Senate File 2339 - Introduced SENATE FILE 2339 BY COMMITTEE ON COMMERCE (SUCCESSOR TO SF 2154) A BILL FOR An Act relating to the manufacture and sale of micro-distilled 1 spirits and establishing a related permit fee. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 5995SV (3) 83 ec/nh

S.F. 2339 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” micro-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 Micro-distilled spirits —— 20 permit. 21 1. For the purposes of this section, unless the context 22 other requires: 23 a. “Micro-distillery” means a business with an operational 24 still which, combining all production facilities of the 25 business, produces and manufactures less than fifty thousand 26 proof gallons of distilled spirits on an annual basis. 27 b. “Micro-distilled spirits” means distilled spirits 28 fermented, distilled, or, for a period of two years, barrel 29 matured on the licensed premises of the micro-distillery when 30 fermented, distilled, or matured. “Micro-distilled spirits” 31 also includes blended or mixed spirits comprised solely of 32 spirits fermented, distilled, or, for a period of two years, 33 barrel matured at a micro-distillery. 34 2. Subject to rules of the division, a micro-distillery 35 -1- LSB 5995SV (3) 83 ec/nh 1/ 4

S.F. 2339 holding a class “A” micro-distilled spirits permit pursuant 1 to this section may sell or offer for sale micro-distilled 2 spirits. As provided in this section, sales may be made at 3 retail for off-premises consumption when sold on the premises 4 of the micro-distillery that manufactures micro-distilled 5 spirits. All sales shall be made through the state’s wholesale 6 distribution system. 7 3. A micro-distillery shall not sell more than one and 8 one-half liters per person per day, of micro-distilled spirits 9 on the premises of the micro-distillery. In addition, a 10 micro-distillery shall not directly ship micro-distilled 11 spirits for sale at retail. The micro-distillery shall 12 maintain records of individual purchases of micro-distilled 13 spirits at the micro-distillery for three years. 14 4. A micro-distillery shall not sell micro-distilled 15 spirits other than as permitted in this chapter and shall not 16 allow micro-distilled spirits sold to be consumed upon the 17 premises of the micro-distillery. However, as a part of a 18 micro-distillery tour, micro-distilled spirits of no more than 19 two ounces per person per day may be sampled on the premises 20 where fermented, distilled, or matured, when no charge is made 21 for the sampling. 22 5. A class “A” micro-distilled spirits permit for a 23 micro-distillery shall be issued and renewed annually upon 24 payment of a fee of five hundred dollars. 25 6. The sale of micro-distilled spirits to the division for 26 wholesale disposition and sale by the division shall be subject 27 to the requirements of this chapter regarding such disposition 28 and sale. 29 7. The division shall issue no more than three permits under 30 this section to a person. In addition, a micro-distillery 31 issued a permit under this section shall file with the 32 division all documents filed by the micro-distillery with the 33 alcohol and tobacco tax and trade bureau of the United States 34 department of the treasury, including all production, storage, 35 -2- LSB 5995SV (3) 83 ec/nh 2/ 4

S.F. 2339 and processing reports. 1 8. Micro-distilled spirits purchased at a micro-distillery 2 shall not be consumed within three hundred feet of a 3 micro-distillery nor on any property owned, operated, or 4 controlled by a micro-distillery. 5 EXPLANATION 6 This bill relates to the manufacture and sale of 7 micro-distilled spirits by a micro-distillery, and provides for 8 the obtaining of a class “A” micro-distilled spirits permit. 9 The bill defines a micro-distillery as a distillery that 10 manufactures less than 50,000 proof gallons of micro-distilled 11 spirits annually. Micro-distilled spirits are defined as 12 distilled spirits fermented, distilled, or, for a period of two 13 years, barrel matured at the micro-distillery. 14 The bill provides that a micro-distillery may sell 15 or offer for sale micro-distilled spirits which may be 16 sold for off-premises consumption through sales on the 17 micro-distillery’s premises. The bill provides that all sales 18 be made through the state’s wholesale distribution system. 19 The bill provides that a micro-distillery shall not sell 20 more than 1.5 liters per person per day and shall maintain 21 records of sales to individuals for three years. The bill 22 provides that a micro-distillery shall not directly ship 23 micro-distilled spirits for sale at retail. The bill does 24 not allow micro-distilled spirits sold to be consumed within 25 300 feet of the micro-distillery but does allow, as part of a 26 tour, no more than 2 ounces of micro-distilled spirits to be 27 sampled on the premises where made, when no charge is made for 28 the sampling. 29 The bill provides for a new permit applicable to 30 micro-distilled spirits, requiring a fee of $500 for initial 31 issuance and annual renewal. The bill limits the number 32 of permits issued to a person to three and requires a 33 micro-distillery issued a permit to file with the alcoholic 34 beverages division documents the micro-distillery files with 35 -3- LSB 5995SV (3) 83 ec/nh 3/ 4

S.F. 2339 the federal alcohol and tobacco tax and trade bureau of the 1 U.S. department of the treasury. 2 -4- LSB 5995SV (3) 83 ec/nh 4/ 4