House of Representatives

SB 1509

alcoholic beverages; revisions

Sponsors: Senators Valadez: Gerard, Mitchell; Representative Soltero

DPA	Committee on Commerce and Economic Development
w/D	Committee on Retirement and Government Operations
X	Caucus and COW
	As Passed the House

SB 1509 makes numerous changes to the statutes that govern the Arizona Department of Liquor Licenses and Control.

History

Historically, Arizona's liquor industry has been controlled by what is commonly known as the three-tier system, which includes the producers / suppliers, the wholesalers, and the retailers. This licensure and control system has been in place since 1939, when the Legislature established the Department of Liquor Licenses and Control.

The Arizona State Liquor Board has seven members appointed by the Governor who serve three-year terms. The Board has the power to grant or deny applications for liquor licenses referred to them through protests lodged by a county, city, town or private individual. In addition to the Board, the Department consists of a director who is appointed by the Governor. The director's responsibilities include licensing establishments and regulating the manufacture and sale of liquor.

SB 1509 amends the statutes that regulate the Department.

Provisions

· Authorizes the director to cancel a hearing and issue a liquor license when a city, town or county makes a recommendation for license approval unless the board or an aggrieved person has requested the hearing.

· Clarifies that a restructuring of a licensee's business is considered a transfer of the license rather than a new license if 1) all of the controlling parties remain the same; and, 2) there is no change in control/beneficial ownership. The history of violations pertaining to the original business also transfers.

· Requires the location to requalify for a new liquor license if the licensee's interest is forfeited, except when a bona fide lienholder demonstrates mitigation.

· Allows an affected lienholder to participate in the determination of any disciplinary action. Prescribes the additional mitigation the director shall consider, including if the lienholder proves by a preponderance of the evidence that the interest is a bona fide security interest. Defines bona fide security interest. The lienholder must also prove a reasonable attempt to remain informed about the business' conduct.

· Authorizes the director to order either or both of the following: 1) the forfeiture of the licensee's interest in the license [current law]; and/or, 2) the lienholder to pay any civil monetary penalty imposed on the licensee.

· Repeals the section of law that allows a supplier to have a financial interest in a retail license, premise or business when the licensee is a regional entertainment facility.

· Allows a distiller, vintner, brewer or wholesaler to donate a maximum $100 of liquor per calendar year to a nonprofit organization for charitable fundraiser activities.

· Exempts the department from the Administrative Procedures Act [rulemaking process] until December 31, 2001 for either: 1) Modifying rules regarding signs, retail/glassware promotions, or product recovery by a wholesaler when a retailer closes or discontinues a product line. 2) Conforming rules to statutory changes.

· Requires the department to provide proper notice and hold at least two public hearings before adopting any proposed rule under the aforementioned exemption.

SB 1509 was amended in the Commerce and Economic Development Committee:

· Allows a domestic farm winery to sell wine from an on-site location.

· Clarifies the exemption language.

· Prescribes that proper notice and a hearing are requirements prior to suspending, revoking or refusing to renew a person's license.

· Eliminates the repeal language.

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45th Legislature

First Regular Session 2 April 9, 2001

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