HB-6426, As Passed Senate, September 22, 2010

SUBSTITUTE FOR

HOUSE BILL NO. 6426

A bill to amend 1998 PA 58, entitled

"Michigan liquor control code of 1998,"

by amending sections 205, 525, 543, 609, 901, 903, 909, and 1027

(MCL 436.1205, 436.1525, 436.1543, 436.1609, 436.1901, 436.1903,

436.1909, and 436.2027), section 205 as amended by 2001 PA 274,

sections 525 and 1027 as amended by 2008 PA 218, section 543 as

amended by 2005 PA 269, section 901 as amended by 2008 PA 11, and

section 903 as amended by 2000 PA 431, and by adding sections 1029

and 1031.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 205. (1) ~~If the commission privatizes any portion of the~~

~~system existing on~~ ~~December 19, 1996~~ ~~under which spirits are~~

~~warehoused or distributed, the~~ The commission shall, as provided in

section 203(1), by order appoint authorized distribution agents to

engage in the warehousing and delivery of spirits in this state so

as to ensure that all retail licensees continue to be properly

serviced with spirits. An authorized distribution agent is subject

to uniform requirements, including business operating procedures,

that the commission may prescribe by rule, subject to this section.

(2) A person is eligible for appointment by the commission as

an authorized distribution agent if the following circumstances

exist:

(a) The person satisfies all applicable commission rules

prescribing qualifications for licensure promulgated under section

215.

(b) The person has entered into a written agreement or

contract with a supplier of spirits for the purposes of warehousing

and delivering a brand or brands of spirits of that supplier of

spirits.

this state for the storing of spirits from which all delivery of

spirits to retail licensees shall be made.

(3) An authorized distribution agent shall not have a direct

or indirect interest in a supplier of spirits or in a retailer. A

supplier of spirits or a retailer shall not have a direct or

indirect interest in an authorized distribution agent. An

authorized distribution agent shall not hold title to spirits.

After September 24, 1996, an authorized distribution agent or an

applicant to become an authorized distribution agent who directly

or indirectly becomes licensed subsequently as a wholesaler shall

not be appointed to sell a brand of wine in a county or part of a

county for which a wholesaler has been appointed to sell that brand

under an agreement required by this act. A wholesaler who directly

or indirectly becomes an authorized distribution agent shall not

sell or be appointed to sell a brand of wine to a retailer in a

county or part of a county for which another wholesaler has been

appointed to sell that brand under an agreement required by this

act, unless that wholesaler was appointed to sell and was actively

selling that brand to retailers in that county or part of that

county prior to September 24, 1996, or unless the sale and

appointment is the result of an acquisition, purchase, or merger

with the existing wholesaler who was selling that brand to a

retailer in that county or part of that county prior to September

24, 1996.

(4) An authorized distribution agent shall deliver to each

retailer located in its assigned distribution area on at least a

weekly basis if the order meets the minimum requirements. Except

that in those weeks that accompany a state holiday, the commission

may order a modified delivery schedule provided that a retailer

waits not longer than 9 days between deliveries due to a modified

delivery schedule. ~~Until the system established by the commission~~

~~under section 206 is activated, the authorized distribution agent~~

~~shall provide retailers access to a computer application that~~

~~includes the capability to determine whether certain spirits are~~

~~currently available for delivery. Beginning on the date the system~~

~~is established by the commission under section 206, the~~ The

commission shall provide for an integrated on-line ordering system

for spirits and shall require the continuance of any ordering

system in existence on the ~~effective~~ activation date of the system

established under section 206. The minimum requirements shall be

set by the commission and shall be a sufficient number of bottles

to comprise not more than 2 cases. A retailer may pick up the

product at the authorized distribution agent's warehouse. To avoid

occasional emergency outages of spirits, a retail licensee may make

up to 12 special emergency orders to an authorized distribution

agent per calendar year which order shall be made available to the

retail licensee within 18 hours of the placing of the order. A

special emergency order placed on Saturday or Sunday shall be made

available to the retail licensee before noon on the following

Monday. An authorized distribution agent may impose a fee of up to

$20.00 to deliver a special emergency order to a retail licensee.

(5) In locations inaccessible to a motor vehicle as that term

is defined by the Michigan vehicle code, 1949 PA 300, MCL 257.1 to

257.923, the authorized distribution agent shall arrange that a

delivery of spirits to a retailer be in compliance with the

following procedures:

(a) After processing an order from a retailer, an authorized

distribution agent shall contact a retailer to confirm the quantity

of cases or bottles, or both, and the exact dollar total of the

order.

(b) The authorized distribution agent shall have the

responsibility to coordinate with the retailer the date and time a

driver is scheduled to deliver the order to a ferry transport dock,

shall arrange any ferry, drayage, or other appropriate service, and

shall pick up the retailer's payment at that time.

other form of conveyance shall take the retailer's payment to the

mainland dock and give that payment to the authorized distribution

agent's driver.

(d) The ferry transport company or company representing any

other form of conveyance shall transport the order to the drayage

or other appropriate company at the island dock for immediate

delivery to the retailer.

(e) The drayage or other appropriate company shall deliver the

order to the retailer.

(6) The authorized distribution agent is responsible for the

payment of all transportation and delivery charges imposed by the

ferry, drayage, or other conveyance company and is responsible for

all breakage and any shortages, whether attributable to the ferry,

drayage, or other conveyance company or any combination of those

companies, until the order is delivered to the retailer's

establishment. This subsection does not in any way prevent the

authorized distribution agent from seeking reimbursement or damages

from any company conveying the authorized distribution agent's

product.

(7) Except as otherwise provided in subsection (4), an

authorized distribution agent shall not charge a delivery fee or a

split-case fee for delivery of spirits sold by the commission to a

retailer.

(8) An authorized distribution agent or prospective authorized

distribution agent shall maintain and make available to the

commission or its representatives, upon notice, any contract or

written agreement it may have with a supplier of spirits or other

authorized distribution agent for the warehousing and delivery of

spirits in this state.

(9) For any violation of this act, rules promulgated under

this act, or the terms of an order appointing an authorized

distribution agent, an authorized distribution agent shall be

subject to the suspension, revocation, forfeiture, and penalty

provisions of sections 903(1) and 907 in the same manner in which a

licensee would be subject to those provisions. An authorized

distribution agent aggrieved by a penalty imposed by the commission

may invoke the hearing and appeal procedures of section 903(2) and

rules promulgated under that section.

(10) A specially designated distributor may sell to an on-

premises licensee up to 9 liters of spirits during any 1-month

period and an on-premises licensee may purchase, collectively from

specially designated distributors, up to that amount during any 1-

month period. Notwithstanding any other provision of this act or

rule promulgated under this act, a specially designated distributor

is only liable for knowingly violating this section. Records

verifying these purchases shall be maintained by the on-premises

licensee and be available to the commission upon request.

(11) An authorized distribution agent shall demonstrate that

it has made a good faith effort to provide employment to those

former state employees who were terminated due to the privatization

of the liquor distribution system. A good faith effort is

demonstrated by the authorized distribution agent performing at

least the following actions:

(a) Seeking from the commission a list of names and resumes of

all such former state employees who have indicated a desire for

continued employment in the distribution of liquor in Michigan.

(b) Providing a list of employment opportunities created by

the authorized distribution agent in the distribution of liquor in

Michigan to each individual whose name and resume is transmitted

from the commission.

any terminated state worker who indicates an interest in pursuing a

job opportunity with the authorized distribution agent.

(d) Providing a priority in hiring for those individuals who

apply and interview under this process.

(12) Any former state employees terminated due to

privatization who have reason to believe that an authorized

distribution agent has not made a good faith effort to provide him

or her with employment opportunities as described in subsection

(11) may file a complaint with the commission who shall hear the

complaint and make a determination on its validity. If the

commission determines that the complaint is valid, the violation

may be treated as a violation of this act and the authorized

distribution agent may be subject to the suspension, revocation,

forfeiture, and penalty provisions of sections 903(1) and 907.

(13) In addition to paying a vendor of spirits the acquisition

price for purchasing spirits, the commission may pay a vendor of

spirits an additional amount of not less than $4.50 and not more

than $7.50 for each case of spirits purchased as an offset to the

costs being incurred by that vendor of spirits in contracting with

an authorized distribution agent for the warehousing and delivery

of spirits to retailers. The payment described in this subsection

shall not be included in the cost of purchasing spirits by the

commission and shall not be subject to the commission's markup,

special taxes, or state sales tax. The per-case offset established

by this subsection may be increased by the state administrative

board each January to reflect reasonable increases in the

authorized distribution agent's cost of warehousing and delivery.

As used in this subsection, "case" means a container holding twelve

750 ml bottles of spirits or other containers containing spirits

which are standard to the industry.

Sec. 525. (1) Except as otherwise provided for in this

section, the following license fees shall be paid at the time of

filing applications or as otherwise provided in this act:

(a) Manufacturers of spirits, but not including makers,

blenders, and rectifiers of wines containing 21% or less alcohol by

volume, $1,000.00.

(b) Manufacturers of beer, $50.00 per 1,000 barrels, or

fraction of a barrel, production annually with a maximum fee of

$1,000.00, and in addition $50.00 for each motor vehicle used in

delivery to retail licensees. A fee increase does not apply to a

manufacturer of less than 15,000 barrels production per year.

this state, $1,000.00.

(d) Wine makers, blenders, and rectifiers of wine, including

makers, blenders, and rectifiers of wines containing 21% or less

alcohol by volume, $100.00. The small wine maker license fee is

$25.00.

(e) Outstate seller of wine, delivering or selling wine in

this state, $300.00.

(f) Outstate seller of mixed spirit drink, delivering or

selling mixed spirit drink in this state, $300.00.

(g) Dining cars or other railroad or Pullman cars selling

alcoholic liquor, $100.00 per train.

(h) Wholesale vendors other than manufacturers of beer,

$300.00 for the first motor vehicle used in delivery to retail

licensees and $50.00 for each additional motor vehicle used in

delivery to retail licensees.

(i) Watercraft, licensed to carry passengers, selling

alcoholic liquor, a minimum fee of $100.00 and a maximum fee of

$500.00 per year computed on the basis of $1.00 per person per

passenger capacity.

(j) Specially designated merchants, for selling beer or wine

for consumption off the premises only but not at wholesale, $100.00

for each location regardless of the fact that the location may be a

part of a system or chain of merchandising.

(k) Specially designated distributors licensed by the

commission to distribute spirits and mixed spirit drink in the

original package for the commission for consumption off the

premises, $150.00 per year, and an additional fee of $3.00 for each

$1,000.00 or major fraction of that amount in excess of $25,000.00

of the total retail value of merchandise purchased under each

license from the commission during the previous calendar year.

(l) Hotels of class A selling beer and wine, a minimum fee of

$250.00 and, for all bedrooms in excess of 20, $1.00 for each

additional bedroom, but not more than $500.00.

(m) Hotels of class B selling beer, wine, mixed spirit drink,

and spirits, a minimum fee of $600.00 and, for all bedrooms in

excess of 20, $3.00 for each additional bedroom. If a hotel of

class B sells beer, wine, mixed spirit drink, and spirits in more

than 1 public bar, the fee entitles the hotel to sell in only 1

public bar, other than a bedroom, and a license shall be secured

for each additional public bar, other than a bedroom, the fee for

which is $350.00.

(n) Taverns, selling beer and wine, $250.00.

(o) Class C license selling beer, wine, mixed spirit drink,

and spirits, $600.00. If a class C licensee sells beer, wine, mixed

spirit drink, and spirits in more than 1 bar, a fee of $350.00

shall be paid for each additional bar. In municipally owned or

supported facilities in which nonprofit organizations operate

concession stands, a fee of $100.00 shall be paid for each

additional bar.

(p) Clubs selling beer, wine, mixed spirit drink, and spirits,

$300.00 for clubs having 150 or fewer duly accredited members and

$1.00 for each additional member. The membership list for the

purpose only of determining the license fees to be paid under this

subdivision shall be the accredited list of members as determined

by a sworn affidavit 30 days before the closing of the license

year. This subdivision does not prevent the commission from

checking a membership list and making its own determination from

the list or otherwise. The list of members and additional members

House Bill No. 6426 as amended September 22, 2010

is not required of a club paying the maximum fee. The maximum fee

shall not exceed $750.00 for any 1 club.

(q) Warehousers, to be fixed by the commission with a minimum

fee for each warehouse of $50.00.

(r) Special licenses, a fee of $50.00 per day, except that the

fee for that license or permit issued to any bona fide nonprofit

association, duly organized and in continuous existence for 1 year

before the filing of its application, is $25.00. Not more than 12

special licenses may be granted to any organization, including an

auxiliary of the organization, in a calendar year.

(s) Airlines licensed to carry passengers in this state that

sell, offer for sale, provide, or transport alcoholic liquor,

$600.00.

(t) Brandy manufacturer, $100.00.

(u) Mixed spirit drink manufacturer, $100.00.

(v) Brewpub, $100.00.

(w) Class G-1, $1,000.00.

(x) Class G-2, $500.00.

(y) Motorsports event license, $250.00.

(z) Small distiller, $100.00.

(AA)>> Wine auction license, $50,000.00.

(2) The fees provided in this act for the various types of

licenses shall not be prorated for a portion of the effective

period of the license. Notwithstanding subsection (1), the initial

license fee for any licenses issued under section 531(3) and (4) is

$20,000.00. The renewal license fee shall be the amount described

in subsection (1). However, the commission shall not impose the

$20,000.00 initial license fee for applicants whose license

eligibility was already approved on July 20, 2005.

(3) Beginning July 23, 2004, and except in the case of any

resort or resort economic development license issued under section

531(2), (3), (4), and (5) and a license issued under section 521,

the commission shall issue an initial or renewal license not later

than 90 days after the applicant files a completed application.

Receipt of the application is considered the date the application

is received by any agency or department of the state of Michigan.

If the application is considered incomplete by the commission, the

commission shall notify the applicant in writing, or make the

information electronically available, within 30 days after receipt

of the incomplete application, describing the deficiency and

requesting the additional information. The determination of the

completeness of an application does not operate as an approval of

the application for the license and does not confer eligibility

upon an applicant determined otherwise ineligible for issuance of a

license. The 90-day period is tolled under any of the following

circumstances:

(a) Notice sent by the commission of a deficiency in the

application until the date all of the requested information is

received by the commission.

(b) The time period during which actions required by a party

other than the applicant or the commission are completed that

include, but are not limited to, completion of construction or

renovation of the licensed premises; mandated inspections by the

commission or by any state, local, or federal agency; approval by

the legislative body of a local unit of government; criminal

history or criminal record checks; financial or court record

checks; or other actions mandated by this act or rule or as

otherwise mandated by law or local ordinance.

(4) If the commission fails to issue or deny a license within

the time required by this section, the commission shall return the

license fee and shall reduce the license fee for the applicant's

next renewal application, if any, by 15%. The failure to issue a

license within the time required under this section does not allow

the commission to otherwise delay the processing of the

application, and that application, upon completion, shall be placed

in sequence with other completed applications received at that same

time. The commission shall not discriminate against an applicant in

the processing of the application based upon the fact that the

license fee was refunded or discounted under this subsection.

(5) Beginning October 1, 2005, the chair of the commission

shall submit a report by December 1 of each year to the standing

committees and appropriations subcommittees of the senate and house

of representatives concerned with liquor license issues. The chair

of the commission shall include all of the following information in

the report concerning the preceding fiscal year:

(a) The number of initial and renewal applications the

commission received and completed within the 90-day time period

described in subsection (3).

(b) The number of applications denied.

90-day time period and the amount of money returned to licensees

under subsection (4).

(6) As used in this section, "completed application" means an

application complete on its face and submitted with any applicable

licensing fees as well as any other information, records, approval,

security, or similar item required by law or rule from a local unit

of government, a federal agency, or a private entity but not from

another department or agency of the state of Michigan.

Sec. 543. (1) Quarterly, upon recommendation of the

commission, the state shall pay pursuant to appropriation in the

manner prescribed by law to the city, village, or township in which

a full-time police department or full-time ordinance enforcement

department is maintained or, if a police department or full-time

ordinance enforcement department is not maintained, to the county,

to be credited to the sheriff's department of the county in which

the licensed premises are located, 55% of the amount of the

proceeds of the retailers' license fees and license renewal fees

collected in that jurisdiction, for the specific purpose of

enforcing this act and the rules promulgated under this act. Forty-

one and one-half percent of the amount of the proceeds of

retailers' license and license renewal fees collected shall be

deposited in a special fund to be annually appropriated to the

commission for carrying out the licensing and enforcement

provisions of this act. Any unencumbered or uncommitted money in

the special fund shall revert to the general fund of the state 12

months after the end of each fiscal year in which the funds were

collected. The legislature shall appropriate 3-1/2% of the amount

of the proceeds of retailers' license and license renewal fees

collected to be credited to a special fund in the state treasury

for the purposes of promoting and sustaining programs for the

prevention, rehabilitation, care, and treatment of alcoholics. This

subsection does not apply to retail license fees collected for

railroad or Pullman cars, watercraft, or aircraft, or wine auctions

or to the transfer fees provided in section 529.

(2) All license and license renewal fees, other than retail

license and license renewal fees, shall be credited to the grape

and wine industry council created in section 303, to be used as

provided in section 303. Money credited to the grape and wine

industry council shall not revert to the state general fund at the

close of the fiscal year, but shall remain in the account to which

it was credited to be used as provided in section 303.

(3) All retail license fees collected for railroad or Pullman

cars, watercraft, or aircraft , and the transfer fees provided in

section 529 shall be deposited in the special fund created in

subsection (1) for carrying out the licensing and enforcement

provisions of this act.

(4) The license fee enhancement imposed for licenses issued

under section 531(3) and (4) shall be deposited into a special fund

to be annually appropriated to the commission for enforcement and

other related projects determined appropriate by the commission.

The money representing that amount of the license fees for

identical licenses not issued under section 531(3) and (4) shall be

House Bill No. 6426 as amended September 22, 2010

allocated and appropriated under subsection (1).

(5) The license fee imposed on direct shipper licenses and any

violation fines imposed by the commission shall be deposited into

the direct shipper enforcement revolving fund. The direct shipper

enforcement revolving fund is created within the state treasury.

The state treasurer shall direct the investment of the fund. The

state treasurer shall credit to the fund interest and earnings from

fund investments. Money in the fund at the close of the fiscal year

shall remain in the fund and shall not lapse to the general fund.

The commission shall expend money from the fund, upon

appropriation, only for enforcement of the provisions of section

203 and related projects.

(6) One hundred percent of the wine auction license fee

imposed in section <<525(1)(aa)>> shall be deposited into the general

fund.

(7) ~~(6)~~ As used in this section, "license fee enhancement"

means the money representing the difference between the license fee

imposed for a license under section 525(1) and the additional

amount imposed for resort and resort economic development licenses

under section 525(2).

Sec. 609. Except as provided in ~~section~~ sections 605 and 1029,

a manufacturer, mixed spirit drink manufacturer, warehouser,

wholesaler, outstate seller of beer, outstate seller of wine,

outstate seller of mixed spirit drink, or vendor of spirits shall

not aid or assist any other vendor by gift, loan of money or

property of any description, or other valuable thing, or by the

giving of premiums or rebates, and a vendor shall not accept the

same. However, if manufacturers of spirits reduce the price of

their products, the manufacturer of spirits may refund the amount

of the price reductions to specially designated distributor

licensees in a manner prescribed by the commission.

Sec. 901. (1) A person, directly or indirectly, himself or

herself or by his or her clerk, agent, or employee, shall not

manufacture, manufacture for sale, sell, offer or keep for sale,

barter, furnish, import, import for sale, transport for hire,

transport, or possess any alcoholic liquor unless the person

complies with this act.

(2) A licensee shall not allow unlawful gambling on the

licensed premises and shall not allow on the licensed premises any

gaming devices prohibited by law.

(3) A licensee shall not sell, offer or keep for sale,

furnish, possess, or allow a customer to consume alcoholic liquor

that is not authorized by the license issued to the licensee by the

commission.

(4) A person, whether or not a licensee, shall not sell,

deliver, or import spirits unless the sale, delivery, or

importation is made by the commission, the commission's authorized

agent or distributor, an authorized distribution agent certified by

order of the commission, a person licensed by the commission, or by

prior written order of the commission. A person who violates this

subsection is subject to the sanctions and penalties contained in

section 909(4) and, in the case of a violation of section

909(4)(a), is subject to forfeiture of proceeds or an

instrumentality as provided for in chapter XXVA of the Michigan

penal code, 1931 PA 328, MCL 750.159f to 750.159x.

(5) ~~(4)~~ A licensee shall not sell or furnish alcoholic liquor

to a person who maintains, operates, or leases premises that are

not licensed by the commission and upon which other persons

unlawfully engage in the sale or consumption of alcoholic liquor

for consideration as prohibited by section 913.

(6) ~~(5)~~ A retail licensee shall not, on his or her licensed

premises, sell, offer for sale, accept, furnish, possess, or allow

the consumption of alcoholic liquor that has not been purchased by

the retail licensee from the commission, the commission's

authorized agent or distributor, an authorized distribution agent

certified by order of the commission, or ~~from~~ a licensee of the

commission authorized to sell that alcoholic liquor to a retail

licensee. This subsection does not apply to the consumption of

alcoholic liquor in the bedrooms or suites of registered guests of

licensed hotels or in the bedrooms or suites of bona fide members

of licensed clubs.

Sec. 903. (1) The commission or any commissioner or duly

authorized agent of the commission designated by the chairperson of

the commission, upon due notice and proper hearing, may suspend or

revoke any license upon a violation of this act or any of the rules

promulgated by the commission under this act. The commission or any

commissioner or duly authorized agent of the commission designated

by the chairperson of the commission, may assess a penalty of not

more than $300.00 for each violation of this act or rules

promulgated under this act, or not more than $1,000.00 for each

violation of section 801(2), in addition to or in lieu of

revocation or suspension of the license, which penalty shall be

paid to the commission and deposited with the state treasurer and

shall be credited to the general fund of the state. The commission

shall hold a hearing and order the suspension or revocation of a

license if the licensee has been found liable for 3 or more

separate violations of section 801(2) which violations occurred on

different occasions within a 24-month period unless such violations

for the sale, furnishing, or giving alcoholic liquor to a minor

were discovered by the licensee and disclosed to an appropriate law

enforcement agency immediately upon discovery. A retail licensee

who sells, offers to sell, accepts, furnishes, possesses, or allows

the consumption of spirits in violation of section 901(6) is

subject to an administrative fine of not more than $2,500.00 per

occurrence and the following license sanctions after notice and

opportunity for an administrative hearing under the administrative

procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328:

(a) For a first violation, a license revocation or suspension

for between 1 and 30 days.

(b) For a second violation, a license revocation or suspension

for between 31 and 90 days.

license.

(2) The commission shall provide a procedure by which a

licensee who is aggrieved by any penalty imposed under subsection

(1) and any suspension or revocation of a license ordered by the

commission, a commissioner, or a duly authorized agent of the

commission may request a hearing for the purpose of presenting any

facts or reasons to the commission as to why the penalty,

suspension, or revocation should be modified or rescinded. Any such

request shall be in writing and accompanied by a fee of $25.00. The

commission, after reviewing the record made before a commissioner

or a duly authorized agent of the commission, may allow or refuse

to allow the hearing in accordance with the commission's rules. The

right to a hearing provided in this subsection, however, shall not

be interpreted by any court as curtailing, removing, or annulling

the right of the commission to suspend or revoke licenses as

provided for in this act. A licensee does not have a right of

appeal from the final determination of the commission, except by

leave of the circuit court. Notice of the order of suspension or

revocation of a license or of the assessment of a penalty, or both,

shall be given in the manner prescribed by the commission. The

suspension or revocation of a license or the assessment of a

penalty, or both, by the commission or a duly authorized agent of

the commission does not prohibit the institution of a criminal

prosecution for a violation of this act. The institution of a

criminal prosecution for a violation of this act or the acquittal

or conviction of a person for a violation of this act does not

prevent the suspension or revocation of a license or the assessment

of a penalty, or both, by the commission. In a hearing for the

suspension or revocation of a license issued under this act, proof

that the defendant licensee or an agent or employee of the licensee

demanded and was shown, before furnishing any alcoholic liquor to a

minor, a motor vehicle operator or chauffeur license or a

registration certificate issued by the federal selective service,

or other bona fide documentary evidence of majority and identity of

the person, may be offered as evidence in a defense to a proceeding

for the suspension or revocation of a license issued under this

act. A licensee who has reason to believe that a minor has used

fraudulent identification to purchase alcoholic liquor in violation

of section 703 shall file a police report concerning the violation

with a local law enforcement agency and shall also present the

alleged fraudulent identification to the local law enforcement

agency at the time of filing the report if the identification is in

the possession of the licensee. The commission may promulgate rules

pursuant to the administrative procedures act of 1969, 1969 PA 306,

MCL 24.201 to 24.328, regarding the utilization by licensees of

equipment designed to detect altered or forged driver licenses,

state identification cards, and other forms of identification.

(3) In addition to the hearing commissioners provided for in

section 209, the chairperson of the commission may designate not

more than 2 duly authorized agents to hear violation cases. A

person appointed under this subsection shall be a member in good

standing of the state bar of Michigan.

(4) A duly authorized agent who has been designated by the

chairperson pursuant to subsection (3) shall have, in the hearing

of violation cases, the same authority and responsibility as does a

hearing commissioner under this act and the rules promulgated under

this act.

(5) A duly authorized agent who has been designated by the

chairperson pursuant to subsection (3) shall be ineligible for

appointment to the commission for a period of 1 year after the

person ceases to serve as a duly authorized agent.

Sec. 909. (1) Except as otherwise provided in this act, a

person, other than a person required to be licensed under this act,

who violates this act is guilty of a misdemeanor.

(2) Except as otherwise provided in this act, a licensee who

violates this act, or a rule or regulation promulgated under this

act, is guilty of a misdemeanor punishable by imprisonment for not

more than 6 months or a fine of not more than $500.00, or both.

(3) A person who performs any act for which a license is

required under this act without first obtaining that license or who

sells alcoholic liquor in a county that has prohibited the sale of

alcoholic liquor under section 1107 is guilty of a felony

punishable by imprisonment for not more than 1 year or by a fine of

not more than $1,000.00, or both.

(4) A person, whether or not a licensee, who violates section

901(4) is subject to the following penalties or sanctions:

(a) A person who sells, delivers, or imports spirits in

violation of section 901(4) in the amount of at least 80,000

milliliters is guilty of a felony punishable by imprisonment for

not more than 4 years or a fine of not more than $5,000.00, or

both.

(b) A person who sells, delivers, or imports spirits in

violation of section 901(4) in the amount of at least 8,000

milliliters but less than 80,000 milliliters is guilty of a

misdemeanor punishable by imprisonment for not more than 93 days or

a fine of not more than $2,500.00, or both.

violation of section 901(4) in the amount of less than 8,000

milliliters is responsible for a state civil infraction and may be

ordered to pay a civil fine of not more than $1,000.00.

(5) The remedies under this act are cumulative and

independent. The use of 1 remedy by a person does not bar the use

of other lawful remedies by that person or the use of a lawful

remedy by another person.

(6) ~~(4)~~ It is the intent of the legislature that the court, in

imposing punishment under this section, should discriminate between

casual or slight violations and habitual sales of alcoholic liquor

or attempts to commercialize violations of this act or the rules or

regulations promulgated under this act.

Sec. 1027. (1) Unless otherwise provided by rule of the

commission, a person shall not conduct samplings or tastings of any

alcoholic liquor for a commercial purpose except at premises that

are licensed by the commission for the sale and consumption of

alcoholic liquor on the premises.

(2) This section does not prevent either of the following:

(a) A vendor of spirits, brewer, wine maker, mixed spirit

drink manufacturer, small wine maker, outstate seller of beer,

outstate seller of wine, or outstate seller of mixed spirit drink,

or a bona fide market research organization retained by 1 of the

persons named in this subsection, from conducting samplings or

tastings of an alcoholic liquor product before it is approved for

sale in this state if the sampling or tasting is conducted pursuant

to prior written approval of the commission.

(b) An on-premises licensee from giving a sampling or tasting

House Bill No. 6426 (H-1) as amended September 16, 2010

as amended September 22, 2010

of alcoholic liquor to an employee of the licensee during the legal

hours for consumption for the purpose of educating the employee

regarding 1 or more types of alcoholic liquor so long as the

employee is at least 21 years of age.

tasting of brands it manufactures on the licensed premises.

(3) A vendor of spirits or a manufacturer may conduct a

consumer sampling event on the premises of a holder of a specially

designated distributor license upon submission of a completed

application to the commission <<

.>>

(4) The holder of the consumer sampling event license shall

comply with the following:

(a) The commission must be notified in writing a minimum of 10

working days prior to the event with the date, time, and location

of the event.

[(b) The consumer sampling event is limited to 3 events per vendor

of spirits or manufacturer per specially designated distributor license

per month.]

consumer sampling event must have a licensed representative present

at the specially designated distributor's establishment.

(d) Licensed representatives or an authorized representative

may distribute merchandise, not to exceed $100.00 in value, to

consumers 21 years of age or older during the event.

(e) Participating specially designated distributor licensees

do not receive any fee or other valuable consideration for

participating in the event.

(f) Each consumer is limited to 3 samples, which total no more

than 1/3 ounce of distilled spirits per serving.

(g) The consumer is not charged for and does not purchase any

sample.

(h) The alcoholic liquor used in the consumer sampling event

is provided by the vendor of spirits or manufacturer, and purchased

at the minimum retail selling price fixed by the commission from

the specially designated distributor on whose premises the event is

located. The vendor of spirits or manufacturer shall remove any

unfinished product from the premises at which the event is held

upon completion of the event.

(i) A consumer sampling event shall not be allowed when the

sale of alcoholic liquor is otherwise prohibited on the premises at

which the event is conducted.

(j) Samples are not to be offered to, or allowed to be

consumed by, any person under the legal age for consuming alcoholic

liquor.

(k) A consumer sampling event may be advertised in any type of

media and the advertisements may include the date, time, location,

and other information regarding the event.

(l) The participating vendor of spirits or manufacturer and

specially designated distributor licensees must comply with this

act and commission rules.

(m) The vendor of spirits or manufacturer must demonstrate

that the individual actually conducting the sampling has

successfully completed the server training program in the manner

provided for in section 906 and rules promulgated by the

commission.

(5) Violation of this subsection subjects the vendor of

spirits or manufacturer to the sanctions and penalties as provided

for under this act.

(6) The commission, by rule or issuance of an order, may

further define eligibility for licensure and processes for

conducting consumer sampling events.

(7) ~~(3)~~ A sampling or tasting of any alcoholic liquor in a

home or domicile for other than a commercial purpose is not subject

to this section.

(8) ~~(4)~~ For purposes of this section, "commercial purpose"

means a purpose for which monetary gain or other remuneration could

reasonably be expected.

Sec. 1029. (1) The commission, by promulgation of a rule,

issuance of an order, or execution of a memorandum of understanding

with the department of treasury, or any combination thereof, may

allow the conduct by a manufacturer or out-state seller of spirits

of a preapproved program for marketing spirits by inclusion of

nonalcoholic carbonated beverages to be packaged with spirits. The

commission may, in conjunction with the department of treasury,

adopt a program that disallows the redemption of returnable

containers from the commission but otherwise allows redemption of

Michigan-sold returnable containers at other venues, and shall

allow for a system of appropriate allocation of funds under 1976 IL

1, MCL 445.571 to 445.576, by means of the issuance of an order or

by adoption of a rule.

(2) The commission shall provide for a system of non-mail-in

House Bill No. 6426 as amended September 22, 2010

or instant coupon transactions that does not diminish the spirit

product margins allocated to the state under this act by means of

the issuance of an order or by adoption of a rule.

Sec. 1031. (1) As used in this section, "wine auction license"

means a license issued by the commission to sell wine by auction,

subject to the following:

(a) The wine is sold through an auction by a person licensed

as a specially designated merchant or through a seller partnering

with a specially designated merchant, as evidenced by a written

agreement of the parties.

(b) The owner of the wine is not licensed under this act.

not licensed under this act.

(d) The specially designated merchant ensures that each bottle

sold from the private collection has a permanently affixed tag or

label stating that the wine was acquired from a private collection.

(2) Upon submission of a completed application and the license

fee described in section <<525(1)(aa)>>, the commission shall issue a

wine auction license to a person licensed as a specially designated

merchant, or a seller partnering with a specially designated

merchant, who is arranging for the sale of wine by an owner that is

not licensed under this act. The commission shall issue the license

for a term of 1 year. The license allows the licensee to hold not

more than 12 auctions per license year.

(3) The license restrictions as prescribed under this section

and under this act are in addition to those requirements and

prescriptions imposed by any local law or ordinance, or resolution

House Bill No. 6426 as amended September 22, 2010

of the local unit of government.

(4) The holder of the wine auction license is responsible for

the payment of any applicable sales or excise taxes regarding the

sale of the wine by auction.

(5) The holder of the wine auction license is responsible for

the delivery, storing, and warehousing of the wine offered for sale

and for the delivery of the wine to the purchasers.

(6) A person licensed to sell wine at wholesale or retail may

purchase any wine offered at an auction under this section and may

resell that wine in accordance with the terms of his or her

license, so long as the tag or label remains permanently affixed to

the bottle upon sale.

(7) The sale and resale of wine purchased at auction is

subject to this act and any rules of the commission promulgated

under this act.

(8) A person holding a wine auction license is not required to

demonstrate compliance with the <<registration>> requirements of

article

29 of the occupational code, 1980 PA 299, MCL 339.2901 to 339.2919.

Enacting section 1. This amendatory act does not take effect

unless House Bill No. 6427 of the 95th Legislature is enacted into

law.