LRB-2880/1
ARG:wj:nwn
2007 - 2008 LEGISLATURE
July 12, 2007 - Introduced by Representatives Newcomer, Black, Pocan,
Pope-Roberts, Musser, Kestell, Vos, Kleefisch, Suder, Montgomery,
Tauchen, Van Akkeren, Roth, Boyle, Gronemus, Shilling, Sinicki, Nelson,
Petrowski, Van Roy, Sheridan, Turner, Travis, Berceau, Mursau, Seidel,
Richards, Meyer, Zepnick, F. Lasee, Honadel, Nygren and A. Ott,
cosponsored by Senators Risser, Schultz, Breske, Hansen, Kanavas, Jauch,
Kapanke, Cowles, Coggs, Harsdorf, Lehman, Leibham, Miller, Darling,
Ellis, Lassa, Plale, Grothman and Kedzie. Referred to Committee on State
Affairs.
AB455,2,2
1An Act to repeal 125.31 (1) (a) 1. (intro.) and 125.31 (1) (a) 3.;
to renumber
2125.31 (1) (a) 1. a. to e.;
to amend 125.02 (2), 125.02 (21), 125.04 (9), 125.07 (4)
3(bm) 1., 125.10 (4), 125.26 (2) (b) 1., 125.28 (2) (b) 2., 125.31 (1) (a) 2., 125.31 (1)
4(a) 4., 125.32 (5) and (7) (a), 125.33 (title), (1), (2) (intro.), (a), (d), (j), (k), (L) 2.,
53. and 4., (n) 2. and (p) 1., (2s), (6), (7) (a) 1. a. and b., (b), (c) and (d), (7m), (8),
6(9), (10) (a) 1. to 4., (b) and (c) 1. and 3. and (11), 125.34 (title), (1) (a) and (c),
7(2) (a), (bg) and (bm), (3) (a) 1. and 2., (4) (a) and (5), 125.54 (1), 139.01 (1) and
8(2), 139.04 (2), 139.08 (4), 139.09, 139.11 (2), (3) and (4), 139.18 (1), 139.22 and
9346.93 (1); and
to create 125.015, 125.02 (2d) (intro.), (2h), (2p) and (2t), 125.25
10(2) (b) 5., 125.28 (2) (b) 1. e., 125.29 (5) and (6), 125.295, 125.69 (1) (d) and 139.01
11(2c) and (2e) of the statutes;
relating to: creating a brewpub permit
12authorizing the manufacture and sale at wholesale of fermented malt
1beverages, authorizing other brewpub interests and operations and limiting
2certain operations of brewers.
Analysis by the Legislative Reference Bureau
Under current law, alcohol beverages are generally distributed to consumers
under a three-tier distribution system: the manufacturer may sell only to a
wholesaler or rectifier; the wholesaler or rectifier may sell only to a wholesaler or to
a retailer; the retailer may sell only to the consumer. With specific exceptions, no
person may sell outside the three-tier system, and no person may sell alcohol
beverages at retail unless the person possesses a license or permit authorizing the
sale on the premises where sold.
Under current law, a brewer of fermented malt beverages (beer) must hold a
permit issued by the Department of Revenue (DOR). A brewer's permit authorizes
the brewer to manufacture, possess, and store beer on the brewery premises. A beer
wholesaler's license, issued by a municipality, authorizes the license holder to sell to
retailers or wholesalers beer in original packages that may not be consumed on the
wholesaler's premises. A brewer may hold a wholesaler's license and may own,
maintain, and operate a warehouse for which the brewer holds a wholesaler's license.
The brewer may transport beer between the brewery premises and the brewer's
warehouse. The brewer may sell beer at wholesale to beer retailers and beer
wholesalers if the brewer holds a wholesaler's license. With various limitations
discussed below, the brewer may sell beer at retail if the brewer holds a retailer's
license. A brewer may also hold a limited intoxicating liquor wholesaler's permit, for
wine only.
Under current law, a brewer may hold a Class "A" retail license, which
authorizes the retail sale of beer in original packages for consumption off the licensed
premises, but, with exceptions, may not hold a Class "B" license, which authorizes
the retail sale of beer for consumption on or off the premises where sold. One
exception allows a brewer to maintain and operate, and hold a Class "B" license for,
one retail premises on brewery premises and one retail premises on property owned
by the brewer or its subsidiary or affiliate. Under another exception, in addition to
these two Class "B" licenses, a brewer may possess a Class "B" license for not more
than four restaurants in which the sale of alcohol beverages accounts for less than
50 percent of gross receipts if the brewer is a "small brewer" (generally one that
manufactures less than 4,000 barrels of beer annually), the restaurant also sells
other brewers' beer, and the brewer's own beer is purchased by the restaurant from
an independent wholesaler. A brewer may hold both a wholesaler's license and Class
"B" license but, with an exception for grandfathered licenses, may not hold both a
wholesaler's license and a Class "A" license. A "Class B" license authorizes the retail
sale of intoxicating liquor for consumption on or off the licensed premises, which
authorization is subject to certain limitations, some of which depend on whether the
issuing municipality has adopted an ordinance related to "Class B" licenses. A "Class
C" license authorizes the retail sale of wine by the glass or in an opened original
container for consumption on the licensed premises and may be issued only for a
restaurant. Because a "Class B" license may be issued only to the holder of a Class
"B" license, a brewer is limited in the number of "Class B" licenses it may hold.
Under current law, beer may not be sold, transported, or delivered to a Class
"A" licensee or Class "B" licensee unless the beer is first unloaded at and distributed
from a licensed beer wholesaler's warehouse, which generally must be at a location
that is physically separate from any retail premises or brewery premises. However,
there are a number of exceptions to this prohibition, including exceptions that apply
to certain brewers that hold wholesale and retail licenses or that manufacture 50,000
barrels of beer or less annually. Also under current law, deliveries of beer to retailers
may be made only by licensed wholesalers and must be made to retailers only at their
retail premises. No retailer may transport beer from one retail premises to another
retail premises to sell it unless a brewer operates both retail premises. Current law
also requires, with limited exceptions, that beer wholesalers enter into written
agreements with brewers supplying beer brands that grant to the wholesalers
distribution rights within exclusive designated sales territories in order for the beer
to be distributed, and further imposes requirements on the termination of these
agreements. A brewer, in providing beer to its own retail premises, is not subject to
restrictions on the sale, transportation, and delivery of beer generally applicable to
wholesalers and retailers.
This bill creates a brewpub permit issued by DOR. An applicant is eligible to
obtain a brewpub permit if all of the following apply:
1. The applicant manufactures not more than 10,000 barrels of beer each year.
2. The applicant's entire beer manufacturing process occurs on the brewpub
premises.
3. The applicant operates a restaurant on the brewpub premises in which the
sale of alcohol beverages accounts for less than 60 percent of the restaurant's gross
receipts.
4. The applicant holds a Class "B" license for the restaurant and offers for sale
in the restaurant, in addition to its own beer, beer manufactured by other brewers.
5. The applicant holds a business tax registration certificate issued by DOR.
6. The applicant does not hold or have an interest in a Class "A" license, a beer
wholesaler's license, a brewer's permit, or an alcohol beverage, warehouse permit,
and does not hold or have an interest in a Class "B," "Class B," or "Class C" license
other than one for brewpub premises.
If an applicant for a brewpub permit has no current operations, the applicant
can certify that the applicant will comply with these requirements prior to or upon
commencing operations under the brewpub permit. If an applicant for a brewpub
permit holds a brewer's permit, wholesale license, or any other prohibited license or
permit at the time of the application, the applicant can certify that the applicant will
surrender any such license or permit upon issuance of the brewpub permit.
A brewpub permit authorizes a brewpub to do all of the following:
1. Manufacture beer on the brewpub premises, up to 10,000 barrels each year
for all brewpub premises, if the entire manufacturing process occurs on these
premises.
2. Bottle on the brewpub premises beer that has been manufactured on these
premises.
3. Package in refillable containers exceeding 24 ounces in volume, on brewpub
premises, beer that has been manufactured on these premises, and possess and store
on brewpub premises any beer.
4. Transport beer that has been manufactured on the brewpub premises
between these premises and any other brewpub premises or brewpub Class "B"
premises.
5. Sell at wholesale, ship, transport, and deliver to wholesalers, from the
brewpub premises, beer manufactured on these premises or on other brewpub
premises.
6. Sell at wholesale, ship, transport, and deliver to retailers, from the brewpub
premises, beer manufactured on these premises or on other brewpub premises, but
only up to 1,000 barrels of beer each year, not including beer provided to the
brewpub's own retail premises.
7. Sell alcohol beverages at retail on the brewpub premises in accordance with
the terms of any Class "B," "Class B," or "Class C" license held by the brewpub.
A brewpub may not hold more than six permits for brewpub locations. A
brewpub may hold only Class "B," "Class B," and "Class C" licenses for restaurants
on brewpub premises.
Like the holder of a brewer's permit, a brewpub, in providing beer to its own
retail premises, is not subject to restrictions on the sale, transportation, and delivery
of beer generally applicable to wholesalers and retailers. However, a brewpub does
not hold a wholesaler's license and may maintain wholesale operations, including
the sale, transportation, and delivery to retailers if otherwise authorized, from its
brewpub premises. To distribute its beer through licensed beer wholesalers, a
brewpub must enter into written agreements with the wholesalers for each brewpub
brand distributed providing exclusive designated sales territories to the wholesalers
for these brands. A brewpub is also subject to certain requirements generally
applicable to wholesalers when selling its own beer to unaffiliated retailers.
Current law prohibits a person from operating a restaurant unless the person
has been issued a restaurant permit. This bill prohibits a person issued a brewer's
permit after the bill's effective date from holding a restaurant permit, thereby
requiring a person who intends to begin manufacturing beer and operating a
restaurant after this date to obtain a brewpub permit if the person is otherwise
eligible for a brewpub permit.
The bill also repeals the authorization for a small brewer to possess a Class "B"
license for not more than four restaurants in which the sale of alcohol beverages
accounts for less than 50 percent of the restaurant's gross receipts.
Current law includes a global severability provision applicable to all statutes,
which states that the provisions of the statutes and of any session law are severable.
If any provision of the statutes or of a session law is invalid, or if the application of
either to any person or circumstance is invalid, the invalidity does not affect other
provisions or applications that can be given effect without the invalid provision or
application.
This bill includes another severability provision specifically applicable to
chapter 125 of the statutes relating to alcohol beverages. The bill states that if any
provision or clause of chapter 125 or its application to any person or circumstance is
held invalid, the invalidity does not affect other provisions or applications of the
chapter that can be given effect without the invalid provision or application, and to
this end the provisions of the chapter are severable.
For further information see the state and local fiscal estimate, which will be
printed as an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB455, s. 1
1Section
1. 125.015 of the statutes is created to read:
AB455,5,6
2125.015 Severability. If any provision or clause of this chapter or its
3application to any person or circumstance is held invalid, the invalidity shall not
4affect other provisions or applications of this chapter that can be given effect without
5the invalid provision or application, and to this end the provisions of this chapter are
6severable.
AB455, s. 2
7Section
2. 125.02 (2) of the statutes is amended to read:
AB455,5,108
125.02
(2) "Brewer" means any person who manufactures fermented malt
9beverages for sale or transportation
, except that "brewer" does not include a
10permittee under s. 125.295.
AB455, s. 3
11Section
3. 125.02 (2d) (intro.), (2h), (2p) and (2t) of the statutes are created to
12read:
AB455,5,1513
125.02
(2d) (intro.) "Brewer group" means a brewer, including all premises for
14which the brewer holds a permit issued under s. 125.29, together with all of the
15following:
AB455,5,16
16(2h) "Brewpub" means a permittee under s. 125.295.
AB455,5,18
17(2p) "Brewpub group" means a brewpub, including all premises for which the
18brewpub holds a permit issued under s. 125.295, together with all of the following:
AB455,6,2
1(a) All brewpubs that share membership with the brewpub in a controlled
2group of brewpubs, as determined under
26 USC 5051 (a) (2) (B).
AB455,6,43(b) All brewpubs considered with the brewpub as one taxpayer under
27 CFR
425.111b (b).
AB455,6,55
(c) All franchisees, as defined in s. 553.03 (5), of the brewpub.
AB455,6,76
(d) All franchisees, as defined in s. 553.03 (5), of the brewpub's franchisor, as
7defined in s. 553.03 (6).
AB455,6,88
(e) The franchisor, as defined in s. 553.03 (6), of the brewpub.
AB455,6,10
9(2t) "Brewpub premises" means any premises covered by a permit issued under
10s. 125.295.
AB455, s. 4
11Section
4. 125.02 (21) of the statutes is amended to read:
AB455,6,1412
125.02
(21) "Wholesaler" means a person, other than a brewer,
brewpub, 13manufacturer
, or rectifier, who sells alcohol beverages to a licensed retailer or to
14another person who holds a permit or license to sell alcohol beverages at wholesale.
AB455, s. 5
15Section
5. 125.04 (9) of the statutes is amended to read:
AB455,6,2016
125.04
(9) Separate license or permit required. Except as provided under ss.
17125.27 (2) (a) and 125.51 (5) (c) 1., wholesalers, manufacturers, rectifiers, brewers
,
18brewpubs, and retailers shall have a separate permit or license covering each
19location or premises, except a licensed public warehouse, from which deliveries and
20sales of alcohol beverages are made or at which alcohol beverages are stored.
AB455, s. 6
21Section
6. 125.07 (4) (bm) 1. of the statutes is amended to read:
AB455,6,2222
125.07
(4) (bm) 1. A brewer
or brewpub.
AB455, s. 7
23Section
7. 125.10 (4) of the statutes is amended to read: