SF 533 (LSB 2490SV (2) 88)

SENATE FILE 533

BY  COMMITTEE ON COMMERCE

(SUCCESSOR TO SSB 1216)

(COMPANION TO 2490HV BY COMMITTEE ON COMMERCE)

A BILL FOR

An Act concerning alcoholic beverage control, relating to limitations on business interests of certain manufacturers, wholesalers, and retailers of alcoholic beverages.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 123.45, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  01.  For purposes of this section, “institutional investor” means a person who maintains a diversified portfolio of investments through a state or federally chartered bank, a mutual fund, a retirement plan or account created by an employer, the person, or another individual to provide retirement benefits or deferred compensation to the person, a private investment firm, or a holding company publicly traded on the New York stock exchange, the American stock exchange, or NASDAQ stock market and who has a majority of investments in businesses other than businesses that manufacture, bottle, wholesale, or sell at retail alcoholic beverages.
    Sec. 2.  Section 123.45, subsection 1, unnumbered paragraph 1, Code 2019, is amended to read as follows:
   A Subject to such exceptions as otherwise authorized under this chapter, a person engaged in the business of manufacturing, bottling, or wholesaling alcoholic beverages, wine, or beer excluding an institutional investor, or any jobber, representative, broker, employee, or agent of such a person, shall not do any of the following:
    Sec. 3.  Section 123.45, subsection 1, paragraphs c and d, Code 2019, are amended to read as follows:
   c.  Directly or indirectly be interested in the ownership, conduct, or operation of the business of another licensee or permittee authorized under this chapter to sell at retail, unless the licensee or permittee authorized under this chapter to sell at retail does not purchase or sell the alcoholic beverages of the person engaged in the business of manufacturing, bottling, or wholesaling alcoholic beverages. However, the licensee or permittee authorized under this chapter to sell at retail may purchase and sell the wine of the person engaged in the business of manufacturing wine that is not native wine provided the licensed premises is the principal office, as defined in section 490.140, of the manufacturer.
   d.  Hold a retail liquor control license or retail wine or beer permit, unless the licensee or permittee holding a retail liquor control license or retail wine or beer permit does not purchase or sell the alcoholic beverages of the person engaged in the business of manufacturing, bottling, or wholesaling alcoholic beverages. However, a person engaged in the business of manufacturing wine that is not native wine may purchase and sell the person’s wine under the authority of a special class “C” liquor control license and a class “B” wine permit provided the licensed premises is the principal office, as defined in section 490.140, of the person.
    Sec. 4.  Section 123.45, Code 2019, is amended by adding the following new subsections:
   NEW SUBSECTION.  1A.  Notwithstanding any provision of law to the contrary, a broker, employee, or agent of a person engaged in the business of manufacturing, bottling, or wholesaling alcoholic beverages may be a broker, employee, or agent of another person engaged in the business of manufacturing, bottling, or wholesaling alcoholic beverages or a broker, employee, or agent of a business authorized under this chapter to sell alcoholic beverages at retail as long as the broker, employee, or agent is not an officer, owner, director, or employee in a position to exercise any control or influence over the types of sales or the purchasing of alcoholic beverages in either position of employment.
   NEW SUBSECTION.  4.  The exceptions established by subsection 1 to the general prohibition against tied interests shall be limited to their express terms so as not to undermine the general prohibition and shall therefore be construed accordingly, and shall not be construed to affect exceptions to the general prohibition against tied interests as otherwise authorized under this chapter.
    Sec. 5.  Section 123.130, subsection 1, Code 2019, is amended to read as follows:
   1.  a.  Any person holding a class “A” beer permit issued by the division shall be authorized to manufacture and sell, or sell at wholesale, beer for consumption off the premises, such sales within the state to be made only to persons holding subsisting class “A”, “B”, or “C” beer permits, both a class “C” native wine permit and a class “A” wine permit pursuant to section 123.178B, subsection 4, or liquor control licenses issued in accordance with the provisions of this chapter.  However, a person holding a class “A” beer permit issued by the division who also holds a brewer’s notice issued by the alcohol and tobacco tax and trade bureau of the United States department of the treasury shall be authorized to sell, at wholesale, no more than thirty thousand barrels of beer on an annual basis for consumption off the premises. 
   b.  A class “A” or special class “A” beer permit does not grant authority to manufacture wine as defined in section 123.3, subsection 48.
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 alcoholic beverage control relating to limitations on business interests of manufacturers, wholesalers, and retailers of alcoholic beverages.
   Code section 123.45, concerning limitations on business interests, is amended. The bill, for purposes of the Code section, defines “institutional investor” to mean a person who maintains a diversified portfolio of investments and who has a majority of investments in businesses other than businesses that manufacture, bottle, wholesale, or sell at retail alcoholic beverages.
   Code section 123.45(1), providing the general limitation on business interests, is amended. The bill provides that the limitation on business interests applicable to a person engaged in the business of manufacturing, bottling, or wholesaling alcoholic beverages does not apply to a person who is an institutional investor. In addition, the bill provides that a manufacturer, bottler, or wholesaler of alcoholic beverages is not prohibited from being interested in the business of another retail licensee or permittee, or from holding a retail liquor control license or retail wine or beer permit, if the retail business, licensee, or permittee does not purchase or sell the alcoholic beverages of the person engaged in the business of manufacturing, bottling, or wholesaling alcoholic beverages. The bill further provides that a person engaged in the business of manufacturing wine that is not native wine who is interested in the business of another retail licensee or permittee may still purchase and sell the person’s wine on the premises of a retail licensee of the person so long as the licensed premises is the principal office of the manufacturer.
   Code section 123.45, new subsection 1A, provides that a broker, employee, or agent of a person engaged in the business of manufacturing, bottling, or wholesaling alcoholic beverages may be a broker, employee, or agent of another person engaged in the business of manufacturing, bottling, or wholesaling alcoholic beverages or a business authorized to sell alcoholic beverages at retail as long as the broker, employee, or agent is not an officer, owner, director, or employee in a position to exercise any control or influence over the types of sales or the purchasing of alcoholic beverages in either position of employment.
   Code section 123.45 is further amended to provide that the exceptions established by subsection 1 of this Code section to the general prohibition against tied interests shall be limited and shall not be construed to affect exceptions to the general prohibition against tied interests as otherwise authorized under Code chapter 123. 
   Code section 123.130, concerning authority under a class “A” beer permit, is amended to provide that a person holding a class “A” beer permit who also holds a brewer’s notice issued by the alcohol and tobacco tax and trade bureau of the United States department of the treasury shall be authorized to sell, at wholesale, no more than 30,000 barrels of beer on an annual basis for consumption off the premises.