Bill Summary – FastDemocracy

67th Legislature                                                                                                   HB 534.1
                                                     HOUSE BILL NO. 534
                                               INTRODUCED BY E. BUTTREY
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   A BILL FOR AN ACT ENTITLED: “AN ACT GENERALLY REVISING ALCOHOL LICENSE LAWS RELATING
   TO BREWERS AND BREWERIES; ALLOWING LICENSED BREWERS TO HOLD A RETAIL LICENSE;
   ALLOWING A HOLDER OF A RETAIL LICENSE TO HOLD A BREWER LICENSE; AMENDING SECTIONS
   16-3-213, 16-3-241, 16-3-242, 16-3-244, AND 16-4-401, MCA; AND PROVIDING AN EFFECTIVE DATE.”
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   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
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              NEW SECTION. Section 1.         Additional license allowed. (1) A licensed brewer may purchase or hold
   complete ownership of a license issued pursuant to 16-4-104 or 16-4-201.
              (2)   A person who holds a license issued pursuant to 16-4-104 or 16-4-201 may purchase or hold
   complete ownership of a brewer license.
              (3)   A person that holds a brewer license and a license issued pursuant to 16-4-104 or 16-4-201:
              (a)   shall maintain both licenses on the same premises, as approved by the department, and may
   hold:
              (i)   additional brewer licenses; or
              (ii) up to two additional licenses issued pursuant to 16-4-104 or 16-4-201;
              (b)   may not provide samples pursuant to 16-3-213 for the brewery located at the same premises as
   the license issued pursuant to 16-4-104 or 16-4-201, and all retail sales must be conducted through the license
   issued pursuant to 16-4-104 or 16-4-201;
              (c)   may operate pursuant to 16-3-214 with the exception of 16-3-214(1)(b); and
              (d)   is not subject to the limitations of 16-3-241, 16-3-242, 16-3-244, or 16-4-401 when the prohibited
   acts are conducted by a brewer in the operation of its license issued pursuant to 16-4-104 or 16-4-201.
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              Section 2. Section 16-3-213, MCA, is amended to read:
              "16-3-213.    Brewers or beer importers not to retail beer -- small brewery exceptions Brewery
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   sample room. (1) Except as provided for small breweries in subsection (2), it is unlawful for any brewer or
   breweries or beer importer to have or own any permit to sell or retail beer at any place or premises. It is the
   intention of this section to prohibit brewers and beer importers from engaging in the retail sale of beer. This
   section does not prohibit breweries from selling and delivering beer manufactured by them, in original
   packages, at either wholesale or retail.
              (2)   (a)(1) (a) For the purposes of this section, a "small brewery" is a brewery that has an annual
   nationwide production of not less than 100 barrels or more than 60,000 barrels, including:
              (i)   the production of all affiliated manufacturers; and
              (ii) beer purchased from any other beer producer to be sold by the brewery.
              (b)   A small brewery may, at one location for each brewery license and at no more than three locations
   including affiliated manufacturers, provide samples of beer that were brewed and fermented on the premises in
   a sample room located on the licensed premises. The samples may be provided with or without charge
   between the hours of 10 a.m. and 8 p.m. No more than 48 ounces of malt beverage may be sold or given to
   each individual customer during a business day. No more than 2,000 barrels may be provided annually for on-
   premises consumption including all affiliated manufacturers. This subsection (1) does not apply to a brewery
   that holds complete ownership of a license issued pursuant to 16-4-104 or 16-4-201.
              (3)(2)   For the purposes of this section, "affiliated manufacturer" means a manufacturer of beer:
              (a)   that one or more members of the manufacturing entity have more than a majority share interest in
   or that controls directly or indirectly another beer manufacturing entity;
              (b)   for which the business operations conducted between or among entities are interrelated or
   interdependent to the extent that the net income of one entity cannot reasonably be determined without
   reference to operations of the other entity; or
              (c)   of which the brand names, products, recipes, merchandise, trade name, trademarks, labels, or
   logos are identical or nearly identical."
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              Section 3. Section 16-3-241, MCA, is amended to read:
              "16-3-241.    Furnishing of fixtures or interior advertising matter to retailers by brewers, beer
   importers, and wholesalers unlawful -- exceptions. (1) (a) It Except as provided in [section 1], it is unlawful
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   for any brewer, beer importer, or wholesaler to lease, furnish, give, or pay for any premises, furniture, fixtures,
   equipment, or any other advertising matter or any other property to a retail licensee, used or to be used in the
   dispensation of beer in and about the interior of the place of business of the licensed retailer, or to furnish, give,
   or pay for any repairs, improvements, or painting on or within the premises.
              (b)   It is lawful for a brewer, beer importer, or wholesaler to furnish, give, or loan to a retail licensee:
              (i)   bottle openers, can openers, trays, tap handles, menus, apparel, coasters, glassware, cups,
   napkins, or other functional advertising matter that does not exceed $300 in value in any 1 calendar year to any
   one retail establishment for display use within the interior of the retail establishment;
              (ii) not more than six illuminated or electrical signs, neon signs, lamps, or lighted clocks for each brand
   of beer in any 1 calendar year to any one retailer for display use within the interior of the retailer's place of
   business. These signs, displays, lamps, or lighted clocks may bear the name, brand name, trade name,
   trademark, or other designation indicating the name of the manufacturer of beer and the place of manufacture.
   Any beer advertised must be available for sale on the retailer's premises at the time the displays are used
   unless the displays are the property of the retailer or, if supplied by a brewer, beer importer, or wholesaler, a
   display has been in the retailer's possession for more than 9 months.
              (iii) permanent or temporary advertising matter of a decorative nature, excluding items described in
   subsection (1)(b)(ii) but including nonelectric clocks, mirrors, banners, flags, and pennants; and
              (iv) maintenance or repair services on draft beer equipment to keep it sanitary and in good working
   condition.
              (2)   A wholesaler may furnish portable equipment used for the temporary cooling, handling, and
   dispensing of beer to a special permittee or a retailer for use:
              (a)   in catering an event that is off the permittee's or retailer's regular premises; or
              (b)   up to three times a year, on a retailer's regular premises, for a period not to exceed 72 hours."
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              Section 4. Section 16-3-242, MCA, is amended to read:
              "16-3-242.    Financial interest in retailers prohibited. (1) A Except as provided in [section 1], a
   brewer, beer importer, or wholesaler may not:
              (a)   advance, or loan, or furnish money to or furnish money for or pay for or on behalf of any retailer
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   any license or tax that may be required to be paid for any by the retailer. A brewer, beer importer, or wholesaler
   may not; or
              (b)   be financially interested, either directly or indirectly, in the conduct or operation of the business of
   a retailer.
              (2)   A brewer, beer importer, or wholesaler is considered to have a financial interest within the
   meaning of this section if:
              (1)(a)   the brewer, beer importer, or wholesaler owns or holds any interest in or a lien or mortgage
   against the retailer or the retailer's premises;
              (2)(b)   the brewer, beer importer, or wholesaler is under any contract with a retailer concerning future
   purchases or the sale of merchandise by one from or to the other; or
              (3)(c)   any retailer holds an interest, as a stockholder or otherwise, in the business of the wholesaler."
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              Section 5. Section 16-3-244, MCA, is amended to read:
              "16-3-244.    Beer advertising limitations. It (1) Except as provided in subsection (2), it is lawful to
   advertise beer, as defined and regulated, subject to the restrictions on brewers and beer importers contained in
   16-3-241 of this code and subject to the following restrictions on retailers. A retail licensee may not display or
   permit to be displayed on the exterior portion or surface of the retailer's place of business or on the exterior
   portion or surface of any building of which the place of business is a part or on any premises adjacent to the
   place of business, whether any of the premises are owned or leased by the retailer, any sign, poster, or
   advertisement bearing the name, brand name, trade name, trademark, or other designation indicating the
   manufacturer, brewer, beer importer, wholesaler, or place of manufacture of any beer, unless it is on a
   marquee, board, or other space used for temporary advertisements and is not displayed for more than 10 days
   per display period.
              (2)   A person that holds a brewer license and a license issued pursuant to 16-4-104 or 16-4-201 under
   [section 1] is not subject to the restrictions in subsection (1) for products manufactured by the person."
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              Section 6. Section 16-4-401, MCA, is amended to read:
              "16-4-401.    License as privilege -- criteria for decision on application -- exceptions. (1) A license
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   under this code is a privilege that the state may grant to an applicant and is not a right to which any applicant is
   entitled.
               (2)   Except as provided in 16-4-311 and subsection (6) of this section and subject to subsection (8), in
   the case of a license that permits on-premises consumption, the department shall find in every case in which it
   makes an order for the issuance of a new license or for the approval of the transfer of a license that:
               (a)   if the applicant is an individual:
               (i)   and the application is approved, the applicant will not possess an ownership interest in more than
   three establishments licensed under this chapter for all-beverages sales. However, resort retail all-beverages
   licenses issued under 16-4-213 do not count toward this limit.
               (ii) the applicant does not possess an ownership interest in an agency liquor store as defined in 16-1-
   106;
               (iii) except as provided in subsections (9) and (10), the applicant or any member of the applicant's
   immediate family is without financing from or any affiliation to a manufacturer, importer, bottler, or distributor of
   alcoholic beverages;
               (iv) the applicant's past record and present status as a purveyor of alcoholic beverages and as a
   business person and citizen demonstrate that the applicant is likely to operate the establishment in compliance
   with all applicable laws of the state and local governments; and
               (v)   the applicant is not under 19 years of age;
               (b)   if the applicant is a publicly traded corporation:
               (i)   each owner of 10% or more of the outstanding stock meets the requirements for an individual
   applicant listed in subsection (2)(a). If no single owner owns more than 10% of the outstanding stock, the
   applicant shall designate two or more officers or board members, each of whom must meet the requirements
   for an individual applicant listed in subsection (2)(a).
               (ii) each individual who has control over the operation of the license meets the requirements for an
   individual applicant listed in subsection (2)(a);
               (iii) each person who shares in the profits or liabilities of a license meets the requirements for an
   individual applicant listed in subsection (2)(a). This subsection (2)(b)(iii) does not apply to a shareholder of a
   corporation who owns less than 10% of the outstanding stock in that corporation except that the provisions of
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   subsection (8) apply.
              (iv) the corporation is authorized to do business in Montana;
              (c)   if the applicant is a privately held corporation:
              (i)   each owner of 10% or more of the outstanding stock meets the requirements for an individual
   applicant listed in subsection (2)(a). If no single owner owns more than 10% of the outstanding stock, the
   applicant shall designate two or more officers or board members, each of whom must meet the requirements
   for an individual applicant listed in subsection (2)(a), and the owners of 51% of the outstanding stock must meet
   the requirements of subsection (2)(a).
              (ii) each individual who has control over the operation of the license meets the requirements for an
   individual applicant listed in subsection (2)(a);
              (iii) each person who shares in the profits or liabilities of a license meets the requirements for an
   individual applicant listed in subsection (2)(a). This subsection (2)(c)(iii) does not apply to a shareholder of a
   corporation who owns less than 10% of the outstanding stock in that corporation except that the provisions of
   subsection (8) apply.
              (iv) the corporation is authorized to do business in Montana;
              (d)   if the applicant is a general partnership, each partner must meet the requirements of subsection
   (2)(a);
              (e)   if the applicant is a limited partnership or a limited liability partnership, each general partner and all
   limited partners whose ownership interest in the partnership equals or exceeds 10% must meet the
   requirements of subsection (2)(a). If no single limited partner's interest equals or exceeds 10%, then 51% of all
   limited partners must meet the requirements of subsection (2)(a).
              (f)   if the applicant is a limited liability company, all managing members and those members whose
   ownership interest in the company equals or exceeds 10% must meet the requirements of subsection (2)(a). If
   no single member's interest equals or exceeds 10%, then 51% of all members must meet the requirements of
   subsection (2)(a).
              (3)   In the case of a license that permits only off-premises consumption and subject to subsection (8),
   the department shall find in every case in which it makes an order for the issuance of a new license or for the
   approval of the transfer of a license that:
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              (a)   if the applicant is an individual:
              (i)   and the application is approved, the applicant will not possess an ownership interest in more than
   three establishments licensed under this chapter for all-beverages sales;
              (ii) the applicant does not possess an ownership interest in an agency liquor store as defined in 16-1-
   106;
              (iii) the applicant or any member of the applicant's immediate family is without financing from or any
   affiliation to a manufacturer, importer, bottler, or distributor of alcoholic beverages;
              (iv) the applicant has not been convicted of a felony or, if the applicant has been convicted of a felony,
   the applicant's rights have been restored;
              (v)   the applicant's past record and present status as a purveyor of alcoholic beverages and as a
   business person and citizen demonstrate that the applicant is likely to operate the establishment in compliance
   with all applicable laws of the state and local governments; and
              (vi) the applicant is not under 19 years of age;
              (b)   if the applicant is a publicly traded corporation:
              (i)   each owner of 10% or more of the outstanding stock meets the requirements for an individual listed
   in subsection (3)(a). If no single owner owns more than 10% of the outstanding stock, the