By Shauna Helfert, Administrator
Liquor Control Division
Montana Department of Revenue
From our perspective at the Liquor Division, the results of this year' legislative session were like a breath of fresh spring air.
All of the key liquor-related bills that our agency requested were successfully passed into law. We consider this to be quite an accomplishment and, naturally, we're very pleased.
Many of you played an important role in this success. The Montana Tavern Association, Montana Beer and Wine Distributors Association, Wine Institute, in-state wineries and brewers, legislators and others provided a great outpouring of support. We know it could not have happened without you!
Here' a brief overview of the key law changes that were enacted.
Compliance with Commerce ClauseOur main focus during the legislative session was bringing Montana' liquor laws into compliance with the U.S. Constitution' interstate Commerce Clause in a manner acceptable to all affected parties. House Bill 113, as well as Senate Bills 127 and 524, helped us to meet this objective.
Revise Residency Requirement for Liquor Licenses (House Bill 113)This legislation brings Montana residency requirements into compliance with a Montana District Court decision that determined our state law to be unconstitutional with respect to the interstte Commerce Clause.
Out-of-state residents will be allowed to apply for liquor licenses. The legislation provides clear, uniform statutes on who must qualify for license ownership for all entities (sole proprietorships, publicly traded corporations, privately held corporations, partnerships and limited liability companies) applying for a liquor license. Generally, those required to qualify are those persons with 10 percent or more ownership or interest in a license.
In addition, this legislation provides our agency with statutory authority to review a license applicant' funding source to ensure it is legitimate. It also provides language that details what would be determined to be unsuitable, to help ensure all interested parties in the license are qualified to have license ownership.
Revise Wine Distribution (Senate Bill 127) and Beer Distribution (Senate Bill 524)These pieces of legislation are the result of the 2005 U.S. Supreme Court decision in Granholm v. Heald. Under the Commerce Clause, a state cannot discriminate against out-of-state producers of wine or beer. Montana must regulate wineries and breweries in the same manner, whether they are in-state or out-of-state. Currently, in-state wineries and breweries may sell their product directly to retailers while out-of-state wineries cannot.
WineriesOut-of-state wineries will be allowed to "opt-in" and become licensed. They may then ship limited amounts of wine directly to a licensed retailer in Montana. Otherwise, they may remain registered and must ship to a distributor or licensed connoisseur.
If a winery uses its own personnel, vehicles and equipment to deliver wine to a retailer, the winery may ship up to 4,500 cases annually. If wine is delivered by a common carrier, up to 4,500 cases may be shipped annually, but only three cases per day per retailer may be delivered by the common carrier.
BreweriesOut-of-state brewers will be allowed to "opt-in" to directly distribute product. They may then ship limited amounts of beer directly to a licensed retailer in Montana. Otherwise, they may continue to ship to a distributor or licensed connoisseur.
Brewers who manufacture less than 60,000 barrels of beer per year can directly distribute to licensed retailers within the state who choose to purchase from them. The brewers can distribute beer to licensed retailers if the brewer uses the brewer' own personnel, vehicles and equipment to deliver the beer provided that 1) individual deliveries other than draught beer are limited to the case equivalent of eight barrels per day, per licensed retailer and 2) the total amount of beer sold or delivered to retail licenses does not exceed 10,000 barrels per year.
The tax on any wine or beer shipped directly to a retailer must be paid to our agency by the winery or brewery. The winery or brewery must report the amount of product shipped directly to a retailer monthly and the retailer must report the amount of product it purchased from an out-of-state winery or brewery monthly.
Changes to Alcoholic Beverage CodeFour other bills that make changes to Montana' Alcoholic Beverage Code have been signed into law. The Department of Revenue requested the first bill listed, while the other bills were initiated by legislators.
Clarify the Jurisdiction of Courts (House Bill 84)This legislation clarifies the jurisdiction of courts as to misdemeanor criminal actions prosecuted under Title 16, the Montana Alcoholic Beverage Code. This change to the law ensures that justice courts, municipal courts and city courts all have concurrent jurisdiction in all prosecutions under the Montana Alcoholic Beverage Code.
Revise False Statement Provisions in Alcoholic Beverages Licenses Code (House Bill 300)This legislation amends state law so that our agency may not revoke or deny a liquor license in a case where the liquor license applicant relied in good faith upon a written statement made by a governmental officer. The bill applies to liquor license revocation actions that have not been finally adjudicated. Currently, we have two cases that will be affected by this legislation.
Revise Quota Lottery Liquor License Applications and Prohibit Gambling (House Bill 633)Currently, liquor statutes provide a mechanism for all-beverage licensees to float a license from an existing location that is technically over quota (if the over-quota area meets certain statutory requirements) to a location that is technically under-quota. Licenses established pursuant to this statute are called "floater" licenses.
Currently, whenever a quota location becomes eligible to "float" a license, we publish a public notice and hold a lottery. Anyone interested in a floater license can participate in the lottery. At this time, there are no specific qualification requirements. This legislation establishes a set of requirements associated with floater liquor licensee applications.
Applicants in a lottery for a license must provide a letter of credit of $100,000 when applying for the lottery, apply for only one lottery a year and, if successful in the lottery, must open the business within 12 months of the lottery.
In addition, a license floated from one area to another cannot have gambling, which is a significant change. Over time, the changes will create a sub category of all-beverage licenses that cannot have gambling. These licenses may be less expensive, and will presumably be utilized by restaurants that choose not to have gambling.
Increase Restaurant Beer and Wine Licenses (Senate Bill 296)This legislation revises the quota system for issuing restaurant beer and wine licenses, often called "cabaret" licenses. It in essence doubles the number of restaurant beer and wine licenses that may be issued in cities with a population of more than 5,000. Cities with a population under 5,000 would receive an additional four licenses for each quota area. This bill is effective July 1, 2007.
Availability of these licenses will be published once a week for four consecutive weeks in publications in the local area where the licenses are available. The expected publishing time will be June/July 2007. If there are more applicants than the new quota allows, applicants will go through the lottery process.
Based on the current census, new licenses will be available as follows: Billings - 21; Missoula - 11; Bozeman/Belgrade - 10; Kalispell - 10; Helena/East Helena - 8; Hamilton/Pinesdale - 5; Fairfield - 4; Hot Springs - 4; Philipsburg - 4; St. Ignatius - 4; Twin Bridges - 4; Whitefish/Columbia Falls - 4; Darby - 3; Ennis - 3; Eureka/Rexburg - 3; Stevensville - 3; Virginia City - 3; West Yellowstone - 3.
Source: The Montana Tavern Times, June 2007, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.