97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB1957

 

Introduced 2/10/2011, by Sen. Linda Holmes

 

SYNOPSIS AS INTRODUCED:
 
235 ILCS 5/3-12

    Amends the Liquor Control Act of 1934. Provides that certain licensed wine manufacturers that annually produce less than 50,000 (rather than 25,000) gallons of wine may make application to the Illinois Liquor Control Commission for a self-distribution exemption to allow the sale of not more than 10,000 (rather than 5,000) gallons of the exemption holder's wine to retail licensees per year. Effective January 1, 2012.


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A BILL FOR

 

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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.
6        In lieu of suspending or revoking a license, the
7    commission may impose a fine, upon the State commission's
8    determination and notice after hearing, that a licensee has
9    violated any provision of this Act or any rule or
10    regulation issued pursuant thereto and in effect for 30
11    days prior to such violation. The fine imposed under this
12    paragraph may not exceed $500 for each violation. Each day
13    that the activity, which gave rise to the original fine,
14    continues is a separate violation. The maximum fine that
15    may be levied against any licensee, for the period of the
16    license, shall not exceed $20,000. The maximum penalty that
17    may be imposed on a licensee for selling a bottle of
18    alcoholic liquor with a foreign object in it or serving
19    from a bottle of alcoholic liquor with a foreign object in
20    it shall be the destruction of that bottle of alcoholic
21    liquor for the first 10 bottles so sold or served from by
22    the licensee. For the eleventh bottle of alcoholic liquor
23    and for each third bottle thereafter sold or served from by
24    the licensee with a foreign object in it, the maximum
25    penalty that may be imposed on the licensee is the
26    destruction of the bottle of alcoholic liquor and a fine of

 

 

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1    up to $50.
2        (2) To adopt such rules and regulations consistent with
3    the provisions of this Act which shall be necessary to
4    carry on its functions and duties to the end that the
5    health, safety and welfare of the People of the State of
6    Illinois shall be protected and temperance in the
7    consumption of alcoholic liquors shall be fostered and
8    promoted and to distribute copies of such rules and
9    regulations to all licensees affected thereby.
10        (3) To call upon other administrative departments of
11    the State, county and municipal governments, county and
12    city police departments and upon prosecuting officers for
13    such information and assistance as it deems necessary in
14    the performance of its duties.
15        (4) To recommend to local commissioners rules and
16    regulations, not inconsistent with the law, for the
17    distribution and sale of alcoholic liquors throughout the
18    State.
19        (5) To inspect, or cause to be inspected, any premises
20    in this State where alcoholic liquors are manufactured,
21    distributed, warehoused, or sold.
22        (5.1) Upon receipt of a complaint or upon having
23    knowledge that any person is engaged in business as a
24    manufacturer, importing distributor, distributor, or
25    retailer without a license or valid license, to notify the
26    local liquor authority, file a complaint with the State's

 

 

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1    Attorney's Office of the county where the incident
2    occurred, or initiate an investigation with the
3    appropriate law enforcement officials.
4        (5.2) To issue a cease and desist notice to persons
5    shipping alcoholic liquor into this State from a point
6    outside of this State if the shipment is in violation of
7    this Act.
8        (5.3) To receive complaints from licensees, local
9    officials, law enforcement agencies, organizations, and
10    persons stating that any licensee has been or is violating
11    any provision of this Act or the rules and regulations
12    issued pursuant to this Act. Such complaints shall be in
13    writing, signed and sworn to by the person making the
14    complaint, and shall state with specificity the facts in
15    relation to the alleged violation. If the Commission has
16    reasonable grounds to believe that the complaint
17    substantially alleges a violation of this Act or rules and
18    regulations adopted pursuant to this Act, it shall conduct
19    an investigation. If, after conducting an investigation,
20    the Commission is satisfied that the alleged violation did
21    occur, it shall proceed with disciplinary action against
22    the licensee as provided in this Act.
23        (6) To hear and determine appeals from orders of a
24    local commission in accordance with the provisions of this
25    Act, as hereinafter set forth. Hearings under this
26    subsection shall be held in Springfield or Chicago, at

 

 

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

 

 

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

 

 

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1    with the provisions of this Act which shall be necessary
2    for the control, sale or disposition of alcoholic liquor
3    damaged as a result of an accident, wreck, flood, fire or
4    other similar occurrence.
5        (11) To develop industry educational programs related
6    to responsible serving and selling, particularly in the
7    areas of overserving consumers and illegal underage
8    purchasing and consumption of alcoholic beverages.
9        (11.1) To license persons providing education and
10    training to alcohol beverage sellers and servers under the
11    Beverage Alcohol Sellers and Servers Education and
12    Training (BASSET) programs and to develop and administer a
13    public awareness program in Illinois to reduce or eliminate
14    the 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) On or before January 15, 1994, the Commission
21    shall issue a written report to the Governor and General
22    Assembly that is to be based on a comprehensive study of
23    the impact on and implications for the State of Illinois of
24    Section 1926 of the Federal ADAMHA Reorganization Act of
25    1992 (Public Law 102-321). This study shall address the
26    extent to which Illinois currently complies with the

 

 

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1    provisions of P.L. 102-321 and the rules promulgated
2    pursuant thereto.
3        As part of its report, the Commission shall provide the
4    following essential information:
5            (i) the number of retail distributors of tobacco
6        products, by type and geographic area, in the State;
7            (ii) the number of reported citations and
8        successful convictions, categorized by type and
9        location of retail distributor, for violation of the
10        Prevention of Tobacco Use by Minors and Sale and
11        Distribution of Tobacco Products Act and the Smokeless
12        Tobacco Limitation Act;
13            (iii) the extent and nature of organized
14        educational and governmental activities that are
15        intended to promote, encourage or otherwise secure
16        compliance with any Illinois laws that prohibit the
17        sale or distribution of tobacco products to minors; and
18            (iv) the level of access and availability of
19        tobacco products to individuals under the age of 18.
20        To obtain the data necessary to comply with the
21    provisions of P.L. 102-321 and the requirements of this
22    report, the Commission shall conduct random, unannounced
23    inspections of a geographically and scientifically
24    representative sample of the State's retail tobacco
25    distributors.
26        The Commission shall consult with the Department of

 

 

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1    Public Health, the Department of Human Services, the
2    Illinois State Police and any other executive branch
3    agency, and private organizations that may have
4    information relevant to this report.
5        The Commission may contract with the Food and Drug
6    Administration of the U.S. Department of Health and Human
7    Services to conduct unannounced investigations of Illinois
8    tobacco vendors to determine compliance with federal laws
9    relating to the illegal sale of cigarettes and smokeless
10    tobacco products to persons under the age of 18.
11        (14) On or before April 30, 2008 and every 2 years
12    thereafter, the Commission shall present a written report
13    to the Governor and the General Assembly that shall be
14    based on a study of the impact of this amendatory Act of
15    the 95th General Assembly on the business of soliciting,
16    selling, and shipping wine from inside and outside of this
17    State directly to residents of this State. As part of its
18    report, the Commission shall provide all of the following
19    information:
20            (A) The amount of State excise and sales tax
21        revenues generated.
22            (B) The amount of licensing fees received.
23            (C) The number of cases of wine shipped from inside
24        and outside of this State directly to residents of this
25        State.
26            (D) The number of alcohol compliance operations

 

 

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1        conducted.
2            (E) The number of winery shipper's licenses
3        issued.
4            (F) The number of each of the following: reported
5        violations; cease and desist notices issued by the
6        Commission; notices of violations issued by the
7        Commission and to the Department of Revenue; and
8        notices and complaints of violations to law
9        enforcement officials, including, without limitation,
10        the Illinois Attorney General and the U.S. Department
11        of Treasury's Alcohol and Tobacco Tax and Trade Bureau.
12        (15) As a means to reduce the underage consumption of
13    alcoholic liquors, the Commission shall conduct alcohol
14    compliance operations to investigate whether businesses
15    that are soliciting, selling, and shipping wine from inside
16    or outside of this State directly to residents of this
17    State are licensed by this State or are selling or
18    attempting to sell wine to persons under 21 years of age in
19    violation of this Act.
20        (16) The Commission shall, in addition to notifying any
21    appropriate law enforcement agency, submit notices of
22    complaints or violations of Sections 6-29 and 6-29.1 by
23    persons who do not hold a winery shipper's license under
24    this amendatory Act to the Illinois Attorney General and to
25    the U.S. Department of Treasury's Alcohol and Tobacco Tax
26    and Trade Bureau.

 

 

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1        (17) (A) A person licensed to make wine under the laws
2    of another state who has a winery shipper's license under
3    this amendatory Act and annually produces less than 50,000
4    25,000 gallons of wine or a person who has a first-class or
5    second-class wine manufacturer's license, a first-class or
6    second-class wine-maker's license, or a limited wine
7    manufacturer's license under this Act and annually
8    produces less than 50,000 25,000 gallons of wine may make
9    application to the Commission for a self-distribution
10    exemption to allow the sale of not more than 10,000 5,000
11    gallons of the exemption holder's wine to retail licensees
12    per year.
13            (B) In the application, which shall be sworn under
14        penalty of perjury, such person shall state (1) the
15        date it was established; (2) its volume of production
16        and sales for each year since its establishment; (3)
17        its efforts to establish distributor relationships;
18        (4) that a self-distribution exemption is necessary to
19        facilitate the marketing of its wine; and (5) that it
20        will comply with the liquor and revenue laws of the
21        United States, this State, and any other state where it
22        is licensed.
23            (C) The Commission shall approve the application
24        for a self-distribution exemption if such person: (1)
25        is in compliance with State revenue and liquor laws;
26        (2) is not a member of any affiliated group that

 

 

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1        produces more than 50,000 25,000 gallons of wine per
2        annum or produces any other alcoholic liquor; (3) will
3        not annually produce for sale more than 50,000 25,000
4        gallons of wine; and (4) will not annually sell more
5        than 10,000 5,000 gallons of its wine to retail
6        licensees.
7            (D) A self-distribution exemption holder shall
8        annually certify to the Commission its production of
9        wine in the previous 12 months and its anticipated
10        production and sales for the next 12 months. The
11        Commission may fine, suspend, or revoke a
12        self-distribution exemption after a hearing if it
13        finds that the exemption holder has made a material
14        misrepresentation in its application, violated a
15        revenue or liquor law of Illinois, exceeded production
16        of 50,000 25,000 gallons of wine in any calendar year,
17        or become part of an affiliated group producing more
18        than 50,000 25,000 gallons of wine or any other
19        alcoholic liquor.
20            (E) Except in hearings for violations of this Act
21        or amendatory Act or a bona fide investigation by duly
22        sworn law enforcement officials, the Commission, or
23        its agents, the Commission shall maintain the
24        production and sales information of a
25        self-distribution exemption holder as confidential and
26        shall not release such information to any person.

 

 

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1            (F) The Commission shall issue regulations
2        governing self-distribution exemptions consistent with
3        this Section and this Act.
4            (G) Nothing in this subsection (17) shall prohibit
5        a self-distribution exemption holder from entering
6        into or simultaneously having a distribution agreement
7        with a licensed Illinois distributor.
8            (H) It is the intent of this subsection (17) to
9        promote and continue orderly markets. The General
10        Assembly finds that in order to preserve Illinois'
11        regulatory distribution system it is necessary to
12        create an exception for smaller makers of wine as their
13        wines are frequently adjusted in varietals, mixes,
14        vintages, and taste to find and create market niches
15        sometimes too small for distributor or importing
16        distributor business strategies. Limited
17        self-distribution rights will afford and allow smaller
18        makers of wine access to the marketplace in order to
19        develop a customer base without impairing the
20        integrity of the 3-tier system.
21    (b) On or before April 30, 1999, the Commission shall
22present a written report to the Governor and the General
23Assembly that shall be based on a study of the impact of this
24amendatory Act of 1998 on the business of soliciting, selling,
25and shipping alcoholic liquor from outside of this State
26directly to residents of this State.

 

 

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1    As part of its report, the Commission shall provide the
2following information:
3        (i) the amount of State excise and sales tax revenues
4    generated as a result of this amendatory Act of 1998;
5        (ii) the amount of licensing fees received as a result
6    of this amendatory Act of 1998;
7        (iii) the number of reported violations, the number of
8    cease and desist notices issued by the Commission, the
9    number of notices of violations issued to the Department of
10    Revenue, and the number of notices and complaints of
11    violations to law enforcement officials.
12(Source: P.A. 95-634, eff. 6-1-08; 96-179, eff. 8-10-09;
1396-446, eff. 1-1-10; 96-1000, eff. 7-2-10.)
 
14    Section 99. Effective date. This Act takes effect January
151, 2012.