HB2602 - 551R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 4-101, Arizona Revised Statutes, is amended to read:

START_STATUTE4-101. Definitions

In this title, unless the context otherwise requires:

1. "Act of violence":

(a) Means an incident consisting of that consists a riot, a fight, an altercation or tumultuous conduct and that meets at least one of the following criteria:

(i) In which bodily injuries are sustained by any person and the injuries would be obvious to a reasonable person.

(ii) Of sufficient intensity as to require the intervention of a peace officer to restore normal order.

(iii) In which a weapon is brandished, displayed or used.

(iv) Where In which a licensee or an employee or contractor of the licensee fails to follow a clear and direct lawful order from a law enforcement officer or a fire marshal.

(b) Does not include the use of nonlethal devices by a peace officer.

2. "Aggrieved party" means a person who resides at, owns or leases property within a one-mile radius of a premises proposed to be licensed and who filed a written request with the department to speak in favor of or opposition to the issuance of the license no not later than sixty days after the filing of the application or fifteen days after action by the local governing body, whichever is sooner.

3. "Beer" means any beverage obtained by the alcoholic fermentation, infusion or decoction of barley malt, hops, or other ingredients not drinkable, or any combination of them.

4. "Biometric identity verification device" means a device authorized by the department that instantly verifies the identity and age of a person by an electronic scan of a biometric of the person, through a fingerprint, iris image, facial image or other biometric characteristic, or any combination of these characteristics, that references the person's identity and age against any record described in section 4-241, subsection K, and that meets all of the following conditions:

(a) The authenticity of the record was previously verified by an electronic authentication process.

(b) The identity of and information about the record holder was previously verified through either:

(i) A secondary, electronic authentication process or set of processes utilizing using commercially available data, such as a public records query or a knowledge-based authentication quiz.

(ii) Utilizing Using a state or federal government system of record for digital authentication.

(c) The authenticated record was securely linked to biometrics contemporaneously collected from the verified record holder and is stored in a centralized, highly secured, encrypted biometric database.

5. "Board" means the state liquor board.

6. "Bona fide guest" means:

(a) An individual who is personally familiar to the member, who is personally sponsored by the member and whose presence as a guest is in response to a specific and personal invitation.

(b) In the case of a club that meets the criteria prescribed in paragraph 8, subdivision (a) of this section, a current member of the armed services of the United States who presents proper military identification and any member of a recognized veterans' organization of the United States and of any country allied with the United States during current or past wars or through treaty arrangements.

7. "Broken package" means any container of spirituous liquor on which the United States tax seal has been broken or removed, or from which the cap, cork or seal placed thereupon on the container by the manufacturer has been removed.

8. "Club" includes any of the following organizations where the sale of spirituous liquor for consumption on the premises is made only to members, spouses of members, families of members, bona fide guests of members and guests at other events authorized in this title:

(a) A post, chapter, camp or other local unit composed solely of veterans and its duly recognized auxiliary that has been chartered by the Congress of the United States for patriotic, fraternal or benevolent purposes and that has, as the owner, lessee or occupant, operated an establishment for that purpose in this state.

(b) A chapter, aerie, parlor, lodge or other local unit of an American national fraternal organization that has, as the owner, lessee or occupant, operated an establishment for fraternal purposes in this state. An American national fraternal organization as used in this subdivision shall actively operate in at least thirty‑six states or have been in active continuous existence for at least twenty years.

(c) A hall or building association of a local unit mentioned in subdivisions (a) and (b) of this paragraph, of which all of the capital stock of which is owned by the local unit or the members, and that operates the clubroom facilities of the local unit.

(d) A golf club that has more than fifty bona fide members and that owns, maintains or operates a bona fide golf links together with a clubhouse.

(e) A social club with that has more than one hundred bona fide members who are actual residents of the county in which it is located, that owns, maintains or operates club quarters, that is authorized and incorporated to operate as a nonprofit club under the laws of this state, and that has been continuously incorporated and operating for a period of at least one year. The club shall have had, during this one‑year period, a bona fide membership with regular meetings conducted at least once each month, and the membership shall be and shall have been actively engaged in carrying out the objects of the club. The club's membership shall consist of bona fide dues-paying members paying dues of at least $6 per year, payable monthly, quarterly or annually, which have been recorded by the secretary of the club, and the members at the time of application for a club license shall be in good standing having for at least one full year paid dues. At least fifty‑one percent of the members shall have signified their intention to secure a social club license by personally signing a petition, on a form prescribed by the board, which shall also include the correct mailing address of each signer. The petition shall not have been signed by a member at a date earlier than one hundred eighty days before the filing of the application. The club shall qualify for exemption from the payment of state income taxes under title 43. It is the intent of this subdivision that a license shall not be granted to a club that is, or has been, primarily formed or activated to obtain a license to sell liquor, but solely to a bona fide club, where the sale of liquor is incidental to the main purposes of the club.

(f) An airline club operated by or for airlines that are certificated by the United States government and that maintain or operate club quarters located at airports with international status.

9. "Company" or "association", when used in reference to a corporation, includes successors or assigns.

10. "Control" means the power to direct or cause the direction of the management and policies of an applicant or licensee, whether through the ownership of voting securities or a partnership interest, by agreement or otherwise. Control is presumed to exist if a person has the direct or indirect ownership of or power to vote ten percent or more of the outstanding voting securities of the applicant or licensee or to control in any manner the election of one or more of the directors of the applicant or licensee. In the case of a partnership, control is presumed to mean the general partner or a limited partner who holds ten percent or more of the voting rights of the partnership. For the purposes of determining the percentage of voting securities owned, controlled or held by a person, there shall be aggregated with the voting securities attributed to the person the voting securities of an officer, partner, employee or agent of the person or a spouse, parent or child of the person. Control is also presumed to exist if a creditor of the applicant or licensee holds a beneficial interest in ten percent or more of the liabilities of the licensee. The presumptions in this paragraph regarding control are rebuttable.

11. "Controlling person" means a person directly or indirectly possessing control of an applicant or licensee.

12. "Craft distiller" means a distiller in the United States or in a territory or possession of the United States that holds a license pursuant to section 4‑205.10.

13. "Department" means the department of liquor licenses and control.

14. "Director" means the director of the department of liquor licenses and control.

15. "Distilled spirits" includes alcohol, brandy, whiskey, rum, tequila, mescal, gin, absinthe, a compound or mixture of any of them or of any of them with any vegetable or other substance, alcohol bitters, bitters containing alcohol, fruits preserved in ardent spirits, and any alcoholic mixture or preparation, whether patented or otherwise, that may in sufficient quantities produce intoxication.

16. "electronic smoking device":

(a) Means any device that may be used to deliver any aerosolized or vaporized substance to the person who inhales from the device, including an e-cigarette, e-cigar, vape pen or E-hookah.

(b) includes:

(i) any component, part or accessory of the device.

(ii) any SUBSTANCE that is intended to be aerosolized or vaporized during the use of the device, whether or not the substance contains nicotine.

(c) does not include drugs, devices or combination products authorized for sale by the united states food and drug administration, as those items are defined in the federal food, drug, and cosmetic act or the regulations adopted pursuant to that act.

16. 17. "Employee" means any person who performs any service on licensed premises on a full‑time, part‑time or contract basis with consent of the licensee, whether or not the person is denominated an employee, or independent contractor or otherwise. Employee does not include a person who is exclusively on the premises for musical or vocal performances, for repair or maintenance of the premises or for the delivery of goods to the licensee.

17. 18. "Farm winery" means a winery in the United States or in a territory or possession of the United States that holds a license pursuant to section 4‑205.04.

18. 19. "Government license" means a license to serve and sell spirituous liquor on specified premises available only to a state agency, state board, state commission, county, city, town, community college or state university or the national guard or Arizona coliseum and exposition center on application by the governing body of a the state agency, state board, state commission, county, city, town, community college or state university or the national guard or Arizona exposition and state fair board.

19. 20. "Legal drinking age" means twenty‑one years of age or older.

20. 21. "License" means a license or an interim retail permit issued pursuant to this title.

21. 22. "Licensee" means a person who has been issued a license or an interim retail permit pursuant to this title or a special event licensee.

22. 23. "License fees" means fees collected for license issuance, license application, license renewal, interim permit issuance and license transfer between persons or locations.

23. 24. "Manager" means a natural person who meets the standards required of licensees and who has authority to organize, direct, carry on, control or otherwise operate a licensed business on a temporary or full‑time basis.

24. 25. "Microbrewery" means a brewery in the United States or in a territory or possession of the United States that meets the requirements of section 4‑205.08.

25. 26. "Off‑sale retailer" means any person operating that operates a bona fide regularly established retail liquor store selling that sells spirituous liquors, wines and beer, and any established retail store selling commodities other than spirituous liquors and that is engaged in the sale of spirituous liquors only in the original unbroken package, to be taken away from the premises of the retailer and to be consumed off the premises.

26. 27. "On‑sale retailer" means any person operating an establishment where spirituous liquors are sold in the original container for consumption on or off the premises or in individual portions for consumption on the premises.

27. 28. "Permanent occupancy" means the maximum occupancy of the building or facility as set by the office of the state fire marshal for the jurisdiction in which the building or facility is located.

28. 29. "Person" includes a partnership, limited liability company, association, company or corporation, as well as a natural person.

29. 30. "Premises" or "licensed premises" means the area from which the licensee is authorized to sell, dispense or serve spirituous liquors under the provision of the license. Premises or licensed premises includes a patio that is not contiguous to the remainder of the premises or licensed premises if the patio is separated from the remainder of the premises or licensed premises by a public or private walkway or driveway not to exceed thirty feet, subject to rules the director may adopt to establish criteria for noncontiguous premises.

30. 31. "Registered mail" includes certified mail.

31. 32. "Registered retail agent" means any person who is authorized pursuant to section 4‑222 to purchase spirituous liquors for and on behalf of the person and other retail licensees.

32. 33. "Repeated acts of violence" means:

(a) For licensed premises with a permanent occupancy of two hundred or fewer persons, two or more acts of violence occurring within seven days or three or more acts of violence occurring within thirty days.

(b) For licensed premises with a permanent occupancy of more than two hundred but not more than four hundred persons, four or more acts of violence within thirty days.

(c) For licensed premises with a permanent occupancy of more than four hundred but not more than six hundred fifty persons, five or more acts of violence within thirty days.

(d) For licensed premises with a permanent occupancy of more than six hundred fifty but not more than one thousand fifty persons, six or more acts of violence within thirty days.

(e) For licensed premises with a permanent occupancy of more than one thousand fifty persons, seven or more acts of violence within thirty days.

34. "retail tobacco vendor":

(a) Means a person, partnership, joint venture, society, club, trustee, true association, organization or corporation that owns, operates or manages any tobacco retail establishment.

(b) does not include the nonmanagement employees of any tobacco retail establishment.

33. 35. "Sell" includes soliciting or receiving an order for, keeping or exposing for sale, directly or indirectly delivering for value, peddling, keeping with intent to sell and trafficking in.

34. 36. "Spirituous liquor" includes alcohol, brandy, whiskey, rum, tequila, mescal, gin, wine, porter, ale, beer, any malt liquor or malt beverage, absinthe, a compound or mixture of any of them or of any of them with any vegetable or other substance, alcohol bitters, bitters containing alcohol, any liquid mixture or preparation, whether patented or otherwise, which that produces intoxication, fruits preserved in ardent spirits, and beverages containing more than one‑half of one percent of alcohol by volume.

37. "tobacco product":

(a) means any of the following:

(i) a product containing, made of or derived from tobacco or NICOTINE that is intended for human consumption or is likely to be consumed, whether inhaled, absorbed or ingested by any other means, including a cigarette, a cigar, pipe tobacco, shisha, beedies, bidis, chewing tobacco, snuff or snus.

(ii) an electronic smoking device and any substance that may be aerosolized or vaporized by the device, whether or not the substance contains nicotine.

(iii) a component, part or accessory of any product, electronic smoking device or substance that is listed in item (i) or (ii) of this subdivision, whether or not any of these contain tobacco or nicotine, including filters, rolling papers, blunt or hemp wraps and pipes.

(b) does not include drugs, devices or combination products authorized for sale by the united states food and drug administration as those terms are defined in the federal food, drug, and cosmetic act or the regulations adopted pursuant to that act.

35. 38. "Vehicle" means any means of transportation by land, water or air, and includes everything made use of in any way for such transportation.

36. 39. "Vending machine" means a machine that dispenses merchandise through the means of coin, token, credit card or other nonpersonal means of accepting payment for merchandise received.

37. 40. "Veteran" means a person who has served in the United States air force, army, navy, marine corps or coast guard, as an active nurse in the services of the American red cross, in the army and navy nurse corps in time of war, or in any expedition of the armed forces of the United States, and who has received a discharge other than dishonorable.

38. 41. "Voting security" means any security presently entitling the owner or holder of the security to vote for the election of directors of an applicant or a licensee.

39. 42. "Wine" means the product obtained by the fermentation of grapes, other agricultural products containing natural or added sugar or cider or any such alcoholic beverage fortified with grape brandy and containing not more than twenty‑four percent of alcohol by volume. END_STATUTE

Sec. 2. Section 4-112, Arizona Revised Statutes, is amended to read:

START_STATUTE4-112. Powers and duties of board and director; investigations; county and municipal regulation; definition

A. The board shall:

1. Grant and deny applications in accordance with the provisions of this title.

2. Adopt rules in order to carry out the provisions of this section.

3. Hear appeals and hold hearings as provided in this section.

B. Except as provided in subsection A of this section, the director shall administer the provisions of this title, including and shall do the following:

1. Adopting Adopt rules:

(a) For carrying To carry out the provisions of this title.

(b) For the proper To properly conduct of the business to be carried on under each specific type of spirituous liquor license.

(c) To enable and assist state officials and political subdivisions to collect taxes levied or imposed in connection with spirituous liquors.

(d) For the issuance To issue and revocation of revoke certificates of registration of retail agents, including provisions governing the shipping, storage and delivery of spirituous liquors by registered retail agents, the keeping of records and the filing of reports by registered retail agents.

(e) To establish requirements for licensees under section 4‑209, subsection B, paragraph 12.

2. Subject to title 41, chapter 4, article 4, employing employ necessary personnel and fixing fix their compensation pursuant to section 38‑611.

3. Keeping Keep an index record that is a public record open to public inspection and that contains the name and address of each licensee and the name and address of any person having an interest, either legal or equitable, in each license as shown by any written document that is placed on file in the office of the board.

4. Providing Provide the board with supplies and personnel as directed by the board.

5. Responding Respond in writing to any law enforcement agency that submits an investigative report to the department relating to a violation of this title, setting forth what action, if any, the department has taken or intends to take on the report and, if the report lacks sufficient information or is otherwise defective for use by the department, what the agency must do to remedy the report.

6. Taking Take steps that are necessary to maintain effective liaison with the department of public safety and all local law enforcement agencies in the enforcement of enforcing this title, including the laws of this state against the consumption of spirituous liquor by persons under the legal drinking age or the use of tobacco products by persons under the minimum age of sale for tobacco products as set by the federal food, drug, and cosmetic act.

7. Providing Provide training to law enforcement agencies in the proper investigation property investigating and reporting of violations of this title.

8. enforce title 36, chapter 6, article 14.

C. The director shall establish within the department a separate investigations unit that has as its sole responsibility the investigation of investigating compliance with this title, including the investigation of investigating licensees alleged to have sold or distributed spirituous liquor in any form to persons under the legal drinking age or to have sold tobacco products to a person who is under the minimum age of sale for tobacco products as set by the federal food, drug, and cosmetic act. Investigations conducted by this unit may include covert undercover investigations.

D. All employees of the department of liquor licenses and control, except members of the state liquor board and the director of the department, shall be employed by the department in the manner prescribed by the department of administration.

E. The director may enter into a contract or agreement with any public agency for any joint or cooperative action as provided for by title 11, chapter 7, article 3.

F. The board or the director may take evidence, administer oaths or affirmations, issue subpoenas requiring attendance and testimony of witnesses, cause depositions to be taken and require by subpoena duces tecum the production of books, papers and other documents that are necessary for the enforcement of to enforce this title. Proceedings held during the course of a confidential investigation are exempt from title 38, chapter 3, article 3.1. If a person refuses to obey a subpoena or fails to answer questions as provided by this subsection, the board or the director may apply to the superior court in the manner provided in section 12‑2212. The board or director may serve subpoenas by personal service or certified mail, return receipt requested.

G. The director may:

1. Examine books, records and papers of a licensee.

2. Require applicants, licensees, employees who serve, sell or furnish spirituous liquors to retail customers, managers and managing agents to take training courses approved by the director in spirituous liquor handling and spirituous liquor laws and rules. The director shall adopt rules that set standards for approving training courses. The director may suspend or revoke the previous approval of trainers who do not adhere to course administration requirements prescribed by the department or who do not meet course standards. If the director suspends or revokes the previous approval of a trainer pursuant to this paragraph, the trainer may appeal to the board pursuant to section 4‑210.02 as if the suspension or revocation was a sanction against a licensee. After January 1, 2019, The rules for on‑sale retailer basic training and on‑sale retailer management training shall include security procedures for security personnel assigned to monitor admission of patrons, interaction with patrons, calls to law enforcement and strategies for use of force and for the use of de-escalation techniques. If the retailer uses a registered security guard, the retailer shall attempt to verify the validity and status of the security guard's registration certificate. The department's licensed investigators may participate and receive compensation as lecturers at approved training courses within this state's jurisdiction that are conducted by other entities but shall not participate in in‑house training programs for licensees.

3. Delegate to employees of the department authority to exercise powers of the director in order to administer the department.

4. Regulate signs that advertise a spirituous liquor product at licensed retail premises.

5. Cause to be removed from the marketplace spirituous liquor and tobacco products that may be contaminated, illegal or adulterated.

6. Regulate the age and conduct of erotic entertainers at licensed premises. The age limitation governing these erotic entertainers may be different from other employees of the licensee.

7. Issue and enforce cease and desist orders against any person or entity that sells beer, wine, or spirituous liquor and tobacco products without an appropriate license or permit.

8. Confiscate wines carrying a label including a reference to Arizona or any Arizona city, town or place unless at least seventy‑five percent by volume of the grapes used in making the wine were grown in this state.

9. Accept and expend private grants of monies, gifts and devises for conducting educational programs for parents and students on the repercussions of underage alcohol consumption or the underage use of tobacco products. State general fund monies shall not be expended for the purposes of this paragraph. If the director does not receive sufficient monies from private sources to carry out the purposes of this paragraph, the director shall not provide the educational programs prescribed in this paragraph. Grant monies received pursuant to this paragraph are nonlapsing and do not revert to the state general fund at the close of the fiscal year.

10. Procure fingerprint scanning equipment and provide fingerprint services to license applicants and licensees. The department may charge a fee for providing these services.

11. Accept electronic signatures on all department and licensee forms and documents and applications. The director may adopt requirements that would require facsimile signatures to be followed by original signatures within a specified time period.

12. For use after January 1, 2019, Adopt a form that is required to be used by all on-sale retailers that hire or designate employees to serve as security personnel. All security personnel job applicants and employees for on-sale retailers shall complete the form, which shall be notarized, before assignment to a security role. The form shall require the applicant or other person to disclose whether in the previous five years the person has been a registered sex offender or pled guilty, pled no contest or been convicted of any offense that constitutes assault, homicide, domestic violence, sexual misconduct, misconduct involving a deadly weapon or a drug violation that constitutes the illegal sale, manufacturing, cultivation or transportation for sale of marijuana, a dangerous drug or a narcotic drug. A licensee may not hire or assign to a role as security personnel any person who fails to complete the form or if the whose form discloses one of the listed offenses within the previous five years. The licensee shall maintain on file affidavits of all security personnel hired or designated by the licensee. The form may not be required for a peace officer who is certified by the Arizona peace officer standards and training board or other security personnel who hold a current security guard registration certificate or armed security guard registration certificate issued pursuant to title 32, chapter 26.

H. A county or municipality may enact and enforce ordinances regulating the age and conduct of erotic entertainers at licensed premises in a manner at least as restrictive as rules adopted by the director.

I. For the purposes of this section, "security personnel" includes individuals whose primary assigned responsibilities include the security and safety of employees and patrons of an on-sale retailer premises. Security personnel does not include a person whose primary responsibilities include checking the identification cards of patrons to determine compliance with age requirements. END_STATUTE

Sec. 3. Section 4-205.02, Arizona Revised Statutes, is amended to read:

START_STATUTE4-205.02. Restaurant license; issuance; regulatory provisions; expiration; definitions

A. The director may issue a restaurant license to any restaurant in this state that is regularly open for the serving of food to guests for compensation and that has suitable kitchen facilities connected with the restaurant for keeping, cooking and preparing foods required for ordinary meals.

B. The director shall issue the license in the name of the restaurant on application for the license by the owner or lessee of the restaurant, provided if the applicant is otherwise qualified to hold a spirituous liquor license. The holder of such a license is subject to the penalties prescribed for any violation of the law relating to alcoholic beverages.

C. The holder of a restaurant license may sell and serve spirituous liquors solely for consumption on the licensed premises. For the purpose of this subsection, "licensed premises" may include rooms, areas or locations in which the restaurant normally sells or serves spirituous liquors pursuant to regular operating procedures and practices and that are contiguous to the restaurant or a noncontiguous patio pursuant to section 4‑101, paragraph 29 30. For the purposes of this subsection, a restaurant licensee must submit proof of tenancy or permission from the landowner or lessor for all property to be included in the licensed premises.

D. In addition to other grounds prescribed in this title on which a license may be revoked, the director may require the holder of a restaurant license issued pursuant to this section to surrender the license in any case in which the licensee ceases to operate as a restaurant, as prescribed in subsection A of this section. The surrender of a license pursuant to this subsection does not prevent the director from revoking the license for other grounds prescribed in this title or for making deliberate material misrepresentations to the department regarding the licensee's equipment, service or entertainment items or seating capacity in applying for the restaurant license.

E. Neither the director nor the board may initially issue a restaurant license if either finds that there is sufficient evidence that the operation will not satisfy the criteria adopted by the director for issuing a restaurant license described in section 4‑209, subsection B, paragraph 12. The director shall issue a restaurant license only if the applicant has submitted a plan for the operation of the restaurant. The plan shall be completed on forms provided by the department and shall include listings of all restaurant equipment and service items, the restaurant seating capacity and other information requested by the department to substantiate that the restaurant will operate in compliance with this section.

F. The holder of the license described in section 4‑209, subsection B, paragraph 12 who intends to alter the seating capacity or dimensions of a restaurant facility shall notify the department in advance on forms provided by the department.

G. The director may charge a fee for site inspections conducted before the issuance of a restaurant license.

H. A restaurant applicant or licensee may apply for a permit allowing for the sale of beer for consumption off the licensed premises pursuant to section 4‑244, paragraph 32, subdivision (c) on a form prescribed and furnished by the director. The department shall not issue a permit to a restaurant applicant or licensee that does not meet the requirements in section 4‑207, subsection A. Section 4‑207, subsection B does not apply to this subsection. The permit shall be issued only after the director has determined that the public convenience requires and that the best interest of the community will be substantially served by the issuance of the permit, considering the same criteria adopted by the director for issuing a restaurant license described in section 4‑209, subsection B, paragraph 12. The amount of beer sold under the permit shall not exceed ten percent of gross revenue of spirituous liquor sold by the establishment. After the permit has been issued, the permit shall be noted on the license itself and in the records of the department. The director may charge a fee for processing the application for the permit and a renewal fee.

I. Notwithstanding any rule adopted by the department, business establishments that relied on a form issued by the department that provides for a small restaurant exemption for fifty or fewer seats before January 31, 2019, are allowed to continue to maintain the capacity of fifty or fewer seats for the duration of the business. The rights of a business establishment subject to this section are not transferable.

J. For the purposes of this section:

1. "Gross revenue" means the revenue derived from all sales of food and spirituous liquor on the licensed premises, regardless of whether the sales of spirituous liquor are made under a restaurant license issued pursuant to this section or under any other license that has been issued for the premises pursuant to this article.

2. "Restaurant" means an establishment that derives at least forty percent of its gross revenue from the sale of food, including sales of food for consumption off the licensed premises if the amount of these sales included in the calculation of gross revenue from the sale of food does not exceed fifteen percent of all gross revenue of the restaurant. END_STATUTE

Sec. 4. Title 4, Arizona Revised Statutes, is amended by adding chapter 4, to read:

CHAPTER 4

TOBACCO PRODUCTS

ARTICLE 1. LICENSING AND SALE OF TOBACCO PRODUCTS

START_STATUTE4-401. Tobacco retail sales; licenses; requirements; fees; civil penalties

A. Beginning January 1, 2023, a retail tobacco vendor may not distribute tobacco products in this state without a valid tobacco retail sales license. A retail tobacco vendor that distributes tobacco products in this state shall secure for each location, and display at all times, a tobacco retail sales license issued by the department before engaging or continuing to engage in such business.

B. The department shall establish fees for an initial tobacco retail sales license and the renewal of that license. The department shall deposit, pursuant to sections 35-146 and 35-147, the fees collected pursuant to this section in the tobacco retail sales licensing fund established by section 4-404.

C. A tobacco retail sales license is valid for one year, unless the license is suspended or revoked by the department or the department's designee. A tobacco retail sales license may not be renewed if the retail tobacco vendor has any outstanding penalties pursuant to this article. The department may receive and review tobacco retail sales license applications electronically.

D. If a retail tobacco vendor applies for a tobacco retail sales license from the department for a location that is within the jurisdiction of a local licensing authority, the department may not issue a tobacco retail sales license to the retail tobacco vendor until the retail tobacco vendor has obtained the required local license and has provided a copy of the local license to the department.

E. A tobacco retail sales license may not be issued to or renewed for a retail tobacco vendor licensee until the retail tobacco vendor signs a form stating that the retail tobacco vendor has read this article and has provided training to all employees on the sale of tobacco products. The training shall include the following information:

1. That it is illegal to sell tobacco products to persons who are under the minimum age of sale for tobacco products as set by the federal food, drug, and cosmetic act.

2. The types of identification that are legally acceptable for the proof of age.

3. That sales to persons who are under the minimum age of sale for tobacco products as set by the federal food, drug, and cosmetic act subjects the retail tobacco vendor to penalties.

F. The tobacco retail sales license is nontransferable. If a retail tobacco vendor ceases to be a retailer at the licensed retail location by reason of discontinuation, sale or transfer of the retail tobacco vendor's business, the retail tobacco vendor shall notify the department in writing at the time the discontinuance, sale or transfer takes effect.

G. Any business found to be selling tobacco products without a license is subject to a civil penalty of at least $500 but not more than $1,000 for a first or second violation within a thirty‑six-month period. The department shall issue A business that receives a second violation within a thirty‑six-month period a cease and desist order prohibiting the business from selling tobacco products and notifying the business owner that the business is ineligible to receive a tobacco retail sales license for a period of three years after the date of the second violation.

H. This section does not affect a local government's ability to require retail licensure for the sale of tobacco products. END_STATUTE

START_STATUTE4-402. Selling, delivering or giving tobacco products; prohibitions; penalties

A. IT IS UNLAWFUL FOR A RETAIL TOBACCO VENDOR OR A RETAIL TOBACCO VENDOR'S REPRESENTATIVE, AGENT OR EMPLOYEE TO SELL, FURNISH, GIVE OR PROVIDE A TOBACCO PRODUCT TO A PERSON WHO IS UNDER THE MINIMUM age of sale for tobacco products as set by the federal food, drug, and cosmetic act in this state.

B. BEFORE DISTRIBUTING ANY TOBACCO PRODUCT, THE RETAIL TOBACCO VENDOR OR THE RETAIL TOBACCO VENDOR'S REPRESENTATIVE, AGENT OR EMPLOYEE SHALL VERIFY THAT THE PURCHASER IS AT LEAST THE MINIMUM age of sale for tobacco products as set by the federal food, drug, and cosmetic act in this state. EACH RETAIL TOBACCO VENDOR OR RETAIL TOBACCO VENDOR'S REPRESENTATIVE, AGENT OR EMPLOYEE SHALL EXAMINE THE PURCHASER'S GOVERNMENT-ISSUED PHOTO IDENTIFICATION. THIS VERIFICATION IS NOT REQUIRED FOR A PERSON WHO IS THIRTY YEARS OF AGE OR OLDER. THE FACT THAT A PURCHASER APPEARS TO BE THIRTY YEARS OF AGE OR OLDER DOES NOT CONSTITUTE A DEFENSE TO A VIOLATION OF THIS SECTION.

C. IF A RETAIL TOBACCO VENDOR OR THE RETAIL TOBACCO VENDOR'S REPRESENTATIVE, AGENT OR EMPLOYEE VIOLATES THIS SECTION or SECTION 13-3622 OR 36-798.02, THE RETAIL TOBACCO VENDOR IS SUBJECT TO THE FOLLOWING PENALTIES:

1. FOR A FIRST VIOLATION, THE RETAIL TOBACCO VENDOR AND THE RETAIL TOBACCO VENDOR'S REPRESENTATIVE, AGENT OR EMPLOYEE CITED IN THE VIOLATION MUST ATTEND AN EDUCATION CLASS IF AVAILABLE. IF an EDUCATION CLASS IS not AVAILABLE, THE RETAIL TOBACCO VENDOR IS SUBJECT TO A civil penalty of NOT more than $500.

2. FOR A SECOND VIOLATION WITHIN A THIRTY-SIX-MONTH PERIOD, A CIVIL PENALTY OF AT LEAST $750 BUT NOT MORE THAN $1,000, AND THE RETAIL TOBACCO VENDOR IS PROHIBITED FROM DISTRIBUTING TOBACCO PRODUCTS FOR A MINIMUM OF FOURTEEN DAYS.

3. FOR A THIRD VIOLATION WITHIN A THIRTY-SIX-MONTH PERIOD, A CIVIL PENALTY OF AT LEAST $1,000 BUT NOT MORE THAN $1,500 AND THE RETAIL TOBACCO VENDOR IS PROHIBITED FROM DISTRIBUTING TOBACCO PRODUCTS FOR A MINIMum OF THIRTY DAYS.

4. FOR A FOURTH OR ANY SUBSEQUENT VIOLATION WITHIN A THIRTY‑SIX‑MONTH PERIOD, A CIVIL PENALTY OF AT LEAST $1,500 BUT NOT MORE THAN $3,000 AND THE RETAIL TOBACCO VENDOR IS PROHIBITED FROM DISTRIBUTING TOBACCO PRODUCTS FOR A PERIOD OF AT LEAST THREE YEARS.

d. IN ADDITION TO THE PENALTIES IMPOSED FOR A VIOLATION OF THIS SECTION or SECTION 13-3622 OR 36-798.02, A PERSON FOUND TO HAVE VIOLATED THIS SECTION or section 13-3622 OR 36-798.02 WHILE ACTING AS A NONMANAGEMENT AGENT OR EMPLOYEE OF A RETAIL TOBACCO VENDOR IS SUBJECT TO NONCRIMINAL, NONMONETARY PENALTIES, INCLUDING EDUCATION CLASSEs OR COMMUNITY SERVICE.

e. A RETAIL TOBACCO VENDOR IS SUBJECT TO AT LEAST TWO UNANNOUNCED COMPLIANCE CHECKS ANNUALLY. THE DEPARTMENT OR ITS AUTHORIZED DESIGNEE SHALL CONDUCT COMPLIANCE CHECKS BY ENGAGING PERSONs WHO ARE AT LEAST EIGHTEEN years of age but UNDER THE MINIMUM age of sale for tobacco products as set by the federal food, drug, and cosmetic act in this state TO ENTER THE TOBACCO RETAIL ESTABLISHMENT TO ATTEMPT TO PURCHASE TOBACCO PRODUCTS. UNANNOUNCED FOLLOW-UP COMPLIANCE CHECKS OF ALL NONCOMPLIANT RETAIL TOBACCO VENDORS ARE REQUIRED WITHIN THREE MONTHS AFTER ANY VIOLATION OF THIS ARTICLE. THE RESULTS OF ALL COMPLIANCE CHECKS SHALL BE PUBLISHED BY THE DEPARTMENT AT LEAST ANNUALLY AND MADE AVAILABLE TO THE PUBLIC ON REQUEST.

F. IN ADDITION TO ANY OTHER PENALTY, A retail TOBACCO vendor that VIOLATES THIS ARTICLE OR ANY FEDERAL OR STATE LAW RELATING TO TOBACCO PRODUCT SALES IS SUBJECT TO THE PENALTIES PRESCRIBED IN THIS SECTION, INCLUDING CIVIL PENALTIES, AND is prohibited from DISTRIBUTING TOBACCO PRODUCTS.

START_STATUTE4-403. Rulemaking; delegation of authority; collaboration; reporting requirements

A. The department shall adopt rules pursuant to title 41, chapter 6 to carry out this article.

B. The department may delegate the enforcement and compliance inspections required under this article to any county that accepts this delegation.

C. The department may collaborate with and use the findings of other agencies, including the attorney general's office, local licensing authorities and law enforcement, to carry out the obligations of this article and to ensure that the complaints received by other agencies or local licensing authorities are forwarded to the department for timely investigation and action.

D. A local licensing authority or any law enforcement or other local entity that conducts compliance checks to assess retailer compliance of the minimum legal sales age for tobacco products shall report the compliance check results to the department. Any violation shall be a violation of the vendor's tobacco retail sales license. END_STATUTE

START_STATUTE4-404. Tobacco retail sales licensing fund

The tobacco retail sales licensing fund is established consisting of licensing fees collected pursuant to this article. the department shall administer the fund. The department shall deposit, pursuant to sections 35‑146 and 35‑147, ninety percent of all licensing fees collected under this article in the tobacco retail sales licensing fund and the remaining ten percent in the state general fund. Monies in the fund are subject to legislative appropriation and shall be used to administer and enforce this article. END_STATUTE

Sec. 5. Section 13-3622, Arizona Revised Statutes, is amended to read:

START_STATUTE13-3622. Tobacco products; persons under the federal minimum age; classification; exceptions; definitions

A. A person who knowingly sells, gives or furnishes a tobacco product, a vapor product or any instrument or paraphernalia that is solely designed for the smoking or ingestion of tobacco or shisha, including a hookah or waterpipe, to a minor is guilty of a petty offense person who is under the minimum age of sale for tobacco products as set by the federal food, drug, and cosmetic act is subject to the penalties prescribed in sections 4-402 and 36‑798.01.

B. A minor who buys, or has in his possession or knowingly accepts or receives from any person, a tobacco product, a vapor product or any instrument or paraphernalia that is solely designed for the smoking or ingestion of tobacco or shisha, including a hookah or waterpipe, is guilty of a petty offense, and if the offense involves any instrument or paraphernalia that is solely designed for the smoking or ingestion of tobacco or shisha, shall pay a fine of not less than one hundred dollars or perform not less than thirty hours of community restitution.

C. B. A minor person who is under the minimum age of sale for tobacco products as set by the federal food, drug, and cosmetic act and who misrepresents the minor's person's age to any other person by means of a written instrument of identification with the intent to induce the other person to sell, give or furnish a tobacco product, a vapor product or any instrument or paraphernalia that is solely designed for the smoking or ingestion of tobacco or shisha, including a hookah or waterpipe, in violation of subsection A or B of this section is guilty of a petty responsible for a civil offense and, notwithstanding section 13‑802, shall pay a fine of not more than five hundred dollars $100.

D. C. This section does not apply to any of the following:

1. Cigars, cigarettes or cigarette papers, smoking or chewing tobacco products or any instrument or paraphernalia that is solely designed for the smoking or ingestion of ingesting tobacco or shisha, including a hookah or waterpipe, if it is used or intended to be used in connection with a bona fide practice of a religious belief and as an integral part of a religious or ceremonial exercise.

2. Any instrument or paraphernalia that is solely designed for the smoking or ingestion of tobacco or shisha, including a hookah or waterpipe, that is given to or possessed by a minor if the instrument or paraphernalia was a gift or souvenir and is not used or intended to be used by the minor to smoke or ingest tobacco or shisha.

E. D. For the purposes of this section:

1. "Electronic smoking device":

(a) Means any device that may be used to deliver any aerosolized or vaporized substance to the person who inhales from the device, including an e‑cigarette, e‑cigar, e‑pipe, vape pen or e‑hookah.

(b) Includes:

(i) Any component, part or accessory of the device.

(ii) Any substance that is intended to be aerosolized or vaporized during the use of the device, whether or not the substance contains nicotine.

(c) Does not include drugs, devices or combination products authorized for sale by the United States food and drug administration, as those terms are defined in the federal food, drug, and cosmetic act or the regulations adopted pursuant to that act.

1. 2. "Shisha" includes any mixture of tobacco leaf and honey, molasses or dried fruit or any other sweetener.

2. 3. "Tobacco product":

(a) Means any of the following:

(a) Cigars.

(b) Cigarettes.

(d) Smoking tobacco of any kind.

(e) Chewing tobacco of any kind.

3. "Vapor product" means a noncombustible tobacco‑derived product containing nicotine that employs a mechanical heating element, battery or circuit, regardless of shape or size, that can be used to heat a liquid nicotine solution contained in cartridges. Vapor product does not include any product that is regulated by the United States food and drug administration under chapter V of the federal food, drug and cosmetic act.

(i) A product containing, made of or derived from tobacco or nicotine that is intended for human consumption or is likely to be consumed, whether inhaled, absorbed or ingested by any other means, including a cigarette, a cigar, pipe tobacco, shisha, beedies, bidis, chewing tobacco, snuff or snus.

(ii) An electronic smoking device and any substance that may be aerosolized or vaporized by the device, whether or not the substance contains nicotine.

(iii) A component, part or accessory of any product, electronic smoking device or substance that is listed in item (i) or (ii) of this subdivision, whether or not any of these contain tobacco or nicotine, including filters, rolling papers, blunt or hemp wraps and pipes.

(b) Does not include drugs, devices or combination products authorized for sale by the United States food and drug administration, as those terms are defined in the federal food, drug, and cosmetic act or the regulations adopted pursuant to that act. END_STATUTE

Sec. 6. Section 36-798, Arizona Revised Statutes, is amended to read:

START_STATUTE36-798. Definitions

In this article, unless the context otherwise requires:

1. "Bar" means that portion of any premises licensed under section 4‑209, subsection B, paragraph 6, 7, 11, 12 or 14 that is primarily used for the selling, consumption consuming or serving of alcoholic beverages and that is not primarily used for the consumption of consuming food on the premises.

2. "Beedies" or "bidis" means a product containing tobacco that is wrapped in temburni leaf (diospyros melanoxylon) or tendu leaf (diospyros exculpra), or any other product that is offered to, or purchased by, consumers as beedies or bidis.

3. "Cigar" means a roll of tobacco or any lawful substitute for tobacco that is wrapped in tobacco.

4. "Cigarette" means a roll of tobacco or any lawful substitute for tobacco that is wrapped in paper or in any substance other than tobacco.

5. "Minor" means a person who is under eighteen years of age.

5. "Electronic smoking device":

(a) Means any device that may be used to deliver any aerosolized or vaporized substance to the person who inhale from the device, including an e‑cigarette, e‑cigar, e‑pipe, vape pen or e‑hookah.

(b) Includes:

(i) Any component, part or accessory of the device.

(ii) Any substance that is intended to be aerosolized or vaporized during the use of the device, whether or not the substance contains nicotine.

6. "Retail tobacco vendor":

(a) Means a person, who possesses tobacco or tobacco products for the purpose of selling them for consumption and not for resale partnership, joint venture, society, club, trustee, true association, organization or corporation that owns, operates or manages any tobacco retail establishment.

(b) Does not include the nonmanagement employees of any tobacco retail establishment.

7. "Self‑service display" means any display, including a vending machine, from which customers may select a tobacco product without assistance from the retail tobacco vendor or the retail tobacco vendor's agent or employee and without a direct person‑to‑person transfer between the purchaser and the retail tobacco vendor or retail tobacco vendor's agent or employee.

7. "Smokeless tobacco" includes shredded tobacco, snuff, cavendish and plug, twist and other tobacco products that are intended for oral use but not for smoking.

8. "Smoking tobacco" includes any tobacco or tobacco product, other than cigarettes and cigars, that is intended to be smoked.

9. 8. "Tobacco products product": includes cigarettes, cigarette papers, cigars, smokeless tobacco and smoking tobacco.

(a) Means any of the following:

(ii) An electronic smoking device and any substance that may be aerosolized or vaporized by the device, whether or not the substance contains nicotine.

10. 9. "Vending machine" means any mechanical, electrical or electronic device that, on insertion of money, tokens or any other form of payment, automatically dispenses tobacco products. END_STATUTE

Sec. 7. Section 36-798.02, Arizona Revised Statutes, is amended to read:

START_STATUTE36-798.02. Self‑service display sales of tobacco products; civil penalties

A. A person shall may not sell tobacco products through a vending machine self‑service display unless the vending machine self‑service display is located in either:

1. A bar that does not allow persons to enter who are under the minimum age of sale for tobacco products as set by the federal food, drug, and cosmetic act.

2. An employee lounge area that is not open to the public and the business in which the lounge area is located does not employ minors persons who are under the minimum age of sale for tobacco products as set by the federal food, drug, and cosmetic act.

B. A sign measuring at least eighty square inches shall be obviously affixed to the front of each vending machine. The sign shall state in block letters, it is illegal for a minor to purchase cigarettes or tobacco products and, upon conviction, a fine of up to three hundred dollars may be imposed.

B. Subsection A of this section does not apply to cigars or pipe tobacco that is sold or displayed by a person who primarily engages in the business of selling either cigars, pipe tobacco, cigar‑related accessories or pipe tobacco‑related accessories or renting on‑premises humidors or other storage units.

C. This article does not invalidate an ordinance of or prohibit the adoption of an ordinance by a county, city or town to further restrict self‑service displays or the location of vending machines or specify different wording for the vending machines signs as required by subsection B of this section self-service displays.

D. A person who violates this section is guilty of a petty offense subject to the penalties prescribed in sections 4-402 and 36‑798.01. END_STATUTE