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PRINTER'S NO. 632
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
637
Session of
2015
INTRODUCED BY RAFFERTY, VANCE AND BOSCOLA, MARCH 13, 2015
REFERRED TO LAW AND JUSTICE, MARCH 13, 2015
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, further providing for malt and brewed
beverages manufacturers', distributors' and importing
distributors' licenses, for malt and brewed beverages
alternating brewers' licenses, for distributors' and
importing distributors' restrictions on sales, storage, etc.,
for breweries and for unlawful acts relative to malt or
brewed beverages and licensees.
This act shall be construed as an enactment of the General
Assembly's support for the 3-tier system for alcoholic beverages
production, subject to certain rights of a manufacturer,
distribution and sale that, through uniform Statewide
regulation, provides this Commonwealth regulatory authority over
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the production, storage, distribution, transportation, sale and
consumption of alcoholic beverages by and to its citizens, for
the benefit of the public health and welfare and this
Commonwealth's economic stability. The General Assembly intends
that the liquor laws shall be enforced in order to restrict
sales to minors, collect all State and local taxes due on the
commerce in alcoholic beverages, establish open, transparent and
accountable distribution systems for alcoholic beverages and the
intent to exercise, to the fullest extent allowed, all the
authority granted a state under the twenty-first amendment to
the Constitution of the United States.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The definition of "distributor" in section 102 of
the act of April 12, 1951 (P.L.90, No.21), known as the Liquor
Code, reenacted and amended June 29, 1987 (P.L.32, No.14) and
amended May 31, 1996 (P.L.312, No.49), is amended and the
section is amended by adding a definition 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:
* * *
"Contract brewed" shall mean the arrangement by which a
manufacturer hires another manufacturer to produce its malt or
brewed beverage.
* * *
"Distributor" shall mean any person licensed by the board to
engage in the purchase [only from Pennsylvania] from
manufacturers and [from] importing distributors and the resale
of malt or brewed beverages, except to importing distributors
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and distributors, in the original sealed containers as prepared
for the market by the manufacturer at the place of manufacture,
but not for consumption on the premises where sold, and in
quantities of not less than a case or original containers
containing one hundred twenty-eight ounces or more which may be
sold separately.
* * *
Section 2. Section 431(a.1), (a.2), (b), (d) and (f) of the
act, amended or added December 20, 1996 (P.L.1513, No.196) and
December 8, 2004 (P.L.1810, No.239), are amended and the section
is amended by adding subsections to read:
Section 431. Malt and Brewed Beverages Manufacturers',
Distributors' and Importing Distributors' Licenses.--* * *
(a.1) Any [out of State] manufacturer whose products are
sold and delivered within this Commonwealth shall be authorized:
to rent, lease or otherwise acquire space from an importing
distributor or bailee for hire authorized by this act at no more
than two locations per manufacturer for use of a segregated
portion of a warehouse or other storage facility owned or
operated by the importing distributor or bailee for hire at
which the [out of State] manufacturer may store, repackage and
sell malt or brewed beverages to any importing distributor to
whom the [out of State] manufacturer has granted distribution
rights pursuant to subsection (b) or to any purchaser outside
this Commonwealth for delivery outside this Commonwealth; or to
ship to its storage facility outside this Commonwealth. Such
manufacturer may compensate the importing distributor or bailee
for hire for any related storage, repackaging or delivery
services. [The out of State] In order to use a storage facility
as set forth under this subsection, the manufacturer must file
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with the Liquor Control Board the rate of compensation to be
paid. A separate written application must be filed to acquire
storage licenses, and the board may establish the information
that must be provided on the application. The initial filing
must be made prior to any payments being made, and any
subsequent changes in the rate of compensation must be filed
within thirty days of any such change. [Nothing in this act
authorizing storage facilities for out of State manufacturers is
intended to make any change in the manner malt or brewed
beverages are distributed through the three-tier system.]
(a.2) The board shall issue to a holder of a manufacturer's
license no more than two total storage licenses per
manufacturer, as set forth under subsection (a.1), to cover
storage facilities separate from the location of the
manufacturing facility. A manufacturer may use its storage
facilities to receive, store, repackage, sell and distribute
malt or brewed beverages in the same manner as it can at its
place of manufacture or it may rent, lease or otherwise acquire
space from an importing distributor or bailee for hire
authorized by this act in the same manner as an out of State
manufacturer as set forth in subsection (a.1). A separate
written application must be filed to acquire storage licenses,
and the board is empowered to establish what information must be
provided on that application. Nothing in this act authorizing
off-site storage facilities for manufacturers is intended to
make any change in the manner malt or brewed beverages are
distributed through the three-tier system.
(a.3) The following shall apply:
(1) Any manufacturer that holds a valid manufacturer's
license may deliver up to seventy-five thousand total barrels of
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malt or brewed beverages, to which it owns the brand rights and
that it has manufactured or has had contract brewed for it by
another manufacturer, directly to any holder of any license
issued by the board per year. A manufacturer may not directly
deliver malt or brewed beverages that it has contract brewed for
another.
(2) A manufacturer may use its own vehicles, leased vehicles
or the services of a transporter-for-hire or other common
carrier to deliver malt or brewed beverages to the holder of any
license issued by the board within this Commonwealth.
(3) A manufacturer may not terminate its primary
relationship with an importing distributor in favor of self-
distribution under this subsection except as otherwise permitted
under this act.
(a.4) In order to be eligible for self-distribution rights,
a manufacturer must submit verification information to the
board, including a certification that such self-distribution
does not exceed the barrelage limits under this subsection and
that the barrelage calculation includes the manufacture of all
brands of the manufacturer. The board shall certify that the
manufacturer is eligible for such self-distribution by reviewing
the written request of the manufacturer, on a form and at such
times prescribed by the board, for such certification. A request
for certification may be submitted by any manufacturer that
holds a manufacturer's license and believes it is eligible for
self-distribution.
(a.5) In addition to compliance under section 444, a
manufacturer that is located outside this Commonwealth and that
holds a manufacturer's license is deemed to have submitted to
the jurisdiction of the board, any other Commonwealth agency and
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the courts of this Commonwealth for purposes of enforcement of
this section and any related laws, rules or regulations. The
manufacturer shall also be subject to citation by the
enforcement bureau under section 471 and nonrenewal under
section 470. The Department of Revenue may promulgate
regulations requiring the filing of periodic reports by a
manufacturer subject to the provisions of this subsection to
ensure compliance with the provisions of this section.
(b) The board shall issue to any reputable person who
applies therefor, and pays the license fee hereinafter
prescribed, a distributor's or importing distributor's license
for the place which such person desires to maintain for the sale
of malt or brewed beverages, not for consumption on the premises
where sold, and in quantities of not less than a case or
original containers containing one hundred twenty-eight ounces
or more which may be sold separately as prepared for the market
by the manufacturer at the place of manufacture. The board shall
have the discretion to refuse a license to any person or to any
corporation, partnership or association if such person, or any
officer or director of such corporation, or any member or
partner of such partnership or association shall have been
convicted or found guilty of a felony within a period of five
years immediately preceding the date of application for the said
license: And provided further, That, in the case of any new
license or the transfer of any license to a new location, the
board may, in its discretion, grant or refuse such new license
or transfer if such place proposed to be licensed is within
three hundred feet of any church, hospital, charitable
institution, school or public playground, or if such new license
or transfer is applied for a place which is within two hundred
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feet of any other premises which is licensed by the board: And
provided further, That the board shall refuse any application
for a new license or the transfer of any license to a new
location if, in the board's opinion, such new license or
transfer would be detrimental to the welfare, health, peace and
morals of the inhabitants of the neighborhood within a radius of
five hundred feet of the place proposed to be licensed. The
board shall refuse any application for a new license or the
transfer of any license to a location where the sale of liquid
fuels or oil is conducted. The board may enter into an agreement
with the applicant concerning additional restrictions on the
license in question. If the board and the applicant enter into
such an agreement, such agreement shall be binding on the
applicant. Failure by the applicant to adhere to the agreement
will be sufficient cause to form the basis for a citation under
section 471 and for the nonrenewal of the license under section
470. If the board enters into an agreement with an applicant
concerning additional restrictions, those restrictions shall be
binding on subsequent holders of the license until the license
is transferred to a new location or until the board enters into
a subsequent agreement removing those restrictions. If the
application in question involves a location previously licensed
by the board, then any restrictions imposed by the board on the
previous license at that location shall be binding on the
applicant unless the board enters into a new agreement
rescinding those restrictions. The board shall require notice to
be posted on the property or premises upon which the licensee or
proposed licensee will engage in sales of malt or brewed
beverages. This notice shall be similar to the notice required
of hotel, restaurant and club liquor licensees.
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Except as hereinafter provided, such license shall authorize
the holder thereof to sell or deliver malt or brewed beverages
in quantities above specified anywhere within the Commonwealth
of Pennsylvania, which, in the case of distributors, have been
purchased only from persons licensed under this act as
manufacturers or importing distributors, and in the case of
importing distributors, have been purchased from manufacturers
or persons outside this Commonwealth engaged in the legal sale
of malt or brewed beverages or from manufacturers or importing
distributors licensed under this article. In the case of an
importing distributor, the holder of such a license shall be
authorized to store and repackage malt or brewed beverages owned
by a manufacturer at a segregated portion of a warehouse or
other storage facility authorized by section 441(d) and operated
by the importing distributor within its appointed territory and
deliver such beverages to another importing distributor who has
been granted distribution rights by the manufacturer as provided
herein. The importing distributor shall be permitted to receive
a fee from the manufacturer for any related storage, repackaging
or delivery services. In the case of a bailee for hire hired by
a manufacturer, the holder of such a permit shall be authorized:
to receive, store and repackage malt or brewed beverages
produced by that manufacturer for sale by that manufacturer to
importing distributors to whom that manufacturer has given
distribution rights pursuant to this subsection or to purchasers
outside this Commonwealth for delivery outside this
Commonwealth; or to ship to that manufacturer's storage
facilities outside this Commonwealth. The bailee for hire shall
be permitted to receive a fee from the manufacturer for any
related storage, repackaging or delivery services. The bailee
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for hire shall, as required in Article V of this act, keep
complete and accurate records of all transactions, inventory,
receipts and shipments and make all records and the licensed
areas available for inspection by the board and for the
Pennsylvania State Police, Bureau of Liquor Control Enforcement,
during normal business hours.
[Each out of State manufacturer] Except as otherwise provided
in subsection (a.3), each manufacturer of malt or brewed
beverages whose products are sold and delivered in this
Commonwealth shall give distributing rights for such products in
designated geographical areas to specific importing
distributors, and such importing distributor shall not sell or
deliver malt or brewed beverages manufactured by the [out of
State] manufacturer to any person issued a license under the
provisions of this act whose licensed premises are not located
within the geographical area for which he has been given
distributing rights by such manufacturer. Should a licensee
accept the delivery of such malt or brewed beverages in
violation of this section, said licensee shall be subject to a
suspension of his license for at least thirty days: Provided,
That [the importing distributor holding such distributing rights
for such product shall not sell or deliver the same to another
importing distributor without first having entered into a
written agreement with the said secondary importing distributor
setting forth the terms and conditions under which such products
are to be resold within the territory granted to the primary
importing distributor by the manufacturer.
When a Pennsylvania manufacturer of malt or brewed beverages
licensed under this article names or constitutes a distributor
or importing distributor as the primary or original supplier of
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his product, he shall also designate the specific geographical
area for which the said distributor or importing distributor is
given distributing rights, and such distributor or importing
distributor shall not sell or deliver the products of such
manufacturer to any person issued a license under the provisions
of this act whose licensed premises are not located within the
geographical area for which distributing rights have been given
to the distributor and importing distributor by the said
manufacturer: Provided, That] the importing distributor holding
such distributing rights for such product shall not sell or
deliver the same to another importing distributor without first
having entered into a written agreement with the said secondary
importing distributor setting forth the terms and conditions
under which such products are to be resold within the territory
granted to the primary importing distributor by the
manufacturer. Nothing herein contained shall be construed to
prevent any manufacturer from authorizing the importing
distributor holding the distributing rights for a designated
geographical area from selling the products of such manufacturer
to another importing distributor also holding distributing
rights from the same manufacturer for another geographical area,
providing such authority be contained in writing and a copy
thereof be given to each of the importing distributors so
affected.
* * *
(d) (1) The following shall apply:
(i) All distributing rights as hereinabove required shall be
in writing, shall be equitable in their provisions [and], shall
include all territorial assignments, shall be renegotiated in
good faith by the fifth anniversary of any written agreement,
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shall be substantially similar as to terms and conditions with
all other distributing rights agreements between the
manufacturer giving such agreement and its other importing
distributors [and distributors], shall not be modified,
canceled, terminated or rescinded by the manufacturer without
good cause, [and] shall give notice and the opportunity to
rectify any claimed deficiency in accordance with section
492(19), unless otherwise expressly provided for in this act and
shall contain a provision in substance or effect as follows:
"The manufacturer recognizes that the importing distributor and
distributor are free to manage their business in the manner the
importing distributor and distributor deem best and that this
prerogative vests in the importing distributor and distributor
the exclusive right to establish a selling price, to select the
brands of malt or brewed beverages they wish to handle and to
determine the efforts and resources which the importing
distributor and distributor will exert to develop and promote
the same of the manufacturer's products handled by the importing
distributor and distributor. However, the manufacturer expects
that the importing distributor and distributor will price
competitively the products handled by them, devote reasonable
effort and resources to the sale of such products and maintain a
reasonable sales level.["] The importing distributor and the
manufacturer agree to act in good faith with respect to all
aspects of this agreement and the importing distributor agrees
to not unfairly allocate its resources and efforts to brands of
a competitor." Each written agreement between a manufacturer and
an importing distributor shall conform to the provisions of this
section and shall set forth all essential, commercially
acceptable, fair and reasonable terms, requirements and
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conditions of the business relationship between the manufacturer
and the importing distributor, including, but not limited to:
(A) Termination of the relationship, with or without good
cause.
(B) The duties and responsibilities of each party.
(C) Changes in ownership.
(ii) In the event an importing distributor's license is
suspended for more than five days, a manufacturer whose products
are distributed by such importing distributor may self-
distribute such products directly to the holders of any license
in the designated geographic territory granted to the importing
distributor by the manufacturer during the time period of the
suspension without regard to the limitations set forth under
subsection (a.3).
(iii) The following shall apply:
(A) Upon thirty days' written notice, a manufacturer may
modify, cancel, terminate or rescind, in whole or in part, an
agreement pertaining to the distribution of the manufacturer's
brands with an existing importing distributor without good cause
at any time as long as the manufacturer pays to the importing
distributor the fair market value of the importing distributor's
business with respect to the modified, canceled, terminated or
rescinded brand or brands: Provided, That such modification,
cancellation, termination or rescission shall not be permitted,
and shall be enjoined by a competent court of common pleas in
this Commonwealth, where the volume of such brand or brands
accounts for more than twenty per centum (20%) of the entire
volume distributed by the importing distributor. In the event
the manufacturer's modified, canceled, terminated or rescinded
brand or brands constitute twenty per centum (20%) or less of
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the importing distributor's total volume, the manufacturer shall
be free to appoint another importing distributor or to self-
distribute in accordance with the provisions of this act after
thirty days' written notice and upon the manufacturer's payment
to the importing distributor of all of the manufacturer's
inventory at such importing distributor, plus laid-in cost.
(B) In determining the annual production of a manufacturer
under this subparagraph:
(I) the manufacturer of malt or brewed beverages shall
include all brands produced by the manufacturer and every
portion of the production of any other manufacturer who holds,
directly or indirectly, an ownership interest in the
manufacturer or with whom the manufacturer has a distribution
agreement in this Commonwealth; and
(II) any barrelage which is contract brewed by a
manufacturer for and on behalf of another manufacturer will not
be considered as part of the brewing manufacturer's barrelage
and will be considered as part of the barrelage of the
manufacturer for which the malt or brewed beverage is contract
brewed.
(C) For purposes of this subparagraph and in the absence of
any contractual provisions defining the term, "fair market
value" means the amount a willing seller, under no compulsion to
sell, would be willing to accept, and a willing buyer, under no
compulsion to purchase, would be willing to pay for the
importing distributor's business with respect to the modified,
canceled, terminated or rescinded brand or brands where both
have knowledge of the relevant facts.
(iv) ["Good cause" shall mean the failure by any party to an
agreement, without reasonable excuse or justification, to comply
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substantially with an essential, reasonable and commercially
acceptable requirement imposed by the other party under the
terms of an agreement.] For the purposes of modification,
cancellation, termination or rescission, "good cause" shall mean
any of the following:
(A) The failure or refusal of the importing distributor,
without reasonable excuse or justification, to comply
substantially with a material provision of the distribution
agreement, including, without limitation, any provisions
establishing standards of performance and termination with or
without cause, which provision is essential, commercially
acceptable, fair and reasonable.
(B) Suspension of the importing distributor's State or
Federal permit or license for more than thirty days.
(C) The indictment or conviction of the importing
distributor, or of a partner or individual who owns ten per
centum (10%) or more of the partnership, stock or other
ownership interest of the importing distributor, of a felony
related to the business of the importing distributor which might
reasonably be expected to adversely affect the good will or
interest of the manufacturer: Provided, That in the event of an
indictment or conviction of a partner or individual who owns ten
per centum or more of the partnership, stock or other ownership
interest of the importing distributor, no such termination shall
be effective if, within the ninety-day period for the importing
distributor to rectify a deficiency described under section 4-
492(19), the individual owner divests all ownership interests in
the importing distributor to the extent required by the
discretion of the board.
(D) Fraudulent conduct by the importing distributor in its
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dealings with the manufacturer or the manufacturer's products.
(E) A sale of a material quantity of the manufacturer's
brands outside of the agreed upon geographic sales territory
granted to the importing distributor by the manufacturer, which
sale was known or should have been known through the exercise of
business practices commonly used in the industry, to the owners
or senior management of the importing distributor.
(F) If any of the following occur:
(I) The importing distributor sells, transfers or assigns
any ownership interest to or merges with another importing
distributor.
(II) The current owner of the importing distributor engages
in a change in ownership, engages in the establishment of trusts
or other ownership interests, enters into buy-sell agreements,
or grants an option to purchase an ownership interest with or to
anyone other than a current owner of the importing distributor,
a surviving spouse or adult child of such a current owner, a
trust for the benefit of the spouse or children of such current
owner or any of them, or a partnership, corporation or other
business entity of which such current owner, spouse or adult
child, or any combination thereof, owns more than fifty per
centum without first obtaining the prior written consent of the
manufacturer: Provided, That such consent is not unreasonably
withheld or delayed by the manufacturer and the importing
distributor has complied with any reasonable requests for
information concerning such changes.
(G) The failure of any importing distributor to negotiate
any primary agreement in good faith and to accept any material
and commercially reasonable term being offered to the importing
distributor which is substantially similar to terms and
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conditions offered by the manufacturer and accepted by other
importing distributors or distributors.
(2) After January 1, 1980, no manufacturer shall enter into
any agreement with more than one distributor or importing
distributor for the purpose of establishing more than one
agreement for designated brand or brands of malt or brewed
beverages in any one territory. Each franchise territory which
is granted by a manufacturer shall be geographically contiguous.
All importing distributors shall maintain sufficient records to
evidence compliance of this section. With regard to any
territorial distribution authority granted to an importing
distributor by a manufacturer of malt or brewed beverages after
January 1, 1996, the records shall establish that each and every
case of a brand of malt or brewed beverages for which the
importing distributor is assigned was sold, resold, stored,
delivered or transported by the importing distributor, either
from a point or to a point with the assigned [geographically
contiguous] territory, to any person or persons, whether such
person or persons are licensed by this act or not licensed by
this act.
(3) Except for discontinuance of a brand [or], a valid
termination for good cause or a valid termination without cause
under subsection (d)(1)(iii), the purchaser of the assets of the
manufacturer as defined in this act shall become obligated to
all the territorial and brand designations of the agreement in
effect on the date of purchase. Purchase of assets as defined
for the purposes of this act shall include, but not be limited
to, the sale of stock, sale of assets, merger, lease, transfer
or consolidation.
(4) The court of common pleas of the county wherein the
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licensed premises of the importing distributor or distributor
are located is hereby vested with jurisdiction and power to
enjoin the modification, rescission, cancellation or termination
of a franchise or agreement between a manufacturer and an
importing distributor or distributor, or other violation of this
section or of section 492(18), (19) or (20), at the instance of
such importing distributor or distributor who is or might be
adversely affected by such modification, rescission,
cancellation or termination, and in granting an injunction the
court shall provide that no manufacturer shall supply the
customers or territory of the importing distributor or
distributor by servicing the territory or customers through
other importing distributors or distributors or any other means
while the injunction is in effect: Provided, however, That any
injunction issued under this subsection shall require the
posting of sufficient bond against damages arising from an
injunction improvidently granted and a showing [that the danger
of irrevocable loss or damage is immediate] of irreparable harm
as set forth under subsection (d)(1)(iii) and that during the
pendency of such injunction the importing distributor or
distributor shall continue to service the accounts of the
manufacturer in good faith.
[(5) The provisions of this subsection shall not apply to
Pennsylvania manufacturers whose principal place of business is
located in Pennsylvania unless they name or constitute a
distributor or importing distributor as a primary or original
supplier of their products subsequent to the effective date of
this act, or unless such Pennsylvania manufacturers have named
or constituted a distributor or importing distributor as a
primary or original supplier of their products prior to the
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effective date of this act, and which status is continuing when
this act becomes effective.]
* * *
(f) (1) Any malt or brewed beverage [produced outside this
Commonwealth] that is repackaged by a bailee for hire or
importing distributor on behalf of [an out of State] a
manufacturer of malt or brewed beverages must be returned to the
[out of State] manufacturer of malt or brewed beverages and come
to rest [out of State] at the manufacturing facility before it
may [reenter] be sold in this Commonwealth. Such repackaged malt
or brewed beverages must be distributed through the three-tier
system, unless otherwise provided under subsection (a.3) or (b).
[Any malt or brewed beverage that is repackaged by a bailee for
hire or importing distributor on behalf of an in State
manufacturer must be returned to the in State manufacturer and
come to rest at the in State manufacturer's licensed facility.]
(2) For purposes of this section, "repackage" shall mean any
change or alteration to the containers or container
configuration of a case.
Section 3. Section 431.1 of the act, added February 21, 2002
(P.L.103, No.10), is amended to read:
Section 431.1. Malt and Brewed Beverages Alternating
Brewers' Licenses.--(a) The board shall be authorized to issue
an alternating brewer's license to qualified entities. In order
to qualify for the alternating brewer's license, the applicant
must demonstrate that it holds a Federal brewer's notice
registration issued for a premises within this Commonwealth and
meet all the qualifications imposed on the holder of a malt and
brewed beverage manufacturer's license.
(b) The holder of an alternating brewer's license shall have
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all the rights and be subject to the same conditions and
qualifications as those imposed on holders of a malt or brewed
beverage manufacturer's license except as set forth in this
section.
(c) The holder of an alternating brewer's license is not
required to maintain separate manufacturing premises; rather,
the alternating brewer's license shall be valid at premises that
are licensed by another entity under a Pennsylvania
manufacturer's license. The holder of an alternating brewer's
license shall not be entitled to the limited tax credit
available under section 2010 of the act of March 4, 1971 (P.L.6,
No.2), known as the "Tax Reform Code of 1971."
[(d) Malt and brewed beverages manufactured under the
authority of an alternating brewer's license must be distributed
in this Commonwealth only through specific importing
distributors who shall first have been given distributor rights
for such products in designated geographical areas through the
distribution system required for out-of-State manufacturers
under section 431(b) as well as all other pertinent sections of
this act. The alternating brewer must comply with section 444.]
(e) The application, renewal and filing fees for a malt and
brewed beverages alternating brewer's license shall be as
prescribed in section 614-A(10) of the act of April 9, 1929
(P.L.177, No.175), known as "The Administrative Code of 1929."
Section 4. Section 441(g) of the act, added December 20,
1996 (P.L.1513, No.196), is amended to read:
Section 441. Distributors' and Importing Distributors'
Restrictions on Sales, Storage, Etc.--* * *
(g) All malt or brewed beverages purchased by an importing
distributor from a [Pennsylvania] manufacturer of malt or brewed
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beverages [or from any person located outside this Commonwealth]
for resale shall be invoiced to the importing distributor, shall
come physically into the possession of such importing
distributor and shall be unloaded into and distributed from the
licensed premises of such importing distributor. The board may
act to further define and control the storage and distribution
of malt or brewed beverages in conformity with this section and
this act.
* * *
Section 5. Section 446(a) of the act, amended December 22,
2011 (P.L.530, No.113), is amended to read:
Section 446. Breweries.--(a) Holders of a brewery license
may:
(1) Sell malt or brewed beverages produced and owned by the
brewery under such conditions and regulations as the board may
enforce, to individuals for consumption on the licensed premises
in any container or package of any volume and to hotel,
restaurant, club and public service liquor licensees without the
necessity of obtaining any other license.
(2) Operate a restaurant or brewery pub on the licensed
premises under such conditions and regulations as the board may
enforce: Provided, however, That sales on Sunday may be made
irrespective of the volume of food sales if the licensed
premises are at a public venue location. The holder of a brewery
license may sell at its brewery pub premises Pennsylvania wines
it has purchased from either the holder of a Pennsylvania
limited winery license or from the board: Provided, however,
That said wines must be consumed at the licensed brewery pub
premises.
(3) Use brewery storage and distribution facilities for the
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purpose of receiving, storing and distributing malt or brewed
beverages [manufactured outside this Commonwealth] if the
beverages are distributed in this Commonwealth only through
specific importing distributors who shall have first been given
distributing rights for such products in designated geographical
areas through the distribution system required for [out-of-
State] manufacturers under section 431(b) as well as all other
pertinent sections of this act. The manufacturer of the
beverages must comply with section 444.
(4) Apply for and hold a hotel liquor license, a restaurant
liquor license or a malt and brewed beverages retail license to
sell for consumption at the restaurant or brewery pub on the
licensed brewery premises, liquor, wine and malt or brewed
beverages regardless of the place of manufacture, under the same
conditions and regulations as any other hotel liquor license,
restaurant liquor license or malt and brewed beverages retail
license, but must brew at least two hundred fifty barrels per
year. [Each holder of a brewery license who receives a hotel
liquor license, a restaurant liquor license or a malt or brewed
beverages retail license to operate a brew pub shall not sell
directly to any person licensed by this act, except if any malt
or brewed beverage is to be distributed in this Commonwealth it
shall be only through specific importing distributors who shall
have first been given distributing rights for such products in
designated geographical areas through the distribution system
required for out-of-State manufacturers under section 431(b) as
well as all other pertinent sections of this act.]
* * *
Section 6. Section 492(19) and (20) of the act, added June
22, 1980 (P.L.253, No.73), are amended to read:
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Section 492. Unlawful Acts Relative to Malt or Brewed
Beverages and Licensees.--
It shall be unlawful--
* * *
(19) Modifying or Terminating Distributing Rights Agreement.
For any manufacturer or any officer, agent or representative of
any manufacturer to modify, cancel, terminate, rescind or not
renew[, without good cause,] any distributing rights agreement
without complying with section 431(d), and in no event shall any
modification, cancellation, termination, rescission or
nonrenewal of any distributing rights agreement become effective
for at least ninety (90) days after written notice of such
modification, cancellation, termination, rescission or intention
not to renew has been served on the affected party and board by
certified mail, return receipt requested, except by written
consent of the parties to the agreement. The notice shall state
all the reasons for the intended modification, termination,
cancellation, rescission or nonrenewal. The distributor or
importing distributor holding such agreement shall have ninety
(90) days in which to rectify any claimed deficiency, or
challenge the alleged cause.
If the deficiency shall be rectified within ninety (90) days
of notice, then the proposed modification, termination,
cancellation, rescission or nonrenewal shall be null and void
and without legal effect.
If the notice states as one of the reasons for the intended
modification, cancellation, termination, rescission or renewal
that the importing distributor or distributor's equipment or
warehouse requires major changes or additions, then if the
distributor or importing distributor shall have taken some
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positive action to comply with the required changes or
additions, the distributor or importing distributor shall have
deemed to have complied with the deficiency as set forth in the
notice. The notice provisions of this section shall not apply if
the reason for termination, cancellation or nonrenewal is
insolvency, assignment for the benefit of creditors, bankruptcy,
liquidation, fraudulent conduct as set forth under section
431(d)(1)(iv)(D) in its dealings with the manufacturer,
revocation or suspension for more than a thirty (30) day period
of the importing distributor or distributor license.
(20) Interference with Transfer of License, Business or
Franchise. [(i)] For any manufacturer to:
(i) interfere with or prevent any distributor or importing
distributor from selling [or], transferring or assigning his
license, business [or franchise, whether before or after notice
of modification, cancellation, termination, rescission or
nonrenewal has been given, provided the proposed purchaser of
the business of the distributor or importing distributor meets
the material qualifications and standards required of the
manufacturers other distributors or importing distributors; (ii)
if the proposed transfer of the distributor or importing
distributor's business is to a surviving spouse or adult child,
the manufacturer shall not, for any reason, interfere with, or
prevent, the transfer of the distributor or importing
distributor's license, business or franchise. Any subsequent
transfer by surviving spouse or adult child shall thereafter be
subject to the provisions of subclause (i) above.], franchise or
distributing rights to any current owner of the importing
distributor or distributor, any surviving spouse or adult child
of such current owner of the importing distributor or
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distributor, a spouse or adult child of such current owner, a
trust for the benefit of a spouse or the children of such
current owner or any of them, or a partnership, corporation or
other business entity of which such current owner, spouse or
adult child, or any combination thereof, owns more than fifty
percent (50%); or
(ii) unreasonably withhold or delay its written consent to
any other sale, transfer or assignment of an importing
distributor or distributor's license, business franchise or
distributing rights.
* * *
Section 7. This act shall take effect as follows:
(1) The amendment of section 431(b) of the act shall
take effect in 150 days.
(2) This section shall take effect immediately.
(3) The remainder of this act shall take effect in 60
days.
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