The Bench & Bar magazine is published to provide members of the KBA with information that will increase their knowledge of the law, improve the practice of law, and assist in improving the quality of legal services for the citizenry.
Issue link: https://kentuckybenchandbar.epubxp.com/i/213936
FEATURE: BRIDLED SPIRITS Let's face it: people love to drink. Blame it on what you will, but the alcohol industry is expanding rapidly with new niches to quench a thirsty market. Flavored liquors, regional wines and craft beers are all the rage – and their operations require a new level of sophistication that the industry has never before seen. Since the repeal of Prohibition, Kentucky has made changes to its alcohol-related laws on an incremental basis. As a result, Kentucky had "a patchwork of laws and regulations that are duplicative, outdated and cumbersome to administer"1 and more license types than almost any other state in the nation, which created an administrative nightmare and confused licensees. In response to industry growth, increased number of wet cities and counties, and the need for a comprehensive act, Gov. Steve Beshear appointed a task force to study Kentucky's alcoholic beverage control laws in July of 2012 task force, the first of its kind since 1933 when Gov. Ruby Laffoon appointed a liquor control committee to address the issues raised by the repeal of Prohibition.2 The task force was comprised of 22 members that included members of the Department of Alcoholic Beverage Control (Kentucky ABC), Kentucky legislators and various industry groups as well as other groups that deal with alcoholic beverage control issues.3 Many volunteers also participated in the task force. The Governor directed the task force to focus its work on three areas: the number and types of licenses issued by the state and what activities each license should authorize, the effectiveness of local option elections and the enhancement of public safety and compliance with regulatory requirements.4 Based upon its research, the task force approved 34 recommendations, which were incorporated into Senate Bill 13 ("SB 13"), along with other alcohol related items. SB 13 and House Bill 315, which contained proposed legislation permitting breweries to give samples along the same lines permitted by microbreweries, were enacted as law on June 25, 2013. To effectuate the task force's recommendations, SB 13 consolidated similar license types and both state and local licensing fees, simplified the licensing process and modernized local option laws and laws regarding sales on election days.5 SB 13 also strengthened the Kentucky ABC's and local government's public protection powers, reinforced protection of Kentucky's three-tier alcohol distribution system relating to microbreweries, and made fees uniform for the same license types while attempting to keep costs and fees low and maintain revenue neutrality.6 LICENSE TYPES The following license types were changed to simplify the licensing process and/or consolidate similar license types: Distiller's license – The former souvenir retail liquor license allowed distillers located in wet territory to engage in retail sou- venir package sales (up to three liters per visitor per day) to consumers at a gift shop or other retail outlet on their licensed premises.7 The privileges under the former souvenir retail liquor license have simply been added to the privileges of a distiller's license8 so that only one license is now needed. Since almost every distiller located in wet territory held a souvenir retail liquor license, the licenses were merged to eliminate paperwork. Thus, if a distiller is located in wet territory, the distiller automatically has the right to engage in such souvenir package sales; however, a distiller located in dry or moist territory would not have the right to engage in souvenir package sales under this license, or any other license, because the distiller's location in dry or moist territory prohibits retail package sales. Winery license – The previously named "vintner license" caused confusion because most people associated wine production with a "winery," not a vintner. It was also difficult to connect with its counterpart, the "Small Farm Winery license,9" which allows licensees to produce up to 50,000 gallons of wine in a calendar year. Because of the difference in names, applicants could not easily identify that the holder of the former vintner's license operated a winery producing more than 50,000 gallons of wine in a calendar year. The name of this license was simply changed to "Winery."10 Brewer's license – HB 315 permitted in-state brewer's license holders to offer free samples of malt beverages in an amount not to exceed 16 ounces per patron, per day if the brewery is located in wet territory.11 Out-of-State Distilled Spirits/Wine Producer/Supplier license – Out-of-state distilled spirits/wine producers/suppliers must now obtain licenses and register products for sale in Kentucky based on the amount of gallons the licensee imports into Kentucky.12 Quota Retail Package license and Quota Retail Drink license – Only the names of these licenses have changed from "Retail Liquor Package license" to "Quota Retail Package license"13 and "Retail Liquor Drink license" to "Quota Retail Drink license."14 These quota licenses are limited in number and set by quota regulations as opposed to non-quota licenses that are infinite in number.15 NQ1, NQ2 and NQ3 Retail Drink licenses – Several existing non-quota (NQ) licenses were bundled and new types created to simplify and reduce the number of license types. Former license types were grouped together based upon similar costs, qualifications and privileges, but the qualifications and privileges themselves did not change. There are other nonquota licenses, but the NQ designation is not necessarily included in their name. The NQ1, NQ2 and NQ3 retail drink licenses are combo licenses, which means that, with one exception, the holder needs only to hold one license in order to sell all three types of alcoholic TING THE SPIRITS OF KENTUCKY: LIF HOW THE 2013 LEGISLATIVE CHANGES IMPACT THE ALCOHOL INDUSTRY 8 By: Stacy C. Kula and Steve Humphress B&B; • 11.13