasional emergency outages of

 

spirits, a retail licensee may make up to 12 special emergency

 

orders to an authorized distribution agent per in each calendar

 

year. which An authorized distribution agent shall make a special

 

emergency order shall be made available to the retail licensee

 

within 18 hours of the placing of the order. A An authorized

 

distribution agent shall make a special emergency order placed on

 

Saturday or Sunday shall be made available to the retail licensee

 

before noon on the following Monday. An authorized distribution

 

agent may impose a fee of up to $20.00 to deliver a special

 

emergency order to a retail licensee.

 

     (5) In locations inaccessible to a motor vehicle as that term

 

is defined by the Michigan vehicle code, 1949 PA 300, MCL 257.1 to

 

257.923, the an authorized distribution agent shall arrange that a

 

delivery of spirits to a retailer be in compliance with the

 

following procedures:

 

     (a) After processing an order from a retailer, an authorized

 

distribution agent shall contact a retailer to confirm the quantity

 

of cases or bottles, or both, and the exact dollar total of the

 

order.

 

     (b) The authorized distribution agent shall have has the

 

responsibility to coordinate with the retailer the date and time a

 

driver is scheduled to deliver the order to a ferry transport dock,

 

shall arrange any ferry, drayage, or other appropriate service, and

 

shall pick up the retailer's payment at that time.

 

     (c) The ferry transport company or company representing any

 

other form of conveyance shall take the retailer's payment to the

 

mainland dock and give that payment to the authorized distribution

 

agent's driver.

 

     (d) The ferry transport company or company representing any

 

other form of conveyance shall transport the order to the drayage

 

or other appropriate company at the island dock for immediate

 

delivery to the retailer.

 

     (e) The drayage or other appropriate company shall deliver the

 

order to the retailer.

 

     (6) The An authorized distribution agent is responsible for

 

the payment of all transportation and delivery charges imposed by

 

the ferry, drayage, or other conveyance company and is responsible

 

for all breakage and any shortages, whether attributable to the

 

ferry, drayage, or other conveyance company or any combination of

 

those companies, until the order is delivered to the retailer's

 

establishment. This subsection does not in any way prevent the

 

authorized distribution agent from seeking reimbursement or damages

 

from any company conveying the authorized distribution agent's

 

product.

 

     (7) Except as otherwise provided in subsection (4), an

 

authorized distribution agent shall not charge a delivery fee or a

 

split-case fee for delivery of spirits sold by the commission to a

 

retailer.

 

     (8) An authorized distribution agent or prospective authorized

 

distribution agent shall maintain and make available to the

 

commission or its representatives, upon notice, any contract or

 

written agreement it may have has with a supplier of spirits or

 

other authorized distribution agent for the warehousing and

 

delivery of delivering spirits in this state. An authorized

 

distribution agent shall maintain a daily record of spirits

 

received and delivered by the authorized distribution agent. No

 

later than the fifteenth day of the month following that for which

 

the report is rendered, an authorized distribution agent shall, in

 

a form as prescribed by the commission, submit a monthly report to

 

the commission that includes, at a minimum, all of the following

 

information for the immediately preceding month:

 

     (a) The total amount of spirits being stored by the authorized

 

distribution agent on the first of the month.

 

     (b) The total amount of spirits received from a supplier of

 

spirits, including the product name and quantity of each received.

 

     (c) The total amount of spirits delivered to retail licensees,

 

including the product name and quantity of each delivered.

 

     (d) The total amount of spirits delivered to an out-of-state

 

entity, including the product name and quantity of each delivered.

 

     (e) The total amount of spirits lost and disposed of due to

 

spoilage or broken or damaged containers of spirits while in

 

storage or transit.

 

     (f) The total amount of samples and any other bottle or

 

container of spirits provided to induce the sale of that product,

 

including the product name and quantity of each, and to whom those

 

samples and bottles were provided. As used in this subdivision,

 

"sample" means any container of spirits that bears the word

 

"sample" and that is not more than 1 liter or 33.82 United States

 

fluid ounces. If a product is not available in a container of 1

 

liter or less, then the next larger size may be substituted.

 

However, a container shall not be more than 3 liters.

 

     (9) For any violation of this act, rules promulgated under

 

this act, or the terms of an order appointing an authorized

 

distribution agent, an authorized distribution agent shall be is

 

subject to the suspension, revocation, forfeiture, and penalty

 

provisions of sections 903(1) and 907 in the same manner in which a

 

licensee would be subject to those provisions. An authorized

 

distribution agent aggrieved by a penalty imposed by the commission

 

may invoke the hearing and appeal procedures of section 903(2) and

 

rules promulgated under that section.

 

     (10) A specially designated distributor may sell to an on-

 

premises licensee up to 9 liters of spirits during any 1-month

 

period and an on-premises licensee may purchase, collectively from

 

specially designated distributors, up to that amount during any 1-

 

month period. Notwithstanding any other provision of this act or

 

rule promulgated under this act, a specially designated distributor

 

is only liable for knowingly violating this section. Records

 

verifying these purchases shall be maintained by the on-premises

 

licensee and be available to the commission upon request.

 

     (11) An authorized distribution agent shall demonstrate that

 

it has made a good faith effort to provide employment to those

 

former state employees who were terminated due to the privatization

 

of the liquor distribution system. A good faith effort is

 

demonstrated by the authorized distribution agent performing at

 

least the following actions:

 

     (a) Seeking from the commission a list of names and resumes of

 

all such former state employees who have indicated a desire for

 

continued employment in the distribution of liquor in Michigan.

 

     (b) Providing a list of employment opportunities created by

 

the authorized distribution agent in the distribution of liquor in

 

Michigan to each individual whose name and resume is transmitted

 

from the commission.

 

     (c) Providing an opportunity for application and interview to

 

any terminated state worker who indicates an interest in pursuing a

 

job opportunity with the authorized distribution agent.

 

     (d) Providing a priority in hiring for those individuals who

 

apply and interview under this process.

 

     (12) Any former state employees terminated due to

 

privatization who have reason to believe that an authorized

 

distribution agent has not made a good faith effort to provide him

 

or her with employment opportunities as described in subsection

 

(11) may file a complaint with the commission who shall hear the

 

complaint and make a determination on its validity. If the

 

commission determines that the complaint is valid, the violation

 

may be treated as a violation of this act and the authorized

 

distribution agent may be subject to the suspension, revocation,

 

forfeiture, and penalty provisions of sections 903(1) and 907.

 

     (11) (13) In addition to paying a vendor of spirits the

 

acquisition price for purchasing spirits, the commission may pay a

 

vendor of spirits an additional amount of not less than $4.50 and

 

not more than $7.50 for each case of spirits purchased as an offset

 

to the costs being incurred by that vendor of spirits in

 

contracting with an authorized distribution agent for the

 

warehousing and delivery of delivering spirits to retailers. The

 

payment described in this subsection shall not be included in the

 

cost of purchasing spirits by the commission and shall not be

 

subject to the commission's markup, special taxes, or state sales

 

tax. The per-case offset established by this subsection may be

 

increased by the state administrative board each January to reflect

 

reasonable increases in the authorized distribution agent's cost of

 

warehousing and delivery. As used in this subsection, "case" means

 

a container holding twelve 750 ml bottles of spirits or other

 

containers containing spirits which are standard to the industry.

 

     Sec. 1027. (1) Unless otherwise provided by rule of the

 

commission, a person shall not conduct samplings or tastings of any

 

alcoholic liquor for a commercial purpose except at premises that

 

are licensed by the commission for the sale and consumption of

 

alcoholic liquor on the premises.

 

     (2) Notwithstanding section 1025(1) or (2), a retailer

 

licensed by the commission for consumption on the premises may

 

allow customers to sample beer, wine, and spirits if the retailer

 

does not charge for the samples provided to customers. Sample

 

serving sizes shall not exceed 3 ounces for beer, 2 ounces for

 

wine, and 1/2 ounce for spirits. A customer shall not be provided

 

more than 2 samples within a 24-hour period per licensed premises.

 

     (3) This section does not prohibit any of the following:

 

     (a) A vendor of spirits, brewer, wine maker, mixed spirit

 

drink manufacturer, small wine maker, outstate seller of beer,

 

outstate seller of wine, or outstate seller of mixed spirit drink,

 

or a bona fide market research organization retained by 1 of the

 

persons named in this subsection, from conducting samplings or

 

tastings of an alcoholic liquor product before it is approved for

 

sale in this state if the sampling or tasting is conducted pursuant

 

to prior written approval of the commission.

 

     (b) An on-premises licensee from giving a sampling or tasting

 

of alcoholic liquor to an employee of the licensee during the legal

 

hours for consumption for the purpose of educating the employee

 

regarding 1 or more types of alcoholic liquor if the employee is at

 

least 21 years of age.

 

     (c) A small distiller licensee from giving a sampling or

 

tasting of brands it manufactures on the licensed premises or an

 

off-site tasting facility operated by that small distiller.

 

     (d) A micro brewer, brewpub, or on-premises licensee from

 

allowing the sampling and consumption on the licensed premises of

 

beer, wine, mead, honey-based beer, or cider produced by 1 or more

 

home brewers at a meeting of home brewers, or a club composed

 

primarily of home brewers, under the following circumstances:

 

     (i) The sampling or consumption is for the purpose of

 

exhibitions or competitions involving home brewers.

 

     (ii) The beer, honey-based beer, or cider is served in portions

 

that do not exceed 3 ounces. The wine or mead is served in portions

 

that do not exceed 2 ounces.

 

     (iii) The beer, wine, mead, honey-based beer, or cider produced

 

by the home brewer is only consumed by the home brewer, the home

 

brewer's family, a club member, a judge, or a guest speaker and is

 

not sold to members of the general public.

 

     (iv) The participants in the sampling or consumption otherwise

 

comply with applicable state and federal law and applicable

 

regulatory provisions of this act and rules adopted by the

 

commission under this act.

 

     (v) The participants in the sampling or consumption are not

 

charged for the sampling or consumption of the beer, wine, mead,

 

honey-based beer, or cider.

 

     (4) A vendor of spirits or a manufacturer may conduct a

 

consumer sampling event on the premises of a holder of a specially

 

designated distributor license upon submission of a completed

 

application to the commission.

 

     (5) The holder of a consumer sampling event license shall

 

comply with the following:

 

     (a) The commission must be notified in writing a minimum of 10

 

working days before the event with the date, time, and location of

 

the event.

 

     (b) The consumer sampling event is limited to 3 events per

 

vendor of spirits or manufacturer per specially designated

 

distributor license per month.

 

     (c) The vendor of spirits or manufacturer conducting the

 

consumer sampling event must have a licensed representative present

 

at the specially designated distributor's establishment.

 

     (d) Licensed representatives or an authorized representative

 

may distribute merchandise, not to exceed $100.00 in value, to

 

consumers 21 years of age or older during the event.

 

     (e) Participating specially designated distributor licensees

 

do not receive any fee or other valuable consideration for

 

participating in the event.

 

     (f) Each consumer is limited to 3 samples, which total no more

 

than 1/3 ounce of spirits per serving.

 

     (g) The consumer is not charged for and does not purchase any

 

sample.

 

     (h) The alcoholic liquor used in the consumer sampling event

 

is provided by the vendor of spirits or manufacturer, and purchased

 

at the minimum retail selling price fixed by the commission from

 

the specially designated distributor on whose premises the event is

 

located. The vendor of spirits or manufacturer shall remove any

 

unfinished product from the premises at which the event is held

 

upon completion of the event.

 

     (i) A consumer sampling event shall not be allowed if the sale

 

of alcoholic liquor is otherwise prohibited on the premises at

 

which the event is conducted.

 

     (j) Samples are not to be offered to, or allowed to be

 

consumed by, any person under the legal age for consuming alcoholic

 

liquor.

 

     (k) A consumer sampling event may be advertised in any type of

 

media and the advertisements may include the date, time, location,

 

and other information regarding the event.

 

     (l) The participating vendor of spirits or manufacturer and

 

specially designated distributor licensees must comply with this

 

act and commission rules.

 

     (m) The vendor of spirits or manufacturer must demonstrate

 

that the individual actually conducting the sampling has

 

successfully completed the server training program in the manner

 

provided for in section 906 and rules promulgated by the

 

commission.

 

     (6) Violation of this section subjects the vendor of spirits

 

or manufacturer to the sanctions and penalties as provided for

 

under this act.

 

     (7) The commission, by rule or issuance of an order, may

 

further define eligibility for licensure and processes for

 

conducting consumer sampling events.

 

     (8) A sampling or tasting of any alcoholic liquor in a home or

 

domicile for other than a commercial purpose is not subject to this

 

section.

 

     (9) Before a micro brewer, brewpub, or on-premises licensee

 

allows an event to be held under subsection (3)(d), the micro

 

brewer, brewpub, or on-premises licensee shall enter into a written

 

agreement with the home brewers or home brewers club stating all of

 

the following:

 

     (a) The date and time the event will be held.

 

     (b) The location of the event.

 

     (c) Either of the following:

 

     (i) A statement that the micro brewer, brewpub, or on-premises

 

licensee acknowledges that it is not in control of an unregulated

 

alcoholic beverage at its establishment and agrees to assume

 

liability under section 801(3) for the event.

 

     (ii) Proof that the home brewers or home brewers club has

 

obtained a bond or liability insurance equal to that required under

 

section 803(1).

 

     (10) A vendor representative or salesperson that provides a

 

retail licensee with a sample bottle of spirits or any other bottle

 

or container of spirits for the retail licensee's personal sampling

 

is responsible for the payment of the specific taxes levied and

 

imposed under chapter 12 and shall remit payment of the taxes at

 

the time he or she takes possession of any sample or other bottle

 

or container of spirits.

 

     (11) (10) As used in this section:

 

     (a) "Broker" means a person, other than an individual, who is

 

licensed by the commission and who is employed or otherwise

 

retained by a manufacturer of spirits or a vendor of spirits to

 

sell, promote, or otherwise assist in the sale or promotion of

 

spirits.

 

     (b) (a) "Commercial purpose" means a purpose for which

 

monetary gain or other remuneration could reasonably be expected.

 

     (c) (b) "Home brewer" means an individual who manufactures

 

beer, wine, mead, honey-based beer, or cider at his or her

 

dwelling.

 

     (d) "Salesperson" means a person who is employed by a vendor

 

of spirits or broker and who is licensed by the commission to sell,

 

deliver, or promote, or otherwise assist in the sale of, spirits in

 

this state.

 

     (e) "Sample" means any container of spirits that bears the

 

word "sample" and that is not more than 1 liter or 33.82 United

 

States fluid ounces. If a product is not available in a container

 

of 1 liter or less, then the next larger size may be substituted.

 

However, a container shall not be more than 3 liters.

 

     (f) "Vendor representative" means a person who is licensed by

 

the commission and who is authorized by a vendor of spirits to

 

represent the respective employer or principal in transactions with

 

the commission.