Senate File 368 - Introduced



                                    SENATE FILE       
                                    BY  COMMITTEE ON NATURAL RESOURCES
                                        AND ENVIRONMENT

                                    (SUCCESSOR TO SF 276)



    Passed Senate,  Date               Passed House, Date             
    Vote:  Ayes        Nays           Vote:  Ayes        Nays         
                 Approved                            

                                      A BILL FOR

  1 An Act relating to alcoholic beverages, by providing for the
  2    manufacture and sale of native distilled spirits and
  3    establishing a related permit fee, relating to the activities
  4    of the grape and wine development commission, and providing
  5    for the transfer of wine sale revenues to the grape and wine
  6    development fund.
  7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  8 TLSB 2783SV 81
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PAG LIN



  1  1    Section 1.  Section 123.32, subsection 1, Code 2005, is
  1  2 amended to read as follows:
  1  3    1.  FILING OF APPLICATION.  An application for a class "A",
  1  4 class "B", class "C", or class "E" liquor control license, for
  1  5 a class "A" or class "B" native distilled spirits permit, for
  1  6 a retail beer permit as provided in sections 123.128 and
  1  7 123.129, or for a class "B", class "B" native, or class "C"
  1  8 native retail wine permit as provided in section 123.178,
  1  9 123.178A, or 123.178B, accompanied by the necessary fee and
  1 10 bond, if required, shall be filed with the appropriate city
  1 11 council if the premises for which the license or permit is
  1 12 sought are located within the corporate limits of a city, or
  1 13 with the board of supervisors if the premises for which the
  1 14 license or permit is sought are located outside the corporate
  1 15 limits of a city.  An application for a class "D" liquor
  1 16 control license and for a class "A" beer or class "A" wine
  1 17 permit, accompanied by the necessary fee and bond, if
  1 18 required, shall be filed with the division, which shall
  1 19 proceed in the same manner as in the case of an application
  1 20 approved by local authorities.
  1 21    Sec. 2.  Section 123.41, subsection 1, Code 2005, is
  1 22 amended to read as follows:
  1 23    1.  Upon application in the prescribed form and accompanied
  1 24 by a fee of three hundred fifty dollars, the administrator may
  1 25 in accordance with this chapter grant and issue a license,
  1 26 valid for a one=year period after date of issuance, to a
  1 27 manufacturer, other than a manufacturer of native distilled
  1 28 spirits licensed pursuant to section 123.43A, which shall
  1 29 allow the manufacture, storage, and wholesale disposition and
  1 30 sale of alcoholic liquors to the division and to customers
  1 31 outside of the state.
  1 32    Sec. 3.  NEW SECTION.  123.43A  NATIVE DISTILLED SPIRITS ==
  1 33 PERMITS.
  1 34    1.  Subject to rules of the division, a manufacturer of
  1 35 native distilled spirits holding a class "A" native distilled
  2  1 spirits permit pursuant to this section may sell, keep, or
  2  2 offer for sale native distilled spirits.  As provided in this
  2  3 section, sales may be made at retail for off=premises
  2  4 consumption when sold on the premises of the manufacturer of
  2  5 the native distilled spirits, or in a retail establishment
  2  6 operated by the manufacturer.  Any other sale shall only be
  2  7 made to the division for wholesale disposition and sale by the
  2  8 division.
  2  9    2.  For the purposes of this section, "native distilled
  2 10 spirits" means distilled spirits manufactured by a distillery
  2 11 located in this state in which at least eighty percent of the
  2 12 raw materials consumed in the production of the distilled
  2 13 spirits are grown in this state.
  2 14    3.  A manufacturer of native distilled spirits shall not
  2 15 sell more than five thousand gallons of native distilled
  2 16 spirits on the premises of the manufacturer, or in a retail
  2 17 establishment operated by the manufacturer, annually.
  2 18    4.  A manufacturer of native distilled spirits shall not
  2 19 sell native distilled spirits other than as permitted in this
  2 20 chapter and shall not allow native distilled spirits sold to
  2 21 be consumed upon the premises of the manufacturer except as
  2 22 provided in subsection 6.  However, prior to sale, native
  2 23 distilled spirits may be sampled on the premises where made,
  2 24 when no charge is made for the sampling.  A person may
  2 25 manufacture native distilled spirits for consumption on the
  2 26 manufacturer's premises, when the native distilled spirits or
  2 27 any part of the native distilled spirits are not manufactured
  2 28 for sale.
  2 29    5.  A class "A" native distilled spirits permit for a
  2 30 native distilled spirits manufacturer shall be issued and
  2 31 renewed annually upon payment of a fee of twenty=five dollars
  2 32 which shall be in lieu of any other license fee required by
  2 33 this chapter.  The class "A" permit shall allow the native
  2 34 distilled spirits manufacturer to sell, keep, or offer for
  2 35 sale the manufacturer's native distilled spirits as provided
  3  1 under this section.
  3  2    6.  A class "B" native distilled spirits permit for a
  3  3 native distilled spirits manufacturer shall be issued and
  3  4 renewed annually upon payment of a fee of twenty=five dollars
  3  5 which shall be in lieu of any other license fee required by
  3  6 this chapter.  The class "B" permit shall allow the native
  3  7 distilled spirits manufacturer to sell native distilled
  3  8 spirits at retail for consumption on the premises of the
  3  9 manufacturing facility, or in a retail establishment operated
  3 10 by the manufacturer.  A manufacturer of native distilled
  3 11 spirits may be granted not more than one class "B" native
  3 12 distilled spirits permit.
  3 13    7.  For the purposes of this section, "manufacturer"
  3 14 includes only those persons who process in Iowa the Iowa=grown
  3 15 raw materials consumed in the production of distilled spirits
  3 16 by the person.
  3 17    8.  For the purposes of this section, section 123.43 shall
  3 18 not apply to a manufacturer of native distilled spirits.
  3 19    9.  The sale of native distilled spirits to the division
  3 20 for wholesale disposition and sale by the division shall be
  3 21 subject to the requirements of this chapter regarding such
  3 22 disposition and sale.
  3 23    Sec. 4.  Section 123.53, Code 2005, is amended by adding
  3 24 the following new subsection:
  3 25    NEW SUBSECTION.  3A.  The treasurer of state shall transfer
  3 26 to the grape and wine development fund established in section
  3 27 175A.5 a sum of money equal to five percent of the gross
  3 28 amount of wine sales made by the division from the beer and
  3 29 liquor control fund on a monthly basis.
  3 30    Sec. 5.  Section 123.53, subsection 4, Code 2005, is
  3 31 amended to read as follows:
  3 32    4.  The treasurer of state, after making the transfer
  3 33 transfers provided for in subsection subsections 3 and 3A,
  3 34 shall transfer to the division from the beer and liquor
  3 35 control fund and before any other transfer to the general
  4  1 fund, an amount sufficient to pay the costs incurred by the
  4  2 division for collecting and properly disposing of the liquor
  4  3 containers.
  4  4    Sec. 6.  Section 175A.3, subsection 1, paragraph a, Code
  4  5 2005, is amended to read as follows:
  4  6    a.  Establish and administer grape and wine development
  4  7 programs as provided in section 175A.4 and account for and
  4  8 expend moneys from the grape and wine development fund created
  4  9 pursuant to section 175A.5.  Prior to authorizing an
  4 10 expenditure of moneys, the department shall consult with the
  4 11 grape and wine development commission.  The commission shall
  4 12 make recommendations to the department regarding the
  4 13 expenditure of moneys to enhance and develop the native wine
  4 14 industry and to provide an infrastructure to encourage the
  4 15 growth of the native wine industry in this state.
  4 16    Sec. 7.  Section 175A.3, subsection 2, Code 2005, is
  4 17 amended by adding the following new paragraph:
  4 18    NEW PARAGRAPH.  f.  Make recommendations to the department
  4 19 regarding a proposed expenditure of funds as provided in
  4 20 subsection 1, paragraph "a".
  4 21    Sec. 8.  Section 175A.5, subsection 1, Code 2005, is
  4 22 amended to read as follows:
  4 23    1.  A grape and wine development fund is created in the
  4 24 state treasury under the control of the department.  The fund
  4 25 is composed of moneys appropriated by the general assembly and
  4 26 moneys available to and obtained or accepted by the department
  4 27 from the United States or private sources for placement in the
  4 28 fund.  The fund shall include moneys deposited into the fund
  4 29 from the beer and liquor control fund as provided in section
  4 30 123.53, and from the wine gallonage tax as provided in section
  4 31 123.183.
  4 32                           EXPLANATION
  4 33    This bill relates to the manufacture and sale of native
  4 34 distilled spirits, the activities of the grape and wine
  4 35 development commission, and the transfer of wine sale revenues
  5  1 to the grape and wine development fund.
  5  2    The bill provides that a manufacturer of native distilled
  5  3 spirits may sell, keep, or offer for sale native distilled
  5  4 spirits for off=premises consumption either through sales on
  5  5 the manufacturer's premises, or in a retail establishment
  5  6 operated by the manufacturer.  The bill restricts any other
  5  7 form of sale to sales made to the alcoholic beverages division
  5  8 for wholesale disposition and sale by the division.  The bill
  5  9 defines "native distilled spirits" to mean distilled spirits
  5 10 manufactured by a distillery located in Iowa in which at least
  5 11 80 percent of the raw materials consumed in the production of
  5 12 distilled spirits are Iowa=grown.
  5 13    The bill provides that a manufacturer shall not sell more
  5 14 than 5,000 gallons of native distilled spirits on the premises
  5 15 of the manufacturer, or in a retail establishment operated by
  5 16 the manufacturer, annually.  The bill specifies that unless a
  5 17 manufacturer has obtained a class "B" native distilled spirits
  5 18 permit, the manufacturer shall not allow native distilled
  5 19 spirits sold to be consumed upon the premises of the
  5 20 manufacturer, but that prior to sale they may be sampled on
  5 21 the premises where made, when no charge is made for the
  5 22 sampling.
  5 23    The bill provides for two new permits applicable to native
  5 24 distilled spirits, both requiring a fee of $25 for initial
  5 25 issuance and annual renewal.  A class "A" native distilled
  5 26 spirits permit allows a manufacturer to sell, keep, or offer
  5 27 for sale the manufacturer's native distilled spirits, and a
  5 28 class "B" native distilled spirits permit allows a
  5 29 manufacturer to sell native distilled spirits at retail for
  5 30 consumption on the premises of the manufacturing facility, or
  5 31 in a retail establishment operated by the manufacturer.  The
  5 32 bill provides that a manufacturer may be granted not more than
  5 33 one class "B" native distilled spirits license.
  5 34    The bill provides that a "manufacturer" of native distilled
  5 35 spirits includes only those persons who process in Iowa the
  6  1 Iowa=grown raw materials consumed in the production of
  6  2 distilled spirits.  The bill also provides that the sale of
  6  3 native distilled spirits to the alcoholic beverages division
  6  4 for wholesale disposition and sale by the division shall be
  6  5 subject to the requirements of Code chapter 123 relating to
  6  6 liquor sales and distribution by the division.
  6  7    The bill provides that a manufacturer of native distilled
  6  8 spirits is not considered a manufacturer pursuant to Code
  6  9 sections 123.41 and 123.43, which require a license allowing
  6 10 the manufacture, storage, and wholesale disposition and sale
  6 11 of alcoholic liquors to the division and to customers outside
  6 12 of the state.  The bill makes conforming changes to Code
  6 13 chapter 123 relating to these provisions.
  6 14    The bill also provides that the treasurer of state shall
  6 15 transfer on a monthly basis from the beer and liquor control
  6 16 fund to the grape and wine development fund established in
  6 17 Code section 175A.5 an amount equal to 5 percent of gross wine
  6 18 sale revenues.  The amount transferred would be added to other
  6 19 amounts deposited into the fund and used to carry out grape
  6 20 and wine development programs as provided in Code section
  6 21 175A.4.
  6 22    The bill additionally provides that the department of
  6 23 agriculture and land stewardship shall, prior to authorizing
  6 24 an expenditure of money from the grape and wine development
  6 25 fund, consult with the grape and wine development commission.
  6 26 The bill provides that the commission shall make
  6 27 recommendations to the department regarding the expenditure of
  6 28 moneys to enhance and develop the native wine industry, and to
  6 29 provide an infrastructure to encourage its growth in Iowa.
  6 30 LSB 2783SV 81
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