HF 2173 (LSB 5370YH (2) 85)

HOUSE FILE 2173

BY  S. OLSON

A BILL FOR

An Act concerning alcoholic beverage control, by allowing micro-distilled spirits manufacturers to sell micro-distilled spirits at retail for on-site consumption and concerning dramshop liability insurance, and establishing fees.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 123.28, Code 2014, is amended to read as follows:
   123.28  Restrictions on transportation.

   It is lawful to transport, carry, or convey alcoholic liquors from the place of purchase by the division to a state warehouse or depot established by the division or from one such place to another and, when so permitted by this chapter, it is lawful for the division, a common carrier, or other person to transport, carry, or convey alcoholic liquor sold from a state warehouse, depot, or point of purchase by the state to any place to which the liquor may be lawfully delivered under this chapter. The division shall deliver alcoholic liquor purchased by class “E” liquor control licensees. Class “E” liquor control licensees may deliver alcoholic liquor purchased by class “A”, “B”, or “C” liquor control licensees and class “C” micro-distilled spirits permittees, and class “A”, “B”, or “C” liquor control licensees may transport alcoholic liquor purchased from class “E” liquor control licensees. A common carrier or other person shall not break or open or allow to be broken or opened a container or package containing alcoholic liquor or use or drink or allow to be used or drunk any alcoholic liquor while it is being transported or conveyed, but this section does not prohibit a private person from transporting individual bottles or containers of alcoholic liquor exempted pursuant to section 123.22 and individual bottles or containers bearing the identifying mark prescribed in section 123.26 which have been opened previous to the commencement of the transportation. This section does not affect the right of a special permit or liquor control license holder to purchase, possess, or transport alcoholic liquors subject to this chapter.
    Sec. 2.  Section 123.32, subsection 1, Code 2014, is amended to read as follows:
   1.  Filing of application.  An application for a class “A”, class “B”, class “C”, or class “E” liquor control license, for a class “A” micro-distilled spirits permit, for a class “C” micro-distilled spirits permit, for a retail beer permit as provided in sections 123.128 and 123.129, or for a class “B”, class “B” native, or class “C” native retail wine permit as provided in section 123.178, 123.178A, or 123.178B, accompanied by the necessary fee and bond, if required, shall be filed with the appropriate city council if the premises for which the license or permit is sought are located within the corporate limits of a city, or with the board of supervisors if the premises for which the license or permit is sought are located outside the corporate limits of a city. An application for a class “D” liquor control license and for a class “A” beer or class “A” wine permit, accompanied by the necessary fee and bond, if required, shall be submitted to the division electronically, or in a manner prescribed by the administrator, which shall proceed in the same manner as in the case of an application approved by local authorities.
    Sec. 3.  Section 123.33, Code 2014, is amended to read as follows:
   123.33  Records.

   Every holder of a liquor control license or a class “C” micro-distilled spirits permit shall keep a daily record, in printed or electronic format, of the gross receipts of the holder’s business. The records required and the premises of the licensee or permittee shall be accessible and open to inspection pursuant to section 123.30, subsection 1, during normal business hours of the licensee or permittee.
    Sec. 4.  Section 123.43A, subsection 2, Code 2014, is amended to read as follows:
   2.  A micro-distillery shall not sell more than one and one-half nine liters per person per day, of micro-distilled spirits on the premises of the micro-distillery. In addition, a micro-distillery shall not directly ship micro-distilled spirits for sale at retail. The micro-distillery shall maintain records of individual purchases of micro-distilled spirits at the micro-distillery for three years.
    Sec. 5.  Section 123.43A, Code 2014, is amended by adding the following new subsection:
   NEW SUBSECTION.  4A.  Notwithstanding any other provision of this chapter, a person engaged in the business of manufacturing micro-distilled spirits may sell micro-distilled spirits at retail for consumption on the premises of the manufacturing facility by applying for a class “C” micro-distilled spirits permit with the authority as provided in section 123.43B. A manufacturer of micro-distilled spirits may be granted not more than one class “C” micro-distilled spirits permit.
    Sec. 6.  Section 123.43A, subsection 6, Code 2014, is amended to read as follows:
   6.  The division shall issue no more than three permits under this section to a person. In addition, a micro-distillery issued a permit under this section shall file with the division, on or before the fifteenth day of each calendar month, all documents filed by the micro-distillery with the alcohol and tobacco tax and trade bureau of the United States department of the treasury, including all production, storage, and processing reports.
    Sec. 7.  Section 123.43A, subsection 7, Code 2014, is amended by striking the subsection and inserting in lieu thereof the following:
   7.  A micro-distillery may sell the micro-distilled spirits it manufactures at wholesale to customers outside the state.
    Sec. 8.  NEW SECTION.  123.43B  Authority under class “C” micro-distilled spirits permit.
   1.  A person holding a class “C” micro-distilled spirits permit for the same location at which the person holds a class “A” micro-distilled spirits permit may sell its micro-distilled spirits only at retail to patrons by the individual drink for consumption on the licensed premises where it was manufactured.
   2.  A person holding a class “C” micro-distilled spirits permit shall purchase micro-distilled spirits it manufactures from a class “E” liquor control licensee only.
   3.  A class “C” micro-distilled spirits permit for a micro-distillery shall be issued and renewed annually upon payment of a fee of two hundred fifty dollars.
    Sec. 9.  NEW SECTION.  123.43C  Class “C” micro-distilled spirits permit —— application contents.

   Except as otherwise provided in this chapter, a class “C” micro-distilled spirits permit shall be issued to a person who complies with all of the following:

   1.  Submits electronically, or in a manner prescribed by the administrator, an application for the permit and states on the application under oath:
   a.  The name and place of residence of the applicant and the length of time the applicant has lived at the place of residence.
   b.  That the applicant is a citizen of the state of Iowa, or if a corporation, that the applicant is authorized to do business in Iowa.
   c.  The location of the class “A” micro-distillery where the applicant intends to use the permit.
   d.  The name of the owner of the premises, and if that owner is not the applicant, that the applicant is the actual lessee of the premises.
   2.  Establishes all of the following:
   a.  That the applicant meets the test of good moral character as provided in section 123.3, subsection 34.
   b.  That the premises for which the permit is sought is and will continue to be equipped with sufficient tables and seats to accommodate twenty-five persons at one time, and in areas where such business is permitted by any valid zoning ordinance or will be so permitted on the effective date of the permit.
   c.  Consents to inspection as required in section 123.30, subsection 1.
    Sec. 10.  Section 123.92, subsection 2, paragraph a, Code 2014, is amended to read as follows:
   a.  Every liquor control licensee and, class “B” beer permittee, class “C” native wine permittee, and class “C” micro-distilled spirits permittee, except a class “E” liquor control licensee, shall furnish proof of financial responsibility by the existence of a liability insurance policy in an amount determined by the division. If an insurer provides dramshop liability insurance at a new location to a licensee or permittee who has a positive loss experience at other locations for which such insurance is provided by the insurer, and the insurer bases premium rates at the new location on the negative loss history of the previous licensee or permittee at that location, the insurer shall examine and consider adjusting the premium for the new location not less than thirty months after the insurance is issued, based on the loss experience of the licensee or permittee at that location during that thirty-month period of time.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill concerns the authority of micro-distilled spirits manufacturers and makes dramshop liability insurance applicable to certain native wine and micro-distilled spirits permittees.
   Code section 123.43A, providing for a class “A” micro-distilled spirits permit, is amended. The bill provides that a micro-distillery may sell no more than nine liters per person per day instead of the current one and one-half liters per day. The bill also allows the micro-distillery to sell the spirits it manufactures at wholesale to customers outside the state. The bill also allows the micro-distillery to sell the spirits it manufactures for consumption on the premises of the manufacturing facility by applying for a new class “C” micro-distilled spirits permit. The bill limits a manufacturer to no more than one of the new permits. Code provisions governing restrictions on transportation (123.28), applications to local authorities for certain permits (123.32), and records (123.33), are made applicable to the new class “C” micro-distilled spirits permit.
   New Code section 123.43B establishes the authority for a class “C” micro-distilled spirits permit. The Code section provides that the permit shall allow the manufacturer to sell its micro-distilled spirits only at retail to patrons by the individual drink for consumption on the licensed premises where it was manufactured, and that the person holding the permit shall purchase micro-distilled spirits it manufactures from a class “E” liquor control licensee only. The annual fee for the permit shall be $250.
   New Code section 123.43C provides for the information necessary for a person to apply for a class “C” micro-distilled spirits permit. The bill requires the applicant to submit information regarding the applicant and the location of the micro-distillery. The application shall also provide that the applicant is of good moral character and that the premises for which the permit is sought is authorized to sell spirits for consumption on the premises by applicable zoning ordinance and is of sufficient size.
   Code section 123.92, concerning the dramshop Act, is amended to provide that a class “C” native wine permittee and a class “C” micro-distilled spirits permittee shall furnish proof of financial responsibility by having a liability insurance policy.