AN ACT

 

1Amending the act of April 12, 1951 (P.L.90, No.21), entitled, as
2reenacted, "An act relating to alcoholic liquors, alcohol and
3malt and brewed beverages; amending, revising, consolidating
4and changing the laws relating thereto; regulating and
5restricting the manufacture, purchase, sale, possession,
6consumption, importation, transportation, furnishing, holding
7in bond, holding in storage, traffic in and use of alcoholic
8liquors, alcohol and malt and brewed beverages and the
9persons engaged or employed therein; defining the powers and
10duties of the Pennsylvania Liquor Control Board; providing
11for the establishment and operation of State liquor stores,
12for the payment of certain license fees to the respective
13municipalities and townships, for the abatement of certain
14nuisances and, in certain cases, for search and seizure
15without warrant; prescribing penalties and forfeitures;
16providing for local option, and repealing existing laws,"
17further providing for definitions, for malt and brewed
18beverages manufacturers', distributors' and importing
19distributors' licenses, for malt and brewed beverages
20alternating brewers' licenses, for distributors' and
21importing distributors' restrictions on sales, storage, etc.,
22for breweries and for unlawful acts relative to malt or
23brewed beverages and licensees.

24This act shall be construed as an enactment of the General
25Assembly's support for the 3-tier system for alcoholic beverages
26production, subject to certain rights of a manufacturer,
27distribution and sale that, through uniform Statewide
28regulation, provides this Commonwealth regulatory authority over

1the production, storage, distribution, transportation, sale and
2consumption of alcoholic beverages by and to its citizens, for
3the benefit of the public health and welfare and this
4Commonwealth's economic stability. The General Assembly intends
5that the liquor laws shall be enforced in order to restrict
6sales to minors, collect all State and local taxes due on the
7commerce in alcoholic beverages, establish open, transparent and
8accountable distribution systems for alcoholic beverages and the
9intent to exercise, to the fullest extent allowed, all the
10authority granted a state under the twenty-first amendment to
11the Constitution of the United States.

12The General Assembly of the Commonwealth of Pennsylvania
13hereby enacts as follows:

14Section 1. The definition of "distributor" in section 102 of
15the act of April 12, 1951 (P.L.90, No.21), known as the Liquor
16Code, reenacted and amended June 29, 1987 (P.L.32, No.14) and
17amended May 31, 1996 (P.L.312, No.49), is amended and the
18section is amended by adding a definition to read:

19Section 102. Definitions.--The following words or phrases,
20unless the context clearly indicates otherwise, shall have the
21meanings ascribed to them in this section:

22* * *

23"Contract brewed" shall mean the arrangement by which a
24manufacturer hires another manufacturer to produce its malt or
25brewed beverage.

26* * *

27"Distributor" shall mean any person licensed by the board to
28engage in the purchase [only from Pennsylvania] from
29manufacturers and [from] importing distributors and the resale
30of malt or brewed beverages, except to importing distributors

1and distributors, in the original sealed containers as prepared
2for the market by the manufacturer at the place of manufacture,
3but not for consumption on the premises where sold, and in
4quantities of not less than a case or original containers
5containing one hundred twenty-eight ounces or more which may be
6sold separately.

7* * *

8Section 2. Section 431(a.1), (a.2), (b), (d) and (f) of the
9act, amended or added December 20, 1996 (P.L.1513, No.196) and
10December 8, 2004 (P.L.1810, No.239), are amended and the section
11is amended by adding subsections to read:

12Section 431. Malt and Brewed Beverages Manufacturers',
13Distributors' and Importing Distributors' Licenses.--* * *

14(a.1) Any [out of State] manufacturer whose products are
15sold and delivered within this Commonwealth shall be authorized:
16to rent, lease or otherwise acquire space from an importing
17distributor or bailee for hire authorized by this act at no more
18than two locations per manufacturer for use of a segregated
19portion of a warehouse or other storage facility owned or
20operated by the importing distributor or bailee for hire at
21which the [out of State] manufacturer may store, repackage and
22sell malt or brewed beverages to any importing distributor to
23whom the [out of State] manufacturer has granted distribution
24rights pursuant to subsection (b) or to any purchaser outside
25this Commonwealth for delivery outside this Commonwealth; or to
26ship to its storage facility outside this Commonwealth. Such
27manufacturer may compensate the importing distributor or bailee
28for hire for any related storage, repackaging or delivery
29services. [The out of State] In order to use a storage facility 
30as set forth under this subsection, the manufacturer must file

1with the Liquor Control Board the rate of compensation to be
2paid. A separate written application must be filed to acquire
3storage licenses, and the board may establish the information
4that must be provided on the application. The initial filing
5must be made prior to any payments being made, and any
6subsequent changes in the rate of compensation must be filed
7within thirty days of any such change. [Nothing in this act
8authorizing storage facilities for out of State manufacturers is
9intended to make any change in the manner malt or brewed
10beverages are distributed through the three-tier system.]

11(a.2) The board shall issue to a holder of a manufacturer's
12license no more than two total storage licenses per
13manufacturer, as set forth under subsection (a.1), to cover
14storage facilities separate from the location of the
15manufacturing facility. A manufacturer may use its storage
16facilities to receive, store, repackage, sell and distribute
17malt or brewed beverages in the same manner as it can at its
18place of manufacture or it may rent, lease or otherwise acquire
19space from an importing distributor or bailee for hire
20authorized by this act in the same manner as an out of State
21manufacturer as set forth in subsection (a.1). A separate
22written application must be filed to acquire storage licenses,
23and the board is empowered to establish what information must be
24provided on that application. Nothing in this act authorizing
25off-site storage facilities for manufacturers is intended to
26make any change in the manner malt or brewed beverages are
27distributed through the three-tier system.

28(a.3) The following shall apply:

29(1) Any manufacturer that holds a valid manufacturer's
30license may deliver up to seventy-five thousand total barrels of

1malt or brewed beverages, to which it owns the brand rights and
2that it has manufactured or has had contract brewed for it by
3another manufacturer, directly to any holder of any license
4issued by the board per year. A manufacturer may not directly
5deliver malt or brewed beverages that it has contract brewed for
6another.

7(2) A manufacturer may use its own vehicles, leased vehicles
8or the services of a transporter-for-hire or other common
9carrier to deliver malt or brewed beverages to the holder of any
10license issued by the board within this Commonwealth.

11(3) A manufacturer may not terminate its primary
12relationship with an importing distributor in favor of self-
13distribution under this subsection except as otherwise permitted
14under this act.

15(a.4) In order to be eligible for self-distribution rights,
16a manufacturer must submit verification information to the
17board, including a certification that such self-distribution
18does not exceed the barrelage limits under this subsection and
19that the barrelage calculation includes the manufacture of all
20brands of the manufacturer. The board shall certify that the
21manufacturer is eligible for such self-distribution by reviewing
22the written request of the manufacturer, on a form and at such
23times prescribed by the board, for such certification. A request
24for certification may be submitted by any manufacturer that
25holds a manufacturer's license and believes it is eligible for
26self-distribution.

27(a.5) In addition to compliance under section 444, a 
28manufacturer that is located outside this Commonwealth and that 
29holds a manufacturer's license is deemed to have submitted to 
30the jurisdiction of the board, any other Commonwealth agency and
 

1the courts of this Commonwealth for purposes of enforcement of 
2this section and any related laws, rules or regulations. The 
3manufacturer shall also be subject to citation by the 
4enforcement bureau under section 471 and nonrenewal under 
5section 470. The Department of Revenue may promulgate 
6regulations requiring the filing of periodic reports by a 
7manufacturer subject to the provisions of this subsection to 
8ensure compliance with the provisions of this section.

9(b) The board shall issue to any reputable person who
10applies therefor, and pays the license fee hereinafter
11prescribed, a distributor's or importing distributor's license
12for the place which such person desires to maintain for the sale
13of malt or brewed beverages, not for consumption on the premises
14where sold, and in quantities of not less than a case or
15original containers containing one hundred twenty-eight ounces
16or more which may be sold separately as prepared for the market
17by the manufacturer at the place of manufacture. The board shall
18have the discretion to refuse a license to any person or to any
19corporation, partnership or association if such person, or any
20officer or director of such corporation, or any member or
21partner of such partnership or association shall have been
22convicted or found guilty of a felony within a period of five
23years immediately preceding the date of application for the said
24license: And provided further, That, in the case of any new
25license or the transfer of any license to a new location, the
26board may, in its discretion, grant or refuse such new license
27or transfer if such place proposed to be licensed is within
28three hundred feet of any church, hospital, charitable
29institution, school or public playground, or if such new license
30or transfer is applied for a place which is within two hundred

1feet of any other premises which is licensed by the board: And
2provided further, That the board shall refuse any application
3for a new license or the transfer of any license to a new
4location if, in the board's opinion, such new license or
5transfer would be detrimental to the welfare, health, peace and
6morals of the inhabitants of the neighborhood within a radius of
7five hundred feet of the place proposed to be licensed. The
8board shall refuse any application for a new license or the
9transfer of any license to a location where the sale of liquid
10fuels or oil is conducted. The board may enter into an agreement
11with the applicant concerning additional restrictions on the
12license in question. If the board and the applicant enter into
13such an agreement, such agreement shall be binding on the
14applicant. Failure by the applicant to adhere to the agreement
15will be sufficient cause to form the basis for a citation under
16section 471 and for the nonrenewal of the license under section
17470. If the board enters into an agreement with an applicant
18concerning additional restrictions, those restrictions shall be
19binding on subsequent holders of the license until the license
20is transferred to a new location or until the board enters into
21a subsequent agreement removing those restrictions. If the
22application in question involves a location previously licensed
23by the board, then any restrictions imposed by the board on the
24previous license at that location shall be binding on the
25applicant unless the board enters into a new agreement
26rescinding those restrictions. The board shall require notice to
27be posted on the property or premises upon which the licensee or
28proposed licensee will engage in sales of malt or brewed
29beverages. This notice shall be similar to the notice required
30of hotel, restaurant and club liquor licensees.

1Except as hereinafter provided, such license shall authorize
2the holder thereof to sell or deliver malt or brewed beverages
3in quantities above specified anywhere within the Commonwealth
4of Pennsylvania, which, in the case of distributors, have been
5purchased only from persons licensed under this act as
6manufacturers or importing distributors, and in the case of
7importing distributors, have been purchased from manufacturers
8or persons outside this Commonwealth engaged in the legal sale
9of malt or brewed beverages or from manufacturers or importing
10distributors licensed under this article. In the case of an
11importing distributor, the holder of such a license shall be
12authorized to store and repackage malt or brewed beverages owned
13by a manufacturer at a segregated portion of a warehouse or
14other storage facility authorized by section 441(d) and operated
15by the importing distributor within its appointed territory and
16deliver such beverages to another importing distributor who has
17been granted distribution rights by the manufacturer as provided
18herein. The importing distributor shall be permitted to receive
19a fee from the manufacturer for any related storage, repackaging
20or delivery services. In the case of a bailee for hire hired by
21a manufacturer, the holder of such a permit shall be authorized:
22to receive, store and repackage malt or brewed beverages
23produced by that manufacturer for sale by that manufacturer to
24importing distributors to whom that manufacturer has given
25distribution rights pursuant to this subsection or to purchasers
26outside this Commonwealth for delivery outside this
27Commonwealth; or to ship to that manufacturer's storage
28facilities outside this Commonwealth. The bailee for hire shall
29be permitted to receive a fee from the manufacturer for any
30related storage, repackaging or delivery services. The bailee

1for hire shall, as required in Article V of this act, keep
2complete and accurate records of all transactions, inventory,
3receipts and shipments and make all records and the licensed
4areas available for inspection by the board and for the
5Pennsylvania State Police, Bureau of Liquor Control Enforcement,
6during normal business hours.

7[Each out of State manufacturer] Except as otherwise provided 
8in subsection (a.3), each manufacturer of malt or brewed
9beverages whose products are sold and delivered in this
10Commonwealth shall give distributing rights for such products in
11designated geographical areas to specific importing
12distributors, and such importing distributor shall not sell or
13deliver malt or brewed beverages manufactured by the [out of
14State] manufacturer to any person issued a license under the
15provisions of this act whose licensed premises are not located
16within the geographical area for which he has been given
17distributing rights by such manufacturer. Should a licensee
18accept the delivery of such malt or brewed beverages in
19violation of this section, said licensee shall be subject to a
20suspension of his license for at least thirty days: Provided,
21That [the importing distributor holding such distributing rights
22for such product shall not sell or deliver the same to another
23importing distributor without first having entered into a
24written agreement with the said secondary importing distributor
25setting forth the terms and conditions under which such products
26are to be resold within the territory granted to the primary
27importing distributor by the manufacturer.

28When a Pennsylvania manufacturer of malt or brewed beverages
29licensed under this article names or constitutes a distributor
30or importing distributor as the primary or original supplier of

1his product, he shall also designate the specific geographical
2area for which the said distributor or importing distributor is
3given distributing rights, and such distributor or importing
4distributor shall not sell or deliver the products of such
5manufacturer to any person issued a license under the provisions
6of this act whose licensed premises are not located within the
7geographical area for which distributing rights have been given
8to the distributor and importing distributor by the said
9manufacturer: Provided, That] the importing distributor holding
10such distributing rights for such product shall not sell or
11deliver the same to another importing distributor without first
12having entered into a written agreement with the said secondary
13importing distributor setting forth the terms and conditions
14under which such products are to be resold within the territory
15granted to the primary importing distributor by the
16manufacturer. Nothing herein contained shall be construed to
17prevent any manufacturer from authorizing the importing
18distributor holding the distributing rights for a designated
19geographical area from selling the products of such manufacturer
20to another importing distributor also holding distributing
21rights from the same manufacturer for another geographical area,
22providing such authority be contained in writing and a copy
23thereof be given to each of the importing distributors so
24affected.

25* * *

26(d) (1) The following shall apply:

27(i) All distributing rights as hereinabove required shall be
28in writing, shall be equitable in their provisions [and], shall 
29include all territorial assignments, shall be renegotiated in 
30good faith by the fifth anniversary of any written agreement,

1shall be substantially similar as to terms and conditions with
2all other distributing rights agreements between the
3manufacturer giving such agreement and its other importing
4distributors [and distributors], shall not be modified,
5canceled, terminated or rescinded by the manufacturer without
6good cause, [and] shall give notice and the opportunity to 
7rectify any claimed deficiency in accordance with section 
8492(19), unless otherwise expressly provided for in this act and 
9shall contain a provision in substance or effect as follows:
10"The manufacturer recognizes that the importing distributor and
11distributor are free to manage their business in the manner the
12importing distributor and distributor deem best and that this
13prerogative vests in the importing distributor and distributor
14the exclusive right to establish a selling price, to select the
15brands of malt or brewed beverages they wish to handle and to
16determine the efforts and resources which the importing
17distributor and distributor will exert to develop and promote
18the same of the manufacturer's products handled by the importing
19distributor and distributor. However, the manufacturer expects
20that the importing distributor and distributor will price
21competitively the products handled by them, devote reasonable
22effort and resources to the sale of such products and maintain a
23reasonable sales level.["] The importing distributor and the 
24manufacturer agree to act in good faith with respect to all 
25aspects of this agreement and the importing distributor agrees 
26to not unfairly allocate its resources and efforts to brands of 
27a competitor." Each written agreement between a manufacturer and 
28an importing distributor shall conform to the provisions of this 
29section and shall set forth all essential, commercially 
30acceptable, fair and reasonable terms, requirements and
 

1conditions of the business relationship between the manufacturer 
2and the importing distributor, including, but not limited to:

3(A) Termination of the relationship, with or without good
4cause.

5(B) The duties and responsibilities of each party.

6(C) Changes in ownership.

7(ii) In the event an importing distributor's license is
8suspended for more than five days, a manufacturer whose products
9are distributed by such importing distributor may self-
10distribute such products directly to the holders of any license
11in the designated geographic territory granted to the importing
12distributor by the manufacturer during the time period of the
13suspension without regard to the limitations set forth under
14subsection (a.3).

15(iii) The following shall apply:

16(A) Upon thirty days' written notice, a manufacturer may
17modify, cancel, terminate or rescind, in whole or in part, an
18agreement pertaining to the distribution of the manufacturer's
19brands with an existing importing distributor without good cause
20at any time as long as the manufacturer pays to the importing
21distributor the fair market value of the importing distributor's
22business with respect to the modified, canceled, terminated or
23rescinded brand or brands: Provided, That such modification,
24cancellation, termination or rescission shall not be permitted,
25and shall be enjoined by a competent court of common pleas in
26this Commonwealth, where the volume of such brand or brands
27accounts for more than twenty per centum (20%) of the entire
28volume distributed by the importing distributor. In the event
29the manufacturer's modified, canceled, terminated or rescinded
30brand or brands constitute twenty per centum (20%) or less of

1the importing distributor's total volume, the manufacturer shall
2be free to appoint another importing distributor or to self-
3distribute in accordance with the provisions of this act after
4thirty days' written notice and upon the manufacturer's payment
5to the importing distributor of all of the manufacturer's
6inventory at such importing distributor, plus laid-in cost.

7(B) In determining the annual production of a manufacturer
8under this subparagraph:

9(I) the manufacturer of malt or brewed beverages shall
10include all brands produced by the manufacturer and every
11portion of the production of any other manufacturer who holds,
12directly or indirectly, an ownership interest in the
13manufacturer or with whom the manufacturer has a distribution
14agreement in this Commonwealth; and

15(II) any barrelage which is contract brewed by a
16manufacturer for and on behalf of another manufacturer will not
17be considered as part of the brewing manufacturer's barrelage
18and will be considered as part of the barrelage of the
19manufacturer for which the malt or brewed beverage is contract
20brewed.

21(C) For purposes of this subparagraph and in the absence of
22any contractual provisions defining the term, "fair market
23value" means the amount a willing seller, under no compulsion to
24sell, would be willing to accept, and a willing buyer, under no
25compulsion to purchase, would be willing to pay for the
26importing distributor's business with respect to the modified,
27canceled, terminated or rescinded brand or brands where both
28have knowledge of the relevant facts.

29(iv) ["Good cause" shall mean the failure by any party to an
30agreement, without reasonable excuse or justification, to comply

1substantially with an essential, reasonable and commercially
2acceptable requirement imposed by the other party under the
3terms of an agreement.] For the purposes of modification, 
4cancellation, termination or rescission, "good cause" shall mean 
5any of the following:

6(A) The failure or refusal of the importing distributor,
7without reasonable excuse or justification, to comply
8substantially with a material provision of the distribution
9agreement, including, without limitation, any provisions
10establishing standards of performance and termination with or
11without cause, which provision is essential, commercially
12acceptable, fair and reasonable.

13(B) Suspension of the importing distributor's State or
14Federal permit or license for more than thirty days.

15(C) The indictment or conviction of the importing
16distributor, or of a partner or individual who owns ten per
17centum (10%) or more of the partnership, stock or other
18ownership interest of the importing distributor, of a felony
19related to the business of the importing distributor which might
20reasonably be expected to adversely affect the good will or
21interest of the manufacturer: Provided, That in the event of an
22indictment or conviction of a partner or individual who owns ten
23per centum or more of the partnership, stock or other ownership
24interest of the importing distributor, no such termination shall
25be effective if, within the ninety-day period for the importing
26distributor to rectify a deficiency described under section 4-
27492(19), the individual owner divests all ownership interests in
28the importing distributor to the extent required by the
29discretion of the board.

30(D) Fraudulent conduct by the importing distributor in its
 

1dealings with the manufacturer or the manufacturer's products.

2(E) A sale of a material quantity of the manufacturer's
3brands outside of the agreed upon geographic sales territory
4granted to the importing distributor by the manufacturer, which
5sale was known or should have been known through the exercise of
6business practices commonly used in the industry, to the owners
7or senior management of the importing distributor.

8(F) If any of the following occur:

9(I) The importing distributor sells, transfers or assigns
10any ownership interest to or merges with another importing
11distributor.

12(II) The current owner of the importing distributor engages
13in a change in ownership, engages in the establishment of trusts
14or other ownership interests, enters into buy-sell agreements,
15or grants an option to purchase an ownership interest with or to
16anyone other than a current owner of the importing distributor,
17a surviving spouse or adult child of such a current owner, a
18trust for the benefit of the spouse or children of such current
19owner or any of them, or a partnership, corporation or other
20business entity of which such current owner, spouse or adult
21child, or any combination thereof, owns more than fifty per
22centum without first obtaining the prior written consent of the
23manufacturer: Provided, That such consent is not unreasonably
24withheld or delayed by the manufacturer and the importing
25distributor has complied with any reasonable requests for
26information concerning such changes.

27(G) The failure of any importing distributor to negotiate 
28any primary agreement in good faith and to accept any material 
29and commercially reasonable term being offered to the importing 
30distributor which is substantially similar to terms and
 

1conditions offered by the manufacturer and accepted by other 
2importing distributors or distributors.

3(2) After January 1, 1980, no manufacturer shall enter into
4any agreement with more than one distributor or importing
5distributor for the purpose of establishing more than one
6agreement for designated brand or brands of malt or brewed
7beverages in any one territory. Each franchise territory which
8is granted by a manufacturer shall be geographically contiguous.
9All importing distributors shall maintain sufficient records to
10evidence compliance of this section. With regard to any
11territorial distribution authority granted to an importing
12distributor by a manufacturer of malt or brewed beverages after
13January 1, 1996, the records shall establish that each and every
14case of a brand of malt or brewed beverages for which the
15importing distributor is assigned was sold, resold, stored,
16delivered or transported by the importing distributor, either
17from a point or to a point with the assigned [geographically
18contiguous] territory, to any person or persons, whether such
19person or persons are licensed by this act or not licensed by
20this act.

21(3) Except for discontinuance of a brand [or], a valid
22termination for good cause or a valid termination without cause 
23under subsection (d)(1)(iii), the purchaser of the assets of the
24manufacturer as defined in this act shall become obligated to
25all the territorial and brand designations of the agreement in
26effect on the date of purchase. Purchase of assets as defined
27for the purposes of this act shall include, but not be limited
28to, the sale of stock, sale of assets, merger, lease, transfer
29or consolidation.

30(4) The court of common pleas of the county wherein the

1licensed premises of the importing distributor or distributor
2are located is hereby vested with jurisdiction and power to
3enjoin the modification, rescission, cancellation or termination
4of a franchise or agreement between a manufacturer and an
5importing distributor or distributor, or other violation of this 
6section or of section 492(18), (19) or (20), at the instance of
7such importing distributor or distributor who is or might be
8adversely affected by such modification, rescission,
9cancellation or termination, and in granting an injunction the
10court shall provide that no manufacturer shall supply the
11customers or territory of the importing distributor or
12distributor by servicing the territory or customers through
13other importing distributors or distributors or any other means
14while the injunction is in effect: Provided, however, That any
15injunction issued under this subsection shall require the
16posting of sufficient bond against damages arising from an
17injunction improvidently granted and a showing [that the danger
18of irrevocable loss or damage is immediate] of irreparable harm 
19as set forth under subsection (d)(1)(iii) and that during the
20pendency of such injunction the importing distributor or
21distributor shall continue to service the accounts of the
22manufacturer in good faith.

23[(5) The provisions of this subsection shall not apply to
24Pennsylvania manufacturers whose principal place of business is
25located in Pennsylvania unless they name or constitute a
26distributor or importing distributor as a primary or original
27supplier of their products subsequent to the effective date of
28this act, or unless such Pennsylvania manufacturers have named
29or constituted a distributor or importing distributor as a
30primary or original supplier of their products prior to the

1effective date of this act, and which status is continuing when
2this act becomes effective.]

3* * *

4(f) (1) Any malt or brewed beverage [produced outside this
5Commonwealth] that is repackaged by a bailee for hire or
6importing distributor on behalf of [an out of State] a
7manufacturer of malt or brewed beverages must be returned to the
8[out of State] manufacturer of malt or brewed beverages and come
9to rest [out of State] at the manufacturing facility before it
10may [reenter] be sold in this Commonwealth. Such repackaged malt
11or brewed beverages must be distributed through the three-tier
12system, unless otherwise provided under subsection (a.3) or (b).
13[Any malt or brewed beverage that is repackaged by a bailee for
14hire or importing distributor on behalf of an in State
15manufacturer must be returned to the in State manufacturer and
16come to rest at the in State manufacturer's licensed facility.]

17(2) For purposes of this section, "repackage" shall mean any
18change or alteration to the containers or container
19configuration of a case.

20Section 3. Section 431.1 of the act, added February 21, 2002
21(P.L.103, No.10), is amended to read:

22Section 431.1. Malt and Brewed Beverages Alternating
23Brewers' Licenses.--(a) The board shall be authorized to issue
24an alternating brewer's license to qualified entities. In order
25to qualify for the alternating brewer's license, the applicant
26must demonstrate that it holds a Federal brewer's notice
27registration issued for a premises within this Commonwealth and
28meet all the qualifications imposed on the holder of a malt and
29brewed beverage manufacturer's license.

30(b) The holder of an alternating brewer's license shall have

1all the rights and be subject to the same conditions and
2qualifications as those imposed on holders of a malt or brewed
3beverage manufacturer's license except as set forth in this
4section.

5(c) The holder of an alternating brewer's license is not
6required to maintain separate manufacturing premises; rather,
7the alternating brewer's license shall be valid at premises that
8are licensed by another entity under a Pennsylvania
9manufacturer's license. The holder of an alternating brewer's
10license shall not be entitled to the limited tax credit
11available under section 2010 of the act of March 4, 1971 (P.L.6,
12No.2), known as the "Tax Reform Code of 1971."

13[(d) Malt and brewed beverages manufactured under the
14authority of an alternating brewer's license must be distributed
15in this Commonwealth only through specific importing
16distributors who shall first have been given distributor rights
17for such products in designated geographical areas through the
18distribution system required for out-of-State manufacturers
19under section 431(b) as well as all other pertinent sections of
20this act. The alternating brewer must comply with section 444.]

21(e) The application, renewal and filing fees for a malt and
22brewed beverages alternating brewer's license shall be as
23prescribed in section 614-A(10) of the act of April 9, 1929
24(P.L.177, No.175), known as "The Administrative Code of 1929."

25Section 4. Section 441(g) of the act, added December 20,
261996 (P.L.1513, No.196), is amended to read:

27Section 441. Distributors' and Importing Distributors'
28Restrictions on Sales, Storage, Etc.--* * *

29(g) All malt or brewed beverages purchased by an importing
30distributor from a [Pennsylvania] manufacturer of malt or brewed

1beverages [or from any person located outside this Commonwealth]
2for resale shall be invoiced to the importing distributor, shall
3come physically into the possession of such importing
4distributor and shall be unloaded into and distributed from the
5licensed premises of such importing distributor. The board may
6act to further define and control the storage and distribution
7of malt or brewed beverages in conformity with this section and
8this act.

9* * *

10Section 5. Section 446(a) of the act, amended December 22,
112011 (P.L.530, No.113), is amended to read:

12Section 446. Breweries.--(a) Holders of a brewery license
13may:

14(1) Sell malt or brewed beverages produced and owned by the
15brewery under such conditions and regulations as the board may
16enforce, to individuals for consumption on the licensed premises
17in any container or package of any volume and to hotel,
18restaurant, club and public service liquor licensees without the 
19necessity of obtaining any other license.

20(2) Operate a restaurant or brewery pub on the licensed
21premises under such conditions and regulations as the board may
22enforce: Provided, however, That sales on Sunday may be made
23irrespective of the volume of food sales if the licensed
24premises are at a public venue location. The holder of a brewery
25license may sell at its brewery pub premises Pennsylvania wines
26it has purchased from either the holder of a Pennsylvania
27limited winery license or from the board: Provided, however,
28That said wines must be consumed at the licensed brewery pub
29premises.

30(3) Use brewery storage and distribution facilities for the

1purpose of receiving, storing and distributing malt or brewed
2beverages [manufactured outside this Commonwealth] if the
3beverages are distributed in this Commonwealth only through
4specific importing distributors who shall have first been given
5distributing rights for such products in designated geographical
6areas through the distribution system required for [out-of-
7State] manufacturers under section 431(b) as well as all other
8pertinent sections of this act. The manufacturer of the
9beverages must comply with section 444.

10(4) Apply for and hold a hotel liquor license, a restaurant
11liquor license or a malt and brewed beverages retail license to
12sell for consumption at the restaurant or brewery pub on the
13licensed brewery premises, liquor, wine and malt or brewed
14beverages regardless of the place of manufacture, under the same
15conditions and regulations as any other hotel liquor license,
16restaurant liquor license or malt and brewed beverages retail
17license, but must brew at least two hundred fifty barrels per
18year. [Each holder of a brewery license who receives a hotel
19liquor license, a restaurant liquor license or a malt or brewed
20beverages retail license to operate a brew pub shall not sell
21directly to any person licensed by this act, except if any malt
22or brewed beverage is to be distributed in this Commonwealth it
23shall be only through specific importing distributors who shall
24have first been given distributing rights for such products in
25designated geographical areas through the distribution system
26required for out-of-State manufacturers under section 431(b) as
27well as all other pertinent sections of this act.]

28* * *

29Section 6. Section 492(19) and (20) of the act, added June
3022, 1980 (P.L.253, No.73), are amended to read:

1Section 492. Unlawful Acts Relative to Malt or Brewed
2Beverages and Licensees.--

3It shall be unlawful--

4* * *

5(19) Modifying or Terminating Distributing Rights Agreement.
6For any manufacturer or any officer, agent or representative of
7any manufacturer to modify, cancel, terminate, rescind or not
8renew[, without good cause,] any distributing rights agreement
9without complying with section 431(d), and in no event shall any
10modification, cancellation, termination, rescission or
11nonrenewal of any distributing rights agreement become effective
12for at least ninety (90) days after written notice of such
13modification, cancellation, termination, rescission or intention
14not to renew has been served on the affected party and board by
15certified mail, return receipt requested, except by written
16consent of the parties to the agreement. The notice shall state
17all the reasons for the intended modification, termination,
18cancellation, rescission or nonrenewal. The distributor or
19importing distributor holding such agreement shall have ninety
20(90) days in which to rectify any claimed deficiency, or
21challenge the alleged cause.

22If the deficiency shall be rectified within ninety (90) days
23of notice, then the proposed modification, termination,
24cancellation, rescission or nonrenewal shall be null and void
25and without legal effect.

26If the notice states as one of the reasons for the intended
27modification, cancellation, termination, rescission or renewal
28that the importing distributor or distributor's equipment or
29warehouse requires major changes or additions, then if the
30distributor or importing distributor shall have taken some

1positive action to comply with the required changes or
2additions, the distributor or importing distributor shall have
3deemed to have complied with the deficiency as set forth in the
4notice. The notice provisions of this section shall not apply if
5the reason for termination, cancellation or nonrenewal is
6insolvency, assignment for the benefit of creditors, bankruptcy,
7liquidation, fraudulent conduct as set forth under section 
8431(d)(1)(iv)(D) in its dealings with the manufacturer,
9revocation or suspension for more than a thirty (30) day period
10of the importing distributor or distributor license.

11(20) Interference with Transfer of License, Business or
12Franchise. [(i)] For any manufacturer to:

13(i) interfere with or prevent any distributor or importing 
14distributor from selling [or], transferring or assigning his 
15license, business [or franchise, whether before or after notice 
16of modification, cancellation, termination, rescission or 
17nonrenewal has been given, provided the proposed purchaser of 
18the business of the distributor or importing distributor meets 
19the material qualifications and standards required of the 
20manufacturers other distributors or importing distributors; (ii) 
21if the proposed transfer of the distributor or importing 
22distributor's business is to a surviving spouse or adult child, 
23the manufacturer shall not, for any reason, interfere with, or 
24prevent, the transfer of the distributor or importing 
25distributor's license, business or franchise. Any subsequent 
26transfer by surviving spouse or adult child shall thereafter be 
27subject to the provisions of subclause (i) above.], franchise or 
28distributing rights to any current owner of the importing 
29distributor or distributor, any surviving spouse or adult child 
30of such current owner of the importing distributor or
 

1distributor, a spouse or adult child of such current owner, a 
2trust for the benefit of a spouse or the children of such 
3current owner or any of them, or a partnership, corporation or 
4other business entity of which such current owner, spouse or 
5adult child, or any combination thereof, owns more than fifty 
6percent (50%); or

7(ii) unreasonably withhold or delay its written consent to
8any other sale, transfer or assignment of an importing
9distributor or distributor's license, business franchise or
10distributing rights.

11* * *

12Section 7. This act shall take effect as follows:

13(1) The amendment of section 431(b) of the act shall
14take effect in 150 days.

15(2) This section shall take effect immediately.

16(3) The remainder of this act shall take effect in 60
17days.