H.F. 2173 Section 1. Section 123.28, Code 2014, is amended to read as 1 follows: 2 123.28 Restrictions on transportation. 3 It is lawful to transport, carry, or convey alcoholic 4 liquors from the place of purchase by the division to a state 5 warehouse or depot established by the division or from one such 6 place to another and, when so permitted by this chapter , it 7 is lawful for the division, a common carrier, or other person 8 to transport, carry, or convey alcoholic liquor sold from a 9 state warehouse, depot, or point of purchase by the state to 10 any place to which the liquor may be lawfully delivered under 11 this chapter . The division shall deliver alcoholic liquor 12 purchased by class “E” liquor control licensees. Class “E” 13 liquor control licensees may deliver alcoholic liquor purchased 14 by class “A”, “B”, or “C” liquor control licensees and class 15 “C” micro-distilled spirits permittees , and class “A”, “B”, or 16 “C” liquor control licensees may transport alcoholic liquor 17 purchased from class “E” liquor control licensees. A common 18 carrier or other person shall not break or open or allow to be 19 broken or opened a container or package containing alcoholic 20 liquor or use or drink or allow to be used or drunk any 21 alcoholic liquor while it is being transported or conveyed, 22 but this section does not prohibit a private person from 23 transporting individual bottles or containers of alcoholic 24 liquor exempted pursuant to section 123.22 and individual 25 bottles or containers bearing the identifying mark prescribed 26 in section 123.26 which have been opened previous to the 27 commencement of the transportation. This section does not 28 affect the right of a special permit or liquor control license 29 holder to purchase, possess, or transport alcoholic liquors 30 subject to this chapter . 31 Sec. 2. Section 123.32, subsection 1, Code 2014, is amended 32 to read as follows: 33 1. Filing of application. An application for a class “A”, 34 class “B”, class “C”, or class “E” liquor control license, for 35 -1- LSB 5370YH (2) 85 ec/rj 1/ 6

H.F. 2173 a class “A” micro-distilled spirits permit, for a class “C” 1 micro-distilled spirits permit, for a retail beer permit as 2 provided in sections 123.128 and 123.129 , or for a class “B”, 3 class “B” native, or class “C” native retail wine permit as 4 provided in section 123.178 , 123.178A , or 123.178B , accompanied 5 by the necessary fee and bond, if required, shall be filed with 6 the appropriate city council if the premises for which the 7 license or permit is sought are located within the corporate 8 limits of a city, or with the board of supervisors if the 9 premises for which the license or permit is sought are located 10 outside the corporate limits of a city. An application for 11 a class “D” liquor control license and for a class “A” beer 12 or class “A” wine permit, accompanied by the necessary fee 13 and bond, if required, shall be submitted to the division 14 electronically, or in a manner prescribed by the administrator, 15 which shall proceed in the same manner as in the case of an 16 application approved by local authorities. 17 Sec. 3. Section 123.33, Code 2014, is amended to read as 18 follows: 19 123.33 Records. 20 Every holder of a liquor control license or a class “C” 21 micro-distilled spirits permit shall keep a daily record, in 22 printed or electronic format, of the gross receipts of the 23 holder’s business. The records required and the premises of 24 the licensee or permittee shall be accessible and open to 25 inspection pursuant to section 123.30, subsection 1 , during 26 normal business hours of the licensee or permittee . 27 Sec. 4. Section 123.43A, subsection 2, Code 2014, is amended 28 to read as follows: 29 2. A micro-distillery shall not sell more than one and 30 one-half nine liters per person per day, of micro-distilled 31 spirits on the premises of the micro-distillery. In addition, 32 a micro-distillery shall not directly ship micro-distilled 33 spirits for sale at retail. The micro-distillery shall 34 maintain records of individual purchases of micro-distilled 35 -2- LSB 5370YH (2) 85 ec/rj 2/ 6

H.F. 2173 spirits at the micro-distillery for three years. 1 Sec. 5. Section 123.43A, Code 2014, is amended by adding the 2 following new subsection: 3 NEW SUBSECTION . 4A. Notwithstanding any other provision of 4 this chapter, a person engaged in the business of manufacturing 5 micro-distilled spirits may sell micro-distilled spirits at 6 retail for consumption on the premises of the manufacturing 7 facility by applying for a class “C” micro-distilled spirits 8 permit with the authority as provided in section 123.43B. A 9 manufacturer of micro-distilled spirits may be granted not more 10 than one class “C” micro-distilled spirits permit. 11 Sec. 6. Section 123.43A, subsection 6, Code 2014, is amended 12 to read as follows: 13 6. The division shall issue no more than three permits under 14 this section to a person. In addition, a micro-distillery 15 issued a permit under this section shall file with the 16 division , on or before the fifteenth day of each calendar 17 month, all documents filed by the micro-distillery with the 18 alcohol and tobacco tax and trade bureau of the United States 19 department of the treasury, including all production, storage, 20 and processing reports. 21 Sec. 7. Section 123.43A, subsection 7, Code 2014, is amended 22 by striking the subsection and inserting in lieu thereof the 23 following: 24 7. A micro-distillery may sell the micro-distilled spirits 25 it manufactures at wholesale to customers outside the state. 26 Sec. 8. NEW SECTION . 123.43B Authority under class “C” 27 micro-distilled spirits permit. 28 1. A person holding a class “C” micro-distilled spirits 29 permit for the same location at which the person holds a class 30 “A” micro-distilled spirits permit may sell its micro-distilled 31 spirits only at retail to patrons by the individual drink for 32 consumption on the licensed premises where it was manufactured. 33 2. A person holding a class “C” micro-distilled spirits 34 permit shall purchase micro-distilled spirits it manufactures 35 -3- LSB 5370YH (2) 85 ec/rj 3/ 6

H.F. 2173 from a class “E” liquor control licensee only. 1 3. A class “C” micro-distilled spirits permit for a 2 micro-distillery shall be issued and renewed annually upon 3 payment of a fee of two hundred fifty dollars. 4 Sec. 9. NEW SECTION . 123.43C Class “C” micro-distilled 5 spirits permit —— application contents. 6 Except as otherwise provided in this chapter, a class “C” 7 micro-distilled spirits permit shall be issued to a person who 8 complies with all of the following: 9 1. Submits electronically, or in a manner prescribed by the 10 administrator, an application for the permit and states on the 11 application under oath: 12 a. The name and place of residence of the applicant and 13 the length of time the applicant has lived at the place of 14 residence. 15 b. That the applicant is a citizen of the state of Iowa, 16 or if a corporation, that the applicant is authorized to do 17 business in Iowa. 18 c. The location of the class “A” micro-distillery where the 19 applicant intends to use the permit. 20 d. The name of the owner of the premises, and if that owner 21 is not the applicant, that the applicant is the actual lessee 22 of the premises. 23 2. Establishes all of the following: 24 a. That the applicant meets the test of good moral character 25 as provided in section 123.3, subsection 34. 26 b. That the premises for which the permit is sought is and 27 will continue to be equipped with sufficient tables and seats 28 to accommodate twenty-five persons at one time, and in areas 29 where such business is permitted by any valid zoning ordinance 30 or will be so permitted on the effective date of the permit. 31 c. Consents to inspection as required in section 123.30, 32 subsection 1. 33 Sec. 10. Section 123.92, subsection 2, paragraph a, Code 34 2014, is amended to read as follows: 35 -4- LSB 5370YH (2) 85 ec/rj 4/ 6

H.F. 2173 a. Every liquor control licensee and , class “B” beer 1 permittee, class “C” native wine permittee, and class 2 “C” micro-distilled spirits permittee, except a class “E” 3 liquor control licensee, shall furnish proof of financial 4 responsibility by the existence of a liability insurance 5 policy in an amount determined by the division. If an insurer 6 provides dramshop liability insurance at a new location to 7 a licensee or permittee who has a positive loss experience 8 at other locations for which such insurance is provided by 9 the insurer, and the insurer bases premium rates at the new 10 location on the negative loss history of the previous licensee 11 or permittee at that location, the insurer shall examine and 12 consider adjusting the premium for the new location not less 13 than thirty months after the insurance is issued, based on the 14 loss experience of the licensee or permittee at that location 15 during that thirty-month period of time. 16 EXPLANATION 17 The inclusion of this explanation does not constitute agreement with 18 the explanation’s substance by the members of the general assembly. 19 This bill concerns the authority of micro-distilled spirits 20 manufacturers and makes dramshop liability insurance applicable 21 to certain native wine and micro-distilled spirits permittees. 22 Code section 123.43A, providing for a class “A” 23 micro-distilled spirits permit, is amended. The bill provides 24 that a micro-distillery may sell no more than nine liters 25 per person per day instead of the current one and one-half 26 liters per day. The bill also allows the micro-distillery to 27 sell the spirits it manufactures at wholesale to customers 28 outside the state. The bill also allows the micro-distillery 29 to sell the spirits it manufactures for consumption on the 30 premises of the manufacturing facility by applying for a new 31 class “C” micro-distilled spirits permit. The bill limits a 32 manufacturer to no more than one of the new permits. Code 33 provisions governing restrictions on transportation (123.28), 34 applications to local authorities for certain permits (123.32), 35 -5- LSB 5370YH (2) 85 ec/rj 5/ 6

H.F. 2173 and records (123.33), are made applicable to the new class “C” 1 micro-distilled spirits permit. 2 New Code section 123.43B establishes the authority for a 3 class “C” micro-distilled spirits permit. The Code section 4 provides that the permit shall allow the manufacturer to sell 5 its micro-distilled spirits only at retail to patrons by the 6 individual drink for consumption on the licensed premises where 7 it was manufactured, and that the person holding the permit 8 shall purchase micro-distilled spirits it manufactures from a 9 class “E” liquor control licensee only. The annual fee for the 10 permit shall be $250. 11 New Code section 123.43C provides for the information 12 necessary for a person to apply for a class “C” micro-distilled 13 spirits permit. The bill requires the applicant to submit 14 information regarding the applicant and the location of the 15 micro-distillery. The application shall also provide that the 16 applicant is of good moral character and that the premises for 17 which the permit is sought is authorized to sell spirits for 18 consumption on the premises by applicable zoning ordinance and 19 is of sufficient size. 20 Code section 123.92, concerning the dramshop Act, is amended 21 to provide that a class “C” native wine permittee and a class 22 “C” micro-distilled spirits permittee shall furnish proof 23 of financial responsibility by having a liability insurance 24 policy. 25 -6- LSB 5370YH (2) 85 ec/rj 6/ 6