ARIZONA STATE SENATE
Fifty-Fifth Legislature, First Regular Session
AMENDED
spirituous liquor; delivery; off-sale
permits
(NOW: liquor; delivery; off-sale permits; leases)
Purpose
Effective, October 1, 2021, allows a bar or liquor store to sell mixed cocktails for off-premises consumption (to-go mixed cocktails) and allows restaurants to apply for a to-go mixed cocktails lease from a bar or liquor store through December 31, 2025, and for a to-go mixed cocktails permit beginning January 1, 2026. Allows a bar, beer and wine bar or liquor store to lease the license's associated off-sale privileges to a restaurant and establishes registration of an alcohol delivery contractor. Exempts the manufacture or sale of certain bitters products from Alcoholic Beverages statutes.
Background
The Department of Liquor License and Control (DLLC) issues licenses to regulate the production, distribution and sale of alcoholic beverages through the State Liquor Board (Board) and the Office of the DLLC Director (Director). A bar license is a retailer s license to sell spirituous liquors primarily by individual portions to be consumed on the premises and in the original container for consumption on or off the premises. The off-sale use, by total retail spirituous liquor sales, may not exceed 30 percent of the sales price of on-sale spirituous liquor the licensee sells at that location. A spirituous liquor store licensee may sell all types of spirituous liquors, only in the original unbroken package, for consumption off the premises. (A.R.S. 4-206.01 and 4-209).
A restaurant license may be issued to a restaurant that is regularly open for the serving of food to guests for compensation, has suitable kitchen facilities connected with the restaurant for keeping, cooking and preparing foods required for ordinary meals, and derives at least 40 percent of its gross revenue from the sale of food. A restaurant licensee may sell spirituous liquor only for consumption on the licensed premises, unless the licensee holds a permit to sell beer in containers with a one-gallon maximum capacity according to outlined requirements (growler permit). Sales under the growler permit may not exceed 10 percent of total liquor sales (A.R.S. 4-205.02 and 4-209).
A retail liquor licensee with off-sale privileges may take orders for the sale and delivery of spirituous liquor off of the licensed premises to a person in Arizona. The licensee may maintain a delivery service and may contract with an independent contractor or a common carrier for delivery of spirituous liquor. A licensee's employee or other authorized person must verify the age of the person accepting the delivery through the display of identification and receive the person's signature. A licensee must label containers of spirituous liquor for delivery with the words, "contains alcohol, signature of person who is twenty-one years of age or older is required for delivery." The licensee is responsible for any violations of the requirements for the sale and delivery of spirituous liquor (A.R.S. 4-203).
This is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
To-Go Cocktails
1. Exempts bars and liquor stores from the prohibition on allowing spirituous liquor to be removed from the licensed premises except in the original, unbroken package if:
a) the bar or liquor store prepares a mixed cocktail and the licensee or licensee's employee fills the container on the licensed premises; and
b) the container meets prescribed requirements.
2. Directs bar and liquor store licensees, through December 31, 2025, to make a permit available for lease to a restaurant licensee through DLLC for the privilege of selling mixed cocktails for off-premises consumption as follows:
a) the restaurant must prepare the mixed cocktail and the licensee or licensee's employee must fill the container on the licensed premises;
b) the container must meet prescribed requirements; and
c) the sale must be accompanied by the sale of food for consumption on or off the licensed premises.
3. Requires the Director, beginning January 1, 2026, to make to-go cocktail permits available for a restaurant licensee to purchase from DLLC equal in number to the total number of bar and liquor store licensees.
4. Allows a restaurant licensee to apply for a to-go mixed cocktails lease from a bar or liquor store licensee on a form prescribed and provided by the Director.
5. Requires all violations and liability for liquor service under the leased privilege or permit during the lease term to be attributed only the leasing restaurant licensee.
6. Requires a container used for to-go cocktails to:
a) be a clean container composed of a material approved by a national sanitation organization;
b) be tamper proof sealed by the licensee or licensee's employee;
c) have a maximum capacity of up to 32 ounces; and
d) display a government warning label and the restaurant's logo or name.
8. Allows a bar or liquor store lessor to sell to-go mixed cocktails and spirituous liquor as authorized by the license during the term of a to-go mixed cocktails lease.
9. Subjects the off-sale use of a restaurant licensee with a to-go mixed cocktails lease to the limitation of 30 percent of the on-premises spirituous liquor sales, as prescribed for bars.
10. Exempts a restaurant with a to-go cocktails permit from the prohibition on allowing spirituous liquor to be removed from the licensed premises except in the original, unbroken package.
12. Repeals to-go mixed cocktails leasing and lease administration requirements on January 1, 2026.
13. Requires all to-go cocktails permit holders and their employees, managers and agents to complete alcohol training approved by the Director.
14. Requires an issued to-go cocktails permit to be noted on the license and in DLLC records.
15. Authorizes a bar, beer and wine bar or liquor store licensee to lease the off-sale privileges associated with the license, except to-go mixed cocktails, to a restaurant licensee located in the same county.
16. Specifies that the authorization for a bar, beer and wine bar or liquor store licensee to lease their off-sale privileges applies to licenses held in non-use status.
17. Requires DLLC to establish a minimum of four lease windows in a calendar year during which licensees may agree to an off-sale privileges lease.
18. Allows a restaurant licensee to apply to lease a bar, beer and wine bar or liquor store licensee's off-sale privileges on a form prescribed and provided by the Director at least 30 days before the end of a lease window.
19. Requires a restaurant licensee applying for an off-sale privileges lease to provide DLLC a completed lease agreement signed by the lessor and lessee.
20. Directs the Director, upon approval of an off-sale privileges lease and for the lease term, to transfer the lessor's off-sale privileges, except to-go mixed cocktails, to the restaurant lessee.
21. Prohibits a bar or liquor store lessor from using the leased off-sale privileges associated with their license during the term of an off-sale privileges lease.
22. Subjects the off-sale use of a restaurant licensee with an off-sale privileges lease to the limitation of 30 percent of the on-premises spirituous liquor sales, as prescribed for bars.
23. Directs DLLC to establish and publish an off-sale privileges lease amount that fairly recognizes and is derived from the commercial value of selling spirituous liquor for off-premises consumption.
24. Allows DLLC to establish separate amounts for off-sale privileges leases in urban and rural counties and to designate counties for each amount.
25. Allows an off-sale privileges lessor and lessee to agree to a lease amount that is different than the DLLC-established amount.
Lease Administration
27. Allows the Director to establish and charge the following to be used for associated administrative and enforcement costs:
a) a to-go mixed cocktails lease or permit application fee and a permit annual renewal fee; and
b) an off-sale privileges lease application fee.
28. Allows DLLC to adopt a procedure for payment of a lease amount to the lessor and utilize the Arizona Department of Administration to facilitate the payments.
29. Requires all violations and liability for liquor service under the leased off-sale or to-go mixed cocktails privileges during the lease term to be attributed only to the leasing restaurant licensee.
a) deny approval of a lease based on the proposed location of the lease or on the restaurant establishment's history; and
b) immediately suspend a lease for any violation by a restaurant licensee of Alcoholic Beverages statutes or related rules.
31. Directs DLLC to establish a process to facilitate and approve lease conveyance for to-go cocktails and off-sale privileges and to govern the lease, including:
a) a standard form of lease;
b) the responsibilities of the lessor and lessee;
c) the term of the lease, which must be one year except for the first lease year, and the established lease amount;
d) the lease may be transferred to another restaurant licensee if the new licensee purchases the original lessee's business during a lease term;
e) the privileges conveyed to the lessee during the lease term continue if the lessor's license is suspended or revoked;
f) if the lessor sells its license during a lease term, the license purchaser becomes the new lessor;
g) Alcoholic Beverages statutes and rules apply to both the lessor and lessee;
h) all violations and liability for liquor service under the lease must be attributed only to the restaurant leasing the off-sale or to-go cocktails privileges; and
i) the restaurant lessee is not responsible for violations committed by the lessor.
32. Allows the Director, during the first year of a lease, to set a lease term that is less than one year to align the lease renewal date with the renewal date of the restaurant license and allows the first-year lease payment amount to be prorated.
33. Requires a restaurant licensee to pay all lease payments in full, in advance.
35. Requires the Director, if a restaurant does not renew a to-go mixed cocktails lease, to return the lessor to the bar or liquor store lessor to the random selection process.
36. Requires the Director, if a to-go mixed cocktails lessor has its license suspended or revoked, to transfer the lease to another bar or liquor store licensee at the end of the lease term.
Orders for Delivery
37. Authorizes a bar, beer and wine bar or liquor store to take orders for the sale and delivery of mixed cocktails off the licensed premises.
38. Excludes bar, beer and wine bar and restaurant licensees from the existing statutory authorization for a retail licensee with off-sale privileges to contract with an independent contractor other than a registered alcohol delivery contractor.
39. Allows a restaurant to maintain a delivery service and take orders for sales and delivery for off-premises consumption of:
a) beer, if the restaurant holds a beer growler permit;
b) mixed cocktails with the sale of food for consumption or off the licensed premises, if the restaurant holds a to-go mixed cocktails lease or permit;
c) beer and wine, if the restaurant holds an off-sale privileges lease with a beer and wine bar; and
d) beer, wine and distilled spirits, if the restaurant hold an off-sale privileges lease with a bar or liquor store.
40. Authorizes a bar, beer and wine bar, liquor store, beer and wine store or restaurant with a lease or permit to contract with one or more registered alcohol deliver contractors if the liquor is: