SB1927 102ND GENERAL ASSEMBLY

  
  

 


 
102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB1927

 

Introduced 2/26/2021, by Sen. Rachelle Crowe

 

SYNOPSIS AS INTRODUCED:
 
235 ILCS 5/3-12

    Amends the Liquor Control Act of 1934. Provides that a person licensed to make wine under the laws of another state who has a winery shipper's license and annually produces less than 250,000 gallons (instead of 25,000 gallons) of wine or a person who has a first-class or second-class wine manufacturer's license, a first-class or second-class wine-maker's license, or a limited wine manufacturer's license and annually produces less than 250,000 gallons (instead of 25,000 gallons) of wine may make application to the State Commission for a self-distribution exemption to allow the sale of not more than 50,000 gallons (instead of 5,000 gallons) of the exemption holder's wine to retail licensees per year. Makes conforming changes. Effective immediately.


LRB102 16129 RPS 21505 b

 

 

A BILL FOR

 

SB1927LRB102 16129 RPS 21505 b

1    AN ACT concerning liquor.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Liquor Control Act of 1934 is amended by
5changing Section 3-12 as follows:
 
6    (235 ILCS 5/3-12)
7    Sec. 3-12. Powers and duties of State Commission.
8    (a) The State Commission shall have the following powers,
9functions, and duties:
10        (1) To receive applications and to issue licenses to
11    manufacturers, foreign importers, importing distributors,
12    distributors, non-resident dealers, on premise consumption
13    retailers, off premise sale retailers, special event
14    retailer licensees, special use permit licenses, auction
15    liquor licenses, brew pubs, caterer retailers,
16    non-beverage users, railroads, including owners and
17    lessees of sleeping, dining and cafe cars, airplanes,
18    boats, brokers, and wine maker's premises licensees in
19    accordance with the provisions of this Act, and to suspend
20    or revoke such licenses upon the State Commission's
21    determination, upon notice after hearing, that a licensee
22    has violated any provision of this Act or any rule or
23    regulation issued pursuant thereto and in effect for 30

 

 

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1    days prior to such violation. Except in the case of an
2    action taken pursuant to a violation of Section 6-3, 6-5,
3    or 6-9, any action by the State Commission to suspend or
4    revoke a licensee's license may be limited to the license
5    for the specific premises where the violation occurred. An
6    action for a violation of this Act shall be commenced by
7    the State Commission within 2 years after the date the
8    State Commission becomes aware of the violation.
9        In lieu of suspending or revoking a license, the
10    commission may impose a fine, upon the State Commission's
11    determination and notice after hearing, that a licensee
12    has violated any provision of this Act or any rule or
13    regulation issued pursuant thereto and in effect for 30
14    days prior to such violation.
15        For the purpose of this paragraph (1), when
16    determining multiple violations for the sale of alcohol to
17    a person under the age of 21, a second or subsequent
18    violation for the sale of alcohol to a person under the age
19    of 21 shall only be considered if it was committed within 5
20    years after the date when a prior violation for the sale of
21    alcohol to a person under the age of 21 was committed.
22        The fine imposed under this paragraph may not exceed
23    $500 for each violation. Each day that the activity, which
24    gave rise to the original fine, continues is a separate
25    violation. The maximum fine that may be levied against any
26    licensee, for the period of the license, shall not exceed

 

 

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1    $20,000. The maximum penalty that may be imposed on a
2    licensee for selling a bottle of alcoholic liquor with a
3    foreign object in it or serving from a bottle of alcoholic
4    liquor with a foreign object in it shall be the
5    destruction of that bottle of alcoholic liquor for the
6    first 10 bottles so sold or served from by the licensee.
7    For the eleventh bottle of alcoholic liquor and for each
8    third bottle thereafter sold or served from by the
9    licensee with a foreign object in it, the maximum penalty
10    that may be imposed on the licensee is the destruction of
11    the bottle of alcoholic liquor and a fine of up to $50.
12        Any notice issued by the State Commission to a
13    licensee for a violation of this Act or any notice with
14    respect to settlement or offer in compromise shall include
15    the field report, photographs, and any other supporting
16    documentation necessary to reasonably inform the licensee
17    of the nature and extent of the violation or the conduct
18    alleged to have occurred. The failure to include such
19    required documentation shall result in the dismissal of
20    the action.
21        (2) To adopt such rules and regulations consistent
22    with the provisions of this Act which shall be necessary
23    to carry on its functions and duties to the end that the
24    health, safety and welfare of the People of the State of
25    Illinois shall be protected and temperance in the
26    consumption of alcoholic liquors shall be fostered and

 

 

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1    promoted and to distribute copies of such rules and
2    regulations to all licensees affected thereby.
3        (3) To call upon other administrative departments of
4    the State, county and municipal governments, county and
5    city police departments and upon prosecuting officers for
6    such information and assistance as it deems necessary in
7    the performance of its duties.
8        (4) To recommend to local commissioners rules and
9    regulations, not inconsistent with the law, for the
10    distribution and sale of alcoholic liquors throughout the
11    State.
12        (5) To inspect, or cause to be inspected, any premises
13    in this State where alcoholic liquors are manufactured,
14    distributed, warehoused, or sold. Nothing in this Act
15    authorizes an agent of the State Commission to inspect
16    private areas within the premises without reasonable
17    suspicion or a warrant during an inspection. "Private
18    areas" include, but are not limited to, safes, personal
19    property, and closed desks.
20        (5.1) Upon receipt of a complaint or upon having
21    knowledge that any person is engaged in business as a
22    manufacturer, importing distributor, distributor, or
23    retailer without a license or valid license, to conduct an
24    investigation. If, after conducting an investigation, the
25    State Commission is satisfied that the alleged conduct
26    occurred or is occurring, it may issue a cease and desist

 

 

SB1927- 5 -LRB102 16129 RPS 21505 b

1    notice as provided in this Act, impose civil penalties as
2    provided in this Act, notify the local liquor authority,
3    or file a complaint with the State's Attorney's Office of
4    the county where the incident occurred or the Attorney
5    General.
6        (5.2) Upon receipt of a complaint or upon having
7    knowledge that any person is shipping alcoholic liquor
8    into this State from a point outside of this State if the
9    shipment is in violation of this Act, to conduct an
10    investigation. If, after conducting an investigation, the
11    State Commission is satisfied that the alleged conduct
12    occurred or is occurring, it may issue a cease and desist
13    notice as provided in this Act, impose civil penalties as
14    provided in this Act, notify the foreign jurisdiction, or
15    file a complaint with the State's Attorney's Office of the
16    county where the incident occurred or the Attorney
17    General.
18        (5.3) To receive complaints from licensees, local
19    officials, law enforcement agencies, organizations, and
20    persons stating that any licensee has been or is violating
21    any provision of this Act or the rules and regulations
22    issued pursuant to this Act. Such complaints shall be in
23    writing, signed and sworn to by the person making the
24    complaint, and shall state with specificity the facts in
25    relation to the alleged violation. If the State Commission
26    has reasonable grounds to believe that the complaint

 

 

SB1927- 6 -LRB102 16129 RPS 21505 b

1    substantially alleges a violation of this Act or rules and
2    regulations adopted pursuant to this Act, it shall conduct
3    an investigation. If, after conducting an investigation,
4    the State Commission is satisfied that the alleged
5    violation did occur, it shall proceed with disciplinary
6    action against the licensee as provided in this Act.
7        (5.4) To make arrests and issue notices of civil
8    violations where necessary for the enforcement of this
9    Act.
10        (5.5) To investigate any and all unlicensed activity.
11        (5.6) To impose civil penalties or fines to any person
12    who, without holding a valid license, engages in conduct
13    that requires a license pursuant to this Act, in an amount
14    not to exceed $20,000 for each offense as determined by
15    the State Commission. A civil penalty shall be assessed by
16    the State Commission after a hearing is held in accordance
17    with the provisions set forth in this Act regarding the
18    provision of a hearing for the revocation or suspension of
19    a license.
20        (6) To hear and determine appeals from orders of a
21    local commission in accordance with the provisions of this
22    Act, as hereinafter set forth. Hearings under this
23    subsection shall be held in Springfield or Chicago, at
24    whichever location is the more convenient for the majority
25    of persons who are parties to the hearing.
26        (7) The State Commission shall establish uniform

 

 

SB1927- 7 -LRB102 16129 RPS 21505 b

1    systems of accounts to be kept by all retail licensees
2    having more than 4 employees, and for this purpose the
3    State Commission may classify all retail licensees having
4    more than 4 employees and establish a uniform system of
5    accounts for each class and prescribe the manner in which
6    such accounts shall be kept. The State Commission may also
7    prescribe the forms of accounts to be kept by all retail
8    licensees having more than 4 employees, including, but not
9    limited to, accounts of earnings and expenses and any
10    distribution, payment, or other distribution of earnings
11    or assets, and any other forms, records, and memoranda
12    which in the judgment of the commission may be necessary
13    or appropriate to carry out any of the provisions of this
14    Act, including, but not limited to, such forms, records,
15    and memoranda as will readily and accurately disclose at
16    all times the beneficial ownership of such retail licensed
17    business. The accounts, forms, records, and memoranda
18    shall be available at all reasonable times for inspection
19    by authorized representatives of the State Commission or
20    by any local liquor control commissioner or his or her
21    authorized representative. The commission, may, from time
22    to time, alter, amend, or repeal, in whole or in part, any
23    uniform system of accounts, or the form and manner of
24    keeping accounts.
25        (8) In the conduct of any hearing authorized to be
26    held by the State Commission, to appoint, at the

 

 

SB1927- 8 -LRB102 16129 RPS 21505 b

1    commission's discretion, hearing officers to conduct
2    hearings involving complex issues or issues that will
3    require a protracted period of time to resolve, to
4    examine, or cause to be examined, under oath, any
5    licensee, and to examine or cause to be examined the books
6    and records of such licensee; to hear testimony and take
7    proof material for its information in the discharge of its
8    duties hereunder; to administer or cause to be
9    administered oaths; for any such purpose to issue subpoena
10    or subpoenas to require the attendance of witnesses and
11    the production of books, which shall be effective in any
12    part of this State, and to adopt rules to implement its
13    powers under this paragraph (8).
14        Any circuit court may, by order duly entered, require
15    the attendance of witnesses and the production of relevant
16    books subpoenaed by the State Commission and the court may
17    compel obedience to its order by proceedings for contempt.
18        (9) To investigate the administration of laws in
19    relation to alcoholic liquors in this and other states and
20    any foreign countries, and to recommend from time to time
21    to the Governor and through him or her to the legislature
22    of this State, such amendments to this Act, if any, as it
23    may think desirable and as will serve to further the
24    general broad purposes contained in Section 1-2 hereof.
25        (10) To adopt such rules and regulations consistent
26    with the provisions of this Act which shall be necessary

 

 

SB1927- 9 -LRB102 16129 RPS 21505 b

1    for the control, sale, or disposition of alcoholic liquor
2    damaged as a result of an accident, wreck, flood, fire, or
3    other similar occurrence.
4        (11) To develop industry educational programs related
5    to responsible serving and selling, particularly in the
6    areas of overserving consumers and illegal underage
7    purchasing and consumption of alcoholic beverages.
8        (11.1) To license persons providing education and
9    training to alcohol beverage sellers and servers for
10    mandatory and non-mandatory training under the Beverage
11    Alcohol Sellers and Servers Education and Training
12    (BASSET) programs and to develop and administer a public
13    awareness program in Illinois to reduce or eliminate the
14    illegal purchase and consumption of alcoholic beverage
15    products by persons under the age of 21. Application for a
16    license shall be made on forms provided by the State
17    Commission.
18        (12) To develop and maintain a repository of license
19    and regulatory information.
20        (13) (Blank).
21        (14) On or before April 30, 2008 and every 2 years
22    thereafter, the State Commission shall present a written
23    report to the Governor and the General Assembly that shall
24    be based on a study of the impact of Public Act 95-634 on
25    the business of soliciting, selling, and shipping wine
26    from inside and outside of this State directly to

 

 

SB1927- 10 -LRB102 16129 RPS 21505 b

1    residents of this State. As part of its report, the State
2    Commission shall provide all of the following information:
3            (A) The amount of State excise and sales tax
4        revenues generated.
5            (B) The amount of licensing fees received.
6            (C) The number of cases of wine shipped from
7        inside and outside of this State directly to residents
8        of this State.
9            (D) The number of alcohol compliance operations
10        conducted.
11            (E) The number of winery shipper's licenses
12        issued.
13            (F) The number of each of the following: reported
14        violations; cease and desist notices issued by the
15        Commission; notices of violations issued by the
16        Commission and to the Department of Revenue; and
17        notices and complaints of violations to law
18        enforcement officials, including, without limitation,
19        the Illinois Attorney General and the U.S. Department
20        of Treasury's Alcohol and Tobacco Tax and Trade
21        Bureau.
22        (15) As a means to reduce the underage consumption of
23    alcoholic liquors, the State Commission shall conduct
24    alcohol compliance operations to investigate whether
25    businesses that are soliciting, selling, and shipping wine
26    from inside or outside of this State directly to residents

 

 

SB1927- 11 -LRB102 16129 RPS 21505 b

1    of this State are licensed by this State or are selling or
2    attempting to sell wine to persons under 21 years of age in
3    violation of this Act.
4        (16) The State Commission shall, in addition to
5    notifying any appropriate law enforcement agency, submit
6    notices of complaints or violations of Sections 6-29 and
7    6-29.1 by persons who do not hold a winery shipper's
8    license under this Act to the Illinois Attorney General
9    and to the U.S. Department of Treasury's Alcohol and
10    Tobacco Tax and Trade Bureau.
11        (17)(A) A person licensed to make wine under the laws
12    of another state who has a winery shipper's license under
13    this Act and annually produces less than 250,000 25,000
14    gallons of wine or a person who has a first-class or
15    second-class wine manufacturer's license, a first-class or
16    second-class wine-maker's license, or a limited wine
17    manufacturer's license under this Act and annually
18    produces less than 250,000 25,000 gallons of wine may make
19    application to the State Commission for a
20    self-distribution exemption to allow the sale of not more
21    than 50,000 5,000 gallons of the exemption holder's wine
22    to retail licensees per year.
23        (B) In the application, which shall be sworn under
24    penalty of perjury, such person shall state (1) the date
25    it was established; (2) its volume of production and sales
26    for each year since its establishment; (3) its efforts to

 

 

SB1927- 12 -LRB102 16129 RPS 21505 b

1    establish distributor relationships; (4) that a
2    self-distribution exemption is necessary to facilitate the
3    marketing of its wine; and (5) that it will comply with the
4    liquor and revenue laws of the United States, this State,
5    and any other state where it is licensed.
6        (C) The State Commission shall approve the application
7    for a self-distribution exemption if such person: (1) is
8    in compliance with State revenue and liquor laws; (2) is
9    not a member of any affiliated group that produces more
10    than 250,000 25,000 gallons of wine per annum or produces
11    any other alcoholic liquor; (3) will not annually produce
12    for sale more than 250,000 25,000 gallons of wine; and (4)
13    will not annually sell more than 50,000 5,000 gallons of
14    its wine to retail licensees.
15        (D) A self-distribution exemption holder shall
16    annually certify to the State Commission its production of
17    wine in the previous 12 months and its anticipated
18    production and sales for the next 12 months. The State
19    Commission may fine, suspend, or revoke a
20    self-distribution exemption after a hearing if it finds
21    that the exemption holder has made a material
22    misrepresentation in its application, violated a revenue
23    or liquor law of Illinois, exceeded production of 250,000
24    25,000 gallons of wine in any calendar year, or become
25    part of an affiliated group producing more than 250,000
26    25,000 gallons of wine or any other alcoholic liquor.

 

 

SB1927- 13 -LRB102 16129 RPS 21505 b

1        (E) Except in hearings for violations of this Act or
2    Public Act 95-634 or a bona fide investigation by duly
3    sworn law enforcement officials, the State Commission, or
4    its agents, the State Commission shall maintain the
5    production and sales information of a self-distribution
6    exemption holder as confidential and shall not release
7    such information to any person.
8        (F) The State Commission shall issue regulations
9    governing self-distribution exemptions consistent with
10    this Section and this Act.
11        (G) Nothing in this paragraph (17) shall prohibit a
12    self-distribution exemption holder from entering into or
13    simultaneously having a distribution agreement with a
14    licensed Illinois distributor.
15        (H) It is the intent of this paragraph (17) to promote
16    and continue orderly markets. The General Assembly finds
17    that, in order to preserve Illinois' regulatory
18    distribution system, it is necessary to create an
19    exception for smaller makers of wine as their wines are
20    frequently adjusted in varietals, mixes, vintages, and
21    taste to find and create market niches sometimes too small
22    for distributor or importing distributor business
23    strategies. Limited self-distribution rights will afford
24    and allow smaller makers of wine access to the marketplace
25    in order to develop a customer base without impairing the
26    integrity of the 3-tier system.

 

 

SB1927- 14 -LRB102 16129 RPS 21505 b

1        (18)(A) A class 1 brewer licensee, who must also be
2    either a licensed brewer or licensed non-resident dealer
3    and annually manufacture less than 930,000 gallons of
4    beer, may make application to the State Commission for a
5    self-distribution exemption to allow the sale of not more
6    than 232,500 gallons of the exemption holder's beer per
7    year to retail licensees and to brewers, class 1 brewers,
8    and class 2 brewers that, pursuant to subsection (e) of
9    Section 6-4 of this Act, sell beer, cider, or both beer and
10    cider to non-licensees at their breweries.
11        (B) In the application, which shall be sworn under
12    penalty of perjury, the class 1 brewer licensee shall
13    state (1) the date it was established; (2) its volume of
14    beer manufactured and sold for each year since its
15    establishment; (3) its efforts to establish distributor
16    relationships; (4) that a self-distribution exemption is
17    necessary to facilitate the marketing of its beer; and (5)
18    that it will comply with the alcoholic beverage and
19    revenue laws of the United States, this State, and any
20    other state where it is licensed.
21        (C) Any application submitted shall be posted on the
22    State Commission's website at least 45 days prior to
23    action by the State Commission. The State Commission shall
24    approve the application for a self-distribution exemption
25    if the class 1 brewer licensee: (1) is in compliance with
26    the State, revenue, and alcoholic beverage laws; (2) is

 

 

SB1927- 15 -LRB102 16129 RPS 21505 b

1    not a member of any affiliated group that manufactures
2    more than 930,000 gallons of beer per annum or produces
3    any other alcoholic beverages; (3) shall not annually
4    manufacture for sale more than 930,000 gallons of beer;
5    (4) shall not annually sell more than 232,500 gallons of
6    its beer to retail licensees or to brewers, class 1
7    brewers, and class 2 brewers that, pursuant to subsection
8    (e) of Section 6-4 of this Act, sell beer, cider, or both
9    beer and cider to non-licensees at their breweries; and
10    (5) has relinquished any brew pub license held by the
11    licensee, including any ownership interest it held in the
12    licensed brew pub.
13        (D) A self-distribution exemption holder shall
14    annually certify to the State Commission its manufacture
15    of beer during the previous 12 months and its anticipated
16    manufacture and sales of beer for the next 12 months. The
17    State Commission may fine, suspend, or revoke a
18    self-distribution exemption after a hearing if it finds
19    that the exemption holder has made a material
20    misrepresentation in its application, violated a revenue
21    or alcoholic beverage law of Illinois, exceeded the
22    manufacture of 930,000 gallons of beer in any calendar
23    year or became part of an affiliated group manufacturing
24    more than 930,000 gallons of beer or any other alcoholic
25    beverage.
26        (E) The State Commission shall issue rules and

 

 

SB1927- 16 -LRB102 16129 RPS 21505 b

1    regulations governing self-distribution exemptions
2    consistent with this Act.
3        (F) Nothing in this paragraph (18) shall prohibit a
4    self-distribution exemption holder from entering into or
5    simultaneously having a distribution agreement with a
6    licensed Illinois importing distributor or a distributor.
7    If a self-distribution exemption holder enters into a
8    distribution agreement and has assigned distribution
9    rights to an importing distributor or distributor, then
10    the self-distribution exemption holder's distribution
11    rights in the assigned territories shall cease in a
12    reasonable time not to exceed 60 days.
13        (G) It is the intent of this paragraph (18) to promote
14    and continue orderly markets. The General Assembly finds
15    that in order to preserve Illinois' regulatory
16    distribution system, it is necessary to create an
17    exception for smaller manufacturers in order to afford and
18    allow such smaller manufacturers of beer access to the
19    marketplace in order to develop a customer base without
20    impairing the integrity of the 3-tier system.
21        (19)(A) A class 1 craft distiller licensee or a
22    non-resident dealer who manufactures less than 50,000
23    gallons of distilled spirits per year may make application
24    to the State Commission for a self-distribution exemption
25    to allow the sale of not more than 5,000 gallons of the
26    exemption holder's spirits to retail licensees per year.

 

 

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1        (B) In the application, which shall be sworn under
2    penalty of perjury, the class 1 craft distiller licensee
3    or non-resident dealer shall state (1) the date it was
4    established; (2) its volume of spirits manufactured and
5    sold for each year since its establishment; (3) its
6    efforts to establish distributor relationships; (4) that a
7    self-distribution exemption is necessary to facilitate the
8    marketing of its spirits; and (5) that it will comply with
9    the alcoholic beverage and revenue laws of the United
10    States, this State, and any other state where it is
11    licensed.
12        (C) Any application submitted shall be posted on the
13    State Commission's website at least 45 days prior to
14    action by the State Commission. The State Commission shall
15    approve the application for a self-distribution exemption
16    if the applicant: (1) is in compliance with State revenue
17    and alcoholic beverage laws; (2) is not a member of any
18    affiliated group that produces more than 50,000 gallons of
19    spirits per annum or produces any other alcoholic liquor;
20    (3) does not annually manufacture for sale more than
21    50,000 gallons of spirits; and (4) does not annually sell
22    more than 5,000 gallons of its spirits to retail
23    licensees.
24        (D) A self-distribution exemption holder shall
25    annually certify to the State Commission its manufacture
26    of spirits during the previous 12 months and its

 

 

SB1927- 18 -LRB102 16129 RPS 21505 b

1    anticipated manufacture and sales of spirits for the next
2    12 months. The State Commission may fine, suspend, or
3    revoke a self-distribution exemption after a hearing if it
4    finds that the exemption holder has made a material
5    misrepresentation in its application, violated a revenue
6    or alcoholic beverage law of Illinois, exceeded the
7    manufacture of 50,000 gallons of spirits in any calendar
8    year, or has become part of an affiliated group
9    manufacturing more than 50,000 gallons of spirits or any
10    other alcoholic beverage.
11        (E) The State Commission shall adopt rules governing
12    self-distribution exemptions consistent with this Act.
13        (F) Nothing in this paragraph (19) shall prohibit a
14    self-distribution exemption holder from entering into or
15    simultaneously having a distribution agreement with a
16    licensed Illinois importing distributor or a distributor.
17        (G) It is the intent of this paragraph (19) to promote
18    and continue orderly markets. The General Assembly finds
19    that in order to preserve Illinois' regulatory
20    distribution system, it is necessary to create an
21    exception for smaller manufacturers in order to afford and
22    allow such smaller manufacturers of spirits access to the
23    marketplace in order to develop a customer base without
24    impairing the integrity of the 3-tier system.
25    (b) On or before April 30, 1999, the Commission shall
26present a written report to the Governor and the General

 

 

SB1927- 19 -LRB102 16129 RPS 21505 b

1Assembly that shall be based on a study of the impact of Public
2Act 90-739 on the business of soliciting, selling, and
3shipping alcoholic liquor from outside of this State directly
4to residents of this State.
5    As part of its report, the Commission shall provide the
6following information:
7        (i) the amount of State excise and sales tax revenues
8    generated as a result of Public Act 90-739;
9        (ii) the amount of licensing fees received as a result
10    of Public Act 90-739;
11        (iii) the number of reported violations, the number of
12    cease and desist notices issued by the Commission, the
13    number of notices of violations issued to the Department
14    of Revenue, and the number of notices and complaints of
15    violations to law enforcement officials.
16(Source: P.A. 100-134, eff. 8-18-17; 100-201, eff. 8-18-17;
17100-816, eff. 8-13-18; 100-1012, eff. 8-21-18; 100-1050, eff.
188-23-18; 101-37, eff. 7-3-19; 101-81, eff. 7-12-19; 101-482,
19eff. 8-23-19; revised 9-20-19.)
 
20    Section 99. Effective date. This Act takes effect upon
21becoming law.