Bill Text: AZ HB2661 | 2014 | Fifty-first Legislature 2nd Regular | Engrossed


Bill Title: Domestic farm wineries; fruit pomace

Spectrum: Partisan Bill (Republican 1-0)

Status: (Vetoed) 2014-04-30 - Governor Vetoed [HB2661 Detail]

Download: Arizona-2014-HB2661-Engrossed.html

 

 

 

Conference Engrossed

 

 

 

State of Arizona

House of Representatives

Fifty-first Legislature

Second Regular Session

2014

 

 

HOUSE BILL 2661

 

 

 

AN ACT

 

amending section 4‑205.04, Arizona Revised Statutes; amending title 4, chapter 2, article 1, Arizona Revised Statutes, by adding section 4-205.10; relating to liquor licenses; providing for conditional enactment.

 

 

(TEXT OF BILL BEGINS ON NEXT PAGE)

 


Be it enacted by the Legislature of the State of Arizona:

Section 1.  Section 4-205.04, Arizona Revised Statutes, is amended to read:

START_STATUTE4-205.04.  Farm winery license; issuance; regulatory provisions; retail site; fee

A.  The director may issue a domestic farm winery license to any person who meets the requirements of subsection C of this section.  Each location that engages in producing and bottling or manufacturing these products must obtain a separate domestic farm winery license.  The licensee may not transfer the domestic farm winery license from person to person or from location to location.

B.  An applicant for a domestic farm winery license, at the time of filing the application for the license, shall accompany the application with the license fee.  Persons holding a domestic farm winery license shall report annually at the end of each fiscal calendar year, at such time and in such manner as the director may prescribe, the amount of wine produced or manufactured by them during the fiscal calendar year.  In addition to any provision of this title, if the total amount of wine produced or manufactured during the year exceeds the amount permitted annually by the license, the licensee shall apply for and receive a producer's license only upon surrender of the farm winery license or licenses.

C.  A person may be licensed as a domestic farm winery to sell wine produced or manufactured if in a calendar year it produces at least two hundred gallons and not more than forty thousand gallons of wine and if the winery either holds a winery permit issued by the United States alcohol and tobacco tax and trade bureau or has a contract pursuant to subsection E of this section for the production or manufacturing of wine from grapes or other fruit grown on at least five producing acres of land owned or controlled by the applicant and the land has been devoted to fruit growing for at least three consecutive calendar years.  A licensed farm winery may make sales and deliveries of wine only as specifically provided in this section and as follows:

1.  A licensed domestic farm winery may make sales and deliveries of wine to wholesalers licensed to sell wine under this title.

2.  A licensed domestic farm winery may serve wine produced or manufactured on the premises for the purpose of sampling the wine.  The wine may include wine produced pursuant to subsections D and E of this section.

3.  A representative of the licensed domestic farm winery may consume small amounts of the products of the licensed domestic farm winery on the premises for the purpose of sampling the wine.  The wine may include wine produced pursuant to subsections D and E of this section.

4.  A licensed domestic farm winery may sell to a consumer physically present on the premises wine produced or manufactured on the premises in the original container for consumption on or off the premises.  The wine may include wine produced pursuant to subsections D and E of this section.

5.  A licensed domestic farm winery may purchase and sell wine produced by another licensed domestic farm winery for consumption on or off the premises only if the retail sale is to a consumer physically present on the premises of the domestic farm winery, except that the sales of wine produced by another winery may not exceed twenty per cent of the farm winery's sales by volume.  The percentage limitation shall not apply to wine produced pursuant to subsections D and E of this section.

6.  If the licensed domestic farm winery is not otherwise engaged in the business of a distiller, vintner, brewer, rectifier, blender or other producer of spirituous liquor in any jurisdiction, the licensed domestic farm winery may hold licenses prescribed in section 4-209, subsection B, paragraphs 7, 10 and paragraph 12 on the licensed domestic farm winery premises or other retail premises.  Except as provided in paragraph 5 of this subsection, the licensed domestic farm winery shall purchase all other spirituous liquor for sale at the other on-sale retail premises from wholesalers who that are licensed in this state, except that a licensed domestic farm winery may:

(a)  Purchase wine from other domestic farm wineries pursuant to paragraph 7 of this subsection.

(b)  Make deliveries of the wine that the domestic farm winery produces to the domestic farm winery's own commonly controlled retail licensed premises.

7.  A licensed domestic farm winery that produces not more than twenty thousand gallons of wine in a calendar year may make sales and deliveries of the wine that the licensed domestic farm winery produces to on-sale and off‑sale retailers.

8.  Notwithstanding section 4-244, paragraphs 3 and 7, an on-sale or off-sale retailer may purchase and accept delivery of wine from a licensed domestic farm winery pursuant to paragraph 7 of this subsection.

9.  A licensed domestic farm winery that produces not more than twenty thousand gallons of wine in a calendar year may make sales and deliveries of wine that the licensed domestic farm winery produces to consumers off of the licensed premises and that is ordered by telephone, mail, fax or catalogue, through the internet or by other means if all of the following apply:

(a)  The purchaser of the wine provided the licensed domestic farm winery with verification of the purchaser's legal age to purchase alcohol.

(b)  The shipping container in which the wine is shipped is marked to require the signature on delivery of an adult who is of legal age to purchase alcohol and delivery confirmation.

(c)  The wine is for personal use only and not for resale.

(d)  The wine is delivered by the licensed farm winery or shipped by the licensed farm winery by a common carrier to a residential or business address other than a premises licensed pursuant to this title.

(e)  The purchaser could have carried the wine lawfully into or within this state.

(f)  The delivery is made by a person who is at least twenty-one years of age.

(g)  The domestic farm winery shall collect payment for the price of the spirituous liquor no later than at the time of delivery.

10.  A licensed domestic farm winery may make sales and deliveries as expressly permitted by sections 4-203.03, 4-203.04 and 4-244.04.

D.  On application by one or more persons, the director may approve applications for grouping two or more farm winery licenses at one location under a plan of alternating proprietorships if a licensed winery has received approval of the alternating proprietorship by the United States alcohol and tobacco tax and trade bureau and the participating wineries operate under the regulations and guidelines that are issued by the United States alcohol and tobacco tax and trade bureau.  Each participating winery shall be responsible for filing all reports that relate to its wine production or manufacturing with the United States alcohol and tobacco tax and trade bureau and the department.

E.  A person otherwise qualified to receive a farm winery license may enter into a custom crush arrangement where a licensed winery produces or manufactures wine from grapes or other fruit supplied by the person.  The winery receiving the fruit shall be licensed by the United States alcohol and tobacco tax and trade bureau and the department and shall be responsible for filing all reports that relate to its wine production or manufacturing with the United States alcohol and tobacco tax and trade bureau and the department.  Each person supplying the grapes or other fruit shall first apply for and receive a farm winery license and shall report all volumes of wine from its custom crush arrangements to the department, which shall not be allocated to the gallonage of the receiving winery.

F.  On application by a farm winery licensee, the director may authorize a farm winery licensee to operate up to two remote tasting and retail premises if:

1.  The wine sold at the premises is limited to wine produced or manufactured by the licensed farm winery and wines produced or manufactured by other licensed farm wineries, including wines produced or manufactured pursuant to subsections D and E of this section.  The farm winery may sell wine to a consumer physically present on the premises for consumption on or off the premises.  Sales of wines not produced or manufactured by the farm winery shall be limited to no more than twenty per cent of the total sales by volume at that location.  The percentage limitation shall not apply to wine produced pursuant to subsections D and E of this section.

2.  The farm winery licensee:

(a)  Remains responsible for the premises.

(b)  Obtains approval for the premises from the local governing body before submitting an application to the department.  A copy of an order from the local governing body recommending approval of the premises must be filed with the department as part of the application.

(c)  Does not sublease the premises.

(d)  Has an agent who is a natural person who meets the qualifications of licensure in this state.

(e)  Meets the qualifications for a license pursuant to section 4‑203, subsection A.

G.  A farm winery licensee may hold a craft distillery license issued pursuant to section 4-205.10.  The farm wine and craft distillery licensee may only produce distilled spirits up to a gallonage of one thousand gallons in a calendar year from fruit processed at the winery for the primary purpose of making wine.  The farm wine and craft distillery licensee is subject to all other requirements of this section and section 4-205.10.  The farm winery may provide sampling and sales of the distilled spirits pursuant to section 4-205.10, subsection C, paragraphs 2 and 3 on the same premises as the wine sampling and retail sales.

D.  H.  The domestic farm winery is liable for any violation committed in connection with any sale or delivery of the wine.  The rules adopted by the director pursuant to section 4-203, subsection J shall apply to the delivery of wine under subsection C, paragraph 9 of this section.  An act or omission of any person who makes a sale or delivery of wine for a licensee under subsection C, paragraph 9 of this section is deemed to be an act or omission of the licensee for the purposes of section 4-210, subsection A, paragraph 9.

E.  I.  A domestic farm winery that sells or delivers wine pursuant to this section shall:

1.  Pay to the department of revenue all luxury taxes imposed pursuant to title 42, chapter 3 and all transaction privilege or use taxes imposed pursuant to title 42, chapter 5.

2.  File all returns or reports required by law.

F.  J.  A delivery of wine by a domestic farm winery to a purchaser in this state is a transaction deemed to have occurred in this state.

G.  K.  The director shall adopt rules in order to administer this section.

L.  The director may charge an additional farm winery license fee adopted pursuant to section 4-209 for the issuance of licenses, authorizations or approvals pursuant to subsections D, E and F of this section.END_STATUTE

Sec. 2.  Title 4, chapter 2, article 1, Arizona Revised Statutes, is amended by adding section 4-205.10, to read:

START_STATUTE4-205.10.  Craft distiller license; issuance; regulatory provisions; fee

A.  The director may issue a craft distiller license to any person that meets the requirements of subsection C of this section.  Each location that engages in producing and bottling these products must obtain a separate craft distiller license.  The licensee may not transfer the craft distiller license from person to person or from location to location and may not also hold a producer's license.  The licensee and all commonly controlled craft distillery licensees may not manufacture or produce more than twenty thousand gallons of distilled spirits in a calendar year.  For the purposes of this section, "annual gallonage" shall be the total proof gallons of finished distilled product available for wholesale or retail sale as defined by 26 United States Code section 5002 and rules adopted pursuant to this section or its successor. 

B.  Persons holding a craft distiller license shall report annually at the end of each calendar year, at such time and in such manner as the director may prescribe, the amount of distilled spirits that is produced or manufactured by that licensee during the calendar year.  In addition to any other provision of this title, if the total amount of distilled spirits that is produced or manufactured during the year exceeds the amount that is permitted annually by the license, the licensee shall apply for and, upon qualification, receive a producer's license only on the surrender of the craft distiller license and shall have no continuing rights as a craft distillery licensee under this section.

C.  A person may be licensed as a craft distiller to sell distilled spirits that are produced or manufactured by the person if in a calendar year the person produces or manufactures not more than twenty thousand gallons of distilled spirits and may make sales and deliveries of distilled spirits only as specified in this section and subject to the following criteria:

1.  A licensed craft distiller may make sales and deliveries of distilled spirits to wholesalers that are licensed to sell distilled spirits under this title.

2.  A licensed craft distiller may serve distilled spirits that are produced or manufactured on the premises for the purpose of consumption on the premises and may charge for samples on the premises of the craft distiller.

3.  A licensed craft distiller may sell distilled spirits that are produced or manufactured on the premises in the original container for consumption off the premises to a consumer who is physically present on the premises.

4.  The licensed craft distiller may hold one license prescribed in section 4-209, subsection B, paragraph 6 or 12 on or adjacent to the licensed craft distiller premises.  The licensed craft distiller shall purchase all other spirituous liquor for sale at the on-sale retail premises from wholesalers that are licensed in this state, except that a licensed craft distiller may:

(a)  Purchase distilled spirits from other craft distillers that are licensed in this state.  Sales of craft distillery products not produced or manufactured by the craft distiller shall be limited to no more than twenty per cent of the total sales by volume.

(b)  Make deliveries of the distilled spirits that the craft distiller manufactures or produces to any commonly controlled retail licensed premises authorized pursuant to paragraph 4 of this subsection.  The amount of these deliveries must be included in the limitation provided under paragraph 5 of this subsection.

5.  A licensed craft distiller that produces not more than one thousand one hundred eighty nine gallons of distilled spirits in a calendar year may make sales and deliveries of distilled spirits that the licensed craft distiller produces to on-sale and off-sale retailers.

6.  Notwithstanding section 4-244, paragraphs 3 and 7, an on-sale or off-sale retailer may purchase and accept delivery of distilled spirits from a licensed craft distiller pursuant to paragraph 5 of this subsection.

7.  A licensed craft distiller may make sales and deliveries of distilled spirits that the licensed craft distiller manufactures or produces to consumers off of the licensed premises if the sale or delivery is ordered by telephone, mail, fax, catalogue, the internet or by other means if all of the following conditions exist:

(a)  The purchaser of the distilled spirits provided the licensed craft distiller with verification of the purchaser's legal age to purchase alcohol and a copy of same is maintained in the records of the craft distiller.

(b)  The shipping container in which the distilled spirits is shipped is marked to require the signature on delivery of an adult who is of legal age to purchase alcohol and delivery confirmation.

(c)  The distilled spirits are for personal use only and not for resale.

(d)  The distilled spirits are shipped to a residential or business address other than a premises licensed pursuant to this title.

(e)  The purchaser could have carried the distilled spirits lawfully into or within this state.

(f)  A person who is at least twenty-one years of age makes the delivery.

(g)  The craft distiller shall collect payment for the price of the spirituous liquor no later than at the time of delivery.

(h)  Sales do not exceed the limits provided under paragraph 5 of this subsection.

D.  On application by a craft distillery licensee, the director may authorize a craft distillery licensee to operate one other remote tasting and retail premises if:

1.  The distilled spirits sold at the premises is limited to distilled spirits produced or manufactured by the licensed craft distillery and distilled spirits produced or manufactured by another licensed craft distillery.  The craft distillery may sell to a consumer physically present on the premises distilled spirits produced by the craft distillery or by other licensed craft distilleries in the original container for consumption on or off the premises.  The sales of the distilled spirits produced or manufactured by other craft distilleries shall not exceed twenty per cent of the craft distillery's total sales by volume.

2.  The craft distillery licensee:

(a)  Remains responsible for the premises.

(b)  Obtains approval for the premises from the local governing body before submitting an application to the department.  A copy of an order from the local governing body recommending approval of the premises must be filed with the department as part of the application.

(c)  Does not sublease the premises.

(d)  Has an agent who shall be a natural person who meets the qualifications of licensure in this state.

(e)  Meets the qualifications for a license pursuant to section 4‑203, subsection A.

E.  The craft distiller is liable for any violation that is committed in connection with any sale or delivery of the distilled spirits.  The rules adopted by the director pursuant to section 4-203, subsection J apply to the delivery of distilled spirits under subsection C of this section.  An act or omission of any person who makes a sale or delivery of distilled spirits for a licensee under subsection C of this section is deemed to be an act or omission of the licensee for the purposes of section 4-210, subsection A, paragraph 9.

F.  A craft distiller that sells or delivers distilled spirits pursuant to this section shall:

1.  Pay to the department of revenue all luxury taxes that are imposed pursuant to title 42, chapter 3 and all transaction privilege or use taxes that are imposed pursuant to title 42, chapter 5.

2.  File all returns or reports that are required by law.

G.  A delivery of distilled spirits by a craft distiller to a purchaser in this state is a transaction deemed to have occurred in this state.

H.  The director may adopt rules in order to administer this section.

I.  The director may charge a fee adopted pursuant to section 4-209 for the issuance of a license pursuant to this section.

J.  The director may issue a craft distillery license to be located on the same parcel of land as a farm winery licensed pursuant to section 4‑205.04. END_STATUTE

Sec. 3.  Conditional enactment

This act does not become effective unless senate bill 1397, fifty-first legislature, second regular session, relating to spirituous liquor licenses, becomes law.

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