HB-4959, As Passed House, August 31, 2005

SUBSTITUTE FOR

HOUSE BILL NO. 4959

     A bill to amend 1998 PA 58, entitled

"Michigan liquor control code of 1998,"

by amending sections 107, 113, 203, 537, 543, and 607 (MCL

436.1107, 436.1113, 436.1203, 436.1537, 436.1543, and 436.1607),

sections 107 and 537 as amended by 2001 PA 223, section 203 as

amended by 2000 PA 289, and section 543 as amended by 2005 PA 97.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 107. (1) "Cash" means money in hand, bank notes, demand

deposits at a bank, or legal tender, which a creditor must accept

according to law. Cash does not include call loans, postdated

checks, or promissory notes.

     (2) "Class C license" means a place licensed to sell at retail

beer, wine, mixed spirit drink, and spirits for consumption on the

premises.

     (3) "Class G-1 license" means a place licensed to sell at

retail beer, wine, mixed spirit drink, and spirits for consumption

on the premises at a golf course having at least 18 holes that

measure at least 5,000 yards and which license is issued only to a

facility which permits member access by means of payments that

include annual paid membership fees.

     (4) "Class G-2 license" means a place licensed to sell at

retail beer and wine for consumption on the premises at a golf

course having at least 18 holes that measure at least 5,000 yards

and which license is issued only to a facility which permits member

access by means of payments that include annual paid membership

fees.

     (5) "Club" means a nonprofit association, whether incorporated

or unincorporated, organized for the promotion of some common

purpose, the object of which is owning, hiring, or leasing a

building, or space in a building, of an extent and character as in

the judgment of the commission may be suitable and adequate for the

reasonable and comfortable use and accommodation of its members and

their guests, but does not include an association organized for a

commercial or business purpose.

     (6) "Commission" means the liquor control commission provided

for and created in section 209.

     (7) "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.

     (8) "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.

     (9) "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.

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

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

(11)  (7) "Church" means an entire house or structure set

apart primarily for use for purposes of public worship, and which

is tax exempt under the laws of this state, and in which religious

services are held and with which a clergyman is associated, and the

entire structure of which is kept for that use and not put to any

other use inconsistent with that use.

     (12) "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.

     (13) "Diligent inquiry" means a diligent good faith effort to

determine the age of a person, which includes at least an

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

license, an official Michigan personal identification card, or any

other picture identification issued by this state or the federal

government that establishes the identity and age of the person.

     (14) "Direct shipper" means a person who engages in the sale,

delivery, or importation of wine that he or she produces and

bottles to a consumer in this state through the use of any mail

order, internet, telephone, computer, device, or other electronic

means.

(15)  (8) "Distiller" means any person licensed to

manufacture and sell spirits or alcohol, or both, of any kind.

(16)  (9) "Hotel" means a building or group of buildings

located on the same or adjoining pieces of real property, which

provide lodging to travelers and temporary residents and which may

also provide food service and other goods and services to

registered guests and to the public.

(17)  (10) "Class A hotel" means a hotel licensed by the

commission to sell beer and wine for consumption on the premises

only, which provides for the rental of, and maintains the

availability for rental of, not less than 25 bedrooms if located in

a local governmental unit with a population of less than 175,000 or

not less than 50 bedrooms if located in a local governmental unit

with a population of 175,000 or more.

(18)  (11) "Class B hotel" means a hotel licensed by the

commission to sell beer, wine, mixed spirit drink, and spirits for

consumption on the premises only, which provides for the rental of,

and maintains the availability for rental of, not less than 25

bedrooms if located in a local governmental unit with a population

of less than 175,000 or not less than 50 bedrooms if located in a

local governmental unit with a population of 175,000 or more.

     (19) "Identification verification service" means any internet-

based service approved by the commission specializing in age and

identity verification.

(20)  (12) "License" means a contract between the commission

and the licensee granting authority to that licensee to manufacture

and sell, or sell, or warehouse alcoholic liquor in the manner

provided by this act.

Sec. 113. (1) "Tavern" means any place licensed to sell at

retail beer and wine for consumption on the premises only.

     (2) "Vehicle" means any means of transportation by land, by

water, or by air.

     (3) "Vendor" means a person licensed by the commission to sell

alcoholic liquor.

     (4) "Vendor of spirits" means a person selling spirits to the

commission.

     (5) "Warehouse" means a premises or place primarily

constructed, used, or provided with facilities for the storage in

transit or other temporary storage of perishable goods or for the

conduct of a warehousing business, or for both.

     (6) "Warehouser" means a licensee authorized by the commission

to store alcoholic  beverages  liquor, but prohibited from making

sales or deliveries to retailers unless the licensee is also the

holder of a wholesaler  or manufacturer license issued by the

commission.

     (7) "Wholesaler" means a person who sells beer, wine, or mixed

spirit drink only to retailers or other licensees, and who sells

sacramental wine as provided in section 301.

     (8) "Wine" means the product made by the normal alcoholic

fermentation of the juice of sound, ripe grapes, or any other fruit

with the usual cellar treatment, and containing not more than 21%

of alcohol by volume, including fermented fruit juices other than

grapes and mixed wine drinks.

     (9) "Wine maker" means any person licensed by the commission

to manufacture wine,  and sell, at wholesale or retail, wine

manufactured by that person  to sell that wine to a wholesaler, at

retail on the licensed winery premises, and as provided for in

sections 537 and 603.

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

301, a sale, delivery, or importation of alcoholic liquor,

including alcoholic liquor for personal use, shall not be made 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,

or a person licensed by the commission ,  or by prior written

order of the commission.

     (2) 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.

     (3) This section does not apply in the case of an alcoholic

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

amount permitted by federal law by a person of legal age to

purchase alcoholic liquor at the time of reentry into this state

from without the territorial limits of the United States if the

person 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.

     (4)  (2)  For purposes of subsection (1), the sale, delivery,

or importation of alcoholic liquor, except as otherwise provided in

subsection (5), includes, but is not limited to, the sale,

delivery, or importation of alcoholic liquor transacted or caused

to be transacted by means of any mail order, internet, telephone,

computer, device, or other electronic means. Subject to subsection

(3)  (6), if a retail sale, delivery, or importation of alcoholic

liquor occurs by any such  means described in this subsection, the

retailer must comply with all of the following:

     (a) Be appropriately licensed under the laws of this state.

     (b) Pay any applicable taxes to the commission.

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

including, but not limited to, sales to minors.

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

obtaining from him or her an affirmation that he or she is of legal

age to purchase alcoholic liquor. The person receiving and

accepting the order shall record the name, address, date of birth,

and telephone number of the person placing the order on the order

form or other verifiable record of a type and generated in a manner

approved by the commission.

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

commission any document used to verify the age of the individual

ordering the alcoholic liquor from the retail seller.

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

container language that clearly establishes in a prominent fashion

that the package contains alcoholic liquor and that the recipient

at the time of the delivery is required to provide identification

verifying his or her age along with a signature.

     (g) 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 any.

     (5) For purposes of subsection (1), the sale, delivery, or

importation of wine transacted or caused to be transacted by means

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

electronic means shall only be done by a direct shipper. If a

retail sale, delivery, or importation of wine occurs by any means

described in this subsection, the direct shipper must comply with

all of the following:

     (a) Hold a direct shipper license.

     (b) Pay any applicable taxes to the commission as required

under this act or under rules promulgated by the commission.

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

including, but not limited to, 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 or the federal government and by utilizing 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

person 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 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." and that the recipient at the

time of the delivery is required to provide photo identification

verifying his or her age along with a signature.

     (g) Place a tax stamp on the top side of the shipping

container that represents the value of the excise tax due on the

wine being shipped.

     (h) 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.

     (i) Ship to consumers in this state not more than 4,500 liters

of wine annually.

     (j) 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 names, addresses,

and amount of wine ordered by and shipped to specific consumers.

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

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

     (l) 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.

(6) (3)  Notwithstanding subsection  (2)  (4) or (5), in the

case of a retail sale, delivery, or importation of alcoholic liquor

occurring by any means described in subsection (2)  (4) or (5), a

person taking the order on behalf of the retailer or direct shipper

must comply with subsection (2)(c)  (4)(c) through (g) and

subsection (5)(c) through (h).

(7) (4)  The person who delivers the alcoholic liquor shall

verify that the individual accepting delivery is of legal age and

is either the individual who placed the order or the designated

recipient residing at the same address or is 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 of legal age, the delivery person shall

return the alcoholic liquor to the retailer or direct shipper. A

delivery person who returns alcoholic liquor to the retailer or

direct shipper due to inability to obtain the purchaser's or

designated recipient's legal age is not liable for any damages

suffered by the purchaser,  or  retailer, or direct shipper.

     (5) 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.

     (6) This section does not apply in the case of an alcoholic

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

amount permitted by federal law by a person of legal age to

purchase alcoholic liquor at the time of reentry into this state

from without the territorial limits of the United States if the

person 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.

(8)  (7) A person who is of legal age to purchase alcoholic

liquor 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

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

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

that person's personal use so long as that personal importation is

done in compliance with subsection (1).

     (8) As used in this section:

     (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.

     (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.

     (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.

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

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

     (e) "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.

     (f) "Diligent inquiry" means a diligent good faith effort to

determine the age of a person, which 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 which establishes the

identity and age of the person.

     (9) A direct shipper shall not engage in the sale, delivery,

or importation of 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, if done in

compliance with this act. Only the following persons qualify for

the issuance of a direct shipper license:

     (a) A wine maker holding a wine maker license in this state.

     (b) A wine producer and bottler located outside of this state

and holding an outstate seller of wine license.

     (c) A wine producer and bottler located outside of this state

and not licensed as an outstate seller of wine but holding both a

federal basic permit issued by the alcohol and tobacco tax and

trade bureau and licensed to manufacture wine in its state of

domicile.

     (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 fee

and an initial license fee both to be determined by the commission.

If the application is denied, the commission shall refund only the

initial license fee. The application shall 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 to be

determined by the commission and a 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 the code or administrative rule of 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 of the United States

department of treasury of the violation.

     Sec. 537. (1) The following classes of vendors may sell

alcoholic liquors at retail as provided in this section:

     (a) Taverns where beer and wine may be sold for consumption on

the premises only.

     (b) Class C license where beer, wine, mixed spirit drink, and

spirits may be sold for consumption on the premises.

     (c) Clubs where beer, wine, mixed spirit drink, and spirits

may be sold for consumption on the premises only to bona fide

members where consumption is limited to these members and their

bona fide guests, who have attained the age of 21 years.

     (d) Direct shipper where wine may be sold and shipped directly

to a Michigan resident 21 years of age or older for consumption off

the licensed premises for personal use only.

(e)  (d) Hotels of class A where beer and wine may be sold

for consumption on the premises and in the rooms of bona fide

registered guests. Hotels of class B where beer, wine, mixed spirit

drink, and spirits may be sold for consumption on the premises and

in the rooms of bona fide registered guests.

(f)  (e) Specially designated merchants, where beer and wine

may be sold for consumption off the premises only.

(g)  (f) Specially designated distributors where spirits and

mixed spirit drink may be sold for consumption off the premises

only.

(h)  (g) Special licenses where beer and wine or beer, wine,

mixed spirit drink, and spirits may be sold for consumption on the

premises only.

(i)  (h) Dining cars or other railroad or Pullman cars,

watercraft, or aircraft, where alcoholic liquor may be sold for

consumption on the premises only, subject to rules promulgated by

the commission.

(j)  (i) Brewpubs where beer manufactured on the premises by

the licensee may be sold for consumption on or off the premises by

any of the following licensees:

     (i) Class C.

     (ii) Tavern.

     (iii) Class A hotel.

     (iv) Class B hotel.

(k)  (j) Micro brewers and brewers selling less than 200,000

barrels of beer per year where beer produced by the micro brewer or

brewer may be sold to a consumer for consumption on or off the

brewery premises.

(l)  (k) Class G-1 license where beer, wine, mixed spirit

drink, and spirits may be sold for consumption on the premises only

to members required to pay an annual membership fee and consumption

is limited to these members and their bona fide guests.

(m)  (l) Class G-2 license where beer and wine may be sold for

consumption on the premises only to members required to pay an

annual membership fee and consumption is limited to these members

and their bona fide guests.

     (2) A wine maker may sell wine made by that wine maker in a

restaurant for consumption on or off the premises if the restaurant

is owned by the wine maker or operated by another person under an

agreement approved by the commission and located on the premises

where the wine maker is licensed.

     (3) A wine maker, with the prior written approval of the

commission, may conduct wine tastings of wines made by that wine

maker and may sell the wine made by that wine maker for consumption

off the premises at a location other than the premises where the

wine maker is licensed to manufacture wine, under the following

conditions:

     (a) The premises upon which the wine tasting occurs conforms

to local and state sanitation requirements.

     (b) Payment of a $100.00 fee per location is made to the

commission.

     (c) The wine tasting locations shall be considered licensed

premises.

     (d) Wine tasting does not take place between the hours of 2

a.m. and 7 a.m. Monday through Saturday, or between 2 a.m. and 12

noon on Sunday.

     (e) The premises and the licensee comply with and are subject

to all applicable rules promulgated by the commission.

     Sec. 543. (1)  Quarterly  Except for the license fee on direct

shippers, 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 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

allocated and appropriated under subsection (1).

     (5) 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).

     (6) 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 may receive money or other assets from any

source for deposit into the fund. 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

provision of section 203 and related projects.

     Sec. 607. (1) Except as provided in section 537(2), a

warehouser, mixed spirit drink manufacturer, wholesaler, outstate

seller of beer, outstate seller of wine, outstate seller of mixed

spirit drink, wine maker, small wine maker, or vendor of spirits

shall not be licensed as a specially designated merchant or a

specially designated distributor or permitted to sell or deliver to

the consumer any quantity of alcoholic liquor at retail.

     (2) A specially designated distributor or specially designated

merchant or any other retailer shall not hold a mixed spirit drink

manufacturer, wholesale, warehouse, outstate seller of beer,

outstate seller of mixed spirit drink, wine maker, small wine

maker, or outstate seller of wine license.

     (3) A brewer, warehouser, or wholesaler shall not be licensed

as a specially designated merchant.  , except for brewers who

manufacture less than 200,000 barrels of beer per year. This

subsection  shall  does not affect the operation of a brewery

hospitality room.

     (4) A wholesaler may sell or deliver beer and alcoholic liquor

to hospitals, military establishments, governments of federal

Indian reservations, and churches requiring sacramental wines and

may sell to the wholesaler's own employees to a limit of 2 cases of

24 12-ounce units or its equivalent of malt beverage per week, or 1

case of 12 1-liter units or its equivalent of wine or mixed spirit

drink per week.

     Enacting section 1. If any section or part of a section of

this amendatory act is for any reason held to be invalid or

unconstitutional, the remaining amendments made by this amendatory

act are not severable and shall also be invalid, and it is the

intent of the legislature that the direct shipment of wine be

prohibited.