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From the Arizona Licensed Beverage Association (ALBA)

The 2017 Legislative Session is over! The session ended on May 10th. As is always the case, the Legislature dealt with a number of alcoholic beverage-related items. The subject matter ranged from lowering the age of alcohol servers, to expanding gaming in Arizona at licensed beverage establishments. In between, a number of more routine provisions were considered and passed by the Legislature.

The primary liquor bill for 2017 was HB 2337, the near-annual omnibus bill.
This bill provided the following benefits and limitations for ALBA members and other retailers:

  • For licensees holding multiple licenses in the same municipality, the law governing "change of controlling person" has been modified to provide that a local governing body may charge not more than one fee regardless of the number of licenses held by the applicant. Further, the definition of "acquisition of control" is modified providing that there is no acquisition of control, which triggers a review and approval requirement, if a new person is added to the ownership of a licensee's business when the controlling persons remain identical to those that have been previously disclosed to the DLLC. This provision is helpful to change having multiple licenses where corporate personnel changes are made on a routine basis.

  • The bill provides for tighter control over special events. A non-profit entity applying for a special event must be organized as a non-profit corporation, limited liability company, trust or other entity, that is eligible for designation as a 501(c) under the Internal Revenue Code. Further, the applicant must demonstrate that it is in good standing with the state. If a special event contractor is to be used, the special event contractor shall be required to provide controlling person's identification and background information, and to provide proof of the contractor's authority to conduct business in this state, including providing copies of any required local businesses or permits. For ALBA licensees, the bill provides that a licensee holding a 6, 7, 11 or 12, may serve as a special event contractor without any additional requirements. A new special event contractor may be required to show that it is qualified, capable and reliable to conduct a special event and to complete an approved training program for persons authorized to sell liquor at the event. A specific physical location is limited to a total of 30 days of special event licenses during a year.

  • Events hosted by private clubs or other members where individuals are not admitted on the basis of being a guest or a member of the club are limited to not more than twelve events in a calendar year for each club.

  • The privileges for craft distillers are expanded to mirror the privileges existing for Arizona's farm wineries and craft breweries, including the right to have 150 calendar days of festival licenses for each distillery.  Additionally, the craft distillery is authorized to have a remote tasting room with a patio shared by a licensed domestic farm winery.

  • For a five-year period, until January 1st, 2022, the number of new series 7 licenses is doubled. This is in response to the shortage of series 7 licenses in Maricopa and other counties.

  • For quota licenses, a person can enter the random lottery process only equal to the number of licenses available.

  • A fee cap is set for DLLC fees for acquisitions of control.   Where a license change is made to reflect a change of agent or acquisition of control, the maximum total fees charged by DLLC is $1,000.

  • A provision that a wholesaler may in its discretion accept the return of malt beverage products from an on sale retailer under certain special conditions.

  • A provision that requires out-of-state persons engaged in Arizona as a producer, exporter, importer, rectifier, retailer or wholesaler violates a cease and desist order issued by the DLLC Director, the Director may impose a civil penalty up to $150,000; notify the Department of Revenue for the purpose of collection of transaction privilege tax or luxury tax; notify the applicable agency and the state where the out-of-state person resides.

Other liquor bills also of interest to ALBA: HB 2047 lowers the serving age from age 19 to age 18.

Other (non-liquor) bills of interest will have impact on ALBA establishments: SB 1406 is drafted as a remedy to "drive by" disability compliance lawsuits. The bill provides that before filing a civil action based on public accommodation violation, the notice has to be provided to allow the private entity to identify and cure the violation within thirty days. If a corrective action plan is necessary, the owner of the property can provide a notice of the plan; in that  case, an additional sixty days is provided to the property owner to make corrections.

Bills that were filed that did not pass: Several items of legislation were filed that would have impacted ALBA, positively or negatively, that did not pass.  These include the following:
HB 2490 - relating to the disapproval of licenses by municipalities;
SB 1363 - cancellation of a license for non-use;
SB 1465 - approval of licenses by nearby Reservation Tribal Councils;
SB 1312 - electronic bingo.

Generally, legislators and industry members take a "break" for several months after the legislative session. Because there are always instances identified to update the statutory language governing alcoholic beverages, there most likely will be another effort to identify liquor law revisions for the 2018 legislative session. One of these items that ALBA brought forward in 2017, but will continue to work on for the 2018 session, relates to acts of violence. ALBA's goal will be to have the statute and penalties applied to true acts of violence, and not mere verbal or gesturing conduct. ALBA will reach out to its Board and membership for identification of other needed changes in Arizona liquor laws.