HF 2780 (LSB 5476HZ (1) 91)

HOUSE FILE 2780

BY  COMMITTEE ON WAYS AND MEANS

(SUCCESSOR TO HF 2355)
(SUCCESSOR TO HSB 581)

(COMPANION TO SF 2469 BY COMMITTEE ON WAYS AND MEANS)

A BILL FOR

An Act relating to alcoholic beverage control, including certificates of compliance and the issuance of class “A” wine permits to nonnative wine manufacturers, and providing fees.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 123.3, subsection 40, paragraph c, Code 2026, is amended to read as follows:
   c.  Notwithstanding paragraph “e”, the applicant is a citizen of the United States and a resident of this state, or licensed to do business in this state in the case of a corporation. Notwithstanding paragraph “e”, in the case of a partnership, only one general partner need be a resident of this state.  The residency requirements of this paragraph do not apply to an applicant for a class “A” wine permit issued to a nonnative wine manufacturer pursuant to section 123.176A.
    Sec. 2.  Section 123.23, subsection 1, Code 2026, is amended to read as follows:
   1.  Any manufacturer, distiller, or importer of alcoholic liquors shipping, selling, or having alcoholic liquors brought into this state for resale by the state department shall, as a condition precedent to the privilege of so trafficking in alcoholic liquors in this state, annually make application for and hold a distiller’s certificate of compliance which shall be issued by the director for that purpose. No A brand of alcoholic liquor brought into this state shall not be sold by the department in this state unless the manufacturer, distiller, or importer, and all other persons participating in the distribution of that brand in this state have has obtained a certificate. The certificate of compliance shall expire at the end of one year from the date of issuance and shall be renewed for a like period upon application to the director unless otherwise suspended or revoked for cause. Each completed application for a certificate of compliance or renewal shall be submitted electronically, or in a manner prescribed by the director, and shall be accompanied by a fee of two hundred dollars payable to the department. However, this subsection need not apply to a manufacturer, distiller, or importer who ships or sells in this state no more than eleven gallons or its case equivalent during any fiscal year as a result of “special orders” which might be placed, as defined and allowed by departmental rules adopted under this chapter.
    Sec. 3.  Section 123.23, subsection 5, Code 2026, is amended by striking the subsection.
    Sec. 4.  Section 123.135, subsections 1, 2, and 3, Code 2026, are amended to read as follows:
   1.  A manufacturer, brewer, bottler, importer, or vendor of beer, or any agent thereof, desiring to ship or sell beer, or have beer brought into this state for resale by a class “A” beer permittee, shall first make application for and be issued a brewer’s certificate of compliance by the director for that purpose. The certificate of compliance expires at the end of one year from the date of issuance and shall be renewed for a like period upon application to the director unless otherwise revoked for cause. Each completed application for a certificate of compliance or renewal of a certificate shall be submitted electronically, or in a manner prescribed by the director, and shall be accompanied by a fee of two hundred dollars payable to the department. Each holder of a certificate of compliance shall furnish the information in a manner the director requires.  The holder of a brewer’s certificate of compliance may also hold a class “A” beer permit.
   2.  At the time of applying for a certificate of compliance, each applicant shall file with the department electronically, or in a manner prescribed by the director, a list of all class “A” beer permittees with whom it intends to do business and shall designate a designation of the geographic area in which its products are to be distributed by such permittee. The listing of class “A” beer permittees and geographic area as filed with the department shall be amended by the holder of a certificate of compliance as necessary to keep the listing current with the department.
   3.  All class “A” beer permit holders shall sell only those brands of beer brought into the state which are manufactured, brewed, bottled, shipped, or imported by a person holding a current certificate of compliance. Any employee or agent working for or representing the holder of a certificate of compliance within this state shall submit electronically, or in a manner prescribed by the director, the employee’s or agent’s name and address with the department.
    Sec. 5.  Section 123.173, subsection 2, Code 2026, is amended to read as follows:
   2.  A class “A” wine permit allows the holder to manufacture and sell, or sell at wholesale, in this state, wine. The holder of a class “A” wine permit may manufacture in this state wine having an alcoholic content greater than seventeen percent by weight or twenty-one and twenty-five hundredths percent of alcohol by volume for shipment outside this state. All Except as provided in section 123.176A, all class “A” premises shall be located within the state. 
    Sec. 6.  Section 123.175, subsection 2, paragraph c, Code 2026, is amended to read as follows:
   c.  That the applicant is a citizen resident of the state of Iowa or, if a corporation, that the applicant is authorized to do business in the state. This paragraph does not apply if the applicant is the state of Iowa or a state agency as defined in section 669.2.  The residency requirement of this paragraph does not apply to a nonnative wine manufacturer under section 123.176A.
    Sec. 7.  NEW SECTION.  123.176A  Nonnative wine manufacturers.
   1.  As used in this section, “nonnative wine manufacturer” means a person who processes the fruit, vegetables, dandelions, clover, honey, or any combination of these ingredients, by fermentation into wines on a premises located outside of this state.
   2.  A nonnative wine manufacturer licensed or permitted pursuant to laws regulating alcoholic beverages in another state may apply for and be issued a class “A” wine permit, as provided in section 123.175, without being a resident of this state.
   3.  A nonnative wine manufacturer holding a class “A” wine permit may sell, or sell at wholesale, in this state, wine that the nonnative wine manufacturer has itself manufactured by fermentation on its out-of-state licensed or permitted premises, provided the wine is properly registered with the alcohol and tobacco tax and trade bureau of the United States department of the treasury. Pursuant to section 123.177, such sales shall only be made to persons holding a class “A” wine permit or to persons holding a retail alcohol license.
   4.  A nonnative wine manufacturer shall not sell in this state wine fermented by another manufacturer.
   5.  A nonnative wine manufacturer may ship wine in closed containers to individual purchasers within this state by obtaining a wine direct shipper permit pursuant to section 123.187.
   6.  A nonnative wine manufacturer that holds a class “A” wine permit shall be deemed to have consented to the jurisdiction of the department or any other agency or court in this state concerning enforcement of this chapter and any related laws, rules, or regulations. A permit holder shall allow the department to perform an audit of manufacturing and sales records upon request.
   7.  A violation of this section shall subject the permit holder to the general penalties provided in this chapter and shall constitute grounds for imposition of a civil penalty or suspension or revocation of the permit pursuant to section 123.39.
    Sec. 8.  Section 123.177, subsection 2, Code 2026, is amended to read as follows:
   2.  A class “A” wine permit holder may purchase and resell only those brands of wine brought into the state which are manufactured, fermented, bottled, shipped, or imported by a person holding a certificate of compliance issued pursuant to section 123.180.
    Sec. 9.  Section 123.179, Code 2026, is amended to read as follows:
   123.179  Wine permit and license fees.
   1.  The annual permit fee for a class “A” wine permit that is not issued to a native wine manufacturer is seven hundred fifty dollars, except the annual permit fee for a class “A” wine permit issued to a native wine manufacturer as provided in section 123.176 or a nonnative wine manufacturer as provided in section 123.176A is one hundred dollars.
   2.  The annual permit fee for a class “A” wine permit issued to a native wine manufacturer is one hundred dollars.
   3.  2.  The fee for a charity beer, spirits, and wine special event license is one hundred dollars.
   4.  3.  The fee for a wine auction permit is one hundred dollars.
    Sec. 10.  Section 123.180, subsections 1, 2, and 3, Code 2026, are amended to read as follows:
   1.  A manufacturer, vintner, bottler, importer, or vendor of wine, or an agent thereof, desiring to ship, sell, or have wine brought into this state for sale at wholesale resale by a class “A” wine permittee shall first make application for and shall be issued a vintner’s certificate of compliance by the director for that purpose. The vintner’s certificate of compliance shall expire at the end of one year from the date of issuance and shall be renewed for a like period upon application to the director unless otherwise revoked for cause. Each completed application for a vintner’s certificate of compliance or renewal of a certificate shall be submitted electronically, or in a manner prescribed by the director, and shall be accompanied by a fee of two hundred dollars payable to the department. Each holder of a vintner’s certificate of compliance shall furnish the information required by the director in the form the director requires. A vintner or wine bottler whose plant is located in Iowa and who otherwise holds a class “A” wine permit to sell wine at wholesale is exempt from the fee, but not the other terms and conditions. The holder of a vintner’s certificate of compliance may also hold a class “A” wine permit.
   2.  At the time of applying for a vintner’s certificate of compliance, each applicant shall file with the department electronically, or in a manner prescribed by the director, a list of all class “A” wine permittees with whom it intends to do business. The listing of class “A” wine permittees as filed with the department shall be amended by the holder of the certificate of compliance as necessary to keep the listing current with the department.
   3.  a.  Except as provided in paragraph “b”, all class “A” wine permit holders shall sell only those brands of wine brought into the state which are manufactured, bottled, fermented, shipped, or imported by a person holding a current vintner’s certificate of compliance. An employee or agent working for or representing the holder of a vintner’s certificate of compliance within this state shall register the employee’s or agent’s name and address with the department electronically, or register in a manner prescribed by the director. These names and addresses shall be filed with the department’s copy of the certificate of compliance issued except that this provision does not require the listing of those persons who are employed on the premises of a bottling plant, or winery where wine is manufactured, fermented, or bottled in Iowa or the listing of those persons who are thereafter engaged in the transporting of the wine.
   b.  A class “A” wine permit holder may sell brands of wine brought into the state which are not manufactured, bottled, fermented, shipped, or imported by a person holding a current vintner’s certificate of compliance if the brands of wine were purchased from a private sale pursuant to section 123.171, subsection 4, or if authorized by the laws of another state.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to alcoholic beverage control by making changes to distiller’s, vintner’s, and brewer’s certificates of compliance (certificates) and by allowing for the issuance of class “A” wine permits to nonnative wine manufacturers.
   The bill strikes a provision requiring persons participating in the distribution of an alcoholic liquor brand, other than manufacturers, distillers, and importers, to obtain a distiller’s certificate prior to the resale of that brand in this state. The bill also strikes a provision specifying the certificate is not required to be accompanied by a list of persons employed on the premises where alcoholic liquors are manufactured, processed, bottled, or packaged or who are employed in transporting such liquors.
   Currently, an application for a distiller’s, brewer’s, or vintner’s certificate requires the application to be submitted to the department of revenue (department) electronically, or in a manner prescribed by the director of revenue (director). For a brewer’s certificate, the bill specifies that the required list of all class “A” beer permittees with whom the applicant intends to do business and the designated distribution area must also be submitted to the department electronically or in a manner prescribed by the director. The bill also specifies the holder of a brewer’s certificate of compliance may also hold a class “A” beer permit.
   The bill strikes a provision exempting a vintner or wine bottler with a plant in Iowa and holding a class “A” wine permit from paying the $200 fee accompanying an application for a vintner’s certificate. The bill requires (1) each applicant for a vintner’s certificate to file with the department electronically, or in a manner prescribed by the director, a list of all class “A” wine permittees the applicant intends to do business with in the state, and (2) each employee or agent working for or representing the certificate holder to similarly submit electronically with the department the person’s name and address. The bill also strikes a provision specifying a certificate is not required to be accompanied by a list of persons employed on the premises of a bottling plant or winery or persons who are employed in transporting the wine.
   New Code section 123.176A allows a nonnative wine manufacturer (manufacturer) to apply for a class “A” wine permit and to sell or sell at wholesale wine the manufacturer has manufactured on its permitted or licensed premises that are located in another state, provided the wine is properly registered with the federal alcohol and tobacco tax and trade bureau. Class “A” wine permits are governed by Code sections 123.173, 123.175, and 123.177, which generally allow a resident holder of the permit to manufacture and sell or sell at wholesale wine for consumption off premises in this state.
   A sale by the manufacturer within this state is restricted to sales made to a person holding a class “A” wine permit or to a person holding a retail alcohol license, pursuant to current law. The bill prohibits a manufacturer from selling in this state wine fermented by any other manufacturer. The bill also specifies the manufacturer may ship wine in closed containers to purchasers in this state by obtaining a wine direct shipper permit.
   By holding a class “A” wine permit, the manufacturer is deemed to have consented to the jurisdiction of the department and the courts for enforcement, and must allow audits of manufacturing and sales records upon request. Violations of the bill subject the manufacturer to general penalties provided in Code chapter 123 and constitute grounds for imposition of a civil penalty or suspension or revocation of the permit as provided in Code section 123.39.
   The bill establishes the annual fee for a class “A” wine permit issued to a manufacturer at $100, which is equal to the annual class “A” wine permit fee issued to a native manufacturer.