SB-1088, As Passed House, December 14, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

HOUSE SUBSTITUTE FOR

 

SENATE BILL NO. 1088

 

 

 

 

 

 

 

 

 

 

 

 

     A bill to amend 1998 PA 58, entitled

 

"Michigan liquor control code of 1998,"

 

by amending section 203 (MCL 436.1203), as amended by 2014 PA 50.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 203. (1) Except as provided in this section and section

 

301, a person shall not sell, deliver, or import alcoholic liquor,

 

including alcoholic liquor for personal use, in this state unless

 

the sale, delivery, or importation is made by the commission, the

 

commission's authorized agent or distributor, an authorized

 

distribution agent approved by order of the commission, a person

 

licensed by the commission, or by prior written order of the

 

commission.

 

     (2) Notwithstanding R 436.1011(7)(b) and R 436.1527 of the

 


Michigan administrative code Administrative Code and except as

 

provided in subsection (11), subsections (3), (12), (13), (14),

 

(15), and (16), a retailer shall not deliver alcoholic liquor to a

 

consumer in this state at the home or business of the consumer or

 

at any location away from the licensed premises of the retailer.

 

The purpose of this subsection is to exercise the state of

 

Michigan's this state's authority under section 2 of amendment XXI

 

of the constitution of the United States, to maintain the inherent

 

police powers to regulate the transportation and delivery of

 

alcoholic liquor, and to promote a transparent system for the

 

transportation and delivery of alcoholic liquor. The regulation

 

described in this subsection is considered necessary for both of

 

the following reasons:

 

     (a) To promote the public health, safety, and welfare.

 

     (b) To maintain strong, stable, and effective regulation by

 

having beer and wine sold by retailers to consumers in this state

 

by passing through the 3-tier distribution system established under

 

this act.

 

     (3) For purposes of subsection (1), a retailer that holds a

 

specially designated merchant license located in this state may use

 

a common carrier to deliver wine to a consumer in this state. A

 

retailer that uses a common carrier to deliver wine to a consumer

 

under this subsection shall comply with all of the following:

 

     (a) Pay any applicable taxes to the commission and pay any

 

applicable taxes to the department of treasury as directed by the

 

department of treasury. On the request of the department of

 

treasury, a retailer shall furnish an affidavit to verify payment.


     (b) Comply with all laws of this state, including, but not

 

limited to, the prohibition on sales to minors.

 

     (c) Verify the age of the individual placing the order by

 

obtaining from him or her a copy of a photo identification issued

 

by this state, another state, or the federal government or by using

 

an identification verification service. The person receiving and

 

accepting the order on behalf of the retailer shall record the

 

name, address, date of birth, and telephone number of the

 

individual placing the order on the order form or other verifiable

 

record of a type and generated in a manner approved by the

 

commission and provide a duplicate to the commission.

 

     (d) On request of the commission, make available to the

 

commission any document used to verify the age of the individual

 

ordering or receiving the wine from the retailer.

 

     (e) Stamp, print, or label on the outside of the shipping

 

container that the package "Contains Alcohol. Must be delivered to

 

a person 21 years of age or older". The recipient at the time of

 

the delivery shall provide identification verifying his or her age

 

and sign for the delivery.

 

     (f) Place a label on the top panel of the shipping container

 

containing the name and address of the individual placing the order

 

and the name of the designated recipient if different from the name

 

of the individual placing the order.

 

     (4) (3) For purposes of subsection (1), a direct shipper may

 

sell, deliver, or import wine , to consumers in this state by means

 

of any mail order, internet, telephone, computer, device, or other

 

electronic means, or sell directly to a consumer on the winery


premises. A direct shipper that sells, delivers, or imports wine to

 

a consumer under this subsection shall comply with all of the

 

following:

 

     (a) Hold a direct shipper license.

 

     (b) Pay any applicable taxes to the commission and pay any

 

applicable taxes to the department of treasury as directed by the

 

department of treasury. Upon On the request of the department of

 

treasury, a direct shipper shall furnish an affidavit to verify

 

payment.

 

     (c) Comply with all prohibitions of the laws of this state,

 

including, but not limited to, the prohibition on sales to minors.

 

     (d) Verify the age of the individual placing the order by

 

obtaining from him or her a copy of a photo identification issued

 

by this state, another state, or the federal government or by

 

utilizing using an identification verification service. The person

 

receiving and accepting the order on behalf of the direct shipper

 

shall record the name, address, date of birth, and telephone number

 

of the individual placing the order on the order form or other

 

verifiable record of a type and generated in a manner approved by

 

the commission and provide a duplicate to the commission.

 

     (e) Upon On request of the commission, make available to the

 

commission any document used to verify the age of the individual

 

ordering or receiving the wine from the direct shipper.

 

     (f) Stamp, print, or label on the outside of the shipping

 

container that the package "Contains Alcohol. Must be delivered to

 

a person 21 years of age or older." The recipient at the time of

 

the delivery shall provide photo identification verifying his or


her age along with a signature.and sign for the delivery.

 

     (g) Place a label on the top panel of the shipping container

 

containing the direct shipper license number, the order number, the

 

name and address of the individual placing the order , and the name

 

of the designated recipient if different from the name of the

 

individual placing the order. The direct shipper must have received

 

a registration number of approval from the commission for any wine

 

imported into this state. However, the registration number of

 

approval from the commission is not required to be on the invoice

 

or on the label of the wine that the direct shipper sells,

 

delivers, or imports to a consumer in this state.

 

     (h) Direct ship not more than 1,500 9-liter cases, or 13,500

 

liters in total, of wine in a calendar year to consumers in this

 

state. If a direct shipper, whether located in this state or

 

outside this state, owns, in whole or in part, or commonly manages

 

1 or more direct shippers, it shall not in combination ship to

 

consumers in this state more than 13,500 liters of wine in the

 

aggregate.

 

     (i) Pay wine taxes quarterly and report to the commission

 

quarterly the total amount of wine, by type, brand, and price,

 

shipped to consumers in this state during the preceding calendar

 

quarter, and the order numbers.

 

     (j) Authorize and allow the commission and the department of

 

treasury to conduct an audit of the direct shipper's records.

 

     (k) Consent and submit to the jurisdiction of the commission,

 

the department of treasury, and the courts of this state concerning

 

enforcement of this section and any related laws, rules, and


regulations.

 

     (5) (4) Notwithstanding subsection (3), in the case of For a

 

delivery of wine through the use of a common carrier under

 

subsection (3), a person taking the order on behalf of the retailer

 

shall comply with subsection (3)(b) to (f). For a sale, delivery,

 

or importation of alcoholic liquor wine occurring by any means

 

described in subsection (3), (4), a person taking the order on

 

behalf of the direct shipper shall comply with subsection (3)(c)

 

through (4)(c) to (g).

 

     (6) (5) A person that delivers the wine for a direct shipper

 

under this section shall verify that the individual accepting

 

delivery is 21 years of age or older and is the individual who

 

placed the order or the designated recipient, is an individual 21

 

years of age or older currently occupying or present at the

 

address, or is an individual otherwise authorized through a rule

 

promulgated under this act by the commission to receive alcoholic

 

liquor under this section. If the delivery person, after a diligent

 

inquiry, determines that the purchaser or designated recipient is

 

not 21 years of age or older, the delivery person shall return the

 

wine to the direct shipper. A delivery person who returns wine to

 

the direct shipper because the purchaser or designated recipient is

 

not 21 years of age or older is not liable for any damages suffered

 

by the purchaser or direct shipper.

 

     (7) (6) All spirits for sale, use, storage, or distribution in

 

this state , shall originally be purchased by and imported into the

 

state by the commission, or by prior written authority of the

 

commission.


     (8) (7) This section does not apply to alcoholic liquor

 

brought into this state for personal or household use in an amount

 

permitted by federal law by an individual 21 years of age or older

 

at the time of reentry into this state from without the territorial

 

limits of the United States if the individual has been outside the

 

territorial limits of the United States for more than 48 hours and

 

has not brought alcoholic liquor into the United States during the

 

preceding 30 days.

 

     (9) (8) An individual 21 years of age or older may do either

 

of the following in relation to alcoholic liquor that contains less

 

than 21% alcohol by volume:

 

     (a) Personally transport from another state, once in a 24-hour

 

period, not more than 312 ounces of alcoholic liquor for that

 

individual's personal use, notwithstanding subsection (1).

 

     (b) Ship or import from another state alcoholic liquor for

 

that individual's personal use if that personal importation is done

 

in compliance with subsection (1).

 

     (10) (9) A direct shipper shall not sell, deliver, or import

 

wine to a consumer unless it applies for and is granted a direct

 

shipper license from the commission. This subsection does not

 

prohibit wine tasting or the selling at retail by a wine maker of

 

wines he or she produced and bottled or wine manufactured for that

 

wine maker by another wine maker, if done in compliance with this

 

act. Only the following persons qualify for the issuance of a

 

direct shipper license:

 

     (a) A wine maker.

 

     (b) A wine producer and bottler located inside this country


but outside of this state holding both a federal basic permit

 

issued by the alcohol and tobacco tax and trade bureau Alcohol and

 

Tobacco Tax and Trade Bureau of the United States Department of

 

Treasury and a license to manufacture wine in its state of

 

domicile.

 

     (11) (10) An applicant for a direct shipper license shall

 

submit an application to the commission in a written or electronic

 

format provided by the commission and accompanied by an application

 

and initial license fee of $100.00. The application shall must be

 

accompanied by a copy or other evidence of the existing federal

 

basic permit or license, or both, held by the applicant. The direct

 

shipper may renew its license annually by submission of a license

 

renewal fee of $100.00 and a completed renewal application. The

 

commission shall use the fees collected under this section to

 

conduct investigations and audits of direct shippers. The failure

 

to renew, or the revocation or suspension of, the applicant's

 

existing Michigan license, federal basic permit, or license to

 

manufacture wine in its state of domicile is grounds for revocation

 

or denial of the direct shipper license. If a direct shipper is

 

found guilty of violating this act or a rule promulgated by the

 

commission, the commission shall notify both the alcoholic liquor

 

control agency in the direct shipper's state of domicile and the

 

alcohol and tobacco tax and trade bureau Alcohol and Tobacco Tax

 

and Trade Bureau of the United States department of treasury

 

Department of Treasury of the violation.

 

     (12) (11) Except as otherwise provided under subsection (12),

 

a A retailer that holds a specially designated merchant license, in


this state; an out-of-state retailer that holds its state's

 

substantial equivalent license; or a brewpub, a micro brewer, or an

 

out-of-state entity that is the substantial equivalent of a brewpub

 

or micro brewer may deliver beer and wine to the home or other

 

designated location of a consumer in this state if all of the

 

following conditions are met:

 

     (a) The beer or wine, or both, is delivered by the retailer's,

 

brewpub's, or micro brewer's employee. and not by an agent or by a

 

third party delivery service.

 

     (b) The retailer, brewpub, or micro brewer or its employee who

 

delivers the beer or wine, or both, verifies that the individual

 

accepting delivery is at least 21 years of age.

 

     (c) If the retailer, brewpub, or micro brewer or its employee

 

intends to provide service to consumers, the retailer, brewpub, or

 

micro brewer or its employee providing the service has received

 

alcohol server training through a server training program approved

 

by the commission.

 

     (13) (12) A retailer that holds a specially designated

 

merchant license in this state or an out-of-state retailer that

 

holds its state's substantial equivalent license may utilize use a

 

third party that provides delivery service to municipalities in

 

this state that are surrounded by water and inaccessible by motor

 

vehicle to deliver beer and wine to the home or other designated

 

location of that consumer if the delivery service is approved by

 

the commission and agrees to verify that the individual accepting

 

delivery of the beer and wine is at least 21 years of age.

 

     (14) A retailer that holds a specially designated distributor


license may deliver spirits to the home or other designated

 

location of a consumer in this state if all of the following

 

conditions are met:

 

     (a) The spirits are delivered by the retailer's employee.

 

     (b) The retailer or its employee who delivers the spirits

 

verifies that the individual accepting delivery is at least 21

 

years of age.

 

     (c) If the retailer or its employee intends to provide service

 

to consumers, the retailer or its employee providing the service

 

has received alcohol server training through a server training

 

program approved by the commission.

 

     (15) A retailer that holds a specially designated merchant

 

license located in this state may use a third party facilitator

 

service by means of the internet or mobile application to

 

facilitate the sale of beer or wine to be delivered to the home or

 

designated location of a consumer as provided in subsection (12) or

 

this subsection, and a third party facilitator service may deliver

 

beer or wine to a consumer on behalf of a retailer that holds a

 

specially designated merchant license located in this state, if all

 

of the following conditions are met:

 

     (a) If the third party facilitator service delivers beer or

 

wine under this subsection, the third party facilitator service

 

verifies that the individual accepting the delivery of the beer or

 

wine is at least 21 years of age.

 

     (b) A manufacturer, warehouser, wholesaler, outstate seller of

 

beer, outstate seller of wine, supplier of spirits, or outstate

 

seller of mixed spirit drinks does not have a direct or indirect


interest in the third party facilitator service.

 

     (c) A manufacturer, warehouser, wholesaler, outstate seller of

 

beer, outstate seller of wine, supplier of spirits, or outstate

 

seller of mixed spirit drinks does not aid or assist a third party

 

facilitator service by gift, loan of money or property of any

 

description, or other valuable thing as defined in section 609, and

 

a third party facilitator service does not accept the same.

 

     (d) The retailer or consumer pays the fees associated with

 

deliveries provided for under this subsection.

 

     (e) The third party facilitator service offers services for

 

all brands available at the retail location.

 

     (16) A retailer that holds a specially designated distributor

 

license located in this state may use a third party facilitator

 

service by means of the internet or mobile application to

 

facilitate the sale of spirits to be delivered to the home or

 

designated location of a consumer as provided in subsection (14) or

 

this subsection, and a third party facilitator service may deliver

 

spirits to a consumer on behalf of a retailer that holds a

 

specially designated distributor license located in this state, if

 

all of the following conditions are met:

 

     (a) If the third party facilitator service delivers spirits

 

under this subsection, the third party facilitator service verifies

 

that the individual accepting the delivery of the spirits is at

 

least 21 years of age.

 

     (b) A manufacturer, warehouser, wholesaler, outstate seller of

 

beer, outstate seller of wine, supplier of spirits, or outstate

 

seller of mixed spirit drinks does not have a direct or indirect


interest in the third party facilitator service.

 

     (c) A manufacturer, warehouser, wholesaler, outstate seller of

 

beer, outstate seller of wine, supplier of spirits, or outstate

 

seller of mixed spirit drinks does not aid or assist a third party

 

facilitator service by gift, loan of money or property of any

 

description, or other valuable thing as defined in section 609, and

 

a third party facilitator service does not accept the same.

 

     (d) The retailer or consumer pays the fees associated with

 

deliveries provided for under this subsection.

 

     (e) The third party facilitator service offers services for

 

all brands available at the retail location.

 

     (17) A third party facilitator service shall not deliver beer,

 

wine, or spirits to a consumer under subsection (15) or (16), as

 

applicable, and shall not facilitate the sale of beer, wine, or

 

spirits under subsection (15) or (16), as applicable, unless it

 

applies for and is granted a third party facilitator service

 

license by the commission. The commission may charge a reasonable

 

application fee, initial license fee, and annual license renewal

 

fee. The commission shall establish a fee under this subsection by

 

written order.

 

     (18) If a third party facilitator service used by a retailer

 

that holds a specially designated merchant or specially designated

 

distributor license under subsection (15) or (16), as applicable,

 

violates this section, the commission shall not treat the third

 

party facilitator service's violation as a violation by the

 

retailer.

 

     (19) (13) For purposes of subsection (1), a qualified micro


brewer or an out-of-state entity that is the substantial equivalent

 

of a qualified micro brewer may sell and deliver beer to a retailer

 

in this state if all of the following conditions are met:

 

     (a) The retailer is not located in a sales territory for which

 

the qualified micro brewer has granted exclusive sales rights to a

 

wholesaler pursuant to under sections 401 and 403 for the sale of

 

any brand or brands of beer produced by that micro brewer.

 

     (b) The beer is sold and delivered by an employee of the

 

qualified micro brewer, not an agent, and is transported and

 

delivered utilizing using a vehicle owned by the qualified micro

 

brewer., not by a third party delivery service.

 

     (c) The qualified micro brewer is in compliance with

 

applicable state and federal law and applicable regulatory

 

provisions of this act and rules adopted by the commission under

 

this act including, but not limited to, those requirements related

 

to each of the following:

 

     (i) Employees that sell and deliver beer to retailers.

 

     (ii) Vehicles used to deliver beer to retailers.

 

     (iii) Price schedules and temporary price reductions.

 

     (20) A common carrier that carries or transports alcoholic

 

liquor into this state to a person in this state shall submit

 

quarterly reports to the commission. A report required under this

 

subsection must include all of the following about each delivery to

 

a consumer in this state during the preceding calendar quarter:

 

     (a) The name and business address of the person that ships

 

alcoholic liquor.

 

     (b) The name and address of the recipient of alcoholic liquor.


     (c) The weight of alcoholic liquor delivered to a consignee.

 

     (d) The date of the delivery.

 

     (21) A common carrier described in subsection (20) shall

 

maintain the books, records, and documents supporting a report

 

submitted under subsection (20) for 3 years unless the commission

 

notifies the common carrier in writing that the books, records, and

 

supporting documents may be destroyed. Within 30 days after the

 

commission's request, the common carrier shall make the books,

 

records, and documents available for inspection during normal

 

business hours. Within 30 days after a local law enforcement

 

agency's or local governmental unit's request, the common carrier

 

shall also make the books, records, and documents available for

 

inspection to a local law enforcement agency or local governmental

 

unit where the carrier resides or does business.

 

     (22) A third party facilitator service that delivers beer,

 

wine, or spirits to a consumer under subsection (15) or (16), as

 

applicable, shall submit quarterly reports to the commission. A

 

report required under this subsection must include all of the

 

following about each delivery to a consumer in this state during

 

the preceding calendar quarter:

 

     (a) The name and business address of the person that ships

 

beer, wine, or spirits.

 

     (b) The name and address of the recipient of beer, wine, or

 

spirits.

 

     (c) The weight of beer, wine, or spirits delivered to a

 

consignee.

 

     (d) The date of the delivery.


     (23) A third party facilitator service shall maintain the

 

books, records, and documents supporting a report submitted under

 

subsection (22) for 3 years unless the commission notifies the

 

third party facilitator service in writing that the books, records,

 

and supporting documents may be destroyed. Within 30 days after the

 

commission's request, the third party facilitator service shall

 

make the books, records, and documents available for inspection

 

during normal business hours. Within 30 days after a local law

 

enforcement agency's or local governmental unit's request, the

 

third party facilitator service shall also make the books, records,

 

and documents available for inspection to a local law enforcement

 

agency or local governmental unit where the third party facilitator

 

service resides or does business.

 

     (24) A report submitted under subsection (20) or (22) is

 

subject to disclosure under the freedom of information act, 1976 PA

 

442, MCL 15.231 to 15.246.

 

     (25) (14) As used in this section:

 

     (a) "Common carrier" means a company that transports goods, on

 

reasonable request, on regular routes and at set rates.

 

     (b) (a) "Computer" means any connected, directly interoperable

 

or interactive device, equipment, or facility that uses a computer

 

program or other instructions to perform specific operations

 

including logical, arithmetic, or memory functions with or on

 

computer data or a computer program and that can store, retrieve,

 

alter, or communicate the results of the operations to a person,

 

computer program, computer, computer system, or computer network.

 

     (c) (b) "Computer network" means the interconnection of


hardwire or wireless communication lines with a computer through

 

remote terminals, or a complex consisting of 2 or more

 

interconnected computers.

 

     (d) (c) "Computer program" means a series of internal or

 

external instructions communicated in a form acceptable to a

 

computer that directs the functioning of a computer, computer

 

system, or computer network in a manner designed to provide or

 

produce products or results from the computer, computer system, or

 

computer network.

 

     (e) (d) "Computer system" means a set of related, connected or

 

unconnected, computer equipment, devices, software, or hardware.

 

     (f) (e) "Consumer" means an individual who purchases beer,

 

wine, or spirits for personal consumption and not for resale.

 

     (g) (f) "Device" includes, but is not limited to, an

 

electronic, magnetic, electrochemical, biochemical, hydraulic,

 

optical, or organic object that performs input, output, or storage

 

functions by the manipulation of electronic, magnetic, or other

 

impulses.

 

     (h) (g) "Diligent inquiry" means a diligent good faith effort

 

to determine the age of an individual, that includes at least an

 

examination of an official Michigan operator's or chauffeur's

 

license, an official Michigan personal identification card, or any

 

other bona fide picture identification that establishes the

 

identity and age of the individual.

 

     (i) (h) "Direct shipper" means a person who sells, delivers,

 

or imports wine, to consumers in this state, that he or she

 

produces and bottles or wine that is manufactured by a wine maker


for another wine maker and that is transacted or caused to be

 

transacted through the use of any mail order, internet, telephone,

 

computer, device, or other electronic means, or sells directly to

 

consumers on the winery premises.

 

     (j) (i) "Identification verification service" means any an

 

internet-based service approved by the commission specializing in

 

age and identity verification.

 

     (k) "Mobile application" means a specialized software program

 

downloaded onto a wireless communication device.

 

     (l) (j) "Qualified micro brewer" means a micro brewer that

 

produces in total less than 1,000 barrels of beer per year. In

 

determining the 1,000-barrel threshold, all brands and labels of a

 

micro brewer, whether brewed in this state or outside this state,

 

shall must be combined.

 

     (m) "Third party facilitator service" means a person licensed

 

by the commission to do any of the following:

 

     (i) Facilitate the sale of beer or wine to a consumer as

 

provided in subsection (15) on behalf of a retailer that holds a

 

specially designated merchant license located in this state.

 

     (ii) Facilitate the sale of spirits to a consumer as provided

 

in subsection (16) on behalf of a retailer that holds a specially

 

designated distributor license located in this state.

 

     (iii) Deliver beer or wine to a consumer as provided in

 

subsection (15) on behalf of a retailer that holds a specially

 

designated merchant license located in this state.

 

     (iv) Deliver spirits to a consumer as provided in subsection

 

(16) on behalf of a retailer that holds a specially designated


Senate Bill No. 1088 as amended December 14, 2016

[distributor] license located in this state.