H.F. 639 Section 1. Section 123.3, subsection 34, Code 2021, is 1 amended to read as follows: 2 34. “Native distilled spirits” means spirits fermented, 3 distilled, manufactured or, for a period of two years, barrel 4 matured on the licensed premises of the native distillery 5 where fermented, distilled, manufactured or matured. “Native 6 distilled spirits” also includes blended or mixed spirits 7 comprised solely of spirits fermented, distilled, manufactured 8 or, for a period of two years, barrel matured at a native 9 distillery. 10 Sec. 2. Section 123.32, subsection 1, paragraph b, Code 11 2021, is amended by adding the following new subparagraphs: 12 NEW SUBPARAGRAPH . (12) A native distilled spirits direct 13 shipper permit as provided in section 123.43B. 14 NEW SUBPARAGRAPH . (13) A native distilled spirits carrier 15 permit as provided in section 123.43C. 16 Sec. 3. Section 123.43A, subsection 2, Code 2021, is amended 17 to read as follows: 18 2. A native distillery shall not sell more than one and 19 one-half liters per person per day, of native distilled spirits 20 on the premises of the native distillery. However, a native 21 distillery which, combining all production facilities of the 22 business, produces and manufactures not more than one hundred 23 thousand proof gallons of native distilled spirits on an annual 24 basis, may sell not more than nine liters per person per day, 25 of native distilled spirits. In addition, a Except as provided 26 in section 123.43B, a native distillery shall not directly 27 ship native distilled spirits for sale at retail. The native 28 distillery shall maintain records of individual purchases of 29 native distilled spirits at the native distillery for three 30 years. 31 Sec. 4. NEW SECTION . 123.43B Direct shipment of native 32 distilled spirits —— permit and requirements. 33 1. A manufacturer of native distilled spirits licensed or 34 permitted pursuant to laws regulating alcoholic beverages in 35 -1- LSB 1243YH (6) 89 je/rn 1/ 6

H.F. 639 this state or another state may apply for a direct shipper 1 permit, as provided in this section. All shipments of native 2 distilled spirits shall be made through the state’s wholesale 3 distribution system. 4 2. a. Only a manufacturer of native distilled spirits that 5 holds a direct shipper permit issued pursuant to this section 6 shall sell native distilled spirits at retail for direct 7 shipment to any person within this state or another state. 8 This section shall not prohibit an authorized retail licensee 9 or permittee from delivering native distilled spirits pursuant 10 to section 123.46A. 11 b. A manufacturer of native distilled spirits applying 12 for a direct shipper permit shall submit an application for 13 the permit electronically, or in a manner prescribed by the 14 administrator, accompanied by a true copy of the manufacturer’s 15 current alcoholic beverage license or permit issued by the 16 state where the manufacturer is primarily located and a copy 17 of the manufacturer’s basic permit issued by the alcohol and 18 tobacco tax and trade bureau of the United States department of 19 the treasury. 20 c. An application submitted pursuant to paragraph “b” shall 21 be accompanied by a permit fee in the amount of twenty-five 22 dollars. 23 d. An application submitted pursuant to paragraph “b” 24 shall also be accompanied by a bond in the amount of five 25 thousand dollars in the form prescribed and furnished by the 26 division with good and sufficient sureties to be approved by 27 the division conditioned upon compliance with this chapter. 28 e. A permit issued pursuant to this section may be 29 renewed annually by submitting a renewal application with the 30 administrator in a manner prescribed by the administrator, 31 accompanied by the twenty-five dollar permit fee. 32 3. The direct shipment of native distilled spirits pursuant 33 to this section shall be subject to the following requirements 34 and restrictions: 35 -2- LSB 1243YH (6) 89 je/rn 2/ 6

H.F. 639 a. All native distilled spirits shipped directly to a 1 resident of this state shall only be shipped to a resident 2 who is at least twenty-one years of age, for the resident’s 3 personal use and consumption and not for resale. 4 b. Native distilled spirits subject to direct shipping shall 5 be properly registered with the federal alcohol and tobacco tax 6 and trade bureau, and manufactured on the native distillery 7 premises of the direct shipper permittee. 8 c. All containers of native distilled spirits shipped 9 directly to a resident of this state shall be conspicuously 10 labeled with the words “CONTAINS ALCOHOL: SIGNATURE OF 11 PERSON AGE 21 OR OLDER REQUIRED FOR DELIVERY” or shall be 12 conspicuously labeled with alternative wording preapproved by 13 the administrator. 14 d. All containers of native distilled spirits shipped 15 directly to a resident of this state shall be shipped by a 16 holder of a native distilled spirits carrier permit as provided 17 in section 123.43C. 18 e. Shipment of native distilled spirits pursuant to this 19 subsection does not require a refund value for beverage 20 container control purposes under chapter 455C. 21 4. A direct shipper permittee shall be deemed to have 22 consented to the jurisdiction of the division or any other 23 agency or court in this state concerning enforcement of this 24 section and any related laws, rules, or regulations. A permit 25 holder shall allow the division to perform an audit of shipping 26 records upon request. 27 5. A violation of this section shall subject the permittee 28 to the general penalties provided in this chapter and shall 29 constitute grounds for imposition of a civil penalty or 30 suspension or revocation of the permit pursuant to section 31 123.39. 32 Sec. 5. NEW SECTION . 123.43C Native distilled spirits 33 carrier —— permit and requirements. 34 1. A person desiring to deliver native distilled spirits 35 -3- LSB 1243YH (6) 89 je/rn 3/ 6

H.F. 639 subject to direct shipment within this state pursuant to 1 section 123.43B shall submit an application for a native 2 distilled spirits carrier permit electronically, or in a manner 3 prescribed by the administrator, which shall be accompanied by 4 a fee in the amount of one hundred dollars. 5 2. The administrator may in accordance with this chapter 6 issue a native distilled spirits carrier permit which shall 7 be valid for one year from the date of issuance unless it is 8 sooner suspended or revoked for a violation of this chapter. 9 3. A permit issued pursuant to this section may be 10 renewed annually by submitting a renewal application with the 11 administrator in a manner prescribed by the administrator, 12 accompanied by the one hundred dollar permit fee. 13 4. The delivery of native distilled spirits pursuant to 14 this section shall be subject to the following requirements and 15 restrictions: 16 a. A native distilled spirits carrier permittee shall not 17 deliver native distilled spirits to any person under twenty-one 18 years of age, or to any person who either is or appears to be in 19 an intoxicated state or condition. 20 b. A native distilled spirits carrier permittee shall obtain 21 valid proof of identity and age prior to delivery, and shall 22 obtain the signature of an adult as a condition of delivery. 23 c. A native distilled spirits carrier permittee shall 24 maintain records of native distilled spirits shipped which 25 include the permit number and name of the native distilled 26 spirits manufacturer, quantity of native distilled spirits 27 shipped, recipient’s name and address, and an electronic or 28 paper form of signature from the recipient of the native 29 distilled spirits. Records shall be submitted to the division 30 on a monthly basis in a form and manner to be determined by the 31 division. 32 5. A violation of this section shall subject the permittee 33 to the general penalties provided in this chapter and shall 34 constitute grounds for imposition of a civil penalty or 35 -4- LSB 1243YH (6) 89 je/rn 4/ 6

H.F. 639 suspension or revocation of the permit pursuant to section 1 123.39. 2 Sec. 6. Section 123.46A, subsection 4, Code 2021, is amended 3 to read as follows: 4 4. Nothing in this section shall impact the direct shipment 5 of wine as regulated by section 123.187 or direct shipment of 6 native distilled spirits as regulated by section 123.89 . 7 EXPLANATION 8 The inclusion of this explanation does not constitute agreement with 9 the explanation’s substance by the members of the general assembly. 10 This bill authorizes a manufacturer of native distilled 11 spirits licensed or permitted pursuant to state laws regulating 12 alcoholic beverages to apply for a direct shipper permit. All 13 shipments of native distilled spirits shall be made through 14 the state’s wholesale distribution system. A direct shipper 15 permit is required in order to sell native distilled spirits at 16 retail for direct shipment to any person within the state or 17 another state. The annual permit fee is $25. A direct shipper 18 license allows a licensee to ship native distilled spirits to 19 a resident of this state who is at least 21 years of age, for 20 the resident’s personal use and consumption and not for resale. 21 The bill requires that native distilled spirits subject to 22 direct shipping be properly registered, manufactured on the 23 premises of the direct shipper permittee, and conspicuously 24 labeled as set out in the bill. 25 The bill establishes a native distilled spirits carrier 26 permit for persons to deliver native distilled spirits subject 27 to direct shipment within Iowa. The annual permit fee is $100. 28 The bill requires that a carrier permittee not deliver native 29 distilled spirits to any person under 21 years of age, or to 30 any person who either is or appears to be in an intoxicated 31 state or condition; obtain valid proof of identity and age 32 prior to delivery and obtain the signature of an adult as 33 a condition of delivery; and maintain shipping records as 34 provided in the bill. 35 -5- LSB 1243YH (6) 89 je/rn 5/ 6

H.F. 639 The bill modifies the definition of “native distilled 1 spirits” by striking references to fermenting and distilling 2 spirits and instead including manufacturing of spirits. Under 3 current law, “manufacture” means to distill, rectify, ferment, 4 brew, make, mix, concoct, or process any substance capable 5 of producing a beverage containing more than one-half of one 6 percent of alcohol by volume and includes blending, bottling, 7 or the preparation for sale. 8 Penalty provisions of Code chapter 123, including a civil 9 penalty of up to $1,000 or suspension or revocation of a 10 permit, are made applicable to the permits established by the 11 bill. 12 -6- LSB 1243YH (6) 89 je/rn 6/ 6