AB989: Bill Text

LRB-5521/1

ARG:ahe/kjf/emw

2017 - 2018 LEGISLATURE

2017 Assembly BILL 989

February 28, 2018 - Introduced by Representative Vorpagel, cosponsored by Senator Fitzgerald. Referred to Committee on State Affairs.

AB989,3,2 An Act to repeal 20.566 (1) (hd); to renumber and amend 125.69 (1) (a); to amend 15.435 (title), 17.07 (3m), 20.566 (1) (ha), 125.02 (10), 125.02 (12), 125.02 (13), 125.02 (15) (b), 125.02 (16) (intro.), 125.02 (21), 125.02 (23), 125.03 (title), 125.03 (1) (a), 125.03 (1) (b), 125.03 (2), 125.04 (3) (a) (intro.), 125.04 (3) (b), 125.04 (3) (c), 125.04 (3) (d) 1., 125.04 (3) (d) 2., 125.04 (3) (e) 2., 125.04 (4), 125.04 (5) (a) 5., 125.04 (9), 125.045, 125.06 (11m), 125.07 (1) (b) 4., 125.07 (4) (f) 3., 125.105 (1), 125.12 (1) (a), 125.12 (1) (c), 125.12 (4) (title), 125.12 (4) (ag) (intro.), 125.12 (5), 125.12 (6) (a), 125.12 (6) (b), 125.12 (6) (c), 125.12 (6) (cm), 125.12 (6) (d), 125.12 (6) (dm), 125.12 (6) (e), 125.13, 125.14 (2) (c), 125.14 (2) (d), 125.14 (2) (e), 125.14 (2) (f), 125.14 (3) (b), 125.145, 125.15 (1), 125.17 (6) (a) (intro.), 125.19 (1), 125.27 (1) (a), 125.27 (2) (a) 1. (intro.), 125.27 (2) (a) 2., 125.27 (3) (b), 125.275 (1), 125.275 (3), 125.28 (1) (a), 125.28 (1) (b), 125.28 (2) (e) 2., 125.28 (4), 125.28 (5) (b), 125.28 (5) (d) 3., 125.28 (5) (e), 125.29 (1), 125.29 (3) (intro.), 125.295 (1) (intro.), 125.295 (2) (b), 125.295 (2) (c), 125.295 (4), 125.295 (5), 125.30 (1), 125.30 (2) (intro.), 125.30 (2) (b), 125.30 (3), 125.30 (4), 125.30 (5), 125.33 (2) (a), 125.33 (2) (d), 125.51 (2) (am), 125.51 (5) (a) 1., 125.51 (5) (a) 4., 125.51 (5) (b) 2., 125.51 (5) (b) 4., 125.51 (5) (c) 1., 125.51 (5) (d) 2., 125.52 (1) (a), 125.52 (1) (b) 1., 125.52 (1) (b) 2., 125.52 (2), 125.52 (3), 125.53 (1), 125.535 (1), 125.535 (2), 125.535 (3) (b) 2., 125.54 (1), 125.54 (5), 125.54 (7) (a) 2., 125.54 (7) (c) 3., 125.54 (7) (d), 125.54 (8), 125.545 (2) (a) 3. b., 125.545 (3) (a) 1., 125.545 (3) (a) 2., 125.545 (5), 125.545 (6), 125.545 (7), 125.55 (1), 125.56 (2) (a), 125.56 (2) (c), 125.56 (2) (d), 125.58 (1), 125.60 (1), 125.61 (1), 125.61 (3), 125.61 (4), 125.62 (1), 125.62 (3), 125.63 (1), 125.63 (3), 125.65 (1), 125.65 (4) (intro.), 125.65 (4) (e), 125.65 (6), 125.65 (10), 125.68 (9) (b), 125.68 (9) (d), 125.68 (9) (f), 125.68 (10), 125.69 (title), 125.69 (1) (b) 1., 125.69 (1) (c), 125.69 (4) (e), 125.69 (6) (a), 125.70, 139.01 (4), 139.01 (5), 139.01 (6), 139.01 (10), 139.03 (2x) (a), 139.03 (5) (a), 139.04 (4), 139.06 (3), 139.08 (3), 139.08 (4), 139.09, 139.11 (1), 139.11 (2), 139.11 (3), 139.11 (4) (a) 2., 139.11 (4) (b) 2., 139.18 (2), 139.22, 139.25 (9), 227.52 (1), 230.08 (2) (e) 11. and 346.93 (1); and to create 15.435 (2), 19.42 (13) (q), 20.566 (9), 20.923 (4) (c) 6., 125.02 (11g), 125.02 (17r) and (17t), 125.025, 125.11 (3), 125.52 (8), 125.525, 125.535 (3) (a) 2m., 125.69 (1) (a) 3., 125.69 (1) (b) 3., 139.01 (5g) and 139.01 (6m) of the statutes; relating to: creating a resort manufacturer permit authorizing the production and sale of intoxicating liquor, and activities and retail interests of resort manufacturers; creating an Office of Alcohol Beverages Enforcement attached to the Department of Revenue and transferring alcohol beverages regulation and enforcement functions to this office; and making appropriations.

Analysis by the Legislative Reference Bureau

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 consumers under a DOR-issued permit rather than a municipality-issued retail license. A DOR-issued permit authorizing retail sales of intoxicating liquor is not subject to the quota system.

Under current law, a manufacturer's permit or rectifier's permit authorizes the permittee to, respectively, manufacture or rectify intoxicating liquor and sell it to wholesalers. Current law prohibits a manufacturer or rectifier from holding an interest in a retail license and prohibits a retail licensee from holding an interest in a manufacturer or rectifier, but a manufacturer's permit or rectifier's permit authorizes limited retail sales, without a retail license, of intoxicating liquor manufactured or rectified on the premises. A winery permit authorizes the winery to manufacture, blend, and bottle wine for sale to wholesalers. A winery may also hold one retail license. If the retail license is a “Class B" license, the license is limited compared to other “Class B” licenses and authorizes the winery to sell only wine, not distilled spirits. A winery issued a retail license may provide wine made by the winery directly to its own retail licensed premises without the wine first passing through a wholesaler.

This bill creates a resort manufacturer permit, issued by the office, authorizing all of the following: 1) the manufacture or rectification of up to 150,000 gallons of intoxicating liquor per year on the resort manufacturer premises; 2) the bottling of intoxicating liquor manufactured or rectified by the resort manufacturer; 3) the possession and storage of alcohol beverages on the resort manufacturer premises; 4) the sale of intoxicating liquor manufactured or rectified by the resort manufacturer to wholesalers; 5) the retail sale on resort manufacturer premises, without a retail license, of intoxicating liquor manufactured or rectified on these premises, for consumption on the premises or off the premises; 6) the retail sale on resort manufacturer premises, without a retail license, of beer and of intoxicating liquor not manufactured or rectified on the premises, for consumption on the premises, if the beer or intoxicating liquor is purchased from a wholesaler; and 7) the sale and delivery of intoxicating liquor manufactured or rectified on the resort manufacturer premises to the retail licensed premises of the resort or of a secondary resort facility (discussed below). Among the requirements for the office to issue a resort manufacturer permit, the applicant must own and operate at least one resort located in this state. The bill defines a “resort” as a hospitality business operation involving multiple facilities under the same ownership that includes at least 300 guest rooms and includes all of the following located within 15 miles of these guest rooms: at least one spa; comprehensive food and beverage services consisting of at least five separate restaurants; and championship golf courses consisting of at least 36 holes. The bill defines a “secondary resort facility” as a facility, other than a resort, that is located in this state, that is owned by a resort manufacturer, that is of the same or substantially similar consumer brand family as the resort, and that provides lodging or has at least one golf course or both. To be eligible for a resort manufacturer permit, the applicant's entire process for manufacturing or rectifying intoxicating liquor must occur on the resort manufacturer premises. A resort manufacturer may hold the following retail licenses: 1) retail licenses for licensed premises that are part of the resort; 2) Class “B” and “Class B” licenses for up to ten licensed locations that are part of a secondary resort facility; and 3) if a Class “B” or “Class B” license has been issued for a secondary resort facility, a Class “A” or “Class A” license, or both, for any gift shop associated with the secondary resort facility. A person may not hold a resort manufacturer's permit and also a manufacturer's permit or rectifier's permit.

The bill also includes various provisions that treat resort manufacturers similar to manufacturers and rectifiers, including provisions relating to tax reporting.

For further information see the state 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:

AB989,1 Section 1. 15.435 (title) of the statutes is amended to read:

AB989,5,2 15.435 (title) Same; attached boards and offices.

AB989,2 Section 2. 15.435 (2) of the statutes is created to read:

AB989,5,8 15.435 (2) Office of alcohol beverages enforcement. There is created an office of alcohol beverages enforcement which is attached to the department of revenue under s. 15.03. The office shall be under the direction and supervision of a director nominated by the governor, and with the advice and consent of the senate appointed, for a 6-year term, subject to removal under s. 17.07 (3m).

AB989,3 Section 3 . 17.07 (3m) of the statutes is amended to read:

AB989,5,12 17.07 (3m) Notwithstanding sub. (3), the parole commission chairperson and the director of the office of alcohol beverages enforcement may be removed by the governor, at pleasure.

AB989,4 Section 4. 19.42 (13) (q) of the statutes is created to read:

AB989,5,15 19.42 (13) (q) The director and employees of the office of alcohol beverages enforcement.

AB989,5 Section 5 . 20.005 (3) (schedule) of the statutes: at the appropriate place, insert the following amounts for the purposes indicated: - See PDF for table

AB989,6 Section 6. 20.566 (1) (ha) of the statutes is amended to read:

AB989,6,11 20.566 (1) (ha) Administration of liquor tax and alcohol beverages enforcement. The amounts in the schedule for computer, audit, and enforcement costs incurred in administering the tax under s. 139.03 (2m) and for costs incurred in enforcing the 3-tier system for alcohol beverages production, distribution, and sale under ch. 125. All moneys received from the administration fee under s. 139.06 (1) (a) and any permit fee under s. 125.535 (2) shall be credited to this appropriation. Notwithstanding s. 20.001 (3) (a), at the end of each fiscal year, the unencumbered balance of this appropriation account, minus an amount equal to 10 percent of the sum of the amounts expended and the amounts encumbered from the account during the fiscal year, shall lapse to the general fund.

AB989,7 Section 7. 20.566 (1) (hd) of the statutes is repealed.

AB989,8 Section 8. 20.566 (9) of the statutes is created to read:

AB989,6,19 20.566 (9) Office of alcohol beverages enforcement. (g) General program operations. The amounts in the schedule for alcohol beverages regulation and enforcement under ch. 125 and general program operations of the office of alcohol beverages enforcement. All moneys received by the office of alcohol beverages enforcement, including all moneys transferred under 2017 Wisconsin Act .... (this act), section 137 (1) (a), shall be credited to this appropriation account.

AB989,9 Section 9. 20.923 (4) (c) 6. of the statutes is created to read:

AB989,7,1 20.923 (4) (c) 6. Office of alcohol beverages enforcement: director of.

AB989,10 Section 10 . 125.02 (10) of the statutes is amended to read:

AB989,7,4 125.02 (10) “Manufacturer" means a person, other than a rectifier or resort manufacturer, that ferments, manufactures, or distills intoxicating liquor.

AB989,11 Section 11. 125.02 (11g) of the statutes is created to read:

AB989,7,7 125.02 (11g) Except in ss. 125.30 (3) and 125.545 (2) (a) 2., “office" means the office of alcohol beverages enforcement.

AB989,12 Section 12. 125.02 (12) of the statutes is amended to read:

AB989,7,11 125.02 (12) “Peace officer" means a sheriff, undersheriff, deputy sheriff, police officer, constable, marshal, deputy marshal or any employee of the department office or of the department of justice authorized to act under this chapter.

AB989,13 Section 13. 125.02 (13) of the statutes is amended to read:

AB989,7,14 125.02 (13) “Permit" means any permit issued by the department office under this chapter.

AB989,14 Section 14 . 125.02 (15) (b) of the statutes is amended to read:

AB989,7,18 125.02 (15) (b) With respect to intoxicating liquor, the manufacturer, the rectifier, the resort manufacturer, or the exclusive agent designated by the manufacturer or, rectifier, or resort manufacturer.

AB989,15 Section 15 . 125.02 (16) (intro.) of the statutes is amended to read:

AB989,7,21 125.02 (16) (intro.) “Rectifier" means any one of the following but does not include a resort manufacturer:

AB989,16 Section 16 . 125.02 (17r) and (17t) of the statutes are created to read:

AB989,7,23 125.02 (17r) “Resort manufacturer” means a permittee under s. 125.525.

AB989,7,25 (17t) “Resort manufacturer premises" means any premises covered by a permit issued under s. 125.525.

AB989,17 Section 17. 125.02 (21) of the statutes is amended to read:

AB989,8,5 125.02 (21) “Wholesaler" means a person, other than a brewer, brewpub, manufacturer, or rectifier, or resort manufacturer, who sells alcohol beverages to a licensed retailer or to another person who holds a permit to sell alcohol beverages at wholesale.

AB989,18 Section 18. 125.02 (23) of the statutes is amended to read: