H.F. 2525 Section 1. Section 123.28, subsection 5, Code 2022, is 1 amended to read as follows: 2 5. This section does not affect the right of a liquor 3 control license holder to purchase, possess, or transport 4 alcoholic liquors subject to this chapter . In addition, this 5 section shall not impact the direct shipment of alcoholic 6 liquor as regulated by section 123.42A. 7 Sec. 2. Section 123.32, subsection 1, paragraph b, Code 8 2022, is amended by adding the following new subparagraph: 9 NEW SUBPARAGRAPH . (4A) An alcoholic liquor direct shipper 10 license as provided in section 123.42A. 11 Sec. 3. Section 123.32, subsection 1, paragraph b, 12 subparagraph (11), Code 2022, is amended to read as follows: 13 (11) A wine An alcoholic beverage carrier permit as provided 14 in section 123.188 . 15 Sec. 4. Section 123.41, subsection 1, Code 2022, is amended 16 to read as follows: 17 1. Each completed application to obtain or renew a 18 manufacturer’s license shall be submitted to the division 19 electronically, or in a manner prescribed by the administrator, 20 and shall be accompanied by a fee of three hundred fifty 21 dollars payable to the division. The administrator may in 22 accordance with this chapter grant and issue to a manufacturer 23 a manufacturer’s license, valid for a one-year period after 24 date of issuance, which shall allow the manufacture, storage, 25 and wholesale disposition and sale of alcoholic liquors to the 26 division and to customers outside of the state pursuant to the 27 laws of that jurisdiction . 28 Sec. 5. Section 123.41, Code 2022, is amended by adding the 29 following new subsection: 30 NEW SUBSECTION . 1A. A manufacturer of alcoholic liquor 31 may ship alcoholic liquor in closed containers to individual 32 purchasers inside this state by obtaining an alcoholic liquor 33 direct shipper license pursuant to section 123.42A. 34 Sec. 6. NEW SECTION . 123.42A Direct shipment of alcoholic 35 -1- LSB 5262HV (4) 89 ec/rn 1/ 9

H.F. 2525 liquor —— license and requirements. 1 1. An alcoholic liquor manufacturer licensed or permitted 2 pursuant to laws regulating alcoholic beverages in this state 3 or another state may apply for an alcoholic liquor direct 4 shipper license, as provided in this section. For the purposes 5 of this section, an “alcoholic liquor manufacturer” means a 6 business with an operating still which distills spirits, barrel 7 matures spirits for a period of two years on the licensed 8 premises of the distillery where matured, or blends or mixes 9 spirits comprised solely of spirits distilled or barrel matured 10 for a period of two years on the licensed premises of the 11 distillery, and which, combining all production facilities 12 of the business, produces and manufactures not more than one 13 hundred thousand proof gallons of native distilled spirits on 14 an annual basis. 15 2. a. Only an alcoholic liquor manufacturer that holds 16 an alcoholic liquor direct shipper license issued pursuant to 17 this section shall sell alcoholic liquor at retail for direct 18 shipment to any person within this state. This section shall 19 not prohibit an authorized retail licensee or permittee from 20 delivering alcoholic liquor pursuant to section 123.46A. 21 b. An alcoholic liquor manufacturer applying for an 22 alcoholic liquor direct shipper license shall submit an 23 application for the license electronically, or in a manner 24 prescribed by the administrator, accompanied by a true copy 25 of the manufacturer’s current alcoholic beverage license or 26 permit issued by the state where the manufacturer is primarily 27 located, a copy of the manufacturer’s basic permit issued by 28 the alcohol and tobacco tax and trade bureau of the United 29 States department of the treasury, and documents filed by the 30 manufacturer with the alcohol and tobacco tax and trade bureau 31 of the United States department of the treasury that show the 32 total number of proof gallons of distilled spirits produced and 33 manufactured by the manufacturer for the preceding calendar 34 year. 35 -2- LSB 5262HV (4) 89 ec/rn 2/ 9

H.F. 2525 c. An application submitted pursuant to paragraph “b” shall 1 be accompanied by a license fee in the amount of twenty-five 2 dollars. 3 d. An application submitted pursuant to paragraph “b” 4 shall also be accompanied by a bond in the amount of five 5 thousand dollars in the form prescribed and furnished by the 6 division with good and sufficient sureties to be approved by 7 the division conditioned upon compliance with this chapter. 8 e. A license issued pursuant to this section may be 9 renewed annually by submitting a renewal application with the 10 administrator in a manner prescribed by the administrator, 11 accompanied by the twenty-five dollar license fee. 12 3. The direct shipment of alcoholic liquor pursuant to this 13 section shall be subject to the following requirements and 14 restrictions: 15 a. Alcoholic liquor shall only be shipped to a resident of 16 this state who is at least twenty-one years of age, for the 17 resident’s personal use and consumption and not for resale. 18 b. Alcoholic liquor subject to direct shipping shall be 19 properly registered with the federal alcohol and tobacco tax 20 and trade bureau, and manufactured on the licensed premises of 21 the alcoholic liquor direct shipper licensee. 22 c. Alcoholic liquor subject to direct shipping shall 23 be properly registered with the division. Products which 24 are not listed for sale by the division must be registered 25 electronically with the division for direct shipping. This 26 registration will include the name of the manufacturer, the 27 name of the brand, the standard of fill, the wholesale price, 28 and other information as requested by the division. The 29 registration shall be updated as necessary to ensure the 30 division possesses an accurate, current registration. 31 d. All containers of alcoholic liquor shipped directly to a 32 resident of this state shall be conspicuously labeled with the 33 words “CONTAINS ALCOHOL: SIGNATURE OF PERSON AGE 21 OR OLDER 34 REQUIRED FOR DELIVERY” or shall be conspicuously labeled with 35 -3- LSB 5262HV (4) 89 ec/rn 3/ 9

H.F. 2525 alternative wording preapproved by the administrator. 1 e. All containers of alcoholic liquor shipped directly 2 to a resident of this state shall be shipped by a holder of 3 an alcoholic beverage carrier permit as provided in section 4 123.188. 5 f. Shipment of alcoholic liquor pursuant to this subsection 6 does not require a refund value for beverage container control 7 purposes under chapter 455C. 8 4. An alcoholic liquor direct shipper licensee shipping 9 alcoholic liquor to this state shall remit the following amount 10 to the division in a manner as directed by the division: 11 a. For alcoholic liquor that is listed for sale by the 12 division, an amount equivalent to fifty percent of the listed 13 wholesale price. 14 b. For alcoholic liquor that is not listed for sale 15 by the division, an amount equivalent to fifty percent of 16 the wholesale price as registered with the division under 17 subsection 3. 18 5. Each alcoholic liquor direct shipper licensee shall make 19 a report under oath to the division electronically, or in a 20 manner prescribed by the administrator, on or before the tenth 21 day of each month, which includes the following information: 22 a. The products and quantities shipped directly to residents 23 of this state in the preceding month. 24 b. The name and address of the individuals to whom the 25 alcoholic liquor was sold in each sale. 26 c. The wholesale price of the alcoholic liquor sold. 27 d. The purchase price of the alcoholic liquor sold and 28 the amount of taxes charged to the individual purchasing the 29 alcoholic liquor. 30 e. The alcoholic beverage carrier permittee who delivered 31 the shipment. 32 f. All documents filed by the alcoholic liquor direct 33 shipper licensee with the alcohol and tobacco tax and trade 34 bureau of the United States department of treasury for the 35 -4- LSB 5262HV (4) 89 ec/rn 4/ 9

H.F. 2525 preceding month, including all production, storage, and 1 processing reports. 2 6. The license holder at the time of filing the report as 3 required by subsection 5 shall pay to the division the amount 4 as required pursuant to subsection 4. A penalty of ten percent 5 of the amount due shall be assessed and collected if the report 6 required to be filed pursuant to this section and the amount 7 required to be paid as provided by subsection 4 is not filed 8 and the amount paid within the time required by this section. 9 7. An alcoholic liquor direct shipper licensee shall be 10 deemed to have consented to the jurisdiction of the division or 11 any other agency or court in this state concerning enforcement 12 of this section and any related laws, rules, or regulations. A 13 license holder shall allow the division to perform an audit of 14 shipping records upon request. 15 8. A violation of this section shall subject the licensee 16 to the general penalties provided in this chapter and shall 17 constitute grounds for imposition of a civil penalty or 18 suspension or revocation of the license pursuant to section 19 123.39. 20 Sec. 7. Section 123.43A, subsection 2, Code 2022, is amended 21 to read as follows: 22 2. A native distillery shall not sell more than one and 23 one-half liters per person per day, of native distilled spirits 24 on the premises of the native distillery. However, a native 25 distillery which, combining all production facilities of the 26 business, produces and manufactures not more than one hundred 27 thousand proof gallons of native distilled spirits on an 28 annual basis, may sell not more than nine liters per person 29 per day, of native distilled spirits. In addition, a native 30 distillery shall not directly may ship native distilled spirits 31 for sale at retail manufactured by the native distillery in 32 closed containers to individual purchasers inside this state by 33 obtaining an alcoholic liquor direct shipper license pursuant 34 to section 123.42A . The native distillery shall maintain 35 -5- LSB 5262HV (4) 89 ec/rn 5/ 9

H.F. 2525 records of individual purchases of native distilled spirits at 1 the native distillery for three years. 2 Sec. 8. Section 123.43A, subsection 7, Code 2022, is amended 3 to read as follows: 4 7. A native distillery may sell the native distilled spirits 5 it manufactures to customers outside the state , pursuant to the 6 laws of that jurisdiction . 7 Sec. 9. Section 123.46A, subsection 5, Code 2022, is amended 8 to read as follows: 9 5. Nothing in this section shall impact the direct shipment 10 of alcoholic liquor as regulated by section 123.42A or the 11 direct shipment of wine as regulated by section 123.187 . 12 Sec. 10. Section 123.187, subsection 3, paragraph d, Code 13 2022, is amended to read as follows: 14 d. All containers of wine shipped directly to a resident of 15 this state shall be shipped by a holder of a wine an alcoholic 16 beverage carrier permit as provided in section 123.188 . 17 Sec. 11. Section 123.188, subsections 1, 2, and 4, Code 18 2022, are amended to read as follows: 19 1. A person desiring to deliver alcoholic liquor subject 20 to direct shipment within this state pursuant to section 21 123.42A and wine subject to direct shipment within this state 22 pursuant to section 123.187 shall submit an application for a 23 wine an alcoholic beverage carrier permit electronically, or 24 in a manner prescribed by the administrator, which shall be 25 accompanied by a fee in the amount of one hundred dollars. 26 2. The administrator may in accordance with this chapter 27 issue a wine an alcoholic beverage carrier permit which shall 28 be valid for one year from the date of issuance unless it is 29 sooner suspended or revoked for a violation of this chapter . 30 4. The delivery of alcoholic liquor and wine pursuant to 31 this section shall be subject to the following requirements and 32 restrictions: 33 a. A wine An alcoholic beverage carrier permittee shall not 34 deliver alcoholic liquor or wine to any person under twenty-one 35 -6- LSB 5262HV (4) 89 ec/rn 6/ 9

H.F. 2525 years of age, or to any person who either is or appears to be in 1 an intoxicated state or condition. 2 b. A wine An alcoholic beverage carrier permittee shall 3 obtain valid proof of identity and age prior to delivery, 4 and shall obtain the signature of an adult as a condition of 5 delivery. 6 c. A wine An alcoholic beverage carrier permittee shall 7 maintain records of alcoholic liquor and wine shipped which 8 include the permit number and name of the alcoholic liquor 9 or wine manufacturer, quantity of alcoholic liquor and wine 10 shipped, recipient’s name and address, and an electronic or 11 paper form of signature from the recipient of the alcoholic 12 liquor and wine. Records shall be submitted to the division 13 on a monthly basis in a form and manner to be determined by the 14 division. 15 Sec. 12. EFFECTIVE DATE. This Act takes effect January 1, 16 2023. 17 EXPLANATION 18 The inclusion of this explanation does not constitute agreement with 19 the explanation’s substance by the members of the general assembly. 20 This bill allows for the direct shipment of alcoholic liquor 21 within the state. 22 New Code section 123.42A provides for the direct shipment of 23 alcoholic liquor and provides for an alcoholic liquor direct 24 shipper license. The bill provides that only alcoholic liquor 25 manufacturers that produce and manufacture not more than 26 100,000 proof gallons of native distilled spirits on an annual 27 basis are eligible for this license. Provisions governing the 28 direct shipment of wine and the wine direct shipper permit are 29 generally made applicable to the new Code section providing 30 for the direct shipment of alcoholic liquor. In addition to 31 these requirements, the new Code section requires all alcoholic 32 liquor subject to direct shipping to be properly registered 33 with the alcoholic beverages division and that products which 34 are not listed for sale by the division must be registered 35 -7- LSB 5262HV (4) 89 ec/rn 7/ 9

H.F. 2525 to include information on the name of the manufacturer, the 1 name of the brand, the standard of fill, the wholesale price, 2 and other information as requested by the division. The 3 new Code section also requires each alcoholic liquor direct 4 shipper licensee to make a monthly report to the alcoholic 5 beverages division that lists the products and quantities 6 shipped directly to residents of this state in the preceding 7 month, the name and address of the individuals to whom the 8 alcoholic liquor was sold in each sale, the wholesale price of 9 the alcoholic liquor sold, the purchase price and taxes charged 10 of the alcoholic liquor sold, the alcoholic beverage carrier 11 permittee who delivered each shipment, and documents filed by 12 the licensee with the alcohol and tobacco tax and trade bureau 13 of the United States department of treasury for the preceding 14 month, including all production, storage, and processing 15 reports. Finally, the new Code section provides that an 16 alcoholic liquor direct shipper licensee shall remit an amount 17 to the alcoholic beverages division depending on whether the 18 alcoholic liquor shipped is listed for sale by the division. 19 If the alcoholic liquor is listed for sale by the division, the 20 permittee shall remit to the division an amount equivalent to 21 50 percent of the wholesale price paid by the division for the 22 alcoholic liquor. If the alcoholic liquor is not listed for 23 sale by the division, the permittee shall remit to the division 24 an amount equivalent to 50 percent of the wholesale price of 25 the alcoholic liquor as registered with the division. The bill 26 provides that a penalty of 10 percent of the amount due shall 27 be assessed and collected if the amount required to be paid to 28 the division as provided by the bill is not paid within the 29 time required. 30 The bill allows a manufacturer of alcoholic liquor and a 31 native distillery to ship alcoholic liquor or native distilled 32 spirits, as applicable, to individual purchasers inside this 33 state by obtaining an alcoholic liquor direct shipper license 34 as established in the bill. 35 -8- LSB 5262HV (4) 89 ec/rn 8/ 9