SB 285 — Relating to wine and mead; to amend Section 28-3A-20.4, Code of Alabama 1975, to provide that a nonprofit organization may be issued a license to host a wine festival; to further provide for the application process and conditions of licensure to host or participate in a wine festival; and to further provide for the collection and remittance of taxes due on the sale of wine at a wine festival; to amend Section 28-6A-2, Code of Alabama 1975, to further provide for wine manufacturer licensees located in dry counties by allowing such manufacturers to transport and sell wine to retailers under certain limits and to specify that such licensees may host or participate in wine festivals; to amend Section 28-7-10.1, Code of Alabama 1975, to further provide for small farm wineries by permitting such wineries to produce mead; and to amend Section 28-7-16, Code of Alabama 1975, to further provide for the excise tax rate for mead.

SB285 ENGROSSEDENROLLED 5C80M6-25C80M6-3 By Senators Jones, Livingston, Hatcher, Stewart, Sessions, Barfoot, Gudger RFD:

03-May-23 2023 Regular Session Page 0 SB285 EngrossedEnrolled 2Enrolled, 4An AAct, BILL3 TO BE ENTITLED AN ACT 9 Relating to wine and mead;

"§28-3A-20.4 Page 1 SB285 Engrossed (a) The Legislature finds and declares that this section has been enacted pursuant to the authority granted to the state under the Twenty-first Amendment to the United States Constitution and the powers reserved to the state under the Tenth Amendment to the United States Constitution and the Page 1 SB285 Enrolled inherent powers of the state under the Constitution of Alabama of 19012022.

(2) The wine festival license shall authorize the Page 2 SB285 Engrossed licensee to host a festival at which wine festival participant licensees may dispense tastings and sell at retail to individuals physically present at the festival for on-premises or off-premises consumption and for personal use and not for resale, subject to subsection (e).

Page 2 SB285 Enrolled (3) If the applicant for a wine festival license is currently a licensee of the board at the time of application, the board shall only require submission of all of the following information:

(c) A wine festival licensed under this section may not Page 3 SB285 Engrossed operate for more than five consecutive days.

(d)(1) Upon application made on a form provided by the board at least 15 days in advance of the event for which a license is sought and accompanied by a fee not to exceed fifteen dollars ($15)ten dollars ($10), the board shall issue Page 3 SB285 Enrolled a wine festival participant license to any retailer or any manufacturer of table wine licensed by the board that manufactures at least 500 gallons of table wine in this state annually.

(2) A wine festival participant license shall authorize 95 the licensee to dispense tastings and sell at retail to individuals physically present at the festival for on-premises consumption or off-premises consumption and for personal use and not for resale, subject to subsection (e).

(3) Because the applicant for a wine festival 95 participant license is already a licensee of the board at the time of application, the board shall only require submission of all of the following information:

Page 4 SB285 Engrossed (4) The board shall not require any of the following:

A certificate showing that the applicant has purchased a liquor liability insurance policy for the wine Page 4 SB285 Enrolled festival in a case where the applicant submits one of the following:

(f) The sale of wine at any wine festival may not be permitted on any Sunday in a county or municipality that has Page 5 SB285 Engrossed not authorized alcoholic beverages to be sold on Sunday.

(g) If a wine festival is to take place entirely on the premises of the winery that was granted the license to host the wine festival or a winery that is a member of the organization granted the license to host the festival, then Page 5 SB285 Enrolled the board may not require any fee for the wine festival license or any wine festival participant license relating to that festival.

The wine festival licensee shall remit the state and local sales and use taxes to the Page 6 SB285 Engrossed appropriate governing body within seven days following the conclusion of the wine festival, whether or not the wine festival licensee is exempt from sales tax by law.

A wine festival licensee shall register with the county governing body, or if applicable, municipal governing Page 6 SB285 Enrolled body, no less than seven days prior to the wine festival.

Each wine festival licensee and wine festival Page 7 SB285 Engrossed participant licensee shall be subject to audit by the county and municipal governing body of the location at which the wine festival occurs, for the county and local sales tax remitted by or on behalf of that licensee.

Each wine festival licensee shall be responsible for any unreported sales or unremitted Page 7 SB285 Enrolled sales tax, including unreported or unremitted sales tax related to the failure of that licensee to fully remit and record any sale during the wine festival.

(l)(m) If any provision of this section or its application to any person or circumstance is determined by a court to be invalid or unconstitutional, that provision shall Page 8 SB285 Engrossed be stricken and the remaining provisions shall be construed in accordance with the intent of the Legislature to further limit, rather than expand, commerce in alcoholic beverages, including by prohibiting any commerce in alcoholic beverages not expressly authorized, and to enhance strict regulatory Page 8 SB285 Enrolled control over taxation, distribution, and sale of alcoholic beverages through the existing uniform system of regulation of alcoholic beverages." "§28-6A-2 (a)(1) For the purposes of this section, the term "table wine" includes mead.

(2)(3) For the purposes of this section, table wine that has been produced by a manufacturer, or a subsidiary or affiliate or other related entity of the manufacturer, and table wine produced exclusively for the winery by another manufacturer shall be considered to be produced by the winery and shall be included in the 50,000 gallon limit provided in Page 9 SB285 Engrossed subdivision (1)(2).

Page 9 SB285 Enrolled (c) Notwithstanding any provision of this title to the contrary, a small farm winery may do all of the following:

If the winery's table wine has been accepted for distribution by any Page 10 SB285 Engrossed wholesaler of table wine, then the winery may not sell its table wine directly to retailers under this paragraph.

Page 10 SB285 Enrolled c.

Page 11 SB285 Engrossed (f) The board shall adopt rules to implement this section." "§28-7-10.1 (a) Upon an applicant's compliance with this section and the rules adopted pursuant to this section, the board may Page 11 SB285 Enrolled issue a wine manufacturer license to the applicant which shall authorize the licensee to manufacture or otherwise distill, produce, ferment, bottle, or compound wine in a dry county only for the sale for distribution outside of the county.

(c) Any wine manufactured in the dry county by the Page 12 SB285 Engrossed manufacturer licensed pursuant to this section may be sold only for shipment and delivery to a licensed wine distributorwholesaler in this state or to a legal distributor outside of this state., except that the manufacturer may use its employees to sell and transport wine directly to retail Page 12 SB285 Enrolled licensees of the board in a vehicle owned or leased by the manufacturer subject to the following limits:

(e) A wine manufacturer licensee licensed pursuant to this section shall be required to send to the board, prior to Page 13 SB285 Engrossed the twentieth day of each month, a consolidated report of all shipments of alcoholic beverages made to each licensed wholesaler or licensed retailer during the preceding month.

Page 13 SB285 Enrolled (f) Every wine manufacturer licensed pursuant to this section shall keep at its principal place of business within the state, daily permanent records which shall show the quantities of raw materials used in the manufacture of wine, and the quantities of wine manufactured and stored, the sale of wine, the quantities of wine stored for hire or transported for hire by or for the licensee, and the names and addresses of the purchasers of the wine.

(h) Where otherwise lawful, a manufacturer licensed Page 14 SB285 Engrossed under this section may qualify with the board as the host of or as a participant in a wine festival located in a wet municipality in the county of its licensed premises or outside the county of its licensed premises pursuant to Section 28-3A-20.4.

Page 14 SB285 Enrolled (i) Licenses issued under this section, unless revoked in the manner provided in this chapter, shall be valid for the license year commencing January 1 of each year.

Page 15 SB285 Engrossed (b) Collection, Monthly Return, Remittance, Right to Examine Books and Records.

(1) The tax levied by subsection (a) shall be added to the sales price of all table wine containing not more than sixteen and one-half percent alcohol by volume sold and shall Page 15 SB285 Enrolled be collected from the purchasers.

A monthly return filed with the board not later than the 15th day of the second month following the month of receipt of table wine containing not more than sixteen and one-half percent alcohol by volume by the wholesaler on a form prescribed by the board showing receipts Page 16 SB285 Engrossed by the wholesalers from manufacturer, importer, or other wholesaler licensees during the month of receipt and the taxes due thereon at the rate of thirty-eight cents ($.38) per liter of table wine containing not more than sixteen and one-half percent alcohol by volume sold to the wholesale licensee or Page 16 SB285 Enrolled board;

Page 17 SB285 Engrossed (4) The board and the governing body of each county and municipality served by the wholesaler shall have the authority to examine the books and records of any person who sells, stores, or receives for the purpose of distribution any table wine, containing not more than sixteen and one-half percent Page 17 SB285 Enrolled alcohol by volume to determine the accuracy of any return required to be filed with it.

(d) There is hereby levied in addition to the license taxes provided for by this chapter and municipal and county license taxes and in addition to any marked-up price made by Page 18 SB285 Engrossed the board on wine sold by the board a privilege or excise tax measured by and graduated in accordance with the volume of sales of table wine containing more than sixteen and one-half percent alcohol by volume.

The tax shall be an amount equal to two dollars and forty-two cents ($2.42) per liter of table Page 18 SB285 Enrolled wine containing more than sixteen and one-half percent alcohol by volume sold to the wholesale licensee or board, to be collected from the purchaser by the board or by a licensed retailer.

The person who pays the tax in the first instance is acting as an agent of the state for the collection and payment of the tax and as such may not collect a tax on Page 19 SB285 Engrossed table wine containing more than sixteen and one-half percent alcohol by volume for any other level of government.

(2) The tax levied in subsection (d) shall be collected by a monthly return, which shall be filed by the wholesale licensees with the board not later than the 15th day of the Page 19 SB285 Enrolled second month following the month of receipt of table wine containing more than sixteen and one-half percent alcohol by volume by the wholesaler on a form prescribed by the board showing receipts by the wholesalers from manufacturer, importer, or other wholesaler licensees during the month of receipt and the taxes due thereon at the rate of two dollars and forty-two cents ($2.42) per liter of table wine containing more than sixteen and one-half percent alcohol by volume sold to the wholesale licensee or board;

Page 20 SB285 Engrossed (f) Disposition of proceeds.

Page 20 SB285 Enrolled (2) Thirty-four percent to the State General Fund.

The taxes Page 21 SB285 Engrossed levied by subsections (a) and (d) shall not be imposed upon the sale, trade, or barter of table wine by one licensed wholesaler to another wholesaler licensed to sell and handle table wine in this state, which transaction is hereby made exempt from the tax;

provided, however, the board may require Page 21 SB285 Enrolled written reporting of any such transaction in the form as the board may prescribe." Section 2.