Bill
Number: H.B. 2773
Mesnard Floor Amendment
Reference to: House engrossed bill
Amendment drafted by: Laura Benitez
FLOOR AMENDMENT EXPLANATION
Off-Sale Privilege Leases
1. Authorizes a bar, beer and wine bar or liquor store licensee, including non-use status licensees, to lease in one-year terms the off-sale privileges associated with the license, except to-go mixed cocktails, to a restaurant licensee located in the same county.
2. Requires the Department of Liquor Licenses and Control (DLLC) to establish a minimum of four lease windows in a calendar year during which licensees may agree to an off-sale privileges lease.
3. Allows a restaurant licensee to apply to lease a bar, beer and wine bar or liquor store licensee's off-sale privileges (off-sale privileges lease) on a form prescribed and provided by the Director at least 30 days before the end of a lease window.
4. Requires a restaurant licensee applying for an off-sale privileges lease to provide DLLC a completed lease agreement signed by the lessor and lessee.
5. Directs the Director of DLLC (Director), upon approval of an off-sale privileges lease and for the lease term, to transfer the lessor's off-sale privileges, except to-go mixed cocktails, to the restaurant lessee, and prohibits a bar or liquor store lessor from using the leased off-sale privileges associated with their license during the term of an off-sale privileges lease.
6. Subjects the off-sale use of a restaurant licensee with an off-sale privileges lease to the limitation of 30 percent of the on-premises spirituous liquor sales, as prescribed for bars.
7. Directs DLLC to establish and publish an off-sale privileges lease amount that fairly recognizes and is derived from the commercial value of selling spirituous liquor for off-premises consumption.
8. Allows DLLC to establish separate amounts for off-sale privileges leases in urban and rural counties and to designate counties for each amount.
9. Allows an off-sale privileges lessor and lessee to agree to a lease amount that is different than the DLLC-established amount.
To-Go Mixed Cocktails Privileges
10. Extends, to liquor stores and restaurants leasing a to-go mixed cocktails privilege, the to-go mixed cocktails exemption from the prohibition on allowing spirituous liquor to be removed from the licensed premises except in the original, unbroken package.
11. Requires the Director, beginning January 1, 2026, to make to-go mixed cocktail permits available for a restaurant licensee to purchase from DLLC equal in number to the total number of bar and liquor store licensees and requires the permit to be noted on the license and in DLLC records.
12. Directs bar and liquor store licensees, through December 31, 2025, to lease to a restaurant licensee, through the DLLC, the privilege of selling mixed cocktails for off-premises consumption (to-go mixed cocktails lease).
13. Allows a restaurant licensee to apply for a to-go mixed cocktails lease from a bar or liquor store licensee on a form prescribed and provided by the Director.
14. Requires the Director, upon approval of a restaurant licensee's application, to randomly select a bar or liquor store license for the lease to the restaurant of the licensee's to-go mixed cocktail privileges.
15. Subjects the off-sale use of a restaurant licensee with a to-go mixed cocktails lease to the limitation of 30 percent of the on-premises spirituous liquor sales, as prescribed for bars.
16. Allows a bar or liquor store lessor to sell to-go mixed cocktails during the term of a to-go mixed cocktails lease.
17. Requires DLLC to establish a to-go mixed cocktails lease amount that fairly recognizes and is derived from the commercial value of the privilege to sell mixed cocktails for off-premises consumption.
18. Repeals to-go mixed cocktails leasing and lease administration requirements on January 1, 2026.
19. Requires to-go mixed cocktails to be tamper proof sealed by the licensee's employee, rather than sealed.
Lease Administration
20. Allows the Director to establish and charge the following to be used for associated administrative and enforcement costs:
a) a to-go mixed cocktails lease or permit application fee and a permit annual renewal fee; and
b) an off-sale privileges lease application fee.
21. Requires all violations and liability for liquor service under the leased off-sale or to-go mixed cocktails privileges during the lease term to be attributed only to the leasing restaurant licensee.
22. Directs a restaurant that ceases regular kitchen service for food to cease selling spirituous liquor for off-premises consumption, including mixed cocktails.
23. Directs DLLC to establish a process to facilitate and approve lease conveyance for to-go cocktails and off-sale privileges and to govern the lease, including:
a) a standard form of lease;
b) the responsibilities of the lessor and lessee;
c) the term of the lease, which must be one year except for the first lease year, and the established lease amount;
d) the lease may be transferred to another restaurant licensee if the new licensee purchases the original lessee's business during a lease term;
e) the privileges conveyed to the lessee during the lease term continue if the lessor's license is suspended or revoked;
f) if the lessor sells its license during a lease term, the license purchaser becomes the new lessor;
g) Alcoholic Beverages statutes and rules apply to both the lessor and lessee;
h) all violations and liability for liquor service under the lease must be attributed only to the restaurant leasing the off-sale or to-go cocktails privileges; and
i) the restaurant lessee is not responsible for violations committed by the lessor.
24. Specifies that the lease period for a to-go mixed cocktails privilege or off-sale privileges lease is for a period of one year and is renewable for successive, one-year terms.
25. Allows the Director, during the first year of a lease, to set a lease term that is less than one year to align the lease renewal date with the renewal date of the restaurant license and allows the first-year lease payment amount to be prorated.
26. Allows DLLC to adopt a procedure for payment of a lease amount to the lessor and utilize the Arizona Department of Administration to facilitate the payments.
27. Allows the Director to:
a) deny approval of a lease based on the proposed location or history of the lessee; and
b) immediately suspend a lease for any violation by a restaurant licensee of Alcoholic Beverages statutes or related rules.
28. Requires a restaurant licensee to pay all lease payments in full, in advance.
29. Requires all to-go mixed cocktails permit holders, rather than applicants, and their employees, managers and agents to complete alcohol training approved by the Director.
30. Requires the Director, if a restaurant does not renew a to-go mixed cocktails lease, to return the lessor to the bar or liquor store lessor to the random selection process.
31. Requires the Director, if a to-go mixed cocktails lessor has its license suspended or revoked, to transfer the lease to another bar or liquor store licensee at the end of the lease term.
Orders for Delivery
32. Adds beer and wine bars to licensees authorized to take orders for the sale and delivery of spirituous liquor off the licensed premises.
33. Authorizes a bar, beer and wine bar, or restaurant with a lease or permit to maintain a delivery service and specifies that the existing statutory authorization for a retail licensee with off-sale privileges to contract with an independent contractor does not apply to a bar, beer and wine bar or restaurant.
34. Authorizes a bar, beer and wine bar, liquor store, beer and wine store or restaurant with a lease or permit to contract with one or more registered alcohol delivery contractors for spirituous liquor delivery that is:
a) packaged and tamper proof sealed by the licensee or the licensee's employee;
b) loaded for delivery at the premises; and
c) delivered in Arizona on the same business day.
35. Applies the payment, delivery, age verification and spirituous liquor delivery labeling requirements to spirituous liquor deliveries from a bar, beer and wine bar and restaurant licensee and deliveries by a registered alcohol delivery contractor.
36. Specifies that a liquor store or beer and wine store may contract with one or more independent contractors for delivery as statutorily authorized, if the spirituous liquor is loaded for delivery at the liquor store or beer and wine store premises and delivered in Arizona on the same business day.
37. Specifies that the licensee is responsible for any violation of Alcoholic Beverages statutes or related rules committed in connection with sale and delivery.
Alcohol Delivery Contractor Registration
38. Replaces the establishment of a third-party facilitator license with authorization for the Director to register any person in Arizona as an alcohol delivery contractor to deliver spirituous liquor from a bar, beer and wine bar, liquor store, beer and wine store or restaurant licensee to a consumer in Arizona.
39. Allows a registered alcohol delivery contractor to:
a) deliver spirituous liquor to a consumer in Arizona on behalf of a bar, beer and wine bar, liquor store, beer and wine store or restaurant if the registered alcohol delivery contractor complies with statutory Alcoholic Beverages requirements; and
b) contract with independent contractors for liquor delivery to a consumer on behalf of a bar, beer and wine bar, liquor store, beer and wine store or restaurant.
40. Allows DLLC to require new registered alcohol delivery contractors to complete an approved alcohol training course and subjects a registered alcohol delivery contractor to the Director's authority to examine a licensee's books, records and papers.
41. Authorizes DLLC, in addition to all other actions authorized for violations, to limit a contractor's right to deliver for a licensee for up to one year and requires the alcohol delivery contractor to register with DLLC to resume delivery.
42. Deems, as a penalty that is appealable to the State Liquor Board, a limitation of an alcohol delivery contractor's right to deliver.
43. Directs DLLC to maintain a list of registered alcohol delivery contractors that are not in penalty status.
44. Deems, when making a spirituous liquor delivery for a licensee, an alcohol delivery contractor, subcontractor of an alcohol delivery contractor or the employee of the contractor or subcontractor to be acting on behalf of the licensee.
45. Requires a person to apply to be a registered alcohol delivery contractor on a Director-prescribed form and directs the Director to require an applicant to provide:
a) the controlling person's identification; and
b) any background information necessary to identify the person and demonstrate proof of the person's authority to conduct business in Arizona, including copies of required state or local business licenses or permits.
46. Allows the Director to refuse to register a person as an alcohol delivery contractor for good cause.
47. Prohibits the Director from registering, as an alcohol deliver contractor, a person who has been convicted of a felony in Arizona or any other state within the five years immediately preceding application.
48. Allows the Director to establish and charge an alcohol delivery contractor registration and renewal fee to be used for associated administrative and enforcement costs.
49. Subjects a registered alcohol delivery contractor to statutory requirements related to:
a) grounds for license revocation, suspension and refusal to renew;
b) complaints and hearings;
c) the Director's authority to impose a civil penalty between $200 and $3,000 for violations; and
d) the prohibition on selling, disposing of, delivering or giving spirituous liquor to an individual purchaser between 2 a.m. and 6 a.m.
50. Removes the authorization for a bar or restaurant licensee to take orders for the sale and delivery of spirituous liquor through a third-party facilitator and for a third-party facilitator to collect payment for spirituous liquor.
Definitions
51. Redefines mixed cocktail as a drink combined at the premises of an authorized licensee that contains spirituous liquor, is combined with at least one other ingredient besides water and contains more than one-half percent of alcohol by volume when combined.
52. Excludes, from the definition of mixed cocktail, a drink sold in an original manufacturer's package or a drink poured from an original manufacturer's package without the addition of all of the cocktail's other ingredients at the licensed premises.
53. Defines menu food item as a food item from a regular menu, special menu or happy hour menu that is prepared by the licensee or the licensee's employee.
54. Defines registered alcohol delivery contractor as a person who delivers spirituous liquor to a consumer on behalf of a bar, beer and wine bar, liquor store, beer and wine store or restaurant.
55. Excludes, from the definition of registered alcohol delivery contractor:
a) a motor carrier, which is defined as a person who operates or causes to be operated a commercial motor vehicle on a public highway; and
b) an independent contractor, subcontractor of an independent contractor, or an independent contractor's or subcontractor's employee delivering spirituous liquor according to existing statutory requirements on behalf of a retail licensee with off-sale privileges, besides a bar, beer and wine bar or restaurant.
56. Defines tamper-proof sealed as designed to prevent consumption without the removal of a tamper-proof cap, seal, cork or closure that has a device, mechanism or adhesive that clearly shows whether a container has been opened.
57. Modifies the definition of gross revenue relating to the limit on restaurant spirituous liquor sales to include spirituous liquor sold for off-sale consumption.
58. Defines business day, for the purposes of spirituous liquor delivery, as between the hours of 6:00 a.m. of one day 2:00 a.m. of the next day.
Miscellaneous
59. Delays the effective date until October 1, 2021, with a retroactive provision as noted.
60. Exempts, retroactive to July 1, 2020, from Alcoholic Beverages statutes, the manufacture or sale of bitters products that have been classified and approved as a nonbeverage product or unfit for beverage purposes by the U.S. Alcohol and Tobacco, Tax and Trade Bureau (U.S. TTB) and specifies that the exemption is consistent with U.S. TTB classification guidelines.
61. Adds a severability clause.
62. Makes technical and conforming changes.
First Regular Session H.B. 2773
MESNARD FLOOR AMENDMENT
SENATE AMENDMENTS TO H.B. 2773
(Reference to House engrossed bill)
Page 4, after line 43, insert:
"24. "menu food item" means a food item from a regular menu, special menu or happy hour menu that is prepared by the licensee or the licensee's employee."
Renumber to conform
Page 5, strike lines 4 through 7, insert:
"26. "MIXED COCKTAIL":
(a) MEANS ANY DRINK COMBINED AT THE PREMISES OF an authorized licensee that CONTAINS A SPIRITUOUS LIQUOR and THAT IS COMBINED WITH AT LEAST ONE OTHER INGREDIENT, which MAY INCLUDE ADDITIONAL SPIRITuOUS LIQUORS, FRUIT JUICE, VEGETABLE JUICE, MIXERS, CREAM, FLAVORED SYRUP OR OTHER INGREDIENTS EXCEPT WATER, AND THAT WHEN COMBINED CONTAINS MORE THAN ONE-HALF OF ONE PERCENT OF ALCOHOL BY VOLUME.
(b) DOES NOT INCLUDE A DRINK SOLD IN AN ORIGINAL MANUFACTURER'S PACKAGING OR ANY DRINK POURED FROM AN ORIGINAL MANUFACTURER'S PACKAGE WITHOUT THE ADDITION OF ALL OF THE COCKTAIL'S OTHER INGREDIENTS AT THE PREMISES OF the LICENSED BAR, LIQUOR STORE OR RESTAURANT."
Renumber to conform
Between lines 31 and 32, insert:
"32. "REGISTERED ALCOHOL DELIVERY CONTRACTOR":
(a) MEANS A PERSON WHO DELIVERS SPIRITUOUS LIQUOR TO A CONSUMER ON BEHALF OF A BAR, BEER AND WINE BAR, LIQUOR STORE, beer and wine store OR RESTAURANT.
(b) DOES NOT INCLUDE:
(i) A MOTOR CARRIER AS DEFINED in SECTION 28-5201.
(ii) An independent contractor, a subcontractor of an independent contractor, an employee of an independent contractor or an employee of a subcontractor as provided in section 4-203, subsection J."
Renumber to conform
Page 6, strike lines 18 through 21, insert:
"38. "TAMPER PROOF SEALED" MEANS DESIGNED TO PREVENT CONSUMPTION WITHOUT THE REMOVAL OF A TAMPER-PROOF CAP, SEAL, CORK OR CLOSURE THAT HAS A DEVICE, MECHANISM OR ADHESIVE THAT CLEARLY SHOWS WHETHER A CONTAINER HAS BEEN OPENED."
Renumber to conform
Page 9, line 34, after "privileges" insert ", except a bar, beer and wine bar or restaurant licensee,"
Page 11, line 20, after "bar" insert ", beer and wine bar, liquor store, beer and wine store"
Line 22, strike "through a third-party facilitator,"
Line 25, strike "or" insert "and"
Between lines 26 and 27, insert:
"2. BEER AND WINE BAR LICENSEES FOR BEER AND WINE.
3. liquor store licensees for beer, wine, distilled spirits and mixed cocktails.
4. Beer and wine store licensees for beer and wine."
Renumber to conform
Line 27, strike "either" insert "any"
Line 28, strike "Food" insert "menu food items"
Line 30, strike "J" insert "k and section 4-203.07 or A lease pursuant to section 4-203.06"
Between lines 32 and 33, insert:
"(c) BEER, WINE and DISTILLED SPIRITS IF THE RESTAURANT HOLDS AN OFF-SALE PRIVILEGES LEASE WITH A BAR OR LIQUOR STORE PURSUANT TO SECTION 4-203.07.
(d) BEER and WINE IF THE RESTAURANT HOLDS AN OFF-SALE PRIVILEGES LEASE WITH A BEER AND WINE BAR PURSUANT TO SECTION 4-203.07."
Page 11, line 42, strike "third-party facilitators licensed" insert "alcohol delivery contractors registered"
Line 43, after "is" insert "packaged and tamper proof sealed by the bar, beer and wine bar, liquor store, beer and wine store or restaurant licensee or the licensee's employee and is"
Line 44, after "restaurant" insert ", beer and wine bar, liquor store, beer and wine store"
Line 45, after "state" insert "on the same business day"; after the period insert "a liquor store or beer and wine store licensee may contract with one or more independent contractors as provided in subsection j of this section for delivery of spirituous liquor if the spirituous liquor is loaded for delivery at the premises of the liquor store or beer and wine store licensee in this state and delivered in this state on the same business day."
Page 12, line 1, after "be" insert "tamper proof sealed and"
Line 6, after "liquor" strike remainder of line
Line 7, strike "a licensed third-party facilitator"
Line 8, after the second "or" insert "authorized"; strike "an authorized"
Line 9, strike "third-party facilitator" insert "a registered alcohol delivery contractor"
Line 13, after "restaurant" insert ", beer and wine bar, liquor store, beer and wine store"; strike "or third-party facilitator"
Line 16, strike "liquors" insert "liquor"
Line 20, after "or" strike remainder of line
Line 21, strike "facilitator" insert "a registered alcohol delivery contractor"
Line 25, after the period insert "an alcohol delivery contractor, a subcontractor of an alcohol delivery contractor, an employee of an alcohol delivery contractor or an employee of a subcontractor is deemed to be acting on behalf of the licensee when making a delivery of spirituous liquor for the licensee. For the purposes of this subsection, "business day" means between the hours of 6:00 a.m. of one day and 2:00 a.m. of the next day."
Page 12, between lines 25 and 26, insert:
"Sec. 3. Title 4, chapter 2, article 1, Arizona Revised Statutes, is amended by adding sections 4-203.06 and 4-203.07, to read:
4-203.06. Mixed cocktails; off-sale privileges; leases; fees
A. NOTWITHSTANDING SECTION 4-203, SUBSECTION E and section 4-210, subsection A, paragraph 6, THROUGH DECEMBER 31, 2025, BAR AND LIQUOR STORE LICENSEES, THROUGH THE DEPARTMENT, shall lease TO RESTAURANT LICENSEES THE PRIVILEGE OF SELLING MIXED COCKTAILS FOR CONSUMPTION OFF THE LICENSED PREMIses in accordance with SECTION 4-244, PARAGRAPH 32, SUBDIVISION (d). THE LEASE SHALL BE FOR A PERIOD OF ONE YEAR AND SHALL BE RENEWABLE FOR SUCCESSIVE TERMS OF ONE YEAR. THE DEPARTMENT SHALL establish a LEASE AMOUNT THAT FAIRLY RECOGNIZES, AND IS DERIVED FROM, THE COMMERCIAL VALUE OF THE privilege TO SELL MIXED COCKTAILS FOR CONSUMPTION OFF THE LICENSED PREMISES.
B. LEASES MADE PURSUANT TO SUBSECTION A OF THIS SECTION ARE SUBJECT TO THE FOLLOWING CONDITIONS:
1. A RESTAURANT LICENSEE MAY APPLY TO THE DEPARTMENT ON A FORM PRESCRIBED AND PROVIDED BY THE DEPARTMENT FOR A LEASE pursuant to this section. The department may establish and charge an application fee for administrative and enforcement costs associated with this section.
2. ON THE DIRECTOR APPROVING THE APPLICATION OF A RESTAURANT LICENSEE, THE DIRECTOR SHALL RANDOMLY SELECT A BAR OR LIQUOR STORE LICENSE FOR THE LEASE OF THE BAR OR LIQUOR STORE LICENSEE'S mixed cocktail off-sale privileges TO THE RESTAURANT LICENSEE THROUGH THE DEPARTMENT.
3. THE DEPARTMENT SHALL ESTABLISH A PROCESS TO FACILITATE and approve THE LEASE CONVEYANCE AND TO GOVERN THE LEASES, INCLUDING the following:
(a) A STANDARD FORM OF LEASE.
(b) tHE TERM OF THE LEASE, WHICH SHALL BE ONE YEAR EXCEPT for THE FIRST YEAR OF THE LEASE. DURING THE FIRST YEAR OF THE LEASE, THE DIRECTOR MAY SET A LEASE TERM THAT IS LESS THAN A YEAR IN ORDER TO ALIGN THE LEASE RENEWAL DATE WITH THE RENEWAL DATE OF THE RESTAURANT LICENSE. the lease payment amount for the first year may be prorated.
(c) The amount of THE LEASE established BY THE DIRECTOR PURSUANT TO SUBSECTION A OF THIS SECTION.
(d) The RESPONSIBILITIES OF THE LESSOR AND LESSEE.
(e) THE LEASE MAY BE TRANSFERRED TO ANOTHER RESTAURANT LICENSEE IF a NEW RESTAURANT LICENSEE PURCHASES THE BUSINESS OF THE ORIGINAL LESSEE DURING THE TERM OF THE LEASE.
(f) THE PRIVILEGES CONVEYED TO THE LESSEE DURING THE TERM OF THE LEASE WILL CONTINUE IF THE BAR OR LIQUOR STORE LESSOR HAS its LICENSE SUSPENDED OR REVOKED.
(g) IF THE BAR OR LIQUOR STORE LESSOR SELLS its LICENSE DURING THE TERM OF THE LEASE, THE PURCHASER OF THE BAR OR LIQUOR STORE LICENSE BECOMEs THE NEW LESSOR.
(h) THIS TITLE AND RULES ADOPTED PURSUANT TO THIS TITLE APPLY TO BOTH THE LESSOR AND LESSEE.
(i) DURING THE TERM OF THE LEASE, ALL VIOLATIONS AND LIABILITY FOR LIQUOR SERVICE UNDER THE lease SHALL BE ATTRIBUTED ONLY TO THE RESTAURANT LICENSEE LEASING THE mixed cocktail off-sale privilege. The restaurant licensee leasing the off-sale privilege is not responsible for violations committed by the lessor.
4. THE DIRECTOR MAY DENY APPROVAL OF A LEASE BASED ON THE PROPOSED LOCATION OR HISTORY OF THE PROPOSED LESSEE.
5. THE RESTAURANT LICENSEE SHALL PAY to the department ALL LEASE PAYMENTS IN FULL IN ADVANCE.
6. the department of liquor licenses and control may adopt a procedure to pay the lease amount to the lessor and may use the department of administration to facilitate the payments.
7. DURING THE TERM OF THE LEASE, ALL VIOLATIONs AND LIABILITY FOR THE LIQUOR SERVICE UNDER THE LEASE SHALL BE ATTRIBUTED ONLY TO THE RESTAURANT LICENSEE LEASING THE Privilege. PUrsuant to section 4-210, THE DIRECTOR MAY IMMEDIATELY SUSPEND A LEASE FOR ANY VIOLATION OF THIS TITLE OR ANY RULE ADOPTED PURSUANT TO THIS TITLE by the restaurant licensee. The restaurant licensee leasing the off-sale privilege is not responsible for violations committed by the lessor.
8. DURING THE TERM OF the LEASE, A BAR OR LIQUOR STORE LESSOR MAY CONTINUE TO SELL SPIRITUOUS LIQUOR AS AUTHORIZED BY THE BAR OR LIQUOR STORE LICENSE AND MIXED COCKTAILS FOR OFF-PREMISES CONSUMPTION PURSUANT TO SECTION 4-244, PARAGRAPH 32, SUBDIVISION (d).
9. the restaurant licensee leasing the off-sale privilege is subject to the limit on off-sale use by the restaurant licensee's total spirituous liquor sales as prescribed in section 4-206.01, subsection g.
C. IF A RESTAURANT LICENSEE DOES NOT RENEW A LEASE, THE DIRECTOR SHALL RETURN THE BAR OR LIQUOR STORE LESSOR TO THE RANDOM SELECTION PROCESS PURSUANT TO SUBSECTION B, PARAGRAPH 2 OF THIS SECTION.
D. IF a BAR OR LIQUOR STORE LESSOR HAS its LICENSE SUSPENDED OR REVOKED, THE DIRECTOR SHALL TRANSFER THE LEASE TO ANOTHER BAR OR LIQUOR STORE LICENSEE AT THE END OF THE LEASE TERM PURSUANT TO SUBSECTION B, PARAGRAPH 2 OF THIS SECTION.
4-203.07. Off-sale privileges; leases; mixed cocktails; permits; fees
A. NOTWITHSTANDING SECTION 4-203, SUBSECTION E and section 4-210, subsection A, paragraph 6, A BAR, BEER AND WINE BAR AND LIQUOR STORE LICENSEE MAY LEASE THE OFF-SALE PRIVILEGES ASSOCIATED WITH THE licensee's LICENSE, except the privilege to sell mixed cocktails for off-premises consumption pursuant to section 4-244, paragraph 32, subdiviSion (d), TO A RESTAURANT LICENSEE. THE LEASE SHALL BE FOR A PERIOD OF ONE YEAR AND MAY BE RENEWABLE FOR SUCCESSIVE TERMS OF ONE YEAR. THE OFF-SALE PRIVILEGES OF A BAR, BEER AND WINE BAR OR LIQUOR STORE LICENSE that are HELD IN NON-USE STATUS MAY also BE LEASED PURSUANT TO THIS SECTION.
B. LEASES MADE PURSUANT TO THIS SECTION ARE SUBJECT TO THE FOLLOWING CONDITIONS:
1. THE DEPARTMENT SHALL establish A MINIMUM of FOUR LEASE WINDOWS THROUGHOUT THE CALENDAR YEAR DURING WHICH A LEASE MAY BE AGREED TO BETWEEN A BAR, BEER AND WINE BAR OR LIQUOR STORE LICENSEE AND A RESTAURANT LICENSEE FOR THE LEASE OF OFF-SALE PRIVILEGES.
2. A RESTAURANT LICENSEE MAY APPLY TO THE DEPARTMENT FOR APPROVAL OF A LEASE AT LEAST THIRTY DAYS before THE END OF THE LEASE WINDOW. THE RESTAURANT LICENSEE SHALL PROVIDE A COMPLETED LEASE AGREEMENT SIGNED BY BOTH THE LESSOR AND LESSEE. The department may establish and charge an application fee for administrative and enforcement costs associated with this section.
3. ON THE DIRECTOR APPROVING THE LEASE, THE DIRECTOR SHALL TRANSFER THE LESSOR'S OFF-SALE PRIVILEGES, except the privilege to sell mixed cocktails for off-premises consumption pursuant to section 4-244, paragraph 32, subdivision (d), TO THE RESTAURANT LESSEE FOR THE TERM OF THE LEASE.
4. THE DEPARTMENT SHALL ESTABLISH A PROCESS TO FACILITATE and approve THE LEASE CONVEYANCE AND TO GOVERN THE LEASEs, including the following:
(a) A STANDARD FORM OF LEASE.
(b) THE TERM OF THE LEASE SHALL BE ONE YEAR EXCEPT for THE FIRST YEAR OF THE LEASE. DURING THE FIRST YEAR OF THE LEASE, THE DIRECTOR MAY establish A LEASE TERM THAT IS LESS THAN A YEAR IN ORDER TO ALIGN THE LEASE RENEWAL DATE WITH THE RENEWAL DATE OF THE RESTAURANT LICENSE.
(c) The RESPONSIBILITIES OF THE LESSOR AND LESSEE.
(d) THE LEASE MAY BE TRANSFERRED TO ANOTHER RESTAURANT LICENSEE IF THE NEW RESTAURANT LICENSEE PURCHASES THE BUSINESS OF THE ORIGINAL LESSEE DURING THE TERM OF THE LEASE.
(e) THE PRIVILEGES CONVEYED TO THE LESSEE DURING THE TERM OF THE LEASE WILL CONTINUE IF THE BAR, BEER AND WINE BAR OR LIQUOR STORE LESSOR HAS its LICENSE SUSPENDED OR REVOKED.
(f) IF THE BAR, BEER AND WINE BAR OR LIQUOR STORE LESSOR SELLS its LICENSE DURING THE TERM OF THE LEASE, THE PURCHASER OF THE BAR, BEER AND WINE BAR OR LIQUOR STORE LICENSE BECOMEs THE NEW LESSOR.
(g) THIS TITLE AND RULES ADOPTED PURSUANT TO THIS TITLE APPLY TO BOTH THE LESSOR AND LESSEE.
(h) DURING THE TERM OF THE LEASE, ALL VIOLATIONS AND LIABILITY FOR LIQUOR SERVICE UNDER THE LEASE SHALL BE ATTRIBUTED ONLY TO THE RESTAURANT LICENSEE LEASING THE PRIVILEGE. The restaurant licensee leasing the off-sale privilege is not responsible for violations committed by the lessor.
5. The Restaurant licensee shall pay to the department all lease payments in full in advance.
7. DURING THE TERM OF THE LEASE, ALL VIOLATIONs AND LIABILITY FOR THE LIQUOR SERVICE UNDER THE LEASE SHALL BE ATTRIBUTED ONLY TO THE RESTAURANT LICENSEE LEASING THE PRIVILEGE. Pursuant to section 4-210, THE DIRECTOR MAY IMMEDIATELY SUSPEND A LEASE FOR ANY VIOLATION OF THIS TITLE OR ANY RULE ADOPTED PURSUANT TO THIS TITLE BY THE RESTAURANT LICENSEE. The restaurant licensee leasing the off-sale privilege is not responsible for violations committed by the lessor.
8. DURING THE TERM OF the LEASE, A BAR, BEER AND WINE BAR OR LIQUOR STORE LESSOR may NOT SELL SPIRITuOUS LIQUOR FOR OFF-PREMISES CONSUMPTION, EXCEPT A BAR OR LIQUOR STORE LICENSEE MAY SELL MIXED COCKTAILS FOR OFF-PREMISES CONSUMPTION PURSUANT TO SECTION 4-244, PARAGRAPH 32, SUBDIVISION (d).
10. A lessor may lease its off-sale privileges only TO A RESTAURANT LICENSEE LOCATED IN THE SAME COUNTY.
C. THE DIRECTOR SHALL PUBLISH A LEASE AMOUNT FOR LEASES MADE PURSUANT TO THIS SECTION. The department shall establish a lease amount THAT FAIRLY RECOGNIZES, AND IS DERIVED FROM, THE COMMERCIAL VALUE OF selling SPIRITUOUS LIQUOR FOR CONSUMPTION OFF THE LICENSED PREMISES. THE department MAY ESTABLISH SEPARATE LEASE AMOUNTs FOR URBAN AND RURAL COUNTIES AND MAY DESIGNATE COUNTIES IN THIS STATE FOR EACH AMOUNT. THE LEASE AMOUNT applies UNLESS THE LESSOR and LESSEE AGREE TO A DIFFERENT LEASE AMOUNT.
D. BEGINNING JANUARY 1, 2026, THE DIRECTOR SHALL MAKE AVAILABLE FOR RESTAURANT LICENSEES TO PURCHASE FROM THE DEPARTMENT PERMITS TO SELL MIXED COCKTAILS PURSUANT TO SECTION 4-244, PARAGRAPH 32, SUBDIVISION (d) EQUAL IN NUMBER TO THE NUMBER OF TOTAL BAR AND LIQUOR STORE LICENSES. THE DIRECTOR MAY SET THE APPLICATION AND ANNUAL RENEWAL FEE FOR A MIXED COCKTAIL PERMIT to be used for administrative and enforcement costs associated with the permit.
Sec. 4. Delayed repeal
Section 4-203.06, Arizona Revised Statutes, as added by this act, is repealed from and after December 31, 2025."
Renumber to conform
Page 13, line 3, strike "30" insert "31"
Page 14, between lines 11 and 12, insert:
"j. notwithstanding section 4-207, section 4-203, subsection E and section 4-210, subsection A, paragraph 6, through december 31, 2025, a restaurant applicant or licensee may apply to the department for a lease for the PRIVILEGE of selling mixed cocktails for consumption off the licensed premises pursuant to section 4-203.06 and section 4-244, paragraph 32, subdivision (d)."
Reletter to conform
Page 14, line 12, after the comma insert "beginning january 1, 2026,"
Line 14, after "to" insert "section 4-203.07 and"
Line 17, strike "Food" insert "menu food items"
Line 21, strike "applicants for the"; after "permit" insert "holders"
Line 22, strike "managing"
Strike lines 27 through 31, insert:
"L. A RESTAURANT LICENSEE SHALL CEASE selling SPIRITUOUS LIQUOR, including mixed cocktails, FOR OFF-PREMISES CONSUMPTION WHEN THE LICENSEE ceases REGULAR KITCHEN SERVICE FOR food."
Reletter to conform
Line 33, after the second quotation mark insert ":
(a)"
Between lines 37 and 38, insert:
"(b) Includes revenue derived from spirituous liquor sold for off-sale consumption."
Strike page 15
Page 16, strike lines 1 through 21, insert:
"Sec. 6. Title 4, chapter 2, article 1, Arizona Revised Statutes, is amended by adding section 4-205.13, to read:
4-205.13. Registered alcohol delivery contractor; issuance; fee; regulatory provisions
A. THE DIRECTOR MAY REGISTER ANY PERSON IN THIS STATE AS AN ALCOHOL DELIVERY CONTRACTOR FOR THE PURPOSES OF DELIVERING SPIRITuOUS LIQUOR FROM A BAR, BEER AND WINE BAR, LIQUOR STORE, beer and wine store OR RESTAURANT LICENSEE TO A CONSUMER IN THIS STATE PURSUANT TO SECTION 4-203, SUBSECTIONs S AND T.
B. A PERSON SHALL APPLY TO BE A REGISTERED ALCOHOL DELIVERY CONTRACTOR ON A FORM PRESCRIBED BY THE DIRECTOR. THE DIRECTOR SHALL REQUIRE AN APPLICANT TO PROVIDE THE CONTROLLING PERSON'S IDENTIFICATION AND ANY BACKGROUND INFORMATION DEEMED NECESSARY TO IDENTIFY THE PERSON AND TO DEMONSTRATE PROOF OF THE PERSON'S AUTHORITY TO CONDUCT BUSINESS IN THIS STATE, INCLUDING COPIES OF ANY REQUIRED STATE OR LOCAL BUSINESS LICENSES OR PERMITS. THE DIRECTOR MAY ESTABLISH AND CHARGE A REGISTRATION FEE AND A RENEWAL FEE TO BE USED FOR ADMINISTRATIVE AND ENFORCEMENT COSTS ASSOCIATED WITH ALCOHOL DELIVERY CONTRACTORS.
C. THE DEPARTMENT SHALL MAINTAIN A LIST OF REGISTERED ALCOHOL DELIVERY CONTRACTORS THAT ARE NOT OTHERWISE IN PENALTY STATUS PURSUANT TO SUBSECTION G OF THIS SECTION.
D. THE DEPARTMENT MAY REQUIRE NEW REGISTERED ALCOHOL DELIVERY CONTRACTORS TO COMPLETE AN APPROVED TRAINING COURSE IN ACCORDANCE WITH SECTION 4-112, SUBSECTION G, PARAGRAPH 2. A REGISTERED ALCOHOL DELIVERY CONTRACTOR IS SUBJECT TO EXAMINATIONS CONDUCTED PURSUANT TO SECTION 4-112, SUBSECTION G, PARAGRAPH 1.
E. THE DIRECTOR MAY REFUSE TO REGISTER A PERSON AS AN ALCOHOL DELIVERY CONTRACTOR FOR GOOD CAUSE AND MAY NOT REGISTER ANY PERSON AS AN ALCOHOL DELIVERY CONTRACTOR IF THE PERSON HAS BEEN CONVICTED OF A FELONY IN THIS STATE OR ANY OTHER STATE WITHIN FIVE YEARS IMMEDIATELY PRECEDING THE APPLICATION.
F. A REGISTERED ALCOHOL DELIVERY CONTRACTOR MAY DELIVER SPIRITUOUS LIQUOR TO A CONSUMER IN THIS STATE ON BEHALF OF A BAR, BEER and WINE BAR, LIQUOR STORE, beer and wine store OR RESTAURANT IN THIS STATE PURSUANT TO SECTION 4-203, SUBSECTIONS S AND T, IF THE REGISTERED ALCOHOL DELIVERY CONTRACTOR COMPLIES WITH THIS TITLE. A REGISTERED ALCOHOL DELIVERY CONTRACTOR MAY CONTRACT WITH ONE OR MORE INDEPENDENT subCONTRACTORS FOR THE DELIVERY OF SPIRITUOUS LIQUOR TO A CONSUMER IN THIS STATE ON BEHALF OF A BAR, BEER AND WINE BAR, LIQUOR STORE, beer and wine store OR RESTAURANT IN THIS STATE PURSUANT TO SECTION 4-203, SUBSECTIONS S AND T. an alcohol delivery contractor, a subcontractor of an alcohol delivery contractor, an employee of an alcohol delivery contractor or an employee of a subcontractor is deemed to be acting on behalf of the licensee when making a delivery of spirituous liquor for the licensee.
G. IN ADDITION TO ALL OTHER ACTION THAT MAY BE TAKEN BY THE DIRECTOR FOR A VIOLATION OF THIS TITLE OR THE RULES ADOPTED PURSUANT TO THIS TITLE BY A REGISTERED ALCOHOL DELIVERY CONTRACTOR and its EMPLOYEES OR subcontractors and employees of subcontractors, THE DEPARTMENT MAY LIMIT THE RIGHT OF THE registered alcohol delivery CONTRACTOR TO DELIVER SPIRITUOUS LIQUOR ON BEHALF OF A LICENSEE FOR A PERIOD OF UP TO ONE YEAR, AFTER WHICH THE ALCOHOL DELIVERY CONTRACTOR SHALL REGISTER WITH THE DEPARTMENT TO RESUME DELIVERY OF SPIRITUOUS LIQUOR. ANY PENALTY ISSUED PURSUANT TO THIS SUBSECTION MAY BE APPEALED TO THE BOARD PURSUANT TO SECTION 4-210.02."
Page 18, line 41, strike "l" insert "m"
Page 20, strike lines 16 through 18
Line 45, after "to" insert "section 4-203.07 and"; strike "j" insert "k and leases pursuant to sections 4-203.06 and 4-203.07"
Page 22, line 1, after "to" insert "section 4-203.07 and"; strike "j" insert "k"
Line 2, after the period insert "the director may establish and charge fees for lease applications pursuant to sections 4-203.06 and 4-203.07."
Line 13, strike "a third-party facilitator"
Line 14, strike "license" insert "registering an alcohol delivery contractor"
Page 23, line 17, after "to" insert "section 4-203.07 and"
Line 18, strike "J." insert "K. The director may charge annual lease amounts pursuant to sections 4-203.06 and 4-203.07."
Line 30, after "annual" insert "registration"
Line 31, strike "third-party facilitator license" insert "registered alcohol delivery contractor"
Page 25, line 8, strike "a permit" insert "application fees for permits"
Line 9, strike "j and" insert "k,"; strike "a license issued" insert "leases pursuant to sections 4-203.06 and 4-203.07 and registrations"
Line 10, strike ", including the annual renewal fees,"
Line 11, after "permit" insert ", registration"; strike "license" insert "lease"
Line 12, strike "section" insert "chapter"
Between lines 12 and 13, insert:
"Sec. 9. Section 4-210, Arizona Revised Statutes, is amended to read:
4-210. Grounds for revocation, suspension and refusal to renew; notice; complaints; hearings; defense
A. After notice and hearing, the director may suspend, revoke or refuse to renew any license, registration, lease or permit issued pursuant to this chapter for any of the following reasons:
1. There occurs on the licensed premises repeated acts of violence.
2. The licensee, registrant, lessee or permittee fails to satisfactorily maintain the capability, qualifications and reliability requirements of an applicant for a license, registration, lease or permit prescribed in section 4-202, or 4-203, 4-203.06, 4-203.07 or 4-205.13.
3. The licensee, registrant, lessee, permittee or controlling person knowingly files with the department an application or other document that contains material information that is false or misleading or while under oath knowingly gives testimony in an investigation or other proceeding under this title that is false or misleading.
4. The licensee, registrant, lessee, permittee or controlling person is on the premises habitually intoxicated.
5. The licensed, registered, leased or permitted business is delinquent for more than one hundred twenty days in the payment of taxes, penalties or interest in an amount that exceeds $250 to the this state or to any political subdivision of the this state.
6. The licensee or controlling person obtains, assigns, transfers or sells a spirituous liquor license without compliance with this title or leases or subleases a license.
7. The licensee, registrant, lessee or permittee fails to keep for two years and make available to the department on reasonable request all invoices, records, bills or other papers and documents relating to the purchase, sale and delivery of spirituous liquors and, in the case of a restaurant or hotel-motel licensee, all invoices, records, bills or other papers and documents relating to the purchase, sale and delivery of food.
8. The licensee, registrant, lessee, permittee or controlling person is convicted of a felony provided that for a conviction of a corporation to serve as a reason for any action by the director, conduct that constitutes the corporate offense and was the basis for the felony conviction must have been engaged in, authorized, solicited, commanded or recklessly tolerated by the directors of the corporation or by a high managerial agent acting within the scope of employment.
9. The licensee, registrant, lessee, permittee or controlling person violates or fails to comply with this title, any rule adopted pursuant to this title or any liquor law of this state or any other state.
10. The licensee, registrant, lessee or permittee fails to take reasonable steps to protect the safety of a customer of the licensee, registrant, lessee or permittee or any other person entering, leaving or remaining on the licensed premises when the licensee knew or reasonably should have known of the danger to the person, or the licensee fails to take reasonable steps to intervene by notifying law enforcement officials or otherwise to prevent or break up an act of violence occurring on the licensed premises or immediately adjacent to the premises when the licensee knew or reasonably should have known of the acts of violence.
11. The licensee, REGISTRANT, LESSEE, PERMITTEE or controlling person lacks good moral character.
12. The licensee, REGISTRANT, LESSEE, PERMITTEE or controlling person knowingly associates with a person who has engaged in racketeering, as defined in section 13-2301, or who has been convicted of a felony, and the association is of a nature as to create a reasonable risk that the licensee, REGISTRANT, LESSEE OR PERMITTEE will fail to conform to the requirements of this title or of any criminal statute of this state.
13. A licensee that is a liquor store as defined in section 46-297 violates the restrictions on use of automatic teller machines or point-of-sale terminals regarding electronic benefit transfer cards prescribed in section 4-242.01.
14. There occurs on the licensed premises a serious act of violence. For the purposes of this paragraph, "serious act of violence" means an act of violence in which a serious injury causes the death or critical injury of a person and the injuries would be obvious to a reasonable person.
15. The licensee fails to report a serious act of violence that occurs on the licensed premises. For the purposes of this paragraph, "serious act of violence" means an act of violence in which a serious injury causes death or critical injury of a person and the injuries would be obvious to a reasonable person.
16. The licensee, REGISTRANT, LESSEE OR PERMITTEE violates an order of the board.
B. For the purposes of:
1. Subsection A, paragraph 8 of this section, "high managerial agent" means an officer of a corporation or any other agent of the corporation in a position of comparable authority with respect to the formulation of corporate policy.
2. Subsection A, paragraphs 9 and 10 of this section, acts or omissions of an employee of a licensee that violate this title or rules adopted pursuant to this title are deemed to be acts or omissions of the licensee. Acts or omissions by an employee or licensee committed during the time the licensed premises were operated pursuant to an interim permit or without a license may be charged as if they had been committed during the period the premises were duly licensed.
C. The director may suspend, revoke or refuse to issue, transfer or renew a license, REGISTRATION, LEASE OR PERMIT under this section based solely on the unrelated conduct or fitness of any officer, director, managing agent or other controlling person if the controlling person retains any interest in or control of the licensee, REGISTRANT, LESSEE OR PERMITTEE after sixty days following written notice to the licensee, REGISTRANT, LESSEE OR PERMITTEE. If the controlling person holds stock in a corporate licensee, REGISTRANT, LESSEE OR PERMITTEE or is a partner in a partnership licensee, REGISTRANT, LESSEE OR PERMITTEE, the controlling person may only divest himself of his the controlling person's interest by transferring the interest to the existing stockholders or partners who must demonstrate to the department that they meet all the requirements for licensure, REGISTRATION, LEASING OR PERMITTING. For the purposes of this subsection, the conduct or fitness of a controlling person is unrelated if it would not be attributable to the licensee, REGISTRANT, LESSEE OR PERMITTEE.
D. If the director finds, based on clear and convincing evidence in the record, that a violation involves the use by the licensee, registrant, lessee or permittee of a drive-through or walk-up service window or other physical feature of the licensed premises that allows a customer to purchase spirituous liquor without leaving the customer's vehicle or, with respect to a walk-up service window that prevents the licensee, registrant, lessee or permittee from fully observing the customer, and that the use of that drive-through or walk-up service window or other physical feature caused the violation, the director may suspend or terminate the licensee's, registrant's, lessee's or permittee's use of the drive-through or walk-up service window or other physical feature for the sale of spirituous liquor, in addition to any other sanction.
E. The director may refuse to transfer any license, REGISTRATION, LEASE OR PERMIT or issue a new license, REGISTRATION, LEASE OR PERMIT at the same location if the director has filed a complaint against the license, REGISTRATION, LEASE, PERMIT or location that has not been resolved alleging a violation of any of the grounds stated in subsection A of this section until the time the complaint has been finally adjudicated.
F. The director shall receive all complaints of alleged violations of this chapter and is responsible for the investigation of all allegations of a violation of, or noncompliance with, this title, any rule adopted pursuant to this title or any condition imposed on the licensee, REGISTRANT, LESSEE OR PERMITTEE by the license, REGISTRATION, LEASE OR PERMIT. When the director receives three complaints from any law enforcement agency resulting from three separate incidents at a licensed, leased or permitted establishment or by a registrant within a twelve-month period, the director shall transmit a written report to the board setting forth the complaints, the results of any investigation conducted by the law enforcement agency or the department relating to the complaints and a history of all prior complaints against the license, REGISTRATION, LEASE OR PERMIT and their disposition. The board shall review the report and may direct the director to conduct further investigation of a complaint or to serve a licensee, REGISTRANT, LESSEE OR PERMITTEE with a complaint and notice of a hearing pursuant to subsection G of this section.
G. On the director's initiation of an investigation or on the receipt of a complaint and an investigation of the complaint as deemed necessary, the director may cause a complaint and notice of a hearing to be directed to the licensee, REGISTRANT, LESSEE OR PERMITTEE that states the violations alleged against the licensee, REGISTRANT, LESSEE OR PERMITTEE and directing the licensee, REGISTRANT, LESSEE OR PERMITTEE, within fifteen days after service of the complaint and notice of a hearing, to appear by filing with the director an answer to the complaint. Failure of the licensee, REGISTRANT, LESSEE OR PERMITTEE to answer may be deemed an admission by the licensee, REGISTRANT, LESSEE OR PERMITTEE of commission of the act charged in the complaint. The director may then vacate the hearing and impose any sanction provided by this article. The director may waive any sanction for good cause shown, including excusable neglect. With respect to any violation of this title or any rule adopted pursuant to this title that is based on the act or omission of a licensee's, REGISTRANT'S, LESSEE'S OR PERMITTEE'S employee, the director shall consider evidence of mitigation presented by the licensee, REGISTRANT, LESSEE OR PERMITTEE and established by a preponderance of the evidence that the employee acted intentionally and in violation of the express direction or policy adopted by the licensee, REGISTRANT, LESSEE OR PERMITTEE and communicated to the employee and that the employee successfully completed training in a course approved by the director pursuant to section 4-112, subsection G, paragraph 2. The director may set the hearing before the director or an administrative law judge on any of the grounds stated in subsection A of this section. Instead of issuing a complaint, the director may provide for informal disposition of the matter by consent agreement or may issue a written warning to the licensee, REGISTRANT, LESSEE OR PERMITTEE. If a warning is issued, the licensee, REGISTRANT, LESSEE OR PERMITTEE may reply in writing and the director shall keep a record of the warning and the reply.
H. A hearing shall conform to the requirements of title 41, chapter 6, article 10. At the hearing an attorney or corporate officer or employee of a corporation may represent the corporation. The revoking, suspending or refusing to renew a license, REGISTRATION, LEASE OR PERMIT for unpaid taxes, penalties or interest pursuant to subsection A, paragraph 5 of this section is a contested case with the department of revenue pursuant to section 42-1251.01.
I. The expiration, cancellation, revocation, reversion, surrender, acceptance of surrender or termination in any other manner of a license, REGISTRATION, LEASE OR PERMIT does not prevent the initiation or completion of a disciplinary proceeding pursuant to this section against the licensee, REGISTRANT, LESSEE OR PERMITTEE or license, REGISTRATION, LEASE OR PERMIT. An order issued pursuant to a disciplinary proceeding against a license, REGISTRATION, LEASE OR PERMIT is enforceable against other licenses, REGISTRATIONS, LEASES OR PERMITS or subsequent licenses, REGISTRATIONS, LEASES OR PERMITS in which the licensee, REGISTRANT, LESSEE, PERMITTEE or controlling person of the license, REGISTRATION, LEASE OR PERMIT has a controlling interest.
J. The department shall provide the same notice as is provided to the licensee, REGISTRANT, LESSEE OR PERMITTEE to a lienholder, which has provided a document under section 4-112, subsection B, paragraph 3, of all disciplinary or compliance action with respect to a license, REGISTRATION, LEASE OR PERMIT issued pursuant to this title. The state is not liable for damages for any failure to provide any notice pursuant to this subsection.
K. In any disciplinary action pursuant to this title, a lienholder may participate in the determination of the action. The director shall consider mitigation on behalf of the lienholder if the lienholder proves all of the following by a preponderance of the evidence:
1. That the lienholder's interest is a bona fide security interest. For the purposes of this paragraph, "bona fide security interest" means the lienholder provides actual consideration to the licensee, REGISTRANT, LESSEE OR PERMITTEE or the licensee's, REGISTRANT'S, LESSEE'S OR PERMITTEE'S predecessor in interest in exchange for the lienholder's interest. Bona fide security interest includes a lien taken by the seller of a license, REGISTRATION, LEASE OR PERMIT as security for the seller's receipt of all or part of the purchase price of the license, REGISTRATION, LEASE OR PERMIT.
2. That a statement of legal or equitable interest was filed with the department before the alleged conduct occurred that is the basis for the action against the license, REGISTRATION, LEASE OR PERMIT.
3. That the lienholder took reasonable steps to correct the licensee's, REGISTRANT'S, LESSEE'S OR PERMITTEE'S prior actions, if any, or initiated an action pursuant to available contract rights against the licensee, REGISTRANT, LESSEE OR PERMITTEE for the forfeiture of the license, REGISTRATION, LEASE OR PERMIT after being provided with notice by the department of disciplinary action as provided in subsection J of this section.
4. That the lienholder was free of responsibility for the conduct that is the basis for the proposed revocation.
5. That the lienholder reasonably attempted to remain informed by the licensee, REGISTRANT, LESSEE OR PERMITTEE about the business's conduct.
L. If the director decides not to revoke the license, REGISTRATION, LEASE OR PERMIT based on the circumstances provided in subsection K of this section, the director may issue an order requiring either, or both, of the following:
1. The forfeiture of all interest of the licensee, REGISTRANT, LESSEE OR PERMITTEE in the license, REGISTRATION, LEASE OR PERMIT.
2. The lienholder to pay any civil monetary penalty imposed on the licensee, REGISTRANT, LESSEE OR PERMITTEE.
M. If any on-sale licensee proposes to provide large capacity entertainment events or sporting events with an attendance capacity exceeding a limit established by the director, the director may request a security plan from the licensee that may include trained security officers, lighting and other requirements. This subsection exclusively prescribes the security requirements for a licensee and does not create any civil liability for the this state, its agencies, agents or employees or a person licensed under this title or agents or employees of a licensee.
N. The director may consider as a mitigating factor or defense to a complaint against a licensee for a violation of subsection A, paragraph 10 or 14 of this section that the licensee acted reasonably, responsibly and as expeditiously as possible by asking for intervention by a peace officer to prevent or to break up a riot, a fight, an altercation or tumultuous conduct."
Renumber to conform
Page 25, line 17, after "and" insert "A registration pursuant to"
Line 18, strike "e" insert "G"
Line 20, after "licensee" insert "or registrant"
Strike lines 24 through 26, insert:
"b. the director may require a licensee or registrant to pay a civil penalty assessed pursuant to subsection a of this section in a single payment or in installment payments."
Line 28, after "licensee" insert "or registrant"
Between lines 29 and 30, insert:
"Sec. 11. Section 4-226, Arizona Revised Statutes, is amended to read:
4-226. Exemptions
The provisions of This title do does not apply to the following:
1. Drugstores selling spirituous liquors only on prescription.
2. Any confectionery candy containing less than five per cent percent by weight of alcohol.
3. Ethyl alcohol intended for use or used for the following purposes:
(a) Scientific, chemical, mechanical, industrial and medicinal purposes. For the purposes of this paragraph, medicinal purposes does do not include ethyl alcohol or spirituous liquor that contains marijuana or usable marijuana as defined in section 36-2801.
(b) Use By those authorized to procure spirituous liquor or ethyl alcohol tax-free, as provided by the acts of Congress and regulations promulgated thereunder under the acts of congress.
(c) In the manufacture of denatured alcohol produced and used as provided by the acts of Congress and regulations promulgated thereunder under the acts of congress.
(d) In the manufacture of patented, patent, proprietary, medicinal, pharmaceutical, antiseptic, toilet, scientific, chemical, mechanical and industrial preparations or products, unfit and not used for beverage purposes.
(e) In the manufacture of flavoring extracts and syrups unfit for beverage purposes.
4. The purchase, storage, distribution, service or consumption of wine in connection with the bona fide practice of a religious belief or as an integral part of a religious exercise by a church recognized by the United States internal revenue service under section 501(c)(3) of the internal revenue code and in a manner not dangerous to public health or safety. This exemption does not apply to any alleged violation of section 4-244, paragraph 9, 34, 35 or 41.
5. Beer produced for personal or family use that is not for sale. The beer may be removed from the premises where it was made and exhibited at organized affairs, exhibitions or competitions such as homebrewers' contests, tasting or judging.
6. the manufacture or sale of bitters products that have been classified and approved as a nonbeverage product or unfit for beverage purposes by the united states alcohol and tobacco tax and trade bureau. this paragraph is consistent with the classification guidelines as established and administered by the united states alcohol and tobacco tax and trade bureau."
Renumber to conform
Page 28, line 11, after "retailer" insert "or an alcohol delivery contractor"
Page 32, line 9, after "bar" insert "or liquor store"
Line 10, after "that" insert "leases the privilege to sell mixed cocktails for consumption off the licensed premises pursuant to section 4-203.06 or"; after "to" insert "section 4-203.07 and"; strike "J" insert "k"
Line 16, after "premises" insert "of the bar, liquor store or restaurant"
Page 32, line 17, strike "sealed" insert "tamper proof sealed by the licensee or the licensee's employee"
Line 19, after "bar's" insert ", liquor store's"
Line 23, strike "food" insert "menu food items"
Page 34, after line 10, insert:
"Sec. 13. Severability clause
If a provision of this act or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the act that can be given effect without the invalid provisions or application, and to this end the provisions of this act are severable.
Sec. 14. Effective date
Sections 4-101, 4-203, 4-205.02, 4-206.01, 4-209, 4-210, 4-210.01 and 4-244, Arizona Revised Statutes, as amended by this act, and sections 4-203.06, 4-203.07 and 4-205.13, Arizona Revised Statutes, as added by this act, are effective from and after September 30, 2021.
Sec. 15. Retroactivity
Section 4-226, Arizona Revised Statutes, as amended by this act, applies retroactively to July 1, 2020."
Amend title to conform