1     
WINE SERVICES AND AMENDMENTS

2     
2020 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Michael K. McKell

5     
Senate Sponsor: Curtis S. Bramble

6     

7     LONG TITLE
8     General Description:
9          This bill amends the Alcoholic Beverage Control Act to establish a wine subscription
10     program.
11     Highlighted Provisions:
12          This bill:
13          ▸     defines terms;
14          ▸     requires the Department of Alcoholic Beverage Control (department) to establish
15     and administer a wine subscription program in which:
16               •     the department purchases a wine subscription on behalf of an individual;
17               •     an individual pays to the department the cost of the wine subscription plus, in
18     addition to any tax or fee, an established markup;
19               •     wine purchased through the wine subscription program is shipped or transported
20     to a department warehouse;
21               •     the department ships or transports wine purchased through the wine subscription
22     program to a state store or package agency; and
23               •     an individual collects the wine from a state store or package agency;
24          ▸     permits the department to charge a fee to cover costs of administering the wine
25     subscription program;
26          ▸     grants the commission rulemaking authority;
27          ▸     removes the requirement that a person moving the person's residence into the state
28     obtain department approval before bringing liquor for personal consumption into
29     the state;
30          ▸     removes the requirement that a person who inherits liquor that is located outside the
31     state obtain department approval before bringing the liquor into the state; and
32          ▸     makes technical and conforming changes.
33     Money Appropriated in this Bill:
34          None
35     Other Special Clauses:
36          None
37     Utah Code Sections Affected:
38     AMENDS:
39          32B-2-304, as last amended by Laws of Utah 2019, Chapter 403
40          32B-4-414, as enacted by Laws of Utah 2010, Chapter 276
41     ENACTS:
42          32B-2-701, Utah Code Annotated 1953
43          32B-2-702, Utah Code Annotated 1953
44          32B-2-703, Utah Code Annotated 1953
45     

46     Be it enacted by the Legislature of the state of Utah:
47          Section 1. Section 32B-2-304 is amended to read:
48          32B-2-304. Liquor price -- School lunch program -- Remittance of markup.
49          (1) For purposes of this section:
50          (a) (i) "Landed case cost" means:
51          (A) the cost of the product; and
52          (B) inbound shipping costs incurred by the department.
53          (ii) "Landed case cost" does not include the outbound shipping cost from a warehouse
54     of the department to a state store.
55          (b) "Proof gallon" means the same as that term is defined in 26 U.S.C. Sec. 5002.
56          (c) Notwithstanding Section 32B-1-102, "small brewer" means a brewer who
57     manufactures in a calendar year less than 40,000 barrels of beer, heavy beer, and flavored malt
58     beverage.
59          (2) Except as provided in [Subsection] Subsections (3) and (4):
60          (a) spirituous liquor sold by the department within the state shall be marked up in an
61     amount not less than 88% above the landed case cost to the department;
62          (b) wine sold by the department within the state shall be marked up in an amount not
63     less than 88% above the landed case cost to the department;
64          (c) heavy beer sold by the department within the state shall be marked up in an amount
65     not less than 66.5% above the landed case cost to the department; and
66          (d) a flavored malt beverage sold by the department within the state shall be marked up
67     in an amount not less than 88% above the landed case cost to the department.
68          (3) (a) Liquor sold by the department to a military installation in Utah shall be marked
69     up in an amount not less than 17% above the landed case cost to the department.
70          (b) Except for spirituous liquor sold by the department to a military installation in
71     Utah, spirituous liquor that is sold by the department within the state shall be marked up 49%
72     above the landed case cost to the department if:
73          (i) the spirituous liquor is manufactured by a manufacturer producing less than 30,000
74     proof gallons of spirituous liquor in a calendar year; and
75          (ii) the manufacturer applies to the department for a reduced markup.
76          (c) Except for wine sold by the department to a military installation in Utah, wine that
77     is sold by the department within the state shall be marked up 49% above the landed case cost to
78     the department if:
79          (i) (A) except as provided in Subsection (3)(c)(i)(B), the wine is manufactured by a
80     manufacturer producing less than 20,000 gallons of wine in a calendar year; or
81          (B) for hard cider, the hard cider is manufactured by a manufacturer producing less
82     than 620,000 gallons of hard cider in a calendar year; and
83          (ii) the manufacturer applies to the department for a reduced markup.
84          (d) Except for heavy beer sold by the department to a military installation in Utah,
85     heavy beer that is sold by the department within the state shall be marked up 32% above the
86     landed case cost to the department if:
87          (i) a small brewer manufactures the heavy beer; and
88          (ii) the small brewer applies to the department for a reduced markup.
89          (e) The department shall verify an amount described in Subsection (3)(b), (c), or (d)
90     pursuant to a federal or other verifiable production report.
91          (f) For purposes of determining whether an alcoholic product qualifies for a markup
92     under this Subsection (3), the department shall evaluate whether the manufacturer satisfies the
93     applicable production requirement without considering the manufacturer's production of any
94     other type of alcoholic product.
95          (4) Wine the department purchases on behalf of a subscriber through the wine
96     subscription program established in Section 32B-2-702 shall be marked up not less than 88%
97     above the cost of the subscription for the interval in which the wine is purchased.
98          [(4)] (5) The department shall deposit 10% of the total gross revenue from sales of
99     liquor with the state treasurer to be credited to the Uniform School Fund and used to support
100     the school lunch program administered by the State Board of Education under Section
101     53E-3-510.
102          [(5)] (6) This section does not prohibit the department from selling discontinued items
103     at a discount.
104          Section 2. Section 32B-2-701 is enacted to read:
105          32B-2-701. Definitions.
106          As used in this part:
107          (1) "Subscriber" means an individual who subscribes to a wine subscription as
108     described in Subsection 32B-2-702(2).
109          (2) "Subscription program" means the wine subscription program established in
110     Section 32B-2-702.
111          (3) "Wine subscription" means an arrangement in which a customer pays a recurring
112     price at regular intervals for a product that involves the shipment or transportation of wine.
113          (4) "Wine subscription business" means a person that:
114          (a) sells or offers for sale a wine subscription; and
115          (b) contracts with the department to participate in the subscription program.
116          Section 3. Section 32B-2-702 is enacted to read:
117          32B-2-702. Wine subscription program.
118          (1) The department shall establish and administer a wine subscription program as
119     described in this part.
120          (2) The subscription program shall permit an individual to subscribe to a wine
121     subscription that a wine subscription business sells or offers for sale by:
122          (a) enrolling in the wine subscription program in a manner the department prescribes;
123          (b) authorizing the department to purchase the wine subscription in the individual's
124     name;
125          (c) paying the department, in a manner the department prescribes:
126          (i) the price of the wine subscription;
127          (ii) in addition to any tax, the markup described in Subsection 32B-2-304(4); and
128          (iii) a fee the department charges in accordance with Subsection 32B-2-703(1); and
129          (d) designating the state store or package agency at which the individual would prefer
130     to collect the wine.
131          (3) The department shall:
132          (a) designate by contract with a wine subscription business the department warehouse
133     to which the wine subscription business ships or transports wine under the subscription
134     program;
135          (b) deliver wine purchased through the subscription program to the appropriate state
136     store or package agency; and
137          (c) notify a subscriber when wine purchased through the subscription program is ready
138     for the subscriber to collect from the state store or package agency described in Subsection
139     (3)(b).
140          Section 4. Section 32B-2-703 is enacted to read:
141          32B-2-703. Fees -- Rulemaking.
142          (1) The department may charge a fee as part of the subscription program:
143          (a) in accordance with Section 63J-1-504; and
144          (b) to cover costs to the department for administering the subscription program.
145          (2) The commission may make rules in accordance with Title 63G, Chapter 3, Utah
146     Administrative Rulemaking Act, for the administration of this part, including rules designating
147     which package agencies may receive from the department wines that are purchased through the
148     subscription program.
149          Section 5. Section 32B-4-414 is amended to read:
150          32B-4-414. Unlawful possession -- Exceptions.
151          [(1)] A person may not possess liquor within this state unless authorized by this title or
152     the rules of the commission, except that:
153          [(a)] (1) a person who clears United States Customs when entering this country may
154     possess for personal consumption and not for sale or resale, a maximum of [two] nine liters of
155     liquor purchased from without the United States;
156          (2) a person who enters this state may possess for personal consumption and not for
157     sale or resale, a maximum of nine liters of liquor purchased from without the state;
158          [(b)] (3) a person who moves the person's residence to this state from outside of this
159     state may possess for personal consumption and not for sale or resale, liquor previously
160     purchased outside the state and brought into this state during the move[, if the person: (i)
161     obtains department approval before moving the liquor into the state; and (ii) pays the
162     department a reasonable administrative handling fee as determined by the commission];
163          [(c)] (4) a person who inherits liquor as a beneficiary of an estate that is located outside
164     the state, may possess the liquor and transport or cause the liquor to be transported into the
165     state if the person[: (i) obtains department approval before moving the liquor into the state;
166     (ii)] provides sufficient documentation to the department to establish the person's legal right to
167     the liquor as a beneficiary; [and (iii) (b) pays the department a reasonable administrative
168     handling fee as determined by the commission;] or
169          [(d)] (5) a person may transport or possess liquor if:
170          [(i)] (a) the person transports or possesses the liquor:
171          [(A)] (i) for personal household use and consumption; and
172          [(B)] (ii) not for:
173          [(I)] (A) sale;
174          [(II)] (B) resale;
175          [(III)] (C) gifting to another; or
176          [(IV)] (D) consumption on premises licensed by the commission;
177          [(ii)] (b) the liquor is purchased from a store or facility on a military installation; and
178          [(iii)] (c) the maximum amount the person transports or possesses under this
179     Subsection [(1)(d)] (5) is:
180          [(A)] (i) two liters of:
181          [(I)] (A) spirituous liquor;
182          [(II)] (B) wine; or
183          [(III)] (C) a combination of spirituous liquor and wine; and
184          [(B) (I)] (ii) (A) one case of heavy beer that does not exceed 288 ounces; or
185          [(II)] (B) one case of a flavored malt beverage that does not exceed 288 ounces.
186          [(2) (a) Approval under Subsection (1)(b) may be obtained by a person who:]
187          [(i) is transferring the person's permanent residence to this state; or]
188          [(ii) maintains separate residences both in and out of this state.]
189          [(b) A person may not obtain approval to transfer liquor under Subsection (1)(b) more
190     than one time.]
191