Bill Text: MI SB1072 | 2013-2014 | 97th Legislature | Introduced

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Bill Title: Liquor; other; powdered alcohol, conditional licenses, and brand logoed items; prohibit and clarify. Amends secs. 105, 525 & 609 of 1998 PA 58 (MCL 436.1105 et seq.) & adds sec. 914a.

Spectrum: Slight Partisan Bill (Republican 9-5)

Status: (Introduced - Dead) 2014-09-16 - Referred To Committee On Regulatory Reform [SB1072 Detail]

Download: Michigan-2013-SB1072-Introduced.html

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SENATE BILL No. 1072

 

 

September 16, 2014, Introduced by Senators HUNE, ROCCA, PAVLOV, JONES, JOHNSON, WHITMER, MOOLENAAR, KOWALL, ANANICH, BIEDA, BRANDENBURG, PROOS, HILDENBRAND and WARREN 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 105, 525, and 609 (MCL 436.1105, 436.1525, and

 

436.1609), section 105 as amended by 2005 PA 320, section 525 as

 

amended by 2013 PA 236, and section 609 as amended by 2014 PA 47,

 

and by adding section 914a.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 105. (1) "Alcohol" means the product of distillation of

 

fermented liquid, whether or not rectified or diluted with water,

 

but does not mean ethyl or industrial alcohol, diluted or not, that

 

has been denatured or otherwise rendered unfit for beverage

 

purposes.

 

     (2) "Alcohol vapor device" means any device that provides for

 

the use of air or oxygen bubbled through alcoholic liquor to

 

produce a vapor or mist that allows the user to inhale this

 

alcoholic vapor through the mouth or nose.

 

     (3) "Alcoholic liquor" means any spirituous, vinous, malt, or

 

fermented liquor, powder, liquids and compounds, whether or not

 

medicated, proprietary, patented, and by whatever name called,

 

containing 1/2 of 1% or more of alcohol by volume which that are

 

fit for use for food purposes or beverage purposes as defined and

 

classified by the commission according to alcoholic content as

 

belonging to 1 of the varieties defined in this chapter.

 

     (4) "Authorized distribution agent" means a person approved by

 

the commission to do 1 or more of the following:

 

     (a) To store spirits owned by a supplier of spirits or the

 

commission.

 

     (b) To deliver spirits sold by the commission to retail

 

licensees.

 

     (c) To perform any function needed to store spirits owned by a

 

supplier of spirits or by the commission or to deliver spirits sold

 

by the commission to retail licensees.

 

     (5) "Bar" means a barrier or counter at which alcoholic liquor

 

is sold to, served to, or consumed by customers.

 

     (6) "Beer" means any beverage obtained by alcoholic

 

fermentation of an infusion or decoction of barley, malt, hops, or

 

other cereal in potable water.

 

     (7) "Brand" means any word, name, group of letters, symbol,

 

trademark, or combination thereof adopted and used by a supplier to

 

identify a specific beer, malt beverage, wine, mixed wine drink, or

 

mixed spirit drink product and to distinguish that product from

 

another beer, malt beverage, wine, mixed wine drink, or mixed

 

spirit drink product that is produced or marketed by that or

 

another supplier. As used in this section and notwithstanding

 

sections 305(2)(j) and 403(2)(j), "supplier" means a brewer, an

 

outstate seller of beer, a wine maker, a small wine maker, an

 

outstate seller of wine, a manufacturer of mixed wine drink, an

 

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

 

manufacturer, or an outstate seller of mixed spirit drink.

 

     (8) "Brand extension" means any brand which incorporates all

 

or a substantial part of the unique features of a preexisting brand

 

of the same supplier. As used in this section and notwithstanding

 

sections 305(2)(j) and 403(2)(j), "supplier" means a brewer, an

 

outstate seller of beer, a wine maker, a small wine maker, an

 

outstate seller of wine, a manufacturer of mixed wine drink, an

 

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

 

manufacturer, or an outstate seller of mixed spirit drink.

 

     (9) "Brandy" means an alcoholic liquor as defined in 27 CFR

 

5.22(d) (1980).

 

     (10) "Brandy manufacturer" means a person wine maker or a

 

small wine maker licensed under this act to engage in the

 

manufacturing, rectifying or blending, or both, of manufacture,

 

rectify, or blend brandy only and no other distilled spirit. Only a

 

licensed wine maker or a small wine maker is eligible to be a

 

brandy manufacturer. The commission may approve a brandy

 

manufacturer to sell at retail brandy which that it manufactures,

 

blends or rectifies, or both, at its licensed premises or at other

 

premises authorized in this act.

 

     (11) "Brewer" means a person located in this state that is

 

licensed to manufacture and sell to licensed wholesalers beer

 

produced by it.

 

     (12) "Brewpub" means a license issued in conjunction with a

 

class C, tavern, class A hotel, or class B hotel license that

 

authorizes the person licensed with the class C, tavern, class A

 

hotel, or class B hotel to manufacture and brew not more than 5,000

 

barrels of beer per calendar year in Michigan and sell at those

 

licensed premises the beer produced for consumption on or off the

 

licensed brewery premises in the manner provided for in sections

 

405 and 407.

 

     Sec. 525. (1) Except as otherwise provided in this section,

 

the following license fees shall be paid at the time of filing

 

applications or as otherwise provided in this act and are subject

 

to allocation under section 543:

 

     (a) Manufacturers of spirits, not including makers, blenders,

 

and rectifiers of wines containing 21% or less alcohol by volume,

 

$1,000.00.

 

     (b) Manufacturers of beer, $50.00 per 1,000 barrels, or

 

fraction of a barrel, production annually with a maximum fee of

 

$1,000.00, and in addition $50.00 for each motor vehicle used in

 

delivery to retail licensees. A fee increase does not apply to a

 

manufacturer of less than 15,000 barrels production per year.

 

     (c) Outstate seller of beer, delivering or selling beer in

 

this state, $1,000.00.

 

     (d) Wine makers, blenders, and rectifiers of wine, including

 

makers, blenders, and rectifiers of wines containing 21% or less

 

alcohol by volume, $100.00. The small wine maker license fee is

 

$25.00.

 

     (e) Outstate seller of wine, delivering or selling wine in

 

this state, $300.00.

 

     (f) Outstate seller of mixed spirit drink, delivering or

 

selling mixed spirit drink in this state, $300.00.

 

     (g) Dining cars or other railroad or Pullman cars selling

 

alcoholic liquor, $100.00 per train.

 

     (h) Wholesale vendors other than manufacturers of beer,

 

$300.00 for the first motor vehicle used in delivery to retail

 

licensees and $50.00 for each additional motor vehicle used in

 

delivery to retail licensees.

 

     (i) Watercraft, licensed to carry passengers, selling

 

alcoholic liquor, a minimum fee of $100.00 and a maximum fee of

 

$500.00 per year computed on the basis of $1.00 per person per

 

passenger capacity.

 

     (j) Specially designated merchants, for selling beer or wine

 

for consumption off the premises only but not at wholesale, $100.00

 

for each location regardless of whether the location is part of a

 

system or chain of merchandising.

 

     (k) Specially designated distributors licensed by the

 

commission to distribute spirits and mixed spirit drink in the

 

original package for the commission for consumption off the

 

premises, $150.00 per year, and an additional fee of $3.00 for each

 

$1,000.00 or major fraction of that amount in excess of $25,000.00

 

of the total retail value of merchandise purchased under each

 

license from the commission during the previous calendar year.

 

     (l) Hotels of class A selling beer and wine, a minimum fee of

 

$250.00 and $1.00 for each bedroom in excess of 20, but not more

 

than $500.00 total.

 

     (m) Hotels of class B selling beer, wine, mixed spirit drink,

 

and spirits, a minimum fee of $600.00 and $3.00 for each bedroom in

 

excess of 20. If a hotel of class B sells beer, wine, mixed spirit

 

drink, and spirits in more than 1 public bar, a fee of $350.00

 

shall be paid for each additional public bar, other than a bedroom.

 

     (n) Taverns, selling beer and wine, $250.00.

 

     (o) Class C license selling beer, wine, mixed spirit drink,

 

and spirits, $600.00. Subject to section 518(2), if a class C

 

licensee sells beer, wine, mixed spirit drink, and spirits in more

 

than 1 bar, a fee of $350.00 shall be paid for each additional bar.

 

In municipally owned or supported facilities in which nonprofit

 

organizations operate concession stands, a fee of $100.00 shall be

 

paid for each additional bar.

 

     (p) Clubs selling beer, wine, mixed spirit drink, and spirits,

 

$300.00 for clubs having 150 or fewer accredited members and $1.00

 

for each member in excess of 150. Clubs shall submit a list of

 

members by a sworn affidavit 30 days before the closing of the

 

license year. The sworn affidavit shall be used only for

 

determining the license fees to be paid under this subdivision.

 

This subdivision does not prevent the commission from checking a

 

membership list and making its own determination from the list or

 

otherwise. The list of members and additional members is not

 

required of a club paying the maximum fee. The maximum fee shall

 

not exceed $750.00 for any 1 club.

 

     (q) Warehousers, to be fixed by the commission with a minimum

 

fee for each warehouse of $50.00.

 

     (r) Special licenses, a fee of $50.00 per day, except that the

 

fee for that license or permit issued to any bona fide nonprofit

 

association, duly organized and in continuous existence for 1 year

 

before the filing of its application, is $25.00. Not more than 12

 

special licenses may be granted to any organization, including an

 

auxiliary of the organization, in a calendar year.

 

     (s) Airlines licensed to carry passengers in this state that

 

sell, offer for sale, provide, or transport alcoholic liquor,

 

$600.00.

 

     (t) Brandy manufacturer, $100.00.

 

     (u) Mixed spirit drink manufacturer, $100.00.

 

     (v) Brewpub, $100.00.

 

     (w) Class G-1, $1,000.00.

 

     (x) Class G-2, $500.00.

 

     (y) Motorsports event license, the amount as described and

 

determined under section 518(2).

 

     (z) Small distiller, $100.00.

 

     (aa) Wine auction license, $50,000.00.

 

     (bb) Nonpublic continuing care retirement center license,

 

$600.00.

 

     (cc) Conditional license approved under subsection (5) and

 

issued under subsection (6), $300.00.

 

     (2) The fees provided in this act for the various types of

 

licenses shall not be prorated for a portion of the effective

 

period of the license. Notwithstanding subsection (1), the initial

 

license fee for any licenses issued under section 531(3) or (4) is

 

$20,000.00. The renewal license fee shall be the amount described

 

in subsection (1). However, the commission shall not impose the

 

$20,000.00 initial license fee for applicants whose license

 

eligibility was already approved on July 20, 2005.

 

     (3) Except in the case of any resort or resort economic

 

development license issued under section 531(2), (3), (4), or (5)

 

or a license issued under section 521a, the commission shall issue

 

an initial or renewal license not later than 90 days after the

 

applicant files a completed application. The application is

 

considered to be received the date the application is received by

 

any agency or department of this state. If the commission

 

determines that an application is incomplete, the commission shall

 

notify the applicant in writing, or make the information

 

electronically available, within 30 days after receipt of the

 

incomplete application, describing the deficiency and requesting

 

the additional information. The determination of the completeness

 

of an application is not an approval of the application for the

 

license and does not confer eligibility upon an applicant

 

determined otherwise ineligible for issuance of a license. The 90-

 

day period is tolled for the following periods under any of the

 

following circumstances:

 

     (a) If notice is sent by the commission of a deficiency in the

 

application, until the date all of the requested information is

 

received by the commission.

 

     (b) For the time required to complete actions required by a

 

person, other than the applicant or the commission, including, but

 

not limited to, completion of construction or renovation of the

 

licensed premises; mandated inspections by the commission or by any

 

state, local, or federal agency; approval by the legislative body

 

of a local unit of government; criminal history or criminal record

 

checks; financial or court record checks; or other actions mandated

 

by this act or rule or as otherwise mandated by law or local

 

ordinance.

 

     (4) If the commission fails to issue or deny a license within

 

the time required by this section, the commission shall return the

 

license fee and shall reduce the license fee for the applicant's

 

next renewal application, if any, by 15%. The failure to issue a

 

license within the time required under this section does not allow

 

the commission to otherwise delay the processing of the

 

application, and that application, upon completion, shall be placed

 

in sequence with other completed applications received at that same

 

time. The commission shall not discriminate against an applicant in

 

the processing of the application based upon the fact that the

 

license fee was refunded or discounted under this subsection.

 

     (5) If, in addition to a completed application under this

 

section, an applicant submits a separate form requesting a

 

conditional license with an acceptable proof of financial

 

responsibility form under section 803, and an executed property

 

document, the commission shall, after considering the arrest and

 

conviction records or previous violation history in the management,

 

operation, or ownership of a licensed business, approve or deny a

 

conditional license. to any of the following:A conditional license

 

issued under subsection (6) for the transfer of an existing license

 

at the same location shall include any existing permits and

 

approvals held in connection with that license. The following

 

applicants may request a conditional license:

 

     (a) An applicant seeking to transfer ownership of or interest

 

in an existing license at the same location under subsection (3) to

 

sell alcoholic liquor for consumption on or off the premises.

 

     (b) An applicant seeking an initial license under subsection

 

(3), except for other than a specially designated distributor

 

license or a license for the sale of alcoholic liquor for

 

consumption on the premises.

 

     (6) The commission shall issue a conditional license to

 

applicants approved under subsection (5) within 20 business days

 

after receipt of a completed application and a completed

 

conditional license request form and documentation for a

 

conditional license at a single location. The commission may take

 

up to 30 business days to issue conditional licenses to approved

 

applicants seeking conditional licenses at multiple locations.

 

     (7) A conditional license approved under subsection (5) and

 

issued under subsection (6) is nontransferable and nonrenewable. A

 

conditional license approved under subsection (5) and issued under

 

subsection (6) expires when the commission issues an order of

 

denial of the license application that serves as the basis for the

 

conditional license after all administrative remedies before the

 

commission have been exhausted, expires 20 business days after the

 

commission issues an order of approval of the license application

 

that serves as the basis for the conditional license, expires when

 

the licensee or conditional licensee notifies the commission in

 

writing that the initial application should be canceled, or expires

 

1 year after the date the conditional license was issued, whichever

 

occurs first. If a conditionally approved licensee fails to

 

maintain acceptable proof of its financial responsibility, the

 

commission shall, after due notice and proper hearing, suspend the

 

conditional license until the licensee files an acceptable proof of

 

financial responsibility form under section 803. If a conditional

 

license is revoked, the conditional licensee shall not recover from

 

a unit of local government any compensation for property, future

 

income, or future economic loss due to the revocation.

 

     (8) Upon issuing a conditional license under subsection (6),

 

the commission shall, until the conditional license expires under

 

subsection (7), place an existing license under subsection (3) in

 

escrow in compliance with R 436.1107 of the Michigan administrative

 

code. If the conditional license expires because a transfer of an

 

existing license was denied or because the license was not

 

transferred within the 1-year period, an existing licensee may do 1

 

of the following:

 

     (a) Request that the commission release the license from

 

escrow.

 

     (b) Keep the license in escrow. The escrow date for compliance

 

with R 436.1107 of the Michigan administrative code shall be the

 

date the conditional license expires.

 

     (9) The chair of the commission shall submit a report by

 

December 1 of each year to the standing committees and

 

appropriations subcommittees of the senate and house of

 

representatives concerned with liquor license issues. The chair of

 

the commission shall include all of the following information in

 

the report concerning the preceding fiscal year:

 

     (a) The number of initial and renewal applications the

 

commission received and completed within the 90-day time period

 

described in subsection (3).

 

     (b) The number of applications denied.

 

     (c) The number of applicants not issued a license within the

 

90-day time period and the amount of money returned to licensees

 

under subsection (4).

 

     (10) As used in this section, "completed application" means an

 

application complete on its face and submitted with any applicable

 

licensing fees as well as any other information, records, approval,

 

security, or similar item required by law or rule from a local unit

 

of government, a federal agency, or a private entity but not from

 

another department or agency of the state of Michigan.

 

     Sec. 609. (1) Except as provided in this section and sections

 

605 and 1029, a manufacturer, mixed spirit drink manufacturer,

 

warehouser, wholesaler, outstate seller of beer, outstate seller of

 

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

 

shall not aid or assist any other vendor by gift, loan of money or

 

property of any description, or other valuable thing, or by the

 

giving of premiums or rebates, and a vendor shall not accept the

 

same. However, if manufacturers of spirits reduce the price of

 

their products, the manufacturer of spirits may refund the amount

 

of the price reductions to specially designated distributor

 

licensees in a manner prescribed by the commission.

 

     (2) A manufacturer, mixed spirit drink manufacturer,

 

warehouser, wholesaler, outstate seller of beer, outstate seller of

 

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

 

may, in a manner consistent with rules, regulations, and orders

 

made by the commission, provide another licensee with advertising

 

items that promote the brands and prices of alcoholic liquor

 

produced by the manufacturer; sold by the outstate seller of beer,

 

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

 

drink; or distributed by the wholesaler. Except as otherwise

 

provided under subsection (3), or (4), or (5), the advertising

 

items shall not have any use or value beyond the actual advertising

 

of brands and prices of the alcoholic liquor.

 

     (3) Except for those orders that were approved for specific

 

sponsorships or festivals, a manufacturer, mixed spirit drink

 

manufacturer, warehouser, wholesaler, outstate seller of beer,

 

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

 

vendor of spirits may provide goods and services to another

 

licensee that were approved by the commission pursuant to rules or

 

orders adopted prior to January 1, 2014 and the following

 

advertising items:

 

     (a) Alcoholic liquor recipes literature.

 

     (b) Calendars and matchbooks.

 

     (c) Removable tap markers or signs.

 

     (d) Table tents.

 

     (e) Shelf talkers.

 

     (f) Bottle neckers.

 

     (g) Cooler stickers.

 

     (h) Buttons, blinking and nonblinking.

 

     (i) Menu clip-ons.

 

     (j) Mirrors.

 

     (k) Napkin holders.

 

     (l) Spirits cold shot tap machines.

 

     (m) Alcoholic liquor drink menus.

 

     (n) Keg couplers that are lent to an on-premises retailer.

 

     (o) Sporting event or entertainment tickets.

 

     (4) A wholesaler may sell brand logoed items to an off-

 

premises licensee if those brand logoed items are contained within

 

the packaging of an alcoholic liquor product that is to be sold to

 

a consumer.

 

     (5) (4) A retailer shall not use or possess, at its licensed

 

premises, advertising items that have a use or value beyond the

 

actual advertising of brands and prices of alcoholic liquor except

 

for those allowed in subsection subsections (3) and (4) or as

 

otherwise provided in this subsection. A retailer may possess and

 

use brand logoed barware that advertises spirits as long as those

 

items are purchased from a manufacturer of spirits, vendor of

 

spirits, salesperson, broker, or barware retailer. A retailer may

 

possess and use brand logoed barware that advertises beer or wine

 

as long as those items are purchased from a barware retailer. A

 

retailer shall maintain the receipts of all purchased brand logoed

 

barware for at least 3 years and shall make those receipts

 

available for inspection by the commission as provided in section

 

217. Beginning in the 2015 licensing year, a retailer shall

 

disclose, in a manner as prescribed by the commission on the

 

application for renewal of an existing license, if any barware was

 

purchased by the retailer during the immediately preceding license

 

year.

 

     (6) (5) In addition to the penalties provided under section

 

903, a manufacturer of beer or wine, mixed spirit drink

 

manufacturer, warehouser, wholesaler, outstate seller of beer,

 

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

 

that provides or sells barware and is not authorized to provide or

 

sell barware is subject to a fine in an amount of up to $2,500.00

 

as determined by the commission. Multiple violations resulting from

 

the same incident may be treated as a single violation for purposes

 

of issuance of any penalty imposed under this act.

 

     (7) (6) An on-premises retailer that hosts an on-premises

 

brand promotional event conducted by a wholesaler or supplier has

 

14 days after the event to remove from the premises any brand

 

logoed merchandise from the event to maintain compliance with this

 

section.

 

     (8) (7) This act and rules promulgated under this act do not

 

prevent a retailer that holds an off-premises license only from

 

purchasing brand logoed inventory and selling that inventory to its

 

customers.

 

     (9) (8) Not sooner than 18 months after the effective date of

 

the amendatory act that added this subsection, Beginning after

 

September 25, 2015, the commission may, by rule, add an item to or

 

remove an item from the definition of barware. The commission shall

 

not add or remove more than 1 item per rule and shall not

 

promulgate more than 1 rule at a time on the definition of barware.

 

The commission shall not issue a rule that adds refrigerator

 

systems, draft systems, or furniture to the definition of barware.

 

A rule, regulation, or order adopted after January 1, 2014 that is

 

not adopted in accordance with this subsection and that is not

 

consistent with this section or is in conflict with this section is

 

void and unenforceable.

 

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

 

     (a) "Barware" means the following brand logoed items:

 

     (i) Trays.

 

     (ii) Coasters.

 

     (iii) Napkins.

 

     (iv) Shirts.

 

     (v) Hats.

 

     (vi) Pitchers.

 

     (vii) Drinkware that is intended to be reused.

 

     (viii) Bar mats.

 

     (ix) Buckets.

 

     (x) Bottle openers.

 

     (xi) Stir rods.

 

     (xii) Patio umbrellas.

 

     (xiii) Any packaging used to hold and deliver the alcoholic

 

liquor purchased by the retailer.

 

     (xiv) Any other items that have been added by the commission

 

pursuant to subsection (8).(9).

 

     (b) "Barware retailer" means a person that offers brand logoed

 

barware for sale to retailers, whether or not it is in their

 

ordinary course of business, and that is not licensed as, or

 

directly or indirectly affiliated with, a manufacturer of beer or

 

wine, mixed spirit drink manufacturer, warehouser, wholesaler,

 

outstate seller of beer, outstate seller of wine, or outstate

 

seller of mixed spirit drink. For purposes of this subdivision, a

 

licensing agreement that authorizes use of a brand logo does not

 

constitute a direct or indirect affiliation.

 

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

 

licensed by the commission and that 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.

 

     (d) "Indirectly affiliated" means, for purposes of this

 

section only, that a person owns 5% or more of the voting interest

 

of another person.

 

     (e) "Other valuable thing" means any goods, services, or

 

intangible goods that are given, loaned, leased, or sold to another

 

licensee that have value regardless of whether the value is nominal

 

and includes, but is not limited to, goods, services, or intangible

 

goods that provided any benefit, regardless of how nominal, to the

 

licensee other than advertising the brands and prices of alcoholic

 

liquor produced by the manufacturer, sold by the outstate seller of

 

beer, the outstate seller of wine, or the outstate seller of mixed

 

spirit drink, or distributed by the wholesaler, except for

 

consumable goods and those goods, services, or intangible goods

 

approved by rule or order of the commission prior to January 1,

 

2014.

 

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

 

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

 

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

 

spirits in this state.

 

     Sec. 914a. (1) Except as otherwise provided in subsection (2),

 

a person shall not use or offer for use, possess, sell, or offer

 

for sale powdered alcohol. A person that violates this section is

 

guilty of a misdemeanor punishable in the manner as provided for in

 

section 909.

 

     (2) This section does not apply to a hospital that operates

 

primarily for the purpose of conducting scientific research, a

 

state institution conducting bona fide research, a private college

 

or university conducting bona fide research, or a pharmaceutical

 

company or biotechnology company conducting bona fide research.

 

     (3) As used in this section, "powdered alcohol" means alcohol

 

that is sold in powder form for either direct use or

 

reconstitution.