HB2713 - 472R

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. Domestic farm winery or domestic microbrewery license; issuance; regulatory provisions; retail site

A. The director may issue a domestic farm winery or domestic microbrewery license to any domestic farm winery or domestic microbrewery. Each location which that engages in producing and bottling these products must obtain a separate domestic farm winery or domestic microbrewery license, but both such licenses may be issued for a common location. The licensee may not transfer the domestic farm winery or domestic microbrewery license from person to person or from location to location.

B. An applicant for a domestic farm winery or domestic microbrewery license shall, at the time of filing the application for the license, shall accompany the application with the license fee. Persons holding a domestic farm winery or domestic microbrewery license shall report annually at the end of each fiscal year, at such time and in such manner as the director may prescribe, the amount of wine or beer manufactured by them during the fiscal year. If the total amount of wine or beer manufactured during the year exceeds the amount permitted annually by the license, the licensee shall apply for and receive an in‑state producer's license.

C. Notwithstanding any other statute, a licensed domestic farm winery may sell wine produced or manufactured on the premises in the original container for consumption on or off the premises and may make sales and deliveries of wine to persons licensed to sell wine under this title. A licensed domestic farm winery may serve wine produced or manufactured on the premises for the purpose of sampling the wine.

D. A licensed domestic farm winery is subject to all both of the following requirements:

1. The winery shall produce not less than two hundred gallons and not more than seventy‑five thousand gallons of wine annually from grapes or other suitable agricultural products of which at least seventy‑five per cent are grown in this state. The director may allow a percentage of out‑of‑state agricultural products greater than twenty‑five per cent in wine manufactured or produced by a licensed domestic farm winery if the licensed domestic farm winery can demonstrate to the satisfaction of the director that sufficient in‑state agricultural products are not available because of an unexpected failure of suitable in‑state crops due to natural causes. The exemption shall remain in effect only for the period of time during which such shortages actually exist.

2. The winery may purchase and sell wine produced from a domestic farm winery if the retail sale of the wine is conducted from the same site as the location of the winery.

E. Notwithstanding any other statute, a licensed domestic microbrewery may sell beer produced or manufactured on the premises for consumption on or off the premises and may make sales and deliveries of beer to persons licensed to sell beer under this title, including wholesalers licensed under this title. A licensed domestic microbrewery may serve beer produced or manufactured on the premises for the purpose of sampling the beer. A licensed domestic microbrewery is subject to all of the following requirements:

1. The microbrewery shall produce not less than ten thousand gallons of beer in each year following the first year of operation.

2. The microbrewery shall not produce more than three nine hundred ten THIRTY thousand gallons of beer annually.

3. If retail operations are conducted in conjunction with the microbrewery, these retail operations shall be conducted from the same site as the location of the microbrewery.

4. The microbrewery may sell other spirituous liquor products if:

(a) The microbrewery holds an on‑sale retail license.

(b) The retail sale of the spirituous liquor is on or adjacent to the premises of the microbrewery.

F. A person who holds a domestic microbrewery license that meets the requirements of this section and who is not otherwise engaged in the business of a distiller, vintner, brewer, rectifier, blender or other producer of spirituous liquor in any jurisdiction may hold other on‑sale retail licenses. The person shall purchase all spirituous liquor for sale at the other on‑sale retail premises from wholesalers who are licensed in this state, except that the person may distribute microbrewery products produced at the person's microbrewery to that person's retail licensees.

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

Sec. 2. Section 4-243.01, Arizona Revised Statutes, is amended to read:

START_STATUTE4-243.01. Purchasing from other than primary source of supply unlawful; definitions

A. It is unlawful:

1. For any supplier to solicit, accept or fill any order for any spirituous liquor from any wholesaler in this state unless the supplier is the primary source of supply for the brand of spirituous liquor sold or sought to be sold and is duly licensed by the board.

2. For any wholesaler or any other licensee in this state to order, purchase or receive any spirituous liquor from any supplier unless the supplier is the primary source of supply for the brand ordered, purchased or received.

3. Except as provided by section sections 4-205.04 and 4‑243.02, for a retailer to order, purchase or receive any spirituous liquor from any source other than any of the following:

(a) A wholesaler who has purchased the brand from the primary source of supply.

(b) A wholesaler who is the designated representative of the primary source of supply in this state and who has purchased such spirituous liquor from the designated representative of the primary source of supply within or without this state.

(d) A domestic farm winery or domestic microbrewery licensed under section 4‑205.04.

B. All spirituous liquor shipped into this state shall be invoiced to the wholesaler by the primary source of supply. All spirituous liquor shall be unloaded and remain at the wholesaler's premises for at least twenty‑four hours. A copy of each invoice shall be transmitted by the wholesaler and the primary source of supply to the department of revenue.

C. The director may suspend for a period of one year the license of any wholesaler or retailer who violates this section.

D. Upon determination by the department of revenue that a primary source of supply has violated this section, no wholesaler may accept any shipment of spirituous liquor from such primary source of supply for a period of one year.

E. For the purposes of this section:

1. "Primary source of supply" means the distiller, producer, owner of the commodity at the time it becomes a marketable product, bottler or exclusive agent of any such distributor or owner. In the case of imported products, the primary source of supply means either the foreign producer, owner, bottler or agent or the prime importer from, or the exclusive agent in, the United States of the foreign distiller, producer, bottler or owner.

2. "Wholesaler" means any person, firm or corporation that is licensed in this state to sell to retailers and that is engaged in the business of warehousing and distributing brands of various suppliers to retailers generally in the marketing area in which the wholesaler is located. END_STATUTE

Sec. 3. Section 4-243.02, Arizona Revised Statutes, is amended to read:

START_STATUTE4-243.02. Sale of beer or distilled spirits by producer; limitations

A person who holds an in‑state A producer's license may sell beer or distilled SPIRITS produced by the in‑state producer through the producer's own on‑sale retail premises if:

1. The in‑state producer also holds an on‑sale retail license.

2. The retail sale of the beer or distilled spirits is on or adjacent to the premises of the in‑state producer.

END_STATUTE

Sec. 4. Laws 2005, chapter 284, section 15 is amended to read:

Sec. 15. Temporary transfers of licenses

Between July 1, 2006 2007 and December 31, 2007 2008, bar, beer and wine bar and liquor store licenses may be transferred from counties with a population of five hundred thousand or more persons to counties with a population of less than five hundred thousand persons.