HB 2207 — Concerning warehousing of alcohol.

(11) Warehousing of beer is prohibited by any person other than:

(a) A licensed microbrewery, domestic brewery, beer manufacturer, or beer warehouse licensed under this section;

(b) a licensed Washington beer distributor;

(c) a licensed Washington beer importer;

or (d) a beer certificate of approval holder.

(12) For purposes of this section, "beer" includes bottled, canned, or kegged beer and includes strong beer.

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3 SHB 2207 Sec.

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(1) There shall be a license for bonded wine warehouseswarehouses, which shall authorize the storage and handling of bottled wine.wine, and a license for bonded beer warehouses, which shall authorize the storage and handling of bottled, canned, and kegged beer including strong beer.

Under this((this)) the bonded wine warehouse license a licensee may maintain a warehouse for the storage of wine off the premises of a winery.winery or wine distributor.

(2)Under Thethe boardbonded shallbeer adoptwarehouse similarlicense qualificationsa forlicensee amay bondedmaintain winea warehouse licensefor asthe requiredstorage forof obtainingbeer aincluding domesticstrong winerybeer licenseoff asthe specifiedpremises inof RCWa 66.24.010microbrewery, anddomestic 66.24.170.brewery, or beer distributor.

A(2) licenseeThe mustboard beshall adopt similar qualifications for a solebonded proprietor,wine warehouse license as required for obtaining a partnership,domestic winery license as specified in RCW 66.24.010 and 66.24.170 and, for a limitedbonded liabilitybeer company,warehouse orlicense, as required for obtaining a corporation.microbrewery license or domestic brewery license as specified in RCW 66.24.010, 66.24.244, and 66.24.240.

A licensee must be a sole proprietor, a p.

1 HB 2207 partnership, a limited liability company, or a corporation.

(3)One Allor bottledmore winemicrobreweries shippedand todomestic abreweries bondedmay wineoperate warehouseas from a winerypartnership, orcorporation, anotherbusiness bondedco-op, wineor warehouseagricultural shallco-op remainfor under bond and no tax imposed under RCW 66.24.210 shall be due, unless the winepurpose isof removedobtaining from bond and shipped to a licensedbonded Washingtonbeer winewarehouse distributor.license.

Wine(3)(a) mayAll bebottled removedwine fromshipped to a bonded wine warehouse onlyfrom fora thewinery purposeor ofanother beingbonded (a)wine exportedwarehouse fromshall theremain state,under (b)bond shippedand tono atax licensedimposed Washingtonunder wineRCW distributor,66.24.210 (c)shall returnedbe todue, aunless winerythe orwine bondedis wineremoved warehouse,from orbond (d)and shipped to a consumerlicensed pursuantWashington towine RCWdistributor 66.20.360or throughto 66.20.390.a consumer.

(4)Wine Warehousingmay ofbe wineremoved byfrom anya personbonded otherwine thanwarehouse (a)only afor licensedthe domesticpurpose wineryof orbeing a(((a))) bonded(i) wineexported warehousefrom licensed under the provisionsstate, of(((b))) this(ii) section,shipped (b)to a licensed Washington wine distributor, (c)(((c))) a(iii) licensedreturned Washingtonto winea importer,winery (d)or abonded wine certificatewarehouse, ofor approval(((d))) holder(iv) (W7),shipped orto (e)a theconsumer board,pursuant isto prohibited.RCW 66.20.360 through 66.20.390.

(5)(b) AAll licensebottled, applicantcanned, shalland holdkegged abeer federalincluding permitstrong forbeer shipped to a bonded winebeer cellarwarehouse andfrom maya bemicrobrewery, requireddomestic tobrewery, postor aanother continuingbonded winebeer taxwarehouse bondshall ofremain suchunder anbond amount and inno suchtax aimposed formunder asRCW may66.24.290 shall be requireddue, byunless the boardbeer prioris toremoved thefrom issuancebond ofand shipped to a bondedlicensed wineWashington warehousebeer license.distributor or to a consumer.

TheBeer feeincluding strong beer may be removed from a bonded beer warehouse only for thisthe licensepurpose shallof bebeing $150(i) perexported annumfrom ,the unlessstate, an(ii) applicantshipped isto alreadya licensed underWashington sectionbeer 1distributor, of(iii) thisreturned act,to ina whichmicrobrewery, casedomestic therebrewery, isor nobonded additionalbeer annualwarehouse, feeor under(iv) thisshipped subsection.to a consumer pursuant to rules of the board.

(6)(4)(a) TheWarehousing boardof shallwine adoptby rulesany requiringperson other than (((a))) (i) a licensed domestic winery or a bonded wine warehouse tolicensed beunder physicallythe secure,provisions zonedof forthis thesection, intended(((b))) use(ii) anda physicallylicensed separatedWashington fromwine anydistributor, other(((c))) use.(iii) a licensed Washington wine importer, (((d))) or (iv) a wine certificate of approval holder (W7), ((or (e) the board,)) is prohibited.

(7)(b) EveryWarehousing licenseeof shallbeer submitincluding tostrong thebeer boardby any person other than (i) a monthlylicensed reportmicrobrewery, ofdomestic movementbrewery, or bonded beer warehouse under the provisions of bottledthis winessection, to(ii) anda fromlicensed Washington beer distributor, (iii) a bondedlicensed wineWashington warehousebeer inimporter, or (iv) a formbeer prescribedcertificate byof theapproval board.holder, is prohibited.

The board may adopt other necessary p.

42 SHBHB 2207 procedures(5) by((A)) which(a) To warehouse wine, a license applicant shall hold a federal permit for a bonded wine warehousescellar areand licensedmay be required to post a continuing wine tax bond of such an amount and regulated.in such a form as may be required by the board prior to the issuance of a bonded wine warehouse license.

(8)The Handlingfee offor bottledthis wine,license asshall providedbe for$150 inper annum, unless an applicant is already licensed under (b) of this section,subsection includesin packagingwhich andcase repackagingthere services;is no additional annual fee under this subsection (5)(a).

(b) To warehouse beer including strong beer, a license applicant shall hold a federal permit or authorization for the activity as specified by the board and may be required to post a continuing beer tax bond of such an amount and in such a form as may be required by the board prior to the issuance of a bonded beer warehouse license.

The fee for this license shall be $150 per annum, unless an applicant is already licensed under (a) of this subsection in which case there is no additional annual fee under this subsection (5)(b).

(6)(a) The board shall adopt rules requiring a bonded wine warehouse and a bonded beer warehouse to be physically secure, zoned for the intended use, and, except as provided in (b) of this subsection, physically separated from any other use.

(b)(i) A person holding both a bonded wine warehouse license and a bonded beer warehouse license may store and handle bottled wine, bottled, canned, and kegged beer, including strong beer, and nonalcohol materials, in the same area of the premises.

(ii) Nonalcohol materials may be stored and handled in the same area of the premises as wine by a bonded wine warehouse licensee and in the same area of the premises as beer, including strong beer, by a bonded beer warehouse licensee.

(iii) Nothing in this section prohibits a licensed bonded wine warehouse or a licensed bonded beer warehouse from allowing customers to access any areas of the premises.

(7) Every licensee shall submit to the board a monthly report of movement of bottled wines to and from a bonded wine warehouse and of bottled, canned, and kegged beer including strong beer to and from a bonded beer warehouse in a form prescribed by the board.

The board may adopt other necessary procedures by which bonded wine warehouses and bonded beer warehouses are licensed and regulated.

(8)(a) Handling of bottled wine, as provided for in this section, includes packaging and repackaging services;

creating baskets or variety packs that may or may not includep. nonwine products;

3 HB 2207 include nonwine products;

Sec.(b) Handling of bottled, canned, and kegged beer including strong beer, as provided for in this section, includes packaging and repackaging services;

3.labeling services;

RCWcreating 66.24.240baskets andor 2025variety cpacks 343that smay 16or andmay 2025not cinclude 141nonbeer sproducts; 1 are each reenacted and amended to read as follows:

(1)and Therepicking, shallpacking, beand ashipping licensebeer forand domesticstrong breweries;beer orders direct to consumer.

feeA tomicrobrewery beor $2,100domestic brewery contracting with a bonded beer warehouse for productionhandling ofbottled, 60,000canned, barrelsand orkegged morebeer ofincluding maltstrong liquorbeer permust year.comply with all applicable state and federal laws and shall be responsible for financial transactions in direct to consumer shipping activities.

(2)(a) Any domestic brewery, except for a brand owner of malt beverages under RCW 66.04.010(7), licensed under this section may also act as a distributor and/or retailer for beer of its own production.

(b) Any domestic brewery operating as a distributor and/or retailer under this subsection shall comply with the applicable laws and rules relating to distributors and/or retailers, except that a domestic brewery operating as a distributor may maintain a warehouse off the premises of the domestic brewery for the distribution of beer if:

(i) The warehouse has been approved by the board under RCW 66.24.010;

and (ii) The number of warehouses off the premises of the domestic brewery does not exceed one.

(c) A domestic brewery holding a spirits, beer, and wine restaurant license may sell beer of its own production for off- premises consumption from its restaurant premises in kegs or in a sanitary container brought to the premises by the purchaser or furnished by the licensee and filled at the tap by the licensee at the time of sale.

(3) Any domestic brewery licensed under this section may also sell beer produced by another domestic brewery or a microbrewery for on and off-premises consumption from its premises as long as the p.

5 SHB 2207 other breweries' brands do not exceed 25 percent of the domestic brewery's on-tap offering of its own brands.

(4) A domestic brewery may hold up to four retail licenses to operate an on or off-premises tavern, beer and/or wine restaurant, spirits, beer, and wine restaurant, or any combination thereof.

This retail license is separate from the brewery license.

A brewery that holds a tavern license, a spirits, beer, and wine restaurant license, or a beer and/or wine restaurant license shall hold the same privileges and endorsements as permitted under RCW 66.24.320, 66.24.330, and 66.24.420.

However, when qualifying for and maintaining a beer and/or wine restaurant license or a spirits, beer, and wine restaurant license, a domestic brewery may subcontract with one or more individuals or entities to satisfy food service requirements applicable to the beer and/or wine restaurant license or the spirits, beer, and/or wine restaurant license.

(5) Any domestic brewery licensed under this section may contract-produce beer for a brand owner of malt beverages defined under RCW 66.04.010(7), and this contract-production is not a sale for the purposes of RCW 66.28.170 and 66.28.180.

(6)(a) A domestic brewery licensed under this section and qualified for a reduced rate of taxation pursuant to RCW 66.24.290(3)(b) may apply to the board for an endorsement to sell bottled beer of its own production at retail for off-premises consumption at a qualifying farmers market.

The annual fee for this endorsement is $112.50.

(b) For each month during which a domestic brewery will sell beer at a qualifying farmers market, the domestic brewery must provide the board or its designee a list of the dates, times, and locations at which bottled beer may be offered for sale.

This list must be received by the board before the domestic brewery may offer beer for sale at a qualifying farmers market.

(c) The beer sold at qualifying farmers markets must be produced in Washington.

(d) Each approved location in a qualifying farmers market is deemed to be part of the domestic brewery license for the purpose of this title.

The approved locations under an endorsement granted under this subsection do not include the tasting or sampling privilege of a domestic brewery.

The domestic brewery may not store beer at a farmers market beyond the hours that the domestic brewery offers p.

6 SHB 2207 bottled beer for sale.

The domestic brewery may not act as a distributor from a farmers market location.

(e) Before a domestic brewery may sell bottled beer at a qualifying farmers market, the farmers market must apply to the board for authorization for any domestic brewery with an endorsement approved under this subsection to sell bottled beer at retail at the farmers market.

This application shall include, at a minimum:

(i) A map of the farmers market showing all booths, stalls, or other designated locations at which an approved domestic brewery may sell bottled beer;

and (ii) the name and contact information for the on- site market managers who may be contacted by the board or its designee to verify the locations at which bottled beer may be sold.

Before authorizing a qualifying farmers market to allow an approved domestic brewery to sell bottled beer at retail at its farmers market location, the board shall notify the persons or entities of such application for authorization pursuant to RCW 66.24.010 (8) and (9).

An authorization granted under this subsection (6)(e) may be withdrawn by the board for any violation of this title or any rules adopted under this title.

(f) The board may adopt rules establishing the application and approval process under this section and such additional rules as may be necessary to implement this section.

(g) For the purposes of this subsection:

(i) "Qualifying farmers market" means an entity that sponsors a regular assembly of vendors at a defined location for the purpose of promoting the sale of agricultural products grown or produced in this state directly to the consumer under conditions that meet the following minimum requirements:

(A) There are at least five participating vendors who are farmers selling their own agricultural products;

(B) The total combined gross annual sales of vendors who are farmers exceeds the total combined gross annual sales of vendors who are processors or resellers;

(C) The total combined gross annual sales of vendors who are farmers, processors, or resellers exceeds the total combined gross annual sales of vendors who are not farmers, processors, or resellers;

(D) The sale of imported items and secondhand items by any vendor is prohibited;

and (E) No vendor is a franchisee.

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7 SHB 2207 (ii) "Farmer" means a natural person who sells, with or without processing, agricultural products that he or she raises on land he or she owns or leases in this state or in another state's county that borders this state.

(iii) "Processor" means a natural person who sells processed food that he or she has personally prepared on land he or she owns or leases in this state or in another state's county that borders this state.

(iv) "Reseller" means a natural person who buys agricultural products from a farmer and resells the products directly to the consumer.

(7) The state board of health shall adopt rules to allow dogs on the premises of licensed domestic breweries that do not provide or subcontract for food service subject to a food service permit requirement.

(8)(a) Subject to (b) of this subsection, nothing in this title prohibits the use of a domestic brewery's licensed premises for the subcontracted and, where applicable, subleased operation of a mobile food unit, as defined in RCW 43.20.025, or an independently operated food service provider or establishment by one or more persons or entities who sells food and nonalcoholic beverages to the public and does not hold a retail liquor license.

(b)(i) The premises used by the mobile food unit, as defined in RCW 43.20.025, or independently operated food service provider or establishment, and the areas of the licensee's premises to which staff of the mobile food unit or independently operated food service provider or establishment may access, must be substantially separated from the storage of nontax-paid alcohol.

(ii) A person who subcontracts or subleases with a domestic brewery as provided in (a) of this subsection (8) is responsible for all kitchen space identified in the subcontract or sublease and for compliance with all applicable local health department regulations, including kitchen and food service permits.

A diagram of the kitchen plan must be included in the subcontract or sublease, and the subcontract or sublease must evidence agreement of this space to be subcontracted or subleased.

A domestic brewery subcontracting or subleasing space on its licensed premises as provided in (a) of this subsection (8) shall include in the subcontract or sublease a notification that the other party to the agreement is responsible for the entire subcontracted or subleased space and must hold necessary p.

8 SHB 2207 kitchen and food service permits from the applicable local jurisdiction.

94 SHBHB 2207