Senate Study Bill 1164 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON PETERSEN) A BILL FOR An Act concerning alcoholic beverage control, including 1 micro-distillery production and sales and dramshop liability 2 insurance requirements, and establishing fees. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1367XC (7) 86 ec/nh
S.F. _____ Section 1. Section 123.3, subsection 29, Code 2015, is 1 amended to read as follows: 2 29. “Micro-distillery” means a business with an operational 3 still which, combining all production facilities of the 4 business, produces and manufactures less than fifty nine 5 hundred thousand proof gallons of distilled spirits on an 6 annual basis. 7 Sec. 2. Section 123.28, Code 2015, is amended to read as 8 follows: 9 123.28 Restrictions on transportation. 10 It is lawful to transport, carry, or convey alcoholic 11 liquors from the place of purchase by the division to a state 12 warehouse or depot established by the division or from one such 13 place to another and, when so permitted by this chapter , it 14 is lawful for the division, a common carrier, or other person 15 to transport, carry, or convey alcoholic liquor sold from a 16 state warehouse, depot, or point of purchase by the state to 17 any place to which the liquor may be lawfully delivered under 18 this chapter . The division shall deliver alcoholic liquor 19 purchased by class “E” liquor control licensees. Class “E” 20 liquor control licensees may deliver alcoholic liquor purchased 21 by class “A”, “B”, or “C” liquor control licensees and class 22 “C” micro-distilled spirits permittees , and class “A”, “B”, 23 or “C” liquor control licensees and class “C” micro-distilled 24 spirits permittees may transport alcoholic liquor purchased 25 from class “E” liquor control licensees. A common carrier or 26 other person shall not break or open or allow to be broken or 27 opened a container or package containing alcoholic liquor or 28 use or drink or allow to be used or drunk any alcoholic liquor 29 while it is being transported or conveyed, but this section 30 does not prohibit a private person from transporting individual 31 bottles or containers of alcoholic liquor exempted pursuant to 32 section 123.22 and individual bottles or containers bearing 33 the identifying mark prescribed in section 123.26 which have 34 been opened previous to the commencement of the transportation. 35 -1- LSB 1367XC (7) 86 ec/nh 1/ 7
S.F. _____ This section does not affect the right of a special permit 1 or liquor control license holder to purchase, possess, or 2 transport alcoholic liquors subject to this chapter . 3 Sec. 3. Section 123.32, subsection 1, Code 2015, is amended 4 to read as follows: 5 1. Filing of application. An application for a class “A”, 6 class “B”, class “C”, or class “E” liquor control license, for 7 a class “A” micro-distilled spirits permit, for a class “C” 8 micro-distilled spirits permit, for a retail beer permit as 9 provided in sections 123.128 and 123.129 , or for a class “B”, 10 class “B” native, or class “C” native retail wine permit as 11 provided in section 123.178 , 123.178A , or 123.178B , accompanied 12 by the necessary fee and bond, if required, shall be filed with 13 the appropriate city council if the premises for which the 14 license or permit is sought are located within the corporate 15 limits of a city, or with the board of supervisors if the 16 premises for which the license or permit is sought are located 17 outside the corporate limits of a city. An application for 18 a class “D” liquor control license and for a class “A” beer 19 or class “A” wine permit, accompanied by the necessary fee 20 and bond, if required, shall be submitted to the division 21 electronically, or in a manner prescribed by the administrator, 22 which shall proceed in the same manner as in the case of an 23 application approved by local authorities. 24 Sec. 4. Section 123.33, Code 2015, is amended to read as 25 follows: 26 123.33 Records. 27 Every holder of a liquor control license or a class “C” 28 micro-distilled spirits permit shall keep a daily record, in 29 printed or electronic format, of the gross receipts of the 30 holder’s business. The records required and the premises of 31 the licensee or permittee shall be accessible and open to 32 inspection pursuant to section 123.30, subsection 1 , during 33 normal business hours of the licensee or permittee . 34 Sec. 5. Section 123.43A, subsection 2, Code 2015, is amended 35 -2- LSB 1367XC (7) 86 ec/nh 2/ 7
S.F. _____ to read as follows: 1 2. A micro-distillery shall not sell more than one and 2 one-half liters per person per day, of micro-distilled spirits 3 on the premises of the micro-distillery. In addition, a A 4 micro-distillery shall not directly ship micro-distilled 5 spirits for sale at retail. The micro-distillery shall 6 maintain records of individual purchases of micro-distilled 7 spirits at the micro-distillery for three years. 8 Sec. 6. Section 123.43A, Code 2015, is amended by adding the 9 following new subsection: 10 NEW SUBSECTION . 4A. Notwithstanding any other provision of 11 this chapter, a person engaged in the business of manufacturing 12 micro-distilled spirits may sell micro-distilled spirits 13 it manufactures at retail for consumption on the premises 14 of the manufacturing facility by applying for a class “C” 15 micro-distilled spirits permit with the authority as provided 16 in section 123.43B. A manufacturer of micro-distilled spirits 17 may be granted not more than one class “C” micro-distilled 18 spirits permit. 19 Sec. 7. Section 123.43A, subsection 6, Code 2015, is amended 20 to read as follows: 21 6. The division shall issue no more than three class 22 “A” micro-distilled spirits permits under this section to a 23 person. In addition, a micro-distillery issued a permit under 24 this section shall file with the division , on or before the 25 fifteenth day of each calendar month, all documents filed by 26 the micro-distillery with the alcohol and tobacco tax and 27 trade bureau of the United States department of the treasury, 28 including all production, storage, and processing reports. 29 Sec. 8. Section 123.43A, subsection 7, Code 2015, is amended 30 by striking the subsection and inserting in lieu thereof the 31 following: 32 7. A micro-distillery may sell the micro-distilled spirits 33 it manufactures to customers outside the state. 34 Sec. 9. NEW SECTION . 123.43B Authority under class “C” 35 -3- LSB 1367XC (7) 86 ec/nh 3/ 7
S.F. _____ micro-distilled spirits permit. 1 1. A person holding a class “C” micro-distilled spirits 2 permit for the same location at which the person holds a class 3 “A” micro-distilled spirits permit may sell its micro-distilled 4 spirits only at retail to patrons by the individual drink for 5 consumption on the licensed premises where it was manufactured. 6 2. A person holding a class “C” micro-distilled spirits 7 permit shall purchase micro-distilled spirits it manufactures 8 from a class “E” liquor control licensee only. 9 3. A class “C” micro-distilled spirits permit for a 10 micro-distillery shall be issued and renewed annually upon 11 payment of a fee of two hundred fifty dollars. 12 Sec. 10. NEW SECTION . 123.43C Class “C” micro-distilled 13 spirits permit —— application contents. 14 Except as otherwise provided in this chapter, a class “C” 15 micro-distilled spirits permit shall be issued to a person who 16 complies with all of the following: 17 1. Submits electronically, or in a manner prescribed by the 18 administrator, an application for the permit and states on the 19 application under oath: 20 a. The name and place of residence of the applicant and 21 the length of time the applicant has lived at the place of 22 residence. 23 b. That the applicant is a citizen of the state of Iowa, 24 or if a corporation, that the applicant is authorized to do 25 business in Iowa. 26 c. The location of the class “A” micro-distillery where the 27 applicant intends to use the permit. 28 d. The name of the owner of the premises, and if that owner 29 is not the applicant, that the applicant is the actual lessee 30 of the premises. 31 2. Establishes all of the following: 32 a. That the applicant meets the test of good moral character 33 as provided in section 123.3, subsection 34. 34 b. That the premises for which the permit is sought is and 35 -4- LSB 1367XC (7) 86 ec/nh 4/ 7
S.F. _____ will continue to be equipped with sufficient tables and seats 1 to accommodate twenty-five persons at one time, and in areas 2 where such business is permitted by any valid zoning ordinance 3 or will be so permitted on the effective date of the permit. 4 c. That the premises where the applicant intends to operate 5 conform to all applicable laws and health and fire regulations. 6 d. Consents to inspection as required in section 123.30, 7 subsection 1. 8 Sec. 11. Section 123.92, subsection 2, paragraph a, Code 9 2015, is amended to read as follows: 10 a. Every liquor control licensee , and class “B” beer 11 permittee, class “C” native wine permittee, and class 12 “C” micro-distilled spirits permittee, except a class “E” 13 liquor control licensee, shall furnish proof of financial 14 responsibility by the existence of a liability insurance 15 policy in an amount determined by the division. If an insurer 16 provides dramshop liability insurance at a new location to 17 a licensee or permittee who has a positive loss experience 18 at other locations for which such insurance is provided by 19 the insurer, and the insurer bases premium rates at the new 20 location on the negative loss history of the previous licensee 21 or permittee at that location, the insurer shall examine and 22 consider adjusting the premium for the new location not less 23 than thirty months after the insurance is issued, based on the 24 loss experience of the licensee or permittee at that location 25 during that thirty-month period of time. 26 EXPLANATION 27 The inclusion of this explanation does not constitute agreement with 28 the explanation’s substance by the members of the general assembly. 29 This bill concerns micro-distilleries and the authority of 30 micro-distilleries and micro-distilled spirits manufacturers 31 and makes dramshop liability insurance requirements applicable 32 to certain native wine and micro-distilled spirits permittees. 33 Code section 123.3(29), concerning the definition of a 34 micro-distillery, is amended to provide that a micro-distillery 35 -5- LSB 1367XC (7) 86 ec/nh 5/ 7
S.F. _____ is a business that produces less than 900,000 proof gallons of 1 distilled spirits instead of the current limit of 50,000. 2 Code section 123.43A, providing for a class “A” 3 micro-distilled spirits permit, is amended. The bill 4 eliminates the current one and one-half liters per day limit 5 on sales of micro-distilled spirits on the premises. The 6 bill also allows the micro-distillery to sell the spirits it 7 manufactures to customers outside the state. The bill also 8 allows the micro-distillery to sell the spirits it manufactures 9 for consumption on the premises of the manufacturing facility 10 by applying for a new class “C” micro-distilled spirits permit. 11 The bill limits a manufacturer to no more than one of the new 12 permits. 13 Code provisions governing restrictions on transportation 14 (123.28), applications to local authorities for certain permits 15 (123.32), and records (123.33), are made applicable to the new 16 class “C” micro-distilled spirits permit. 17 New Code section 123.43B establishes the authority for a 18 class “C” micro-distilled spirits permit. The Code section 19 provides that the permit shall allow the manufacturer to sell 20 its micro-distilled spirits only at retail to patrons by the 21 individual drink for consumption on the licensed premises where 22 it was manufactured, and that the person holding the permit 23 shall purchase micro-distilled spirits it manufactures from a 24 class “E” liquor control licensee only. The annual fee for the 25 permit shall be $250. 26 New Code section 123.43C provides for the information 27 necessary for a person to apply for a class “C” micro-distilled 28 spirits permit. The bill requires the applicant to submit 29 information regarding the applicant and the location of the 30 micro-distillery. The application shall also provide that the 31 applicant is of good moral character and that the premises for 32 which the permit is sought is authorized to sell spirits for 33 consumption on the premises by applicable zoning ordinance and 34 is of sufficient size. 35 -6- LSB 1367XC (7) 86 ec/nh 6/ 7
S.F. _____ Code section 123.92, concerning the dramshop Act, is amended 1 to provide that a class “C” native wine permittee and a class 2 “C” micro-distilled spirits permittee shall furnish proof 3 of financial responsibility by having a liability insurance 4 policy. 5 -7- LSB 1367XC (7) 86 ec/nh 7/ 7