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House Study Bill 210 - IntroducedA Bill ForAn Act 1concerning alcoholic beverage control, relating to
2limitations on business interests of certain manufacturers,
3wholesalers, and retailers of alcoholic beverages.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 123.3, subsection 40, Code 2019, is
2amended to read as follows:
340. “Retail wine permit” means a class “B” wine permit,
4class “B” native wine permit, class “C” wine permit, or class
5“C” native wine permit issued under this chapter.
6 Sec. 2. Section 123.45, Code 2019, is amended by adding the
7following new subsection:
8 NEW SUBSECTION. 01. For purposes of this section:
9a. “Beer manufacturer or importer” means a holder of a
10license or permit to manufacture beer or import beer into the
11state, including an officer, director, agent, or managerial
12employee of the license or permit holder and an affiliate
13of the license or permit holder, regardless of whether the
14affiliation is corporate or by management, direction, or
15control.
16b. “Institutional investor” means a person who maintains
17a diversified portfolio of investments through a state or
18federally chartered bank, a mutual fund, a retirement plan
19or account created by an employer, the person, or another
20individual to provide retirement benefits or deferred
21compensation to the person, a private investment firm, or a
22holding company publicly traded on the New York stock exchange,
23the American stock exchange, or NASDAQ stock market and who has
24a majority of investments in businesses other than businesses
25that manufacture, bottle, wholesale, or sell at retail
26alcoholic beverages.
27 Sec. 3. Section 123.45, subsection 1, unnumbered paragraph
281, Code 2019, is amended to read as follows:
29A Subject to such exceptions as otherwise authorized
30under this chapter, a person engaged in the business of
31manufacturing, bottling, or wholesaling alcoholic beverages,
32wine, or beer excluding an institutional investor, or any
33jobber, representative, broker, employee, or agent of such a
34person, shall not do any of the following:
35 Sec. 4. Section 123.45, subsection 1, paragraphs c and d,
-1-1Code 2019, are amended to read as follows:
2c. Directly or indirectly be interested in the ownership,
3conduct, or operation of the business of another licensee or
4permittee authorized under this chapter to sell at retail,
5unless the licensee or permittee authorized under this
6chapter to sell at retail does not purchase or sell the
7alcoholic beverages of the person engaged in the business of
8manufacturing, bottling, or wholesaling alcoholic beverages.
9d. Hold a retail liquor control license or retail wine or
10beer permit, unless the licensee or permittee holding a retail
11liquor control license or retail wine or beer permit does not
12purchase or sell the alcoholic beverages of the person engaged
13in the business of manufacturing, bottling, or wholesaling
14alcoholic beverages.
15 Sec. 5. Section 123.45, Code 2019, is amended by adding the
16following new subsections:
17 NEW SUBSECTION. 1A. Notwithstanding any provision of law to
18the contrary, a beer manufacturer or importer shall not have
19any ownership, in whole or in part, directly or indirectly, in
20the license, business, assets, or corporate stock of a beer
21wholesaler and shall not sell beer at wholesale directly to a
22retail permittee. However, a beer manufacturer or importer
23that manufactures no more than ten thousand barrels of beer or
24its metric equivalent in a calendar year may own or have an
25interest in a beer wholesaler that sells the beer that the beer
26manufacturer or importer manufactures.
27 NEW SUBSECTION. 1B. Notwithstanding any provision of
28law to the contrary, a person employed by a person engaged
29in the business of manufacturing, bottling, or wholesaling
30alcoholic beverages may be employed by another person engaged
31in the business of manufacturing, bottling, or wholesaling
32alcoholic beverages or by a business authorized under this
33chapter to sell alcoholic beverages at retail if the person is
34not an officer, owner, director, or managerial employee of the
35person’s employer or employers.
-2-1 NEW SUBSECTION. 4. The exceptions established by this
2section to the general prohibition against tied interests
3shall be limited to their express terms so as not to undermine
4the general prohibition and shall therefore be construed
5accordingly.
6 Sec. 6. Section 123.173, subsection 1, Code 2019, is amended
7to read as follows:
81. Except as provided in section 123.187, permits
9exclusively for the sale or manufacture and sale of wine shall
10be divided into four five classes, and shall be known as class
11“A”, “B”, “B” native, “C”, or “C” native wine permits.
12 Sec. 7. Section 123.175, subsection 2, Code 2019, is amended
13by adding the following new paragraph:
14 NEW PARAGRAPH. h. For a class “C” wine permit, that the
15applicant is a person engaged in the business of manufacturing
16wine that is not native wine and the premises where the
17applicant intends to operate is located on the corporate campus
18of that person in this state.
19 Sec. 8. Section 123.177, subsection 1, Code 2019, is amended
20to read as follows:
211. A person holding a class “A” wine permit may manufacture
22and sell, or sell at wholesale, wine for consumption off the
23premises. Sales within the state may be made only to persons
24holding a class “A”, or “B”, or “C” wine permit and to persons
25holding a retail liquor control license. However, if the
26person holding the class “A” permit is a manufacturer of native
27wine, the person may sell only native wine to a person holding
28a retail wine permit or a retail liquor control license. A
29class “A” wine permittee having more than one place of business
30shall obtain a separate permit for each place of business where
31wine is to be manufactured, stored, warehoused, or sold.
32 Sec. 9. NEW SECTION. 123.178C Authority under class “C”
33wine permit.
341. A person holding a class “C” wine permit may sell wine
35manufactured by that person at retail for consumption on or off
-3-1the premises.
22. A person holding a class “C” wine permit shall purchase
3wine for consumption on the premises only from a person holding
4a class “A” wine permit.
5 Sec. 10. Section 123.179, Code 2019, is amended by adding
6the following new subsection:
7 NEW SUBSECTION. 4A. The annual permit fee for a class “C”
8wine permit is five hundred dollars.
9 Sec. 11. Section 123.185, Code 2019, is amended by adding
10the following new subsection:
11 NEW SUBSECTION. 3. Each class “C” wine permittee shall
12submit a report to the administrator each calendar quarter
13quantifying the volume of sales of wine during the previous
14quarter, the name of each independent distributor that
15distributed the wine to the point of sale during the quarter,
16the average price per unit that the wine was sold at during
17that quarter, and the average price per unit paid to the
18distributor for the wine purchased during the quarter.
19EXPLANATION
20The inclusion of this explanation does not constitute agreement with
21the explanation’s substance by the members of the general assembly.
22This bill concerns alcoholic beverage control relating
23to limitations on business interests of manufacturers,
24wholesalers, and retailers of alcoholic beverages.
25Code section 123.45, concerning limitations on business
26interests, is amended. The bill, for purposes of the Code
27section, defines “beer manufacturer or importer”, and
28“institutional investor”. “Beer manufacturer or importer” is
29defined to mean a holder of a license or permit to manufacture
30beer or import beer into the state, including an affiliate,
31officer, director, agent, or managerial employee of the
32license or permit holder. “Institutional investor” is defined,
33generally, to mean a person who maintains a diversified
34portfolio of investments and who has a majority of investments
35in businesses other than businesses that manufacture, bottle,
-4-1wholesale, or sell at retail alcoholic beverages.
2Code section 123.45(1), providing the general limitation on
3business interests, is amended to provide that a manufacturer,
4bottler, or wholesaler of alcoholic beverages is not an
5institutional investor and is not prohibited from being
6interested in the business of another retail licensee or
7permittee, or from holding a retail liquor control license or
8retail wine or beer permit, if the retail business, licensee,
9or permittee does not purchase or sell the alcoholic beverages
10of the person engaged in the business of manufacturing,
11bottling, or wholesaling alcoholic beverages.
12Code section 123.45, new subsection 1A, provides that a beer
13manufacturer or importer shall not have any ownership in a beer
14wholesaler and shall not sell beer at wholesale directly to
15a retail permittee. However, the bill provides that a beer
16manufacturer or importer that manufactures no more than 10,000
17barrels of beer in a calendar year may own or have an interest
18in a beer wholesaler that sells the beer the beer manufacturer
19or importer manufactures.
20Code section 123.45, new subsection 1B, provides that a
21person employed by a manufacturer, bottler, or wholesaler of
22alcoholic beverages may be employed by another manufacturer,
23bottler, or wholesaler, as well as by a business authorized to
24sell alcoholic beverages at retail, if the person is not an
25officer, owner, director, or managerial employee of any of the
26person’s employers.
27Code section 123.45 is further amended to provide that
28the exceptions established by this section to the general
29prohibition against tied interests shall be limited.
30Code section 123.175, concerning applications for a retail
31wine permit, is amended to provide that issuance of a class “C”
32wine permit, as established by the bill, shall be limited to a
33person engaged in the manufacturing of wine that is not native
34wine who intends to operate under the permit on the corporate
35campus of the person in this state.
-5- 1Code section 123.177 is amended to allow a person holding a
2class “A” wine permit to sell wine to a holder of the new class
3“C” wine permit established in the bill.
4New Code section 123.178C provides for the authority under
5a class “C” wine permit which is established by the bill. The
6bill allows a person holding a class “C” wine permit to sell
7wine manufactured by that person at retail for consumption on
8or off the premises and provides that the permittee purchase
9wine for consumption on the premises only from a person holding
10a class “A” wine permit.
11Code section 123.179, establishing wine permit fees, is
12amended to provide that the annual permit fee for the new class
13“C” wine permit is $500.
14Code section 123.185, concerning records of wine permittees,
15is amended to provide that a class “C” wine permittee submit
16a quarterly report to the administrator of the alcoholic
17beverages division regarding sales of wine by the permittee.
-6-ec/rn
2limitations on business interests of certain manufacturers,
3wholesalers, and retailers of alcoholic beverages.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 123.3, subsection 40, Code 2019, is
2amended to read as follows:
340. “Retail wine permit” means a class “B” wine permit,
4class “B” native wine permit, class “C” wine permit, or class
5“C” native wine permit issued under this chapter.
6 Sec. 2. Section 123.45, Code 2019, is amended by adding the
7following new subsection:
8 NEW SUBSECTION. 01. For purposes of this section:
9a. “Beer manufacturer or importer” means a holder of a
10license or permit to manufacture beer or import beer into the
11state, including an officer, director, agent, or managerial
12employee of the license or permit holder and an affiliate
13of the license or permit holder, regardless of whether the
14affiliation is corporate or by management, direction, or
15control.
16b. “Institutional investor” means a person who maintains
17a diversified portfolio of investments through a state or
18federally chartered bank, a mutual fund, a retirement plan
19or account created by an employer, the person, or another
20individual to provide retirement benefits or deferred
21compensation to the person, a private investment firm, or a
22holding company publicly traded on the New York stock exchange,
23the American stock exchange, or NASDAQ stock market and who has
24a majority of investments in businesses other than businesses
25that manufacture, bottle, wholesale, or sell at retail
26alcoholic beverages.
27 Sec. 3. Section 123.45, subsection 1, unnumbered paragraph
281, Code 2019, is amended to read as follows:
29A Subject to such exceptions as otherwise authorized
30under this chapter, a person engaged in the business of
31manufacturing, bottling, or wholesaling alcoholic beverages,
32wine, or beer excluding an institutional investor, or any
33jobber, representative, broker, employee, or agent of such a
34person, shall not do any of the following:
35 Sec. 4. Section 123.45, subsection 1, paragraphs c and d,
-1-1Code 2019, are amended to read as follows:
2c. Directly or indirectly be interested in the ownership,
3conduct, or operation of the business of another licensee or
4permittee authorized under this chapter to sell at retail,
5unless the licensee or permittee authorized under this
6chapter to sell at retail does not purchase or sell the
7alcoholic beverages of the person engaged in the business of
8manufacturing, bottling, or wholesaling alcoholic beverages.
9d. Hold a retail liquor control license or retail wine or
10beer permit, unless the licensee or permittee holding a retail
11liquor control license or retail wine or beer permit does not
12purchase or sell the alcoholic beverages of the person engaged
13in the business of manufacturing, bottling, or wholesaling
14alcoholic beverages.
15 Sec. 5. Section 123.45, Code 2019, is amended by adding the
16following new subsections:
17 NEW SUBSECTION. 1A. Notwithstanding any provision of law to
18the contrary, a beer manufacturer or importer shall not have
19any ownership, in whole or in part, directly or indirectly, in
20the license, business, assets, or corporate stock of a beer
21wholesaler and shall not sell beer at wholesale directly to a
22retail permittee. However, a beer manufacturer or importer
23that manufactures no more than ten thousand barrels of beer or
24its metric equivalent in a calendar year may own or have an
25interest in a beer wholesaler that sells the beer that the beer
26manufacturer or importer manufactures.
27 NEW SUBSECTION. 1B. Notwithstanding any provision of
28law to the contrary, a person employed by a person engaged
29in the business of manufacturing, bottling, or wholesaling
30alcoholic beverages may be employed by another person engaged
31in the business of manufacturing, bottling, or wholesaling
32alcoholic beverages or by a business authorized under this
33chapter to sell alcoholic beverages at retail if the person is
34not an officer, owner, director, or managerial employee of the
35person’s employer or employers.
-2-1 NEW SUBSECTION. 4. The exceptions established by this
2section to the general prohibition against tied interests
3shall be limited to their express terms so as not to undermine
4the general prohibition and shall therefore be construed
5accordingly.
6 Sec. 6. Section 123.173, subsection 1, Code 2019, is amended
7to read as follows:
81. Except as provided in section 123.187, permits
9exclusively for the sale or manufacture and sale of wine shall
10be divided into four five classes, and shall be known as class
11“A”, “B”, “B” native, “C”, or “C” native wine permits.
12 Sec. 7. Section 123.175, subsection 2, Code 2019, is amended
13by adding the following new paragraph:
14 NEW PARAGRAPH. h. For a class “C” wine permit, that the
15applicant is a person engaged in the business of manufacturing
16wine that is not native wine and the premises where the
17applicant intends to operate is located on the corporate campus
18of that person in this state.
19 Sec. 8. Section 123.177, subsection 1, Code 2019, is amended
20to read as follows:
211. A person holding a class “A” wine permit may manufacture
22and sell, or sell at wholesale, wine for consumption off the
23premises. Sales within the state may be made only to persons
24holding a class “A”, or “B”, or “C” wine permit and to persons
25holding a retail liquor control license. However, if the
26person holding the class “A” permit is a manufacturer of native
27wine, the person may sell only native wine to a person holding
28a retail wine permit or a retail liquor control license. A
29class “A” wine permittee having more than one place of business
30shall obtain a separate permit for each place of business where
31wine is to be manufactured, stored, warehoused, or sold.
32 Sec. 9. NEW SECTION. 123.178C Authority under class “C”
33wine permit.
341. A person holding a class “C” wine permit may sell wine
35manufactured by that person at retail for consumption on or off
-3-1the premises.
22. A person holding a class “C” wine permit shall purchase
3wine for consumption on the premises only from a person holding
4a class “A” wine permit.
5 Sec. 10. Section 123.179, Code 2019, is amended by adding
6the following new subsection:
7 NEW SUBSECTION. 4A. The annual permit fee for a class “C”
8wine permit is five hundred dollars.
9 Sec. 11. Section 123.185, Code 2019, is amended by adding
10the following new subsection:
11 NEW SUBSECTION. 3. Each class “C” wine permittee shall
12submit a report to the administrator each calendar quarter
13quantifying the volume of sales of wine during the previous
14quarter, the name of each independent distributor that
15distributed the wine to the point of sale during the quarter,
16the average price per unit that the wine was sold at during
17that quarter, and the average price per unit paid to the
18distributor for the wine purchased during the quarter.
19EXPLANATION
20The inclusion of this explanation does not constitute agreement with
21the explanation’s substance by the members of the general assembly.
22This bill concerns alcoholic beverage control relating
23to limitations on business interests of manufacturers,
24wholesalers, and retailers of alcoholic beverages.
25Code section 123.45, concerning limitations on business
26interests, is amended. The bill, for purposes of the Code
27section, defines “beer manufacturer or importer”, and
28“institutional investor”. “Beer manufacturer or importer” is
29defined to mean a holder of a license or permit to manufacture
30beer or import beer into the state, including an affiliate,
31officer, director, agent, or managerial employee of the
32license or permit holder. “Institutional investor” is defined,
33generally, to mean a person who maintains a diversified
34portfolio of investments and who has a majority of investments
35in businesses other than businesses that manufacture, bottle,
-4-1wholesale, or sell at retail alcoholic beverages.
2Code section 123.45(1), providing the general limitation on
3business interests, is amended to provide that a manufacturer,
4bottler, or wholesaler of alcoholic beverages is not an
5institutional investor and is not prohibited from being
6interested in the business of another retail licensee or
7permittee, or from holding a retail liquor control license or
8retail wine or beer permit, if the retail business, licensee,
9or permittee does not purchase or sell the alcoholic beverages
10of the person engaged in the business of manufacturing,
11bottling, or wholesaling alcoholic beverages.
12Code section 123.45, new subsection 1A, provides that a beer
13manufacturer or importer shall not have any ownership in a beer
14wholesaler and shall not sell beer at wholesale directly to
15a retail permittee. However, the bill provides that a beer
16manufacturer or importer that manufactures no more than 10,000
17barrels of beer in a calendar year may own or have an interest
18in a beer wholesaler that sells the beer the beer manufacturer
19or importer manufactures.
20Code section 123.45, new subsection 1B, provides that a
21person employed by a manufacturer, bottler, or wholesaler of
22alcoholic beverages may be employed by another manufacturer,
23bottler, or wholesaler, as well as by a business authorized to
24sell alcoholic beverages at retail, if the person is not an
25officer, owner, director, or managerial employee of any of the
26person’s employers.
27Code section 123.45 is further amended to provide that
28the exceptions established by this section to the general
29prohibition against tied interests shall be limited.
30Code section 123.175, concerning applications for a retail
31wine permit, is amended to provide that issuance of a class “C”
32wine permit, as established by the bill, shall be limited to a
33person engaged in the manufacturing of wine that is not native
34wine who intends to operate under the permit on the corporate
35campus of the person in this state.
-5- 1Code section 123.177 is amended to allow a person holding a
2class “A” wine permit to sell wine to a holder of the new class
3“C” wine permit established in the bill.
4New Code section 123.178C provides for the authority under
5a class “C” wine permit which is established by the bill. The
6bill allows a person holding a class “C” wine permit to sell
7wine manufactured by that person at retail for consumption on
8or off the premises and provides that the permittee purchase
9wine for consumption on the premises only from a person holding
10a class “A” wine permit.
11Code section 123.179, establishing wine permit fees, is
12amended to provide that the annual permit fee for the new class
13“C” wine permit is $500.
14Code section 123.185, concerning records of wine permittees,
15is amended to provide that a class “C” wine permittee submit
16a quarterly report to the administrator of the alcoholic
17beverages division regarding sales of wine by the permittee.
-6-ec/rn