S.F. _____ Section 1. Section 123.3, subsection 40, Code 2019, is 1 amended to read as follows: 2 40. “Retail wine permit” means a class “B” wine permit, 3 class “B” native wine permit, class “C” wine permit, or class 4 “C” native wine permit issued under this chapter . 5 Sec. 2. Section 123.45, Code 2019, is amended by adding the 6 following new subsection: 7 NEW SUBSECTION . 01. For purposes of this section: 8 a. “Beer manufacturer or importer” means a holder of a 9 license or permit to manufacture beer or import beer into the 10 state, including an officer, director, agent, or managerial 11 employee of the license or permit holder and an affiliate 12 of the license or permit holder, regardless of whether the 13 affiliation is corporate or by management, direction, or 14 control. 15 b. “Institutional investor” means a person who maintains 16 a diversified portfolio of investments through a state or 17 federally chartered bank, a mutual fund, a retirement plan 18 or account created by an employer, the person, or another 19 individual to provide retirement benefits or deferred 20 compensation to the person, a private investment firm, or a 21 holding company publicly traded on the New York stock exchange, 22 the American stock exchange, or NASDAQ stock market and who has 23 a majority of investments in businesses other than businesses 24 that manufacture, bottle, wholesale, or sell at retail 25 alcoholic beverages. 26 Sec. 3. Section 123.45, subsection 1, unnumbered paragraph 27 1, Code 2019, is amended to read as follows: 28 A Subject to such exceptions as otherwise authorized 29 under this chapter, a person engaged in the business of 30 manufacturing, bottling, or wholesaling alcoholic beverages, 31 wine, or beer excluding an institutional investor , or any 32 jobber, representative, broker, employee, or agent of such a 33 person, shall not do any of the following: 34 Sec. 4. Section 123.45, subsection 1, paragraphs c and d, 35 -1- LSB 2490XC (2) 88 ec/rn 1/ 6

S.F. _____ Code 2019, are amended to read as follows: 1 c. Directly or indirectly be interested in the ownership, 2 conduct, or operation of the business of another licensee or 3 permittee authorized under this chapter to sell at retail , 4 unless the licensee or permittee authorized under this 5 chapter to sell at retail does not purchase or sell the 6 alcoholic beverages of the person engaged in the business of 7 manufacturing, bottling, or wholesaling alcoholic beverages . 8 d. Hold a retail liquor control license or retail wine or 9 beer permit , unless the licensee or permittee holding a retail 10 liquor control license or retail wine or beer permit does not 11 purchase or sell the alcoholic beverages of the person engaged 12 in the business of manufacturing, bottling, or wholesaling 13 alcoholic beverages . 14 Sec. 5. Section 123.45, Code 2019, is amended by adding the 15 following new subsections: 16 NEW SUBSECTION . 1A. Notwithstanding any provision of law to 17 the contrary, a beer manufacturer or importer shall not have 18 any ownership, in whole or in part, directly or indirectly, in 19 the license, business, assets, or corporate stock of a beer 20 wholesaler and shall not sell beer at wholesale directly to a 21 retail permittee. However, a beer manufacturer or importer 22 that manufactures no more than ten thousand barrels of beer or 23 its metric equivalent in a calendar year may own or have an 24 interest in a beer wholesaler that sells the beer that the beer 25 manufacturer or importer manufactures. 26 NEW SUBSECTION . 1B. Notwithstanding any provision of 27 law to the contrary, a person employed by a person engaged 28 in the business of manufacturing, bottling, or wholesaling 29 alcoholic beverages may be employed by another person engaged 30 in the business of manufacturing, bottling, or wholesaling 31 alcoholic beverages or by a business authorized under this 32 chapter to sell alcoholic beverages at retail if the person is 33 not an officer, owner, director, or managerial employee of the 34 person’s employer or employers. 35 -2- LSB 2490XC (2) 88 ec/rn 2/ 6

S.F. _____ NEW SUBSECTION . 4. The exceptions established by this 1 section to the general prohibition against tied interests 2 shall be limited to their express terms so as not to undermine 3 the general prohibition and shall therefore be construed 4 accordingly. 5 Sec. 6. Section 123.173, subsection 1, Code 2019, is amended 6 to read as follows: 7 1. Except as provided in section 123.187 , permits 8 exclusively for the sale or manufacture and sale of wine shall 9 be divided into four five classes, and shall be known as class 10 “A”, “B”, “B” native, “C”, or “C” native wine permits. 11 Sec. 7. Section 123.175, subsection 2, Code 2019, is amended 12 by adding the following new paragraph: 13 NEW PARAGRAPH . h. For a class “C” wine permit, that the 14 applicant is a person engaged in the business of manufacturing 15 wine that is not native wine and the premises where the 16 applicant intends to operate is located on the corporate campus 17 of that person in this state. 18 Sec. 8. Section 123.177, subsection 1, Code 2019, is amended 19 to read as follows: 20 1. A person holding a class “A” wine permit may manufacture 21 and sell, or sell at wholesale, wine for consumption off the 22 premises. Sales within the state may be made only to persons 23 holding a class “A” , or “B” , or “C” wine permit and to persons 24 holding a retail liquor control license. However, if the 25 person holding the class “A” permit is a manufacturer of native 26 wine, the person may sell only native wine to a person holding 27 a retail wine permit or a retail liquor control license. A 28 class “A” wine permittee having more than one place of business 29 shall obtain a separate permit for each place of business where 30 wine is to be manufactured, stored, warehoused, or sold. 31 Sec. 9. NEW SECTION . 123.178C Authority under class “C” 32 wine permit. 33 1. A person holding a class “C” wine permit may sell wine 34 manufactured by that person at retail for consumption on or off 35 -3- LSB 2490XC (2) 88 ec/rn 3/ 6

S.F. _____ the premises. 1 2. A person holding a class “C” wine permit shall purchase 2 wine for consumption on the premises only from a person holding 3 a class “A” wine permit. 4 Sec. 10. Section 123.179, Code 2019, is amended by adding 5 the following new subsection: 6 NEW SUBSECTION . 4A. The annual permit fee for a class “C” 7 wine permit is five hundred dollars. 8 Sec. 11. Section 123.185, Code 2019, is amended by adding 9 the following new subsection: 10 NEW SUBSECTION . 3. Each class “C” wine permittee shall 11 submit a report to the administrator each calendar quarter 12 quantifying the volume of sales of wine during the previous 13 quarter, the name of each independent distributor that 14 distributed the wine to the point of sale during the quarter, 15 the average price per unit that the wine was sold at during 16 that quarter, and the average price per unit paid to the 17 distributor for the wine purchased during the quarter. 18 EXPLANATION 19 The inclusion of this explanation does not constitute agreement with 20 the explanation’s substance by the members of the general assembly. 21 This bill concerns alcoholic beverage control relating 22 to limitations on business interests of manufacturers, 23 wholesalers, and retailers of alcoholic beverages. 24 Code section 123.45, concerning limitations on business 25 interests, is amended. The bill, for purposes of the Code 26 section, defines “beer manufacturer or importer”, and 27 “institutional investor”. “Beer manufacturer or importer” is 28 defined to mean a holder of a license or permit to manufacture 29 beer or import beer into the state, including an affiliate, 30 officer, director, agent, or managerial employee of the 31 license or permit holder. “Institutional investor” is defined, 32 generally, to mean a person who maintains a diversified 33 portfolio of investments and who has a majority of investments 34 in businesses other than businesses that manufacture, bottle, 35 -4- LSB 2490XC (2) 88 ec/rn 4/ 6

S.F. _____ wholesale, or sell at retail alcoholic beverages. 1 Code section 123.45(1), providing the general limitation on 2 business interests, is amended to provide that a manufacturer, 3 bottler, or wholesaler of alcoholic beverages is not an 4 institutional investor and is not prohibited from being 5 interested in the business of another retail licensee or 6 permittee, or from holding a retail liquor control license or 7 retail wine or beer permit, if the retail business, licensee, 8 or permittee does not purchase or sell the alcoholic beverages 9 of the person engaged in the business of manufacturing, 10 bottling, or wholesaling alcoholic beverages. 11 Code section 123.45, new subsection 1A, provides that a beer 12 manufacturer or importer shall not have any ownership in a beer 13 wholesaler and shall not sell beer at wholesale directly to 14 a retail permittee. However, the bill provides that a beer 15 manufacturer or importer that manufactures no more than 10,000 16 barrels of beer in a calendar year may own or have an interest 17 in a beer wholesaler that sells the beer the beer manufacturer 18 or importer manufactures. 19 Code section 123.45, new subsection 1B, provides that a 20 person employed by a manufacturer, bottler, or wholesaler of 21 alcoholic beverages may be employed by another manufacturer, 22 bottler, or wholesaler, as well as by a business authorized to 23 sell alcoholic beverages at retail, if the person is not an 24 officer, owner, director, or managerial employee of any of the 25 person’s employers. 26 Code section 123.45 is further amended to provide that 27 the exceptions established by this section to the general 28 prohibition against tied interests shall be limited. 29 Code section 123.175, concerning applications for a retail 30 wine permit, is amended to provide that issuance of a class “C” 31 wine permit, as established by the bill, shall be limited to a 32 person engaged in the manufacturing of wine that is not native 33 wine who intends to operate under the permit on the corporate 34 campus of the person in this state. 35 -5- LSB 2490XC (2) 88 ec/rn 5/ 6

S.F. _____ Code section 123.177 is amended to allow a person holding a 1 class “A” wine permit to sell wine to a holder of the new class 2 “C” wine permit established in the bill. 3 New Code section 123.178C provides for the authority under 4 a class “C” wine permit which is established by the bill. The 5 bill allows a person holding a class “C” wine permit to sell 6 wine manufactured by that person at retail for consumption on 7 or off the premises and provides that the permittee purchase 8 wine for consumption on the premises only from a person holding 9 a class “A” wine permit. 10 Code section 123.179, establishing wine permit fees, is 11 amended to provide that the annual permit fee for the new class 12 “C” wine permit is $500. 13 Code section 123.185, concerning records of wine permittees, 14 is amended to provide that a class “C” wine permittee submit 15 a quarterly report to the administrator of the alcoholic 16 beverages division regarding sales of wine by the permittee. 17 -6- LSB 2490XC (2) 88 ec/rn 6/ 6