Trial Engrossment of Amendment A00741 to House Bill 0975 P.N. 1206, Regular Session 2017-2018

A00741

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

975

Session of

2017

INTRODUCED BY TURZAI, BARRAR, BERNSTINE, BLOOM, CORBIN, CORR,

CUTLER, DOWLING, DUNBAR, EVANKOVICH, EVERETT, FEE, GREINER,

GROVE, A. HARRIS, HELM, HICKERNELL, IRVIN, JAMES, KAMPF,

KAUFFMAN, KNOWLES, MACKENZIE, MAHER, MARSHALL, MASSER,

McGINNIS, MENTZER, MILNE, MUSTIO, ORTITAY, PICKETT, REESE,

ROTHMAN, SACCONE, SANKEY, SCHEMEL, SIMMONS, SONNEY, STAATS,

TOPPER, WALSH, WARD, WATSON, WHEELAND AND KEEFER,

APRIL 3, 2017

REFERRED TO COMMITTEE ON LIQUOR CONTROL, APRIL 3, 2017

AN ACT

Amending the act of April 12, 1951 (P.L.90, No.21), entitled, as

reenacted, "An act relating to alcoholic liquors, alcohol and

malt and brewed beverages; amending, revising, consolidating

and changing the laws relating thereto; regulating and

restricting the manufacture, purchase, sale, possession,

consumption, importation, transportation, furnishing, holding

in bond, holding in storage, traffic in and use of alcoholic

liquors, alcohol and malt and brewed beverages and the

persons engaged or employed therein; defining the powers and

duties of the Pennsylvania Liquor Control Board; providing

for the establishment and operation of State liquor stores,

for the payment of certain license fees to the respective

municipalities and townships, for the abatement of certain

nuisances and, in certain cases, for search and seizure

without warrant; prescribing penalties and forfeitures;

providing for local option, and repealing existing laws," in

preliminary provisions, further providing for definitions;

and, in licenses and regulations, liquor, alcohol and malt

and brewed beverages, providing for wine wholesale license

and for wine retail license.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Section 102 of the act of April 12, 1951 (P.L.90,

No.21), known as the Liquor Code, is amended by adding a

definition definitions to read:

Section 102. Definitions.--The following words or phrases,

unless the context clearly indicates otherwise, shall have the

meanings ascribed to them in this section:

* * *

"Brand of wine" shall mean a wine product or series of wine

products produced by a single manufacturer.

* * *

"Retail store" shall mean a reputable place operated by

persons of good repute which primarily sells, supplies or offers

consumer products for sale directly to consumers and has an area

under one roof of greater than five thousand square feet. has at

least fifty-one per centum of sales floor space for the sale of

food, supplies for the table and food products for human

consumption primarily off the premises and which has an area

under one roof of greater than five thousand square feet.

* * *

"Variable pricing" shall mean, for purposes of the wholesale

of wine, disparity in the price of an item sold to one licensee

as compared to the price of the same item to another licensee or

a licensee of a different classification. The term shall not

include a discount for a volume purchase.

* * *

Section 2. The act is amended by adding sections to read:

Section 410.1. Wine Wholesale License.--(a) Notwithstanding

any other provision of law, an importer licensed under this

article may make application to the board on forms prescribed by

the board for a wine wholesale license for the purpose of

selling and distributing wholesale wine to the board, to all

licensees and to United States Armed Forces facilities located

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on United States Armed Forces installations within this

Commonwealth. Within thirty days of the effective date of this

section, the board shall accept applications, and the board

shall approve the issuance of a license within sixty days of

receipt of the application if the applicant meets the

requirements under this section. An applicant shall submit the

initial license fee with the application to the board. The

Department of Revenue shall audit wine wholesale licensee's to

determine whether the holder of a wine wholesale license is

remitting taxes. The following shall apply:

(1) The wine wholesale licensee shall:

(i) Provide to the board a list of the brands of wine it

will distribute.

(ii) Serve the board, all licensees, United States Armed

Forces facilities and any other authorized person permitted to

purchase and resell wine under this act and make wine available

for sale under the same pricing structure.

(iii) Post a schedule of prices with the board as follows:

(A) A schedule of prices shall identify the filer by name,

address and license number on forms prescribed by the board.

(B) Schedules shall be filed on or before the twenty-fifth

day of each month and shall become effective on the first day of

the second succeeding calendar month. When the twenty-fifth day

of the month falls on a Saturday, Sunday or holiday, schedules

may be filed on the following business day.

in a manner as designated by the board no later than the

twentieth day of the month prior to the effective date of the

schedule being amended. When the twentieth day of the month

falls on a Saturday, Sunday or holiday, amended schedules may be

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filed on the following business day.

(D) The schedules filed each month which contain a listing

of all brands of wine to be sold shall be known as master

schedules. The board may permit or require the filing of short

form schedules for any particular month in place of the master

schedule. Short form schedules shall show all new items, price

changes or items discontinued since the last filing of a master

schedule. All schedules shall contain statements that the board

may permit or require.

(iv) Keep a detailed log of wholesale wine transactions,

including sales to the board, all licensees, United States Armed

Forces facilities and any other authorized purchaser under this

act.

(2) The wine wholesale licensee may sell and distribute more

than one brand of wine under the same license and shall provide

any contractual agreements between the wine wholesale licensee

and the licensed manufacturer to the board.

(3) The wine wholesale licensee may amend the list of brands

of wine it distributes to include additional brands of wine. The

following shall apply:

(i) For brands of wine that have not been sold by the board

at Pennsylvania Liquor Stores or through special liquor orders,

the wine wholesale licensee shall apply to the board for

permission to add that brand to the licensee's list of brands

permitted to be sold under the license.

(ii) For each new brand of wine, an application filing fee

of two thousand five hundred dollars ($2,500) shall be submitted

with the application.

(4) The wine products shipped into this Commonwealth must be

delivered to the wine wholesale licensee's licensed premises.

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Upon delivery, the products shall be unloaded, inventoried and

remain on the licensed premises for forty-eight hours before

delivery is made to a Pennsylvania Liquor Store, a licensee's

licensed premises or United States Armed Forces facilities.

During that time period, the board may inspect and inventory

warehouses. In the event that the forty-eight-hour hold period

may cause economic hardship to the wholesaler, board or

licensees, case-by-case exceptions may be requested by the

wholesaler or supplier and may be granted by the board.

(5) The wine wholesale licensee may not engage in conduct

that would constitute any of the following:

(i) Variable pricing.

(ii) Unfair or deceptive trade practices proscribed under

Federal or State law or regulation.

(iii) Intentional exclusion of competing brands of wine from

the marketplace.

(6) The wine wholesale licensee may only sell and distribute

those products in this Commonwealth that are subject to a

contractual relationship between the licensee and one or more

licensed manufacturers or suppliers of wine.

(7) A wine wholesale licensee shall remit to the Department

of Revenue all applicable taxes. A wine wholesale licensee shall

be considered a State Liquor Store for the purpose of collecting

and remitting taxes under Article II of the act of March 4, 1971

(P.L.6, No.2), known as the Tax Reform Code of 1971, for

products sold by licensees for on-premises consumption. The

emergency State tax imposed under the act of June 9, 1936 (1st

Sp.Sess., P.L.13, No.4), entitled "An act imposing an emergency

State tax on liquor, as herein defined, sold by the Pennsylvania

Liquor Control Board; providing for the collection and payment

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of such tax; and imposing duties upon the Department of Revenue

and the Pennsylvania Liquor Control Board," shall be included in

the retail price of wine offered for sale by the wine wholesale

licensee. The tax may not be assessed at the point of sale to

consumers. The wine wholesale licensee shall be required to

remit the taxes to the Department of Revenue.

(8) No wine wholesale licensee under this section may hold a

license or permit to engage in any sales of wine at retail to

residents of this Commonwealth, and no licensee or permit holder

selling wine at retail in this Commonwealth may obtain a wine

wholesale license from the board. No wholesale license may be

issued to any wine manufacturer or producer.

(9) Any licensed importer that wishes to obtain a wine

wholesale license shall do all of the following:

(i) Notify the board in writing.

(ii) Pay the licensing fees specified under paragraph (10).

(iii) Provide a statement to the board indicating that the

licensed importer plans to continuously operate under the wine

wholesale license for the duration of the license. The license

shall be in effect from the date of issuance and shall be

renewed on an annual basis with the board unless suspended,

revoked or not renewed under this act.

(10) In addition to any other fees provided for under this

act, a licensed importer shall submit an initial fee equal to

ten per centum of the cost of goods sold with the application.

For purposes of this paragraph, "cost of goods sold" shall be

determined as the purchase price the board paid to the licensed

importer for wine sold by the board in the most recent twelve-

month period.

(11) A wine wholesale license shall be in effect unless

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suspended, revoked or not renewed under this act. A wholesale

license in good standing shall be renewed every year as follows:

(i) Wine wholesale licenses issued under this section shall

be subject to renewal each year.

(ii) The application for renewal shall be submitted, on a

form prescribed by the board, at least thirty days prior to the

expiration of the wine wholesale license and shall include, at a

minimum, an update of the information contained in the initial

and prior renewal applications and the payment of any renewal

fee required under this section.

(iii) A renewal fee of five per centum of the wine wholesale

licensee's gross receipts shall be due upon application for the

renewal of a license. For the purposes of this subparagraph,

"gross receipts" shall be determined as the total of all sales

of wine made by the licensed importer to the board, all

licensees, United States Armed Forces facilities and any other

authorized purchaser under this act.

(iv) The board may revoke a wine wholesale license issued

under this section if it finds that the licensee or any of its

affiliates, executive officers, directors or general or limited

partners or persons holding a controlling interest in the

licensee:

(A) is in violation of any provision of this act;

(B) has furnished the board with false or misleading

information; or

(12) Any violation of this act or the board's regulations

for governing activity occurring under the authority of the wine

wholesale license may be the basis for any of the following:

(i) A fine, suspension or license revocation.

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(ii) Nonrenewal of the license.

(iii) Other penalties authorized under section 471.

(13) The board shall have no authority to do any of the

following once wine wholesale licenses have been issued and

licensees have commenced providing wholesale wine products to

authorized purchasers:

(i) Determine what wine products may be sold in this

Commonwealth.

(ii) Set the price at which wine products may be sold at

wholesale or by retail licensees in this Commonwealth.

(iii) Sell wine products at wholesale to retail licensees or

any other authorized purchaser under this act.

(b) All fees paid to the board under this section shall be

deposited into the General Fund.

Section 417. Wine Retail License.--(a) The board shall

issue a wine retail license to a retail store upon application.

(b) Every applicant for a wine retail license shall file a

written application with the board in the form and containing

the information as the board shall from time to time prescribe.

The application shall contain and follow the requirements set

forth under section 403 and shall at a minimum contain the

following:

(1) a description of the retail store;

(2) a description of any alterations proposed to be made to

the retail store or any additional construction plans to be

undertaken after the approval by the board of the application

for a license; or

(3) proposed storage location.

provisions and restrictions under section 404. Notwithstanding

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any provision of law to the contrary, a wine retail license may

be transferred to another eligible person to be used at the same

licensed facility.

(d) In addition to any other fees provided for under this

act, an applicant shall be required to pay an initial

application fee in the amount of two hundred fifty thousand

dollars ($250,000).

(e) A wine retail license is subject to renewal on an annual

basis. A renewal fee equal to two per centum of the wine retail

licensee's total gross receipts shall be due at the time the

renewal application is filed. For purposes of this paragraph,

"gross receipts" shall be determined as the total of all sales

of wine made to consumers for off-premises consumption in the

most recent twelve-month period.

(f) Every wine retail licensee may sell wine for off-

premises consumption from any location within its licensed

premises. The following shall apply:

(1) Products may be displayed on shelving units and systems

and in or on refrigerated cases and equipment, within the

discretion of the licensee, provided that the displays are not

designed to attract minors and that the manner and method of

display allows access by all customers, including the physically

handicapped.

(2) A wine retail licensee may store wine in a noncontagious

noncontiguous area that is not accessible to the public provided

the storage areas are:

(i) locked at all times when not being accessed by the

licensees' employees;

(ii) not accessible to employees under eighteen years of

age; and

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(iii) identified by dimensions and location on forms

submitted in advance to the board.

(g) A wine retail licensee shall be permitted to hold:

(1) Tastings at any location in the retail store, provided

the tastings are in compliance with the provisions and

regulations regarding tastings held on licensed premises.

(2) Educational classes, including cooking classes, how-to

classes and seminars regarding the proper or recommended use,

consumption, identification, pairing, appellation, aging,

storage, characteristics, service and presentation of the

alcohol products that a wine retail licensee offers for sale,

during which classes the incidental consumption of alcohol by

registered participants of lawful age shall be permitted. The

classes may be free of charge to participants or may be offered

at fee.

(h) Wine retail licensees may purchase wine under the

following requirements and restrictions:

(1) Wine retail licensees shall buy wine sold in accordance

with their wine retail license from the board, as long as the

board continues to operate as a wholesaler, a wine wholesale

licensee or a winery licensed under this act.

(2) All products purchased by wine retail licensees and all

products purchased by restaurant and eating place licensees

owned by the same individual or company must be separately

purchased. Separate records must be maintained for all purchases

and sales by all wine retail licensees and restaurant or eating

place licensees, whether or not located within the same building

or owned by the same individual or company.

(i) Nothing in this section shall affect the ability of an

existing licensee to operate within the scope of its current

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license as authorized by this act.

(1) Wine retail licensees shall be permitted to hold

restaurant or eating place licenses issued for areas within the

same building for which the wine retail license has been issued

or for a different building. Wine retail licenses and restaurant

or eating place licenses issued for areas within the same retail

stores may be issued for areas that are adjacent, abutting and

contiguous, and the board shall approve interior connections

between the areas.

(2) Notwithstanding any other provision of law, a holder of

a wine expanded permit under section 415 may continue to operate

under the permit as authorized by this act. The permit holder

may allow for the purchase of wine for off-premises consumption

to be paid for at a point of sale other than a point of sale

located on the licensed premises. The purchase of wine may not

occur at a point of sale where the customer scans the customer's

own purchases.

(j) For purposes of selling wine for off-premises

consumption:

(1) A wine retail licensee may sell in a single transaction

up to nine thousand (9,000) milliliters of wine.

(2) A wine retail licensee may sell wine from seven o'clock

antemeridian until eleven o'clock postmeridian every day except

Sunday.

(3) A wine retail licensee may sell wine from nine o'clock

antemeridian until eleven o'clock postmeridian on Sundays upon

submission to the board of a Sunday sales permit application and

a fee of two thousand dollars ($2,000) per year.

(4) A wine retail licensee shall comply with the responsible

alcohol management provisions under section 471.1.

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(5) A wine retail licensee shall utilize a transaction scan

device to verify the age of an individual who appears to be

under thirty-five years of age before making a sale of wine. A

wine retail licensee may not sell or share data from the use of

a transaction scan device, except that the licensee may use the

data to show the enforcement bureau of the board that the

licensee is in compliance with this act. As used in this

paragraph, the term "transaction scan device" means a device

capable of deciphering, in an electronically readable format,

the information encoded on the magnetic strip or bar code of an

identification card under section 495(a).

(6) A sale of wine shall be made through a register which is

staffed by a sales clerk who is at least eighteen years of age

and has been trained under section 471.1 and which utilizes a

transaction scan device for the sale. The sale of wine may not

occur at a point of sale where the customer scans the customer's

own purchases.

(7) The sale of wine shall for off-premises consumption be

considered a "purchase at retail" under section 201(f) of the

Tax Reform Code of 1971, a "sale at retail" under section 201(k)

of the Tax Reform Code of 1971 or a "use" under section 201(o)

of the Tax Reform Code of 1971.

(k) A wine retail licensee is not subject to section 493(14)

for the purposes of selling liquor for off-premises consumption.

(l) A licensee or permit holder that sells wine and spirits

for off-premises consumption may not require a customer to

purchase a membership or pay a fee to purchase wine and spirits.

(l) (m) All fees paid to the board under this section shall

be deposited into the General Fund.

Section 3. This act shall take effect in 60 days.

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