SB-0650, As Passed House, March 12, 2014

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 650

     A bill to amend 1998 PA 58, entitled

"Michigan liquor control code of 1998,"

by amending section 203 (MCL 436.1203), as amended by 2008 PA 474.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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

301, a sale, delivery, or importation of person shall not sell,

deliver, or import 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, 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 and except as provided in subsection

(11), a retailer shall not deliver alcoholic liquor to a Michigan

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 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 Michigan consumers in

this state by passing through the 3-tier distribution system

established under this act.

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

importation of a direct shipper may sell, deliver, or import wine,

to consumers in this state , by a person who both produces and

bottles the wine or wine that is manufactured by a wine maker for

another wine maker and that is transacted or caused to be

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

computer, device, or other electronic means, or sold sell directly

to a consumer on the winery premises. , shall only be done by a

direct shipper. If a retail sale, delivery, or importation of wine

occurs A direct shipper that sells, delivers, or imports wine to a

consumer by any means described in under this subsection , the

direct shipper must 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 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, 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 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 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 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 is required to shall provide photo identification

verifying his or her age along with a signature.

     (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.

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

liters in total, of wine in a calendar year to Michigan 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.

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

delivery, or importation of alcoholic liquor occurring by any means

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

the direct shipper must shall comply with subsection (3)(c) through

(g).

     (5) The A person who that delivers the wine for a direct

shipper under this section shall verify that the individual

accepting delivery is of legal age 21 years of age or older and is

the individual who placed the order or the designated recipient, is

an individual of legal age 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 of legal age, 21 years age

or older, the delivery person shall return the wine to the direct

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

due to inability to obtain the purchaser's because the purchaser or

designated recipient's legal age recipient is not 21 years of age

or older is not liable for any damages suffered by the purchaser or

direct shipper.

     (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.

     (7) This section does not apply in the case of an to 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 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 person 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.

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

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

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

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

that person's individual's personal use so long as if that personal

importation is done in compliance with subsection (1).

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

or importation of 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 licensed 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 and a

license 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 and

initial license fee of $100.00. 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 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 of the United States

department of treasury of the violation.

     (11) A Except as otherwise provided under subsection (12), 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, microbrewer, micro brewer, or an

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

or microbrewer 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: and except as otherwise provided

in subsection (12):

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

brewpub's, or microbrewer's micro brewer's employee and not by an

agent or by a third party delivery service.

     (b) The retailer, brewpub, or microbrewer micro brewer or its

employee who delivers the beer or wine, or both, verifies that the

person individual accepting delivery is at least 21 years of age.

     (c) If the retailer, brewpub, or microbrewer micro brewer or

its employee intends to provide service to consumers, the retailer,

brewpub, or microbrewer micro brewer or its employee providing the

service must have has received alcohol server training through a

server training program approved by the commission.

     (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 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 is if the delivery service is approved by the

commission and agrees to verify that the person individual

accepting delivery of the beer and wine is at least 21 years of

age.

     (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 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 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.

(14) (13) 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) "Consumer" means an individual who purchases wine for

personal consumption and not for resale.

     (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.

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

determine the age of a person, which 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 person.individual.

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

delivery, or importation of 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.

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

based service approved by the commission specializing in age and

identity verification.

     (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 be combined.

     Enacting section 1. This amendatory act does not take effect

unless all of the following bills of the 97th Legislature are

enacted into law:

     (a) Senate Bill No. 504.

     (b) Senate Bill No. 505.

     (c) Senate Bill No. 506.

     (d) Senate Bill No. 507.

     (e) House Bill No. 4277.

     (f) House Bill No. 4709.

     (g) House Bill No. 4710.

     (h) House Bill No. 4711.