Analysis by the Legislative Reference Bureau
Distillpub permits
This bill creates a distillpub permit issued by the Department of Revenue that
authorizes the manufacture, rectification, and sale of intoxicating liquor other than
wine (distilled spirits). The bill authorizes certain retail interests and activities of
distillpubs and, if a person holds both a distillpub permit and brewpub permit,
modifies the permissible retail interests for the brewpub.
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. A Class “B" license authorizes the retail sale of fermented malt
beverages (beer) for consumption on or off the premises. A “Class B" license
authorizes the retail sale of intoxicating liquor for consumption on the licensed
premises and, subject to various restrictions, the retail sale of intoxicating liquor in
original packages for consumption off the licensed premises. Intoxicating liquor
includes wine and distilled spirits. Class “B” licenses and “Class B” licenses are
generally issued together for establishments such as restaurants, bars, and taverns.
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.
Class “A” licenses and “Class A” licenses are often issued together for establishments
such as grocery stores, liquor stores, and convenience stores. A “Class C" license,
which may be issued only for a restaurant, authorizes the retail sale of wine by the
glass or in an opened original container for consumption on the premises. Each of
these retail licenses is issued by a municipality.
Also under current law, DOR issues permits to producers of alcohol beverages.
A manufacturer's permit or rectifier's permit issued by DOR 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 liquor license and prohibits a retail liquor licensee from holding
an interest in a manufacturer, but a manufacturer's permit or rectifier's permit
authorizes limited retail sales without a retail license. Under the manufacturer's
permit or rectifier's permit, a manufacturer or rectifier may make retail sales of
intoxicating liquor manufactured or rectified on the premises, for consumption on or
off these premises.
Under current law, to authorize commercial brewing operations, DOR may
issue a brewpub permit or a brewer's permit, but no person may hold both permits.
To be eligible for a brewpub permit, a person must meet certain requirements,
including that 1) the person manufactures not more than 10,000 barrels of beer per
year in all locations, 2) the person operates on the brewpub premises a restaurant
for which a Class “B" license is issued, and 3) the person does not hold, or have an
interest in, a Class “A” license or a Class “B" or “Class B" license other than one issued
for a restaurant on brewpub premises. A brewpub permit authorizes, among other
activities 1) the manufacture of up to 10,000 barrels of beer per year, 2) the retail sale
of alcohol beverages through a Class “B" or “Class B" license issued for the brewpub's
restaurant on brewpub premises, and 3) the annual distribution of up to 1,000
barrels of the brewpub's beer to retailers, excluding the brewpub's own retail
locations.
This bill creates a distillpub permit, issued by DOR, authorizing all of the
following: 1) the manufacture and rectification of distilled spirits not exceeding a
total of 300,000 gallons per year at all distillpub locations; 2) the bottling of distilled
spirits manufactured or rectified by the distillpub; 3) the possession and storage of
intoxicating liquor on distillpub premises; 4) the transportation of distilled spirits
manufactured or rectified on the distillpub premises between these premises and
other distillpub premises or the distillpub's retail locations (discussed below); 5) the
sale and delivery of distilled spirits manufactured or rectified by the distillpub to
wholesalers; 6) the sale and delivery of up to 30,000 gallons per year of distilled
spirits manufactured or rectified by the distillpub to retailers, except that retail
locations operated by the distillpub (discussed below) are not counted toward this
30,000 gallon limit; 7) the retail sale on distillpub premises, without a retail license,
of distilled spirits manufactured or rectified by the distillpub, in original unopened
packages or containers, for off-premise consumption; 8) the retail sale and direct
shipment to consumers at their residences or other designated addresses, without
a retail license, of distilled spirits manufactured or rectified by the distillpub if the
consumer arranges while physically present on the distillpub premises to receive
periodic direct shipments from the distillpub; and 9) the sale of alcohol beverages at
retail in accordance with the terms of any retail license authorized to be held by the
distillpub (discussed below). The bill defines “rectify” or “rectification” as blending,
mixing, purifying, refining, aging, or otherwise processing distilled spirits, including
with wine or other ingredients, but not including distilling. For DOR to issue a
distillpub permit to an applicant, the applicant must meet all of the following
requirements: 1) the applicant manufactures or rectifies not more than a total of
300,000 gallons of distilled spirits per year in all locations; 2) the applicant operates
a restaurant on the distillpub premises; 3) the applicant holds a “Class B" license and
the restaurant is located on the “Class B” licensed premises; 4) on the “Class B"
licensed premises, the applicant offers for sale intoxicating liquor made by others,
in addition to its own distilled spirits; and 5) except as discussed below, the applicant
does not hold, or have an interest in, a Class “A" or “Class A” retail license, a Class
“B" or “Class B" retail license, a “Class C" retail license, a wholesaler's permit, a
liquor manufacturer's permit, a rectifier's permit, a brewer's permit, or an alcohol
beverage warehouse permit. A distillpub may hold only the following retail licenses:
1) any “Class B” license for which the licensed premises includes a restaurant on
distillpub premises; 2) not more than six “Class B” licenses in addition to those that
include a restaurant on distillpub premises if any of these additional six “Class B”
licenses was initially issued prior to January 1, 1983; 3) a Class “B” license for any
premises for which a “Class B” license is issued; 4) one Class “A” license and one
“Class A” license, both issued for the same premises and initially issued prior to
January 1, 1990; and 5) if the distillpub also holds a brewpub permit issued in the
same name, any Class “B” or “Class B” or “Class C” retail license authorized for a
brewpub. Each retail license authorized for a distillpub must be issued in the name
of the distillpub. A “Class B” license issued to a distillpub is not subject to the liquor
license quota system and, unlike most other retailers, a distillpub is not required to
obtain a Class “B” license in order to hold a “Class B” license. A distillpub may hold
permits for not more than six distillpub locations. If more than one permit is issued
to a distillpub, the distillpub is not required to manufacture or rectify distilled spirits
at each location for which a permit is issued. The bill also includes various provisions
that treat distillpubs similar to manufacturers, including provisions that allow
intoxicating liquor to be shipped directly to distillpubs and to be sold by wholesalers
to distillpubs for production purposes.
This bill also modifies the interest restrictions applicable to brewpubs. Under
the bill, if a brewpub also holds a distillpub permit in the same name, the brewpub
may hold any retail license authorized for the brewpub or distillpub, and the
brewpub may self-distribute its own beer directly to any of these retail licensed
premises, without this distribution counting toward the brewpub's 1,000 barrel
self-distribution limit.
Quota for retail liquor licenses
Current law prohibits a person from selling alcohol beverages at retail unless
the seller possesses a license or permit authorizing the sale. Except when issued to
a winery, a “Class B" license authorizes the retail sale of intoxicating liquor for
consumption on the licensed premises and, subject to various restrictions, the retail
sale of intoxicating liquor in original packages for consumption off the licensed
premises. Current law imposes a quota on the number of “Class B" liquor licenses
that a municipality may issue, subject to certain exceptions. The quota is generally
determined by a formula based on the number of licenses previously issued by the
municipality and the municipality's population. For purposes of the quota system,
a reserve “Class B" license is a “Class B" liquor license first issued on or after
December 1, 1997.
This bill increases municipalities' liquor license quotas by increasing by 10
percent, rounded up to the nearest whole number, the number of reserve “Class B"
liquor licenses that a municipality may issue.
Brewpub regulations
Under current law, a person is eligible for a brewpub permit issued by DOR if
the person meets certain requirements, including that the person manufactures not
more than 10,000 barrels of beer per year in all locations. A brewpub permit
authorizes, among other activities, the manufacture of up to 10,000 barrels of beer
per year and the retail sale of beer through a Class “B" beer license issued for a
restaurant on the brewpub premises. A person may not hold more than six brewpub
permits.
This bill increases, from 10,000 to 20,000 barrels per year, the amount of beer
that a brewpub may manufacture. The bill also increases, from six to 12, the number
of locations for which a person may hold a brewpub permit.
Allowing brewers holding brewer's permit to sell wine and distilled spirits
for on-premises consumption
Under current law, a brewer's permit issued by DOR authorizes a brewer to,
among other activities, sell at retail, without a retail license, the brewer's own beer
and other Wisconsin-made beer at the brewery premises and at one off-site retail
outlet of the brewer. A brewer may make retail sales of intoxicating liquor only if the
brewer held a retail intoxicating liquor license on June 1, 2011.
This bill allows any brewer holding a brewer's permit to sell intoxicating liquor
at retail for on-premise consumption at the brewery premises or the brewery's
off-site retail outlet. As under current law, intoxicating liquor sold by the brewer
must be purchased from a wholesaler.
Winery regulations
Current law allows a winery to hold a retail “Class B" license authorizing the
retail sale of wine. A winery operating under a retail “Class B" license may not
remain open for retail sales of wine between the hours of 9 p.m. and 8 a.m.
This bill changes the closing hour for wineries operating under a retail “Class
B" license from 9 p.m. to 2 a.m., but allows municipalities to establish, by ordinance,
more restrictive closing hours for these wineries.
The bill also specifies that a winery may hold a Class “B" license authorizing
the retail sale of beer if the winery holds, for the same premises, a “Class B" license
authorizing the retail sale of wine.
Eligibility criteria for membership in a small winery cooperative wholesaler
Under current law, between October 1 and December 31, 2008, DOR was
authorized to issue intoxicating liquor wholesalers' permits to small winery
cooperatives (cooperative wholesalers). Only wineries certified by DOR as small
wineries can be members of a cooperative wholesaler. A small winery is defined as
a winery that produces and bottles less than 25,000 gallons of wine in a calendar
year. The only alcohol beverage product a cooperative wholesaler can sell and
distribute is the wine of its members.
This bill changes the definition of small winery so that a winery that produces
and bottles less than 50,000, rather than 25,000, gallons of wine in a calendar year
may become a member of an existing cooperative wholesaler.
Eliminating requirement that beer and intoxicating wholesalers have a
minimum number of customers
Under current law, a beer wholesaler must annually sell and deliver beer to at
least 25 separate and independent retail licensees or wholesalers, and an
intoxicating liquor wholesaler must annually sell and deliver intoxicating liquor to
at least ten separate and independent retail licensees or permittees. If a wholesaler
fails to satisfy this requirement, certain penalties apply and the wholesaler's permit
cannot be renewed.
This bill repeals this requirement.
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:
SB418,1
1Section 1
. 125.02 (5g), (5i) and (5k) of the statutes are created to read:
SB418,6,22
125.02
(5g) “Distillpub” means a permittee under s. 125.525.
SB418,6,4
3(5i) “Distillpub group" means a distillpub, including all premises for which the
4distillpub holds a permit issued under s. 125.525, together with all of the following:
SB418,6,75
(a) All distillpubs that share membership with the distillpub in a controlled
6group of distillpubs, as determined according to rules applicable under
26 USC 5041 7(c) (4).
SB418,6,98
(b) All distillpubs considered with the distillpub as one taxpayer under the
9federal Internal Revenue Code.
SB418,6,1010
(c) All franchisees, as defined in s. 553.03 (5), of the distillpub.
SB418,6,1211
(d) All franchisees, as defined in s. 553.03 (5), of the distillpub's franchisor, as
12defined in s. 553.03 (6).
SB418,6,1313
(e) The franchisor, as defined in s. 553.03 (6), of the distillpub.
SB418,6,15
14(5k) “Distillpub premises" means any premises covered by a permit issued
15under s. 125.525.
SB418,2
1Section
2. 125.02 (10) of the statutes is amended to read:
SB418,7,32
125.02
(10) “Manufacturer" means a person, other than a rectifier
or distillpub,
3that ferments, manufactures
, or distills intoxicating liquor.
SB418,3
4Section 3
. 125.02 (15) (b) of the statutes is amended to read:
SB418,7,75
125.02
(15) (b) With respect to intoxicating liquor, the manufacturer, the
6rectifier,
the distillpub, or the exclusive agent designated by the manufacturer
or, 7rectifier
, or distillpub.
SB418,4
8Section 4
. 125.02 (16) (intro.) of the statutes is amended to read:
SB418,7,109
125.02
(16) (intro.) “Rectifier" means any one of the following
but does not
10include a distillpub:
SB418,5
11Section 5
. 125.02 (21) of the statutes is amended to read:
SB418,7,1512
125.02
(21) “Wholesaler" means a person, other than a brewer, brewpub,
13manufacturer,
or rectifier,
or distillpub, who sells alcohol beverages to a licensed
14retailer or to another person who holds a permit to sell alcohol beverages at
15wholesale.
SB418,6
16Section 6
. 125.04 (9) of the statutes is amended to read:
SB418,7,2117
125.04
(9) Separate license or permit required. Except as provided under ss.
18125.27 (2) (a) and 125.51 (5) (c) 1., wholesalers, manufacturers, rectifiers,
distillpubs, 19brewers, brewpubs, and retailers shall have a separate permit or license covering
20each location or premises, except a licensed public warehouse, from which deliveries
21and sales of alcohol beverages are made or at which alcohol beverages are stored.
SB418,7
22Section 7
. 125.10 (4) of the statutes is amended to read:
SB418,8,523
125.10
(4) Regulation of closed retail premises. A municipality may not
24prohibit the permittee, licensee, employees, salespersons, employees of wholesalers
25issued a permit under s. 125.28 (1) or 125.54 (1); employees of permittees under s.
1125.295
or 125.525 with respect to the permittee's own retail premises; or service
2personnel from being present on premises operated under a Class “A", “
Class A" or
3“Class C" license or under a Class “B" or “Class B" license or permit during hours
4when the premises are not open for business if those persons are performing
5job-related activities.
SB418,8
6Section 8
. 125.25 (2) (b) 5. of the statutes is amended to read:
SB418,8,107
125.25
(2) (b) 5.
A Except as provided in s. 125.295 (3m), a Class “A" license
8may not be issued to a person holding a brewpub permit issued under s. 125.295 or
9to a person who has a direct or indirect ownership interest in a premises operating
10under a brewpub permit issued under s. 125.295.
SB418,9
11Section 9
. 125.28 (5) (b) of the statutes is repealed.
SB418,10
12Section 10
. 125.28 (5) (c) of the statutes is amended to read:
SB418,8,1513
125.28
(5) (c) No fermented malt beverages retail licensee or wholesaler may
14receive a benefit from a violation under par. (a)
or (b) with knowledge of the
15circumstances giving rise to the violation.
SB418,11
16Section 11
. 125.29 (3) (h) of the statutes is amended to read:
SB418,8,2217
125.29
(3) (h) Notwithstanding ss. 125.04 (9) and 125.09 (1), the retail sale of
18intoxicating liquor, for on-premise consumption by individuals at the brewery
19premises or an off-site retail outlet established by the brewer,
if the brewer held, on
20June 1, 2011, a license or permit authorizing the retail sale of intoxicating liquor and 21if the intoxicating liquor has been purchased by the brewer from a wholesaler holding
22a permit under s. 125.54.
SB418,12
23Section
12. 125.295 (1) (a) of the statutes is amended to read:
SB418,9,224
125.295
(1) (a) The manufacture of fermented malt beverages on the brewpub
25premises if the entire manufacturing process occurs on these premises and not more
1than
10,000 20,000 barrels of fermented malt beverages are manufactured in a
2calendar year by the permittee's brewpub group.
SB418,13
3Section
13. 125.295 (2) (a) 1. of the statutes is amended to read:
SB418,9,54
125.295
(2) (a) 1. The applicant's brewpub group manufactures a total of not
5more than
10,000 20,000 barrels of fermented malt beverages in a calendar year.
SB418,14
6Section 14
. 125.295 (2) (a) 6. a. of the statutes is amended to read:
SB418,9,87
125.295
(2) (a) 6. a.
A Except as provided in sub. (3m), a Class “A" license
8issued under s. 125.25.
SB418,15
9Section 15
. 125.295 (2) (a) 6. b. of the statutes is amended to read:
SB418,9,1110
125.295
(2) (a) 6. b. Except as provided in subd. 4. and subs. (1) (h)
and, (3) (b),
11and (3m), a Class “B" license issued under s. 125.26.
SB418,16
12Section 16
. 125.295 (2) (a) 6. e. of the statutes is amended to read:
SB418,9,1413
125.295
(2) (a) 6. e. Except as provided in subs. (1) (h)
and, (3) (c),
and (3m), a
14“Class B" license or permit or “Class C" license issued under s. 125.51.
SB418,17
15Section
17. 125.295 (3) (a) of the statutes is amended to read:
SB418,9,1716
125.295
(3) (a) No brewpub group may hold more than
6 12 brewpub permits
17issued under this section.
SB418,18
18Section 18
. 125.295 (3) (b) of the statutes is amended to read:
SB418,9,2519
125.295
(3) (b)
A Except as provided in sub. (3m), a brewpub may not hold any
20Class “B" license other than one issued for a restaurant on the brewpub premises.
21Notwithstanding s. 125.26 (2) (a), each Class “B" license shall be issued for the
22brewpub's restaurant in the same name as the permittee under this section.
23Notwithstanding s. 125.33 (1), a brewpub may own the furniture, fixtures, fittings,
24furnishings, and equipment on the Class “B" premises and shall pay any license fee
25or tax required for the operation of the premises.
SB418,19
1Section
19. 125.295 (3) (c) of the statutes is amended to read:
SB418,10,42
125.295
(3) (c)
Subject Except as provided in sub. (3m), and subject to the
3requirements specified in s. 125.51 (3) and (3m), a brewpub may also hold “Class B"
4licenses and “Class C" licenses, but only for restaurants on brewpub premises.
SB418,20
5Section 20
. 125.295 (3m) of the statutes is created to read:
SB418,10,86
125.295
(3m) If a brewpub also holds a distillpub permit under s. 125.525 and
7the brewpub permit and distillpub permit are issued in the same name, in addition
8to any authorization under sub. (1), the permittee may do any of the following:
SB418,10,99
(a) Hold any retail license authorized under s. 125.525 (4) (b).
SB418,10,1310
(b) Distribute fermented malt beverages manufactured on the brewpub
11premises directly to the permittee's Class “A” or Class “B" licensed premises
12authorized under s. 125.525 (4) (b), which distribution shall not be included in any
13calculation of the 1,000 barrel limitation under sub. (1) (g).
SB418,21
14Section 21
. 125.33 (9) of the statutes is amended to read:
SB418,10,2115
125.33
(9) Campuses and retailers to purchase from wholesalers. Except as
16provided in ss. 125.29 (3m) (b) and (c), 125.295 (1) (g)
and (3m), and 125.30 (4), no
17campus or retail licensee or permittee may purchase or possess fermented malt
18beverages purchased from any person other than a wholesaler holding a permit
19under this chapter for the sale of fermented malt beverages. Any person who violates
20this subsection may be fined not more than $10,000 or imprisoned for not more than
219 months or both.
SB418,22
22Section 22
. 125.51 (2) (am) of the statutes is amended to read:
SB418,11,1123
125.51
(2) (am) In addition to the authorization under par. (a) and s. 125.06
24(13), a “Class A" license authorizes the licensee to provide, free of charge, to
25customers and visitors who have attained the legal drinking age, taste samples of
1intoxicating liquor other than wine that are not in original packages or containers
2and that do not exceed 0.5 fluid ounces each, for consumption on the “Class A"
3premises. No “Class A" licensee may provide more than one such taste sample per
4day to any one person. Taste samples may be provided under this paragraph only
5between the hours of 11 a.m. and 7 p.m. Any representative of a manufacturer,
6rectifier,
distillpub, winery, or out-of-state shipper issued a permit under s. 125.52,
7125.525, 125.53, or 125.58 may assist the “Class A" licensee in dispensing or serving
8the taste samples. No “Class A" licensee may provide as taste samples under this
9paragraph intoxicating liquor other than wine that the “Class A" licensee did not
10purchase from a wholesaler
, unless the “Class A” licensee is a distillpub providing
11intoxicating liquor manufactured or rectified by the distillpub.
SB418,23
12Section 23
. 125.51 (3) (f) of the statutes is amended to read:
SB418,11,1613
125.51
(3) (f) A “Class B" license may be issued only to a holder of a retail Class
14“B" license to sell fermented malt beverages unless the “Class B" license is the kind
15of “Class B" license specified under par. (am)
or
, is a temporary “Class B" license
16under sub. (10)
, or is a “Class B” license issued to a distillpub.
SB418,24
17Section 24
. 125.51 (4) (a) 1. of the statutes is amended to read:
SB418,11,2018
125.51
(4) (a) 1. “License" means a retail “Class B" license issued under sub.
19(3) but does not include a “Class B" license issued to wineries under sub. (3) (am)
or
20a “Class B” license issued to a distillpub.
SB418,25
21Section
25. 125.51 (4) (br) 1. i. of the statutes is created to read:
SB418,11,2422
125.51
(4) (br) 1. i. Multiply the result under subd. 1. a. to h. by 1.1, except that
23if the product is not a whole number, round the product up to the nearest whole
24number.