H.F. 2240 Section 1. Section 123.32, subsection 1, Code Supplement 1 2009, is amended to read as follows: 2 1. Filing of application. An application for a class “A”, 3 class “B”, class “C”, or class “E” liquor control license, for 4 a class “A” native distilled spirits permit, for a retail beer 5 permit as provided in sections 123.128 and 123.129, or for a 6 class “B”, class “B” native, or class “C” native retail wine 7 permit as provided in section 123.178, 123.178A, or 123.178B, 8 accompanied by the necessary fee and bond, if required, shall 9 be filed with the appropriate city council if the premises for 10 which the license or permit is sought are located within the 11 corporate limits of a city, or with the board of supervisors 12 if the premises for which the license or permit is sought are 13 located outside the corporate limits of a city. An application 14 for a class “D” liquor control license and for a class “A” 15 beer or class “A” wine permit, accompanied by the necessary 16 fee and bond, if required, shall be filed with the division, 17 which shall proceed in the same manner as in the case of an 18 application approved by local authorities. 19 Sec. 2. NEW SECTION . 123.43A Native distilled spirits —— 20 permit —— excise tax. 21 1. Subject to rules of the division, a manufacturer of 22 native distilled spirits holding a class “A” native distilled 23 spirits permit pursuant to this section may sell, keep, or 24 offer for sale native distilled spirits. As provided in 25 this section, sales may be made at retail for off-premises 26 consumption when sold on the premises of the manufacturer of 27 the native distilled spirits. Any other sale shall only be 28 made to the division for wholesale disposition and sale by the 29 division. 30 2. For the purposes of this section, “native distilled 31 spirits” means distilled spirits fermented, distilled, or, for 32 a period of two years, barrel-matured by a distillery located 33 in this state. 34 3. A manufacturer of native distilled spirits shall not 35 -1- LSB 5995HH (2) 83 ec/nh 1/ 3

H.F. 2240 manufacture more than fifty thousand proof gallons annually, 1 and shall not sell more than one and one-half liters per person 2 per day, of native distilled spirits on the premises of the 3 manufacturer. In addition, a manufacturer shall not directly 4 ship native distilled spirits for sale at retail. For each 5 proof gallon sold at retail in a month, the manufacturer of 6 native distilled spirits shall remit an excise tax per proof 7 gallon to the division on or before the tenth day of the 8 following month. For purposes of this section, the excise tax 9 shall be in an amount equal to fifty percent of the wholesale 10 price per proof gallon that would have been paid by the 11 division for the native distilled spirits. All revenue derived 12 from the excise tax shall be deposited in the general fund of 13 the state. 14 4. A manufacturer of native distilled spirits shall not 15 sell native distilled spirits other than as permitted in this 16 chapter and shall not allow native distilled spirits sold to 17 be consumed upon the premises of the manufacturer. However, 18 prior to sale, native distilled spirits may be sampled on the 19 premises where made, when no charge is made for the sampling. 20 5. A class “A” native distilled spirits permit for a 21 native distilled spirits manufacturer shall be issued and 22 renewed annually upon payment of a fee of five hundred 23 dollars. The class “A” permit shall allow the native distilled 24 spirits manufacturer to sell, keep, or offer for sale the 25 manufacturer’s native distilled spirits as provided under this 26 section. 27 6. Section 123.43 shall not apply to a manufacturer of 28 native distilled spirits under this section. 29 7. The sale of native distilled spirits to the division for 30 wholesale disposition and sale by the division shall be subject 31 to the requirements of this chapter regarding such disposition 32 and sale. 33 EXPLANATION 34 This bill relates to the manufacture and sale of native 35 -2- LSB 5995HH (2) 83 ec/nh 2/ 3

H.F. 2240 distilled spirits, and provides for the obtaining of a class 1 “A” native distilled spirits permit. 2 The bill provides that a manufacturer of native distilled 3 spirits may sell, keep, or offer for sale native distilled 4 spirits for off-premises consumption through sales on the 5 manufacturer’s premises. The bill restricts any other form 6 of sale to sales made to the alcoholic beverages division for 7 wholesale disposition and sale by the division. The bill 8 defines “native distilled spirits” to mean distilled spirits 9 fermented, distilled, or barrel-matured for two years by a 10 distillery located in Iowa. 11 The bill provides that a manufacturer shall not manufacture 12 more than 50,000 proof gallons of native distilled spirits on 13 the premises of the manufacturer, annually. In addition, the 14 manufacturer shall not sell more than 1.5 liters per person per 15 day. The bill also imposes an excise tax of 50 percent of the 16 wholesale price per proof gallon to be deposited in the general 17 fund of the state. The bill specifies that a manufacturer 18 shall not allow native distilled spirits sold to be consumed 19 upon the premises of the manufacturer, but that prior to sale 20 they may be sampled on the premises where made, when no charge 21 is made for the sampling. 22 The bill provides for a new permit applicable to native 23 distilled spirits, requiring a fee of $500 for initial issuance 24 and annual renewal. The class “A” native distilled spirits 25 permit allows a manufacturer to sell, keep, or offer for sale 26 the manufacturer’s native distilled spirits. 27 The bill also provides that the sale of native distilled 28 spirits to the alcoholic beverages division for wholesale 29 disposition and sale by the division shall be subject to the 30 requirements of Code chapter 123 relating to liquor sales and 31 distribution by the division. 32 The bill provides that a manufacturer of native distilled 33 spirits is not considered a manufacturer pursuant to Code 34 section 123.43. 35 -3- LSB 5995HH (2) 83 ec/nh 3/ 3