AB 989

This bill creates an Office of Alcohol Beverages Enforcement and a new permit

for resort manufacturers issued by the office.

Office of Alcohol Beverages Enforcement

The Office of Alcohol Beverages Enforcement is attached to the Department of

Revenue. The bill transfers DOR's alcohol beverages regulation and enforcement

functions, including issuance of certain alcohol beverages permits, to the office. The

office is led by a director appointed by the governor, subject to senate confirmation.

The director must appoint a chief legal counsel and may appoint special agents and

other employees necessary to carry out the permitting, audit, education, and

enforcement functions of the office. The director and employees of the office may not

be employed by or have a financial interest in the alcohol beverages industry and are

subject to the standards of conduct and conflict of interest prohibitions for state

public officials. The bill transfers DOR employees to the office and creates additional

employee positions in the office. The office is funded from program revenues

consisting of alcohol beverages permit fees and other administrative fees received by

the office.

Resort manufacturer permits

The bill creates a resort manufacturer permit issued by the office that

authorizes the production and sale of intoxicating liquor, which includes distilled

spirits and wine. The permittee may also sell fermented malt beverages (beer) under

the permit if the beer is purchased from a wholesaler. The bill specifies the

permissible activities and retail interests of a resort manufacturer.

Under current law, alcohol beverages are generally distributed to consumers

under a three-tier distribution system: the producer sells to a wholesaler; the

wholesaler sells to a retailer; and the retailer sells to a consumer. With specific

exceptions, no person may sell outside the three-tier system and no person may sell

alcohol beverages to a consumer unless the seller possesses a license or permit

authorizing the sale. In general, municipalities issue retail licenses authorizing the

sale of alcohol beverages to consumers. Class “A” and “Class A” licenses authorize

the retail sale of, respectively, beer and intoxicating liquor in original packages for

consumption off the licensed premises, while Class “B" and “Class B” licenses

authorize the retail sale of, respectively, beer and intoxicating liquor for consumption

on the premises or, subject to certain restrictions, off the premises. “

Class B”

licenses, other than those issued to wineries, are subject to a quota system. With

limited exceptions, a retail licensee may not purchase alcohol beverages from, or

possess alcohol beverages purchased from, any person other than a wholesaler. DOR

issues permits to alcohol beverage wholesalers and producers, such as

manufacturers, rectifiers, and wineries (a function transferred to the office under the

bill). Certain exceptions exist authorizing the retail sale of alcohol beverages to