HB2773 - 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 that consists of 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 records 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. "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. "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. "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. "Legal drinking age" means twenty-one years of age or older.

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

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

23. "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. "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.

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.

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.

25. 27. "Off-sale retailer" means any person operating that operates a bona fide regularly established retail liquor store selling spirituous liquors, wines and beer, and any established retail store selling that sells commodities other than spirituous liquors and 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. 28. "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. 29. "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. 30. "Person" includes a partnership, limited liability company, association, company or corporation, as well as a natural person.

29. 31. "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.

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.

30. 33. "Registered mail" includes certified mail.

31. 34. "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. 35. "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.

33. 36. "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. 37. "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.

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.

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

36. 40. "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. 41. "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. 42. "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. 43. "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 4-203, Arizona Revised Statutes, is amended to read:

START_STATUTE4-203. Licenses; issuance; transfer; reversion to state

A. A spirituous liquor license shall be issued only after satisfactory showing of the capability, qualifications and reliability of the applicant and, with the exception of wholesaler, producer, government or club licenses, that the public convenience requires and that the best interest of the community will be substantially served by the issuance. If an application is filed for the issuance of a transferable or nontransferable license, other than for a craft distiller license, a microbrewery license or a farm winery license, for a location that on the date the application is filed has a valid license of the same series, or in the case of a restaurant license application filed for a location with a valid hotel-motel license, issued at that location, there shall be a rebuttable presumption that the public convenience and best interest of the community at that location was established at the time the location was previously licensed. The presumption may be rebutted by competent contrary evidence. The presumption shall not apply once the licensed location has not been in use for more than one hundred eighty days and the presumption shall not extend to the personal qualifications of the applicant.

B. The license shall be to manufacture, sell or deal in spirituous liquors only at the place and in the manner provided in the license. A separate license shall be issued for each specific business, and each shall specify:

1. The particular spirituous liquors that the licensee is authorized to manufacture, sell or deal in.

2. The place of business for which issued.

3. The purpose for which the liquors may be manufactured or sold.

C. A spirituous liquor license issued to a bar, a liquor store or a beer and wine bar shall be transferable as to any permitted location within the same county, if the transfer meets the requirements of an original application. A spirituous liquor license may be transferred to a person qualified to be a licensee, if the transfer is pursuant to either judicial decree, nonjudicial foreclosure of a legal or equitable lien, including security interests held by financial institutions pursuant to section 4-205.05, a sale of the license, a bona fide sale of the entire business and stock in trade, or other bona fide transactions that are provided for by rule. Any change in ownership of the business of a licensee, directly or indirectly, as defined by rule is deemed a transfer, except that there is no transfer if a new artificial person is added to the ownership of a licensee's business but the controlling persons remain identical to the controlling persons that have been previously disclosed to the director as part of the licensee's existing ownership.

D. All applications for a new license pursuant to section 4-201 or for a transfer to a new location pursuant to subsection C of this section shall be filed with and determined by the director, except when the governing body of the city or town or the board of supervisors receiving an application pursuant to section 4-201 orders disapproval of the application or when the director, the state liquor board or any aggrieved party requests a hearing. The application shall then be presented to the state liquor board, and the new license or transfer shall not become effective unless approved by the state liquor board.

E. A person who assigns, surrenders, transfers or sells control of a liquor license or business that has a spirituous liquor license shall notify the director within thirty business days after the assignment, surrender, transfer or sale. A spirituous liquor license shall not be leased or subleased. A concession agreement entered into under section 4-205.03 is not considered a lease or sublease in violation of this section.

F. If a person other than those persons originally licensed acquires control over a license or licensee, the person shall file notice of the acquisition with the director within thirty business days after the acquisition of control and a list of officers, directors or other controlling persons on a form prescribed by the director. There is no acquisition of control if a new person is added to the ownership of a licensee's business but the controlling persons remain identical to the controlling persons that have been previously disclosed to the director as part of the licensee's existing ownership. All officers, directors or other controlling persons shall meet the qualifications for licensure as prescribed by this title. On request, the director shall conduct a preinvestigation before the assignment, sale or transfer of control of a license or licensee, the reasonable costs of which, not more than $1,000, shall be borne by the applicant. The preinvestigation shall determine whether the qualifications for licensure as prescribed by this title are met. On receipt of notice of an acquisition of control or request of a preinvestigation, the director, within fifteen days after receipt, shall forward the notice of the acquisition of control to the local governing body of the city or town, if the licensed premises is in an incorporated area, or the county, if the licensed premises is in an unincorporated area. The director shall include in the notice to the local governing body written instructions on how the local governing body may examine, free of charge, the results of the department's investigation regarding the capabilities, qualifications and reliability of all officers, directors or other controlling persons listed in the application for acquisition of control. The local governing body, or the governing body's designee, may provide the director with a recommendation, either in favor of or against the acquisition of control, within sixty days after the director mails the notice, but section 4-201 does not apply to the acquisition of control provided for in this section. A local governing body may charge not more than one fee, regardless of the number of licenses held by the applicant, for review of one or more applications for acquisition of control submitted to the department at the same time and for the same entity. Within one hundred five days after filing the notice of the acquisition of control, the director shall determine whether the applicant is qualified, capable and reliable for licensure. A recommendation by the local governing body, or the governing body's designee, against the acquisition of control or denial by the director shall be set for a hearing before the board. The person who has acquired control of a license or licensee has the burden of an original application at the hearing, and the board shall make its determination pursuant to section 4-202 and this section with respect to capability, reliability and qualification.

G. A licensee who holds a license in nonuse status for more than five months shall be required to pay a $100 surcharge for each month thereafter. The surcharge shall be paid at the time the license is returned to active status. A license automatically reverts to the state after being held in continuous nonuse for more than thirty-six months. The director may waive the surcharge and may extend the time period provided in this subsection for good cause if the licensee files a written request for an extension of time to place the license in active status before the date of the automatic reversion. A license shall not be deemed to have gone into active status if the license is transferred to a location that at the time of or immediately before the transfer had an active license of the same type, unless the licenses are under common ownership or control.

H. A restructuring of a licensee's business is not an acquisition of control, a transfer of a spirituous liquor license or the issuance of a new spirituous liquor license if both of the following apply:

1. All of the controlling persons of the licensee and the new business entity are identical.

2. There is no change in control or beneficial ownership.

I. If subsection H of this section applies, the licensee's history of violations of this title is the history of the new business entity. The director may prescribe a form and shall require the applicant to provide the necessary information to ensure compliance with this subsection and subsections F and G of this section.

J. Notwithstanding subsection B of this section, the holder of a retail license in this state having off-sale privileges, except a bar, beer and wine bar or restaurant licensee, may take orders by telephone, mail, fax, or catalog, through the internet or by other means for the sale and delivery of spirituous liquor off of the licensed premises to a person in this state in connection with the sale of spirituous liquor. Notwithstanding the definition of "sell" prescribed in section 4-101, the placement of an order and payment pursuant to this section is not a sale until delivery has been made. At the time that the order is placed, the licensee shall inform the purchaser that state law requires a purchaser of spirituous liquor to be at least twenty-one years of age and that the person accepting delivery of the spirituous liquor is required to comply with this state's age identification requirements as prescribed in section 4-241, subsections A and K. The licensee may maintain a delivery service and may contract with one or more independent contractors, that may also contract with one or more independent contractors, or may contract with a common carrier for delivery of spirituous liquor if the spirituous liquor is loaded for delivery at the premises of the retail licensee in this state and delivered in this state. All containers of spirituous liquor delivered pursuant to this subsection shall be conspicuously labeled with the words "contains alcohol, signature of person who is twenty-one years of age or older is required for delivery". The licensee is responsible for any violation of this title or any rule adopted pursuant to this title that is committed in connection with any sale or delivery of spirituous liquor. Delivery must be made by an employee of the licensee or other authorized person as provided by this section who is at least twenty-one years of age to a customer who is at least twenty-one years of age and who displays an identification at the time of delivery that complies with section 4-241, subsection K. The retail licensee shall collect payment for the full price of the spirituous liquor from the purchaser before the product leaves the licensed premises. The director shall adopt rules that set operational limits for the delivery of spirituous liquors by the holder of a retail license having off-sale privileges. With respect to the delivery of spirituous liquor, for 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 employee or other authorized person, the mitigation provisions provision of section 4-210, subsection G apply applies, with the exception of the training requirement. For the purposes of this subsection and notwithstanding the definition of "sell" prescribed in section 4-101, section 4-241, subsections A and K apply only at the time of delivery. For the purposes of compliance with this subsection, an independent contractor, a subcontractor of an independent contractor, the employee of an independent contractor or the employee of a subcontractor is deemed to be acting on behalf of the licensee when making a delivery of spirituous liquor for the licensee.

K. Except as provided in subsection J of this section, Arizona licensees may transport spirituous liquors for themselves in vehicles owned, leased or rented by the licensee.

L. Notwithstanding subsection B of this section, an off-sale retail licensee may provide consumer tasting of wines off of the licensed premises subject to all applicable provisions of section 4-206.01.

M. The director may adopt reasonable rules to protect the public interest and prevent abuse by licensees of the activities permitted such licensees by subsections J and L of this section.

N. Failure to pay any surcharge prescribed by subsection G of this section or failure to report the period of nonuse of a license shall be grounds for revocation of the license or grounds for any other sanction provided by this title. The director may consider extenuating circumstances if control of the license is acquired by another party in determining whether or not to impose any sanctions under this subsection.

O. If a licensed location has not been in use for three years, the location must requalify for a license pursuant to subsection A of this section and shall meet the same qualifications required for issuance of a new license except when the director deems that the nonuse of the location was due to circumstances beyond the licensee's control and an extension of time has been granted pursuant to subsection G of this section.

P. If the licensee's interest is forfeited pursuant to section 4-210, subsection L, the location shall requalify for a license pursuant to subsection A of this section and shall meet the same qualifications required for issuance of a new license except when a bona fide lienholder demonstrates mitigation pursuant to section 4-210, subsection K.

Q. The director may implement a procedure for the issuance of a license with a licensing period of two years.

R. For any sale of a farm winery or craft distiller or change in ownership of a farm winery or craft distiller directly or indirectly, the business, stock-in-trade and spirituous liquor may be transferred with the ownership, in compliance with the applicable requirements of this title. END_STATUTE

s. notwithstanding subsection b of this section, bar, beer and wine bar, liquor store, beer and wine store or restaurant licensees in this state may take orders by telephone, mail, fax or catalog, through the internet or by other means for the sale and delivery of spirituous liquor off the licensed premises as follows:

1. bar licensees for beer, wine, distilled spirits and mixed cocktails.

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.

5. restaurant licensees for any of the following:

(a) mixed cocktails, with the sale of menu food items for consumption on or off the licensed premises, if the restaurant holds a permit issued pursuant to section 4-205.02, subsection k and section 4-203.07 or A lease pursuant to section 4-203.06.

(b) Beer if the restaurant holds a permit issued pursuant to section 4-205.02, subsection H.

(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.

t. Notwithstanding the definition of "sell" prescribed in section 4-101, placing an order and paying for that order pursuant to subsection s of this section is not a sale until delivery has been made. At the time that the order is placed, the licensee shall inform the purchaser that state law requires a purchaser of spirituous liquor to be at least twenty-one years of age and that the person accepting delivery of the spirituous liquor is required to comply with this state's age identification requirements as prescribed in section 4-241, subsections A and K. The licensee may maintain a delivery service and may contract with one or more alcohol delivery contractors registered pursuant to section 4-205.13 for delivery of spirituous liquor if the spirituous liquor is 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 loaded for delivery at the premises of the restaurant, beer and wine bar, liquor store, beer and wine store or bar licensee in this state and delivered in this state on the same business day. 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. All containers of spirituous liquor delivered pursuant to subsection s of this section shall be tamper proof sealed and conspicuously labeled with the words "contains alcohol, signature of person who is twenty-one years of age or older is required for delivery". The licensee is responsible for any violation of this title or any rule adopted pursuant to this title that is committed in connection with any sale or delivery of spirituous liquor. Delivery must be made by an employee of the licensee or an employee or authorized independent contractor of a registered alcohol delivery contractor as provided by this section who is at least twenty-one years of age and delivery must be made to a customer who is at least twenty-one years of age and who displays an identification at the time of delivery that complies with section 4-241, subsection K. The restaurant, beer and wine bar, liquor store, beer and wine store or bar licensee shall collect payment for the full price of the spirituous liquor from the purchaser before the product leaves the licensed premises. The director shall adopt rules that set operational limits for the delivery of spirituous liquor pursuant to this subsection and subsection s of this section With respect to the delivery of spirituous liquor. for 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 employee or a registered alcohol delivery contractor, the mitigation provision of section 4-210, subsection G applies, with the exception of the training requirement. For the purposes of this subsection and notwithstanding the definition of "sell" prescribed in section 4-101, section 4-241, subsections A and K apply only at the time of delivery. 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. END_STATUTE

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:

START_STATUTE4-203.06. 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.

(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. END_STATUTE

START_STATUTE4-203.07. 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.

(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.

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, 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. END_STATUTE

Sec. 4. Delayed repeal

Section 4-203.06, Arizona Revised Statutes, as added by this act, is repealed from and after December 31, 2025.

Sec. 5. Section 4-205.02, Arizona Revised Statutes, is amended to read:

START_STATUTE4-205.02. Restaurant license; issuance; regulatory provisions; expiration; off-sale permit; fee; 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 31. 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. 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).

K. NOTWITHSTANDING SECTION 4-207, beginning january 1, 2026, A restaurant applicant or licensee may apply for a permit to allow the sale of mixed cocktails for consumption off the licensed premises pursuant to section 4-203.07 and section 4-244, paragraph 32, subdivision (d), on a form prescribed and furnished by the director. the sale of mixed cocktails for consumption off the licensed premises must be accompanied by the sale of menu food items for consumption on or off the licensed premises. The department shall issue the permit only after the director has determined that the public convenience requires and that the best interest of the community will be substantially served by issuing the permit. All permit holders and their employees, managers and agents must complete alcohol training pursuant to section 4-112, subsection g, paragraph 2. After the department issues the permit, the permit shall be noted on the license itself and in the records of the department. The director may establish and charge a fee for processing the permit application and a renewal fee.

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.

J. M. For the purposes of this section:

1. "Gross revenue":

(a) 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.

(b) Includes revenue derived from spirituous liquor sold for off-sale consumption.

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. 6. Title 4, chapter 2, article 1, Arizona Revised Statutes, is amended by adding section 4-205.13, to read:

START_STATUTE4-205.13. 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. END_STATUTE

Sec. 7. Section 4-206.01, Arizona Revised Statutes, is amended to read:

START_STATUTE4-206.01. Bar, beer and wine bar or liquor store licenses; number permitted; fee; sampling privileges; off-sale permit

A. The director shall determine the total number of spirituous liquor licenses by type and in each county. The director shall publish a listing of that information as determined by the director.

B. In each county, the director, each year, shall issue additional bar or liquor store licenses at the rate of one of each type for each additional ten thousand person increase over the population in that county as of July 1, 2010. For every license that has been revoked or reverted in any county, the director may issue a new license of the same series in the same county, except that if there are more than five licenses of a particular class, the director may issue five new licenses plus an additional number of new licenses equivalent to twenty percent of the difference between the number of revoked or reverted licenses per year and five. The director may waive the issuance of licenses in a county for one year where there has been no request made to the department for the issuance of a new license of that series. For the purposes of this subsection, the population of a county is deemed to be the population estimated by the office of economic opportunity as of July 1 of each year.

C. In each county, the director, each year, shall issue additional beer and wine bar licenses at the rate of one for each additional five thousand person increase over the population in that county as of July 1, 2010. Beginning January 1, 2022, in each county, the director, each year, shall issue additional beer and wine bar licenses at the rate of one for each additional ten thousand person increase over the population in that county as of July 1, 2010. For every license that has been revoked or reverted in any county, the director may issue a new license of the same series in the same county, except that if there are more than five licenses of a particular class, the director may issue five new licenses plus an additional number of new licenses equivalent to twenty percent of the difference between the number of revoked or reverted licenses per year and five. The director may waive the issuance of licenses in a county for one year if there has been no request made to the department for the issuance of a new license of that series. For the purposes of this subsection, the population of a county is deemed to be the population estimated as of July 1 of each year by the office of economic opportunity.

D. A person issued a license authorized by subsection B or C of this section shall pay an additional issuance fee equal to the license's fair market value that shall be paid to the state general fund. An appraisal shall be conducted to determine the fair market value of that license type in a specific county. The fair market value is defined to mean the price arrived at in good faith that a knowledgeable and willing buyer will pay and is computed by determining the average value, or weighted average value if there are trends in license pricing in that county, of licenses of the same type, free of any encumbrances, sold on the open market in the same county during the prior twelve months, but if there are not three or more sales then the fair market value is determined by two appraisals furnished to the department by independent professional appraisers employed by the director. The valuation method under both approaches shall take into account trends in the value of licenses of the specific type during the previous twelve months. A new license authorized pursuant to subsection B or C of this section may not be issued to a person or entity that has had a similar license revoked or reverted unless the person or entity provides the director with satisfactory proof that all previous liens on the revoked or reverted license have been satisfied in full.

E. The director shall employ professional appraisal services to determine the fair market value of bar, beer and wine bar or liquor store licenses.

F. If more than one person applies for an available license, a priority of applicants shall be determined by a random selection method prescribed by the director, except that the number of times that a person may enter the random selection process shall not exceed the number of licenses of that series that are available for issuance. For the purposes of this subsection, a partnership, limited liability company, association, company or corporation is considered the same person if it is owned, managed, operated or controlled by the same controlling person.

G. Bar licenses and beer and wine bar licenses shall be issued and used only if the clear primary purpose and actual primary use is for on-sale retailer privileges. The off-sale privileges associated with a bar license and a beer and wine bar license shall be limited to use, which is clearly auxiliary to the active primary on-sale privilege. A bar license or a beer and wine bar license shall not be issued or used if the associated off-sale use, by total retail spirituous liquor sales, exceeds thirty percent of the sales price of on-sale spirituous liquors by the licensee at that location. For dual licenses issued pursuant to a single site or where a second license is issued to a site that already has a spirituous liquor license, other than settlement licenses issued as provided by law, the applicant has the burden of establishing that public convenience and the best interest of the community will be served by the issuance of the license.

H. The director may issue a beer and wine store license to the holder of a beer and wine bar license simultaneously at the same premises. An applicant for a beer and wine bar license and a beer and wine store license may consolidate the application and may apply for both licenses at the same time. The holder of each license shall fully comply with this title. A beer and wine bar license and beer and wine store license on the same premises shall be owned by and issued to the same licensee.

I. The director may issue a beer and wine bar license to the holder of a liquor store license issued simultaneously at the same premises. An applicant for a liquor store license and a beer and wine bar license may consolidate the application and may apply for both licenses at the same time. The holder of each license shall fully comply with this title. A liquor store license and a beer and wine bar license on the same premises shall be owned by and issued to the same licensee.

J. The director may issue a restaurant license to the holder of a beer and wine bar license issued simultaneously at the same premises. An applicant for a restaurant license and a beer and wine bar license may consolidate the application and may apply for both licenses at the same time. The holder of each license shall fully comply with this title. A restaurant license and a beer and wine bar license on the same premises shall be owned by and issued to the same licensee. The limitation stated in subsection G of this section with respect to the off-sale privileges of the beer and wine bar licenses shall be measured against the on-sales of beer and wine sales of the establishment. For the purposes of compliance with section 4-205.02, subsection J M, paragraph 2, it shall be conclusively presumed that all on-premises sales of spirituous liquors are made under the authority of the restaurant license.

K. An applicant for a liquor store license or a beer and wine store license and the licensee of a liquor store license or a beer and wine store license may apply for sampling privileges associated with the license. Beer and wine store premises containing less than five thousand square feet must dedicate at least seventy-five percent of retail shelf space to the sale of spirituous liquor in order to be eligible for sampling privileges. A person desiring a sampling privilege associated with a liquor store license shall apply to the director on a form prescribed and furnished by the director. The application for sampling privileges may be filed for an existing license or may be submitted with an initial license application. The request for sampling approval, the review of the application and the issuance of approval shall be conducted under the same procedures for the issuance of a spirituous liquor license prescribed in section 4-201. After a sampling privilege has been issued for a liquor store license or a beer and wine store license, the sampling privilege shall be noted on the license itself and in the records of the department. The sampling rights associated with a license are not transferable. The director may charge a fee for processing each application for sampling privileges and a renewal fee as provided in this section. A city or town shall not charge any fee relating to the issuance or renewal of a sampling privilege. Notwithstanding section 4-244, paragraph 19, a liquor store licensee or a beer and wine store licensee that holds a license with sampling privileges may provide spirituous liquor sampling subject to the following requirements:

1. Any open product shall be kept locked by the licensee when the sampling area is not staffed.

2. The licensee is otherwise subject to all other provisions of this title. The licensee is liable for any violation of this title committed in connection with the sampling.

3. The licensed retailer shall make sales of sampled products from the licensed retail premises.

4. The licensee shall not charge any customer for the sampling of any products, except that the licensee may charge a fee for bona fide educational classes conducted in a classroom by an instructor on the licensed premises where the sampling of any spirituous liquor product is incidental to the course taught and to the course materials presented.

5. The sampling shall be conducted under the supervision of an employee of a sponsoring distiller, vintner, brewer, wholesaler or retail licensee.

6. Accurate records of sampling products dispensed shall be retained by the licensee.

7. Sampling shall be limited to three ounces of beer or cooler-type products, one and one-half ounces of wine and one ounce of distilled spirits per person, per brand, per day.

8. The sampling shall be conducted only on the licensed premises.

L. If a beer and wine bar license and a beer and wine store license are issued at the same premises, for the purposes of reporting liquor purchases under each license, all spirituous beverages purchased for sampling are conclusively presumed to be purchased under the beer and wine bar license and all spirituous liquor sold off-sale are conclusively presumed to be purchased under the beer and wine store license.

M. The director may issue a beer and wine store license to the holder of a bar license simultaneously at the same premises. An applicant for a beer and wine store license and a bar license may consolidate the application and may apply for both licenses at the same time. The holder of each license shall fully comply with this title. A beer and wine store license and a bar license on the same premises shall be owned by and issued to the same licensee. If a beer and wine store license and a bar license are issued at the same premises, for purposes of reporting liquor purchases under each license, all off-sale beer and wine sales are conclusively presumed to be purchased under the beer and wine store license. END_STATUTE

Sec. 8. Section 4-209, Arizona Revised Statutes, is amended to read:

START_STATUTE4-209. Fees for license, application, issuance, renewal and transfer; late renewal penalty; seasonal operation; surcharges

A. A fee shall accompany an application for an original license or transfer of a license, or in case of renewal, shall be paid in advance. Every license expires annually, except that a license may be renewed for a two-year period pursuant to subsection M of this section if no compliance penalties have been issued to that location during the year before the renewal. A licensee who fails to renew the license on or before the due date shall pay a penalty of one hundred fifty dollars $150, which the licensee shall pay with the renewal fee. A license renewal that is deposited, properly addressed and postage prepaid in an official depository of the United States mail on or before the due date shall be deemed filed and received by the department on the date shown by the postmark or other official mark of the United States postal service stamped on the envelope. If the due date falls on a Saturday, Sunday or other legal holiday, the renewal shall be considered timely if it is received by the department on the next business day. The director may waive a late renewal penalty if good cause is shown by the licensee. A licensee who fails to renew the license on or before the due date may not sell, purchase or otherwise deal in spirituous liquor until the license is renewed. A license that is not renewed within sixty days after the due date is deemed terminated. The director may renew the terminated license if good cause is shown by the licensee. except an application fee for a permit pursuant to section 4-203.07 and section 4-205.02, subsection k and leases pursuant to sections 4-203.06 and 4-203.07, an application fee for an original license or the transfer of a license shall be one hundred dollars $100, which shall be retained by this state.

B. Issuance fees for original licenses shall be:

1. For an in-state producer's license, to manufacture or produce spirituous liquor in this state, one thousand five hundred dollars $1,500.

2. Except as provided in paragraph 15 of this subsection, for an out-of-state producer's, exporter's, importer's or rectifier's license, two hundred dollars $200.

3. For a microbrewery license, three hundred dollars $300.

4. For a wholesaler's license, to sell spirituous liquors, one thousand five hundred dollars $1,500.

5. For a government license issued in the name of a state agency, state commission, state board, county, city, town, community college or state university or the national guard, one hundred dollars $100.

6. For a bar license, which is an on-sale retailer's license to sell all spirituous liquors primarily by individual portions and in the original containers, one thousand five hundred dollars $1,500.

7. For a beer and wine bar license, which is an on-sale retailer's license to sell beer and wine primarily by individual portions and in the original containers, one thousand five hundred dollars $1,500.

8. For a conveyance license issued to an operating railroad company, to sell all spirituous liquors in individual portions or in the original containers on all passenger trains operated by the railroad company, or to an operating airline company, to sell or serve spirituous liquors solely in individual portions on all passenger planes operated by the airline company, or to a boat operating in the waters of this state, to sell all spirituous liquors in individual portions or in the original containers for consumption on the boat, one thousand five hundred dollars $1,500.

9. For a liquor store license, which is an off-sale retailer's license to sell all spirituous liquors, one thousand five hundred dollars $1,500.

10. For a beer and wine store license, which is an off-sale retailer's license to sell beer and wine, one thousand five hundred dollars $1,500.

11. For a hotel-motel license issued as such, to sell and serve spirituous liquors solely for consumption on the licensed premises of the hotel or motel, one thousand five hundred dollars $1,500.

12. For a restaurant license issued as such, to sell and serve spirituous liquors solely for consumption on the licensed premises of the restaurant, one thousand five hundred dollars $1,500. For a permit issued under section 4-205.02, subsection H allowing for the sale of beer for the consumption off the licensed premises pursuant to section 4-244, paragraph 32, subdivision (c), the director may charge a fee. for an application for a permit pursuant to section 4-203.07 and section 4-205.02, subsection K, the director may charge a fee. the director may establish and charge fees for lease applications pursuant to sections 4-203.06 and 4-203.07.

13. For a farm winery license, one hundred dollars $100. The director may charge a licensed farm winery a fee pursuant to section 4-205.04, subsection L.

14. For a club license issued in the name of a bona fide club qualified under this title to sell all spirituous liquors on-sale, one thousand dollars $1,000.

15. For an out-of-state winery that sells not more than two hundred forty gallons of wine in this state in a calendar year, twenty-five dollars $25.

16. The department may charge a fee for a craft distiller license.

17. The department may charge a fee for registering an alcohol delivery contractor pursuant to section 4-205.13.

C. The department may issue licenses with staggered renewal dates to distribute the renewal workload as uniformly as practicable throughout the twelve months of the calendar year. If a license is issued less than six months before the scheduled renewal date of the license, as provided by the department's staggered license renewal system, one-half of the annual license fee shall be charged.

D. The annual fees for licenses shall be:

1. For an in-state producer's license, to manufacture or produce spirituous liquors in this state, three hundred fifty dollars $350.

2. Except as provided in paragraph 15 of this subsection, for an out-of-state producer's, exporter's, importer's or rectifier's license, fifty dollars $50.

3. For a microbrewery license, three hundred dollars $300.

4. For a wholesaler's license, to sell spirituous liquors, two hundred fifty dollars $250.

5. For a government license issued to a county, city or town, community college or state university or the national guard, one hundred dollars $100.

6. For a bar license, which is an on-sale retailer's license to sell all spirituous liquors primarily by individual portions and in the original containers, one hundred fifty dollars $150.

7. For a beer and wine bar license, which is an on-sale retailer's license to sell beer and wine primarily by individual portions and in the original containers, seventy-five dollars $75.

8. For a conveyance license issued to an operating railroad company, to sell all spirituous liquors in individual portions or in the original containers on all passenger trains operated by the railroad company, or to an operating airline company, to sell or serve spirituous liquors solely in individual portions on all passenger planes operated by the airline company, or to a boat operating in the waters of this state, to sell all spirituous liquor in individual portions or in the original containers for consumption on the boat, two hundred twenty-five dollars $225.

9. For a liquor store license, which is an off-sale retailer's license to sell all spirituous liquors, fifty dollars $50.

10. For a beer and wine store license, which is an off-sale retailer's license to sell beer and wine, fifty dollars $50.

11. For a hotel-motel license issued as such, to sell and serve spirituous liquors solely for consumption on the licensed premises of the hotel or motel, five hundred dollars $500.

12. For a restaurant license issued as such, to sell and serve spirituous liquors solely for consumption on the licensed premises of the restaurant, five hundred dollars $500, and for a restaurant license that is permitted allowed to continue operating as a restaurant pursuant to section 4-213, subsection E, an additional amount established by the director. The department shall transfer this amount to the state treasurer for deposit in the state general fund. the director may establish an annual fee for a permit pursuant to section 4-203.07 and section 4-205.02, subsection K. The director may charge annual lease amounts pursuant to sections 4-203.06 and 4-203.07.

13. For a farm winery license, one hundred dollars $100. The director may charge a licensed farm winery an annual fee pursuant to section 4-205.04, subsection L.

14. For a club license issued in the name of a bona fide club qualified under this title to sell all spirituous liquors on-sale, one hundred fifty dollars $150.

15. For an out-of-state winery that sells not more than two hundred forty gallons of wine in this state in a calendar year, twenty-five dollars $25.

16. The director may charge a fee for the annual renewal of a craft distiller license.

17. the department may charge a fee for the annual registration renewal of a registered alcohol delivery contractor pursuant to section 4-205.13.

E. Where the business of an on-sale retail licensee is seasonal, not extending over periods of more than six months in any calendar year, the licensee may designate the periods of operation, and a license may be granted for those periods only, on payment of one-half of the fee prescribed in subsection D of this section.

F. Transfer fees from person to person for licenses transferred pursuant to section 4-203, subsection C shall be three hundred dollars $300.

G. Transfer fees from location to location, as provided for in section 4-203, shall be one hundred dollars $100.

H. Assignment fees for a change of agent, as provided for in section 4-202, subsection A, an acquisition of control, as provided for in section 4-203, subsection F, or a restructuring, as provided for in section 4-203, subsection H, shall be one hundred dollars $100, except that where a licensee holds multiple licenses and requests multiple, simultaneous changes, the change of agent, acquisition of control or restructuring fee for the first license shall be one hundred dollars $100 and the fee for all remaining licenses shall be fifty dollars $50 each, except that the aggregate fees shall not exceed one thousand dollars $1,000 for all change of agents, one thousand dollars $1,000 for all acquisitions of control and one thousand dollars $1,000 for all restructurings.

I. No fee shall be charged by the department for an assignment of a liquor license in probate or an assignment pursuant to the provisions of a will or pursuant to a judicial decree in a domestic relations proceeding that assigns ownership of a business that includes a spirituous liquor license to one of the parties in the proceeding. In the case of nontransferable licenses, no fee shall be charged by the department for the issuance of a license for a licensed business pursuant to a transfer of the business in probate or pursuant to the provisions of a will or pursuant to a judicial decree in a domestic relations proceeding that assigns ownership of the business to one of the parties in the proceeding.

J. The director shall assess a surcharge of thirty dollars $30 on all licenses prescribed in subsection D, paragraphs 6, 7 and 12 of this section. Monies from the surcharge shall be used by the department exclusively for the costs of an auditor and support staff to review compliance by applicants and licensees with the requirements of section 4-205.02, subsection E. The department shall assess the surcharge as part of the annual license renewal fee.

K. The director shall assess a surcharge of thirty-five dollars $35 on all licenses prescribed in this section. Monies from the surcharge shall be used by the department exclusively for the costs of an enforcement program to investigate licensees who have been the subject of multiple complaints to the department. The enforcement program shall respond to complaints against licensees by neighborhood associations, by neighborhood civic groups and from municipal and county governments. The department shall assess the surcharge as part of the annual license renewal fee.

L. The director shall assess a surcharge of twenty dollars $20 on all licenses prescribed in subsection D, paragraphs 11 and 12 of this section and thirty-five dollars $35 on all other licenses prescribed in this section. Monies from the surcharge and from surcharges imposed pursuant to subsection K of this section shall be used by the department exclusively for the costs of a neighborhood association interaction and liquor enforcement management unit. The unit shall respond to complaints from neighborhood associations, neighborhood civic groups and local governing authorities regarding liquor violations. The director shall report the unit's activities and the use of monies from the surcharge or surcharges imposed pursuant to subsection K of this section to the board at each board meeting or as the board may direct.

M. Licenses may be renewed every two years with payment of license fees that are twice the amount designated in subsection D of this section and other applicable fees. Licensees renewing every two years must comply with annual reporting requirements. The director may adopt reasonable rules to permit allow licensees to renew every two years.

N. the department shall use ALL MONIES received FROM application fees for permits ISSUED PURSUANT TO SECTION 4-205.02, SUBSECTION K, leases pursuant to sections 4-203.06 and 4-203.07 and registrations PURSUANT TO SECTION 4-205.13 FOR ADMINISTRATIVE COSTS ASSOCIATED WITH THE PERMIT, registration OR lease AND ENFORCEMENT of this chapter. END_STATUTE

Sec. 9. Section 4-210, Arizona Revised Statutes, is amended to read:

START_STATUTE4-210. 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.END_STATUTE

Sec. 10. Section 4-210.01, Arizona Revised Statutes, is amended to read:

START_STATUTE4-210.01. Authority to impose civil penalty; training

A. In lieu of or in addition to the suspension or revocation of or refusal to renew a license authorized by section 4-210, subsection A and A registration pursuant to section 4-205.13, subsection G, the director may impose a civil penalty of not less than two hundred nor at least $200 and not more than three thousand dollars $3,000 for each violation. The licensee or registrant is entitled to appeal the decision of the director to the board. The board may affirm, modify or reverse the finding and decision of the director and may decrease the civil penalty imposed by the director.

B. The director may establish payment of the civil penalty as authorized in subsection A of this section, by the licensee in the form of a single payment or installment payments.

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.

C. In addition to the imposition of any other penalty authorized by this title, the director may impose a requirement that the licensee or registrant or other person attend a training program approved by the department. END_STATUTE

Sec. 11. Section 4-226, Arizona Revised Statutes, is amended to read:

START_STATUTE4-226. 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. END_STATUTE

Sec. 12. Section 4-244, Arizona Revised Statutes, is amended to read:

START_STATUTE4-244. Unlawful acts

It is unlawful:

1. For a person to buy for resale, sell or deal in spirituous liquors in this state without first having procured a license duly issued by the board, except that the director may issue a temporary permit of any series pursuant to section 4-205.05 to a trustee in bankruptcy to acquire and dispose of the spirituous liquor of a debtor.

2. For a person to sell or deal in alcohol for beverage purposes without first complying with this title.

3. For a distiller, vintner, brewer or wholesaler knowingly to sell, dispose of or give spirituous liquor to any person other than a licensee except in sampling wares as may be necessary in the ordinary course of business, except in donating spirituous liquor to a nonprofit organization that has obtained a special event license for the purpose of charitable fund-raising fundraising activities or except in donating spirituous liquor with a cost to the distiller, brewer or wholesaler of up to $500 in a calendar year to an organization that is exempt from federal income taxes under section 501(c) (3), (4), (6) or (7) of the internal revenue code and not licensed under this title.

4. For a distiller, vintner or brewer to require a wholesaler to offer or grant a discount to a retailer, unless the discount has also been offered and granted to the wholesaler by the distiller, vintner or brewer.

5. For a distiller, vintner or brewer to use a vehicle for trucking or transportation of spirituous liquors unless there is affixed to both sides of the vehicle a sign showing the name and address of the licensee and the type and number of the person's license in letters not less than three and one-half inches in height.

6. For a person to take or solicit orders for spirituous liquors unless the person is a salesman or solicitor of a licensed wholesaler, a salesman or solicitor of a distiller, brewer, vintner, importer or broker or a registered retail agent.

7. For any retail licensee to purchase spirituous liquors from any person other than a solicitor or salesman of a wholesaler licensed in this state.

8. For a retailer to acquire an interest in property owned, occupied or used by a wholesaler in the wholesaler's business, or in a license with respect to the premises of the wholesaler.

9. Except as provided in paragraphs 10 and 11 of this section, for a licensee or other person to sell, furnish, dispose of or give, or cause to be sold, furnished, disposed of or given, to a person under the legal drinking age or for a person under the legal drinking age to buy, receive, have in the person's possession or consume spirituous liquor. This paragraph does not prohibit the employment by an off-sale retailer of persons who are at least sixteen years of age to check out, if supervised by a person on the premises who is at least eighteen years of age, package or carry merchandise, including spirituous liquor, in unbroken packages, for the convenience of the customer of the employer, if the employer sells primarily merchandise other than spirituous liquor.

10. For a licensee to employ a person under eighteen years of age to manufacture, sell or dispose of spirituous liquors. This paragraph does not prohibit the employment by an off-sale retailer of persons who are at least sixteen years of age to check out, if supervised by a person on the premises who is at least eighteen years of age, package or carry merchandise, including spirituous liquor, in unbroken packages, for the convenience of the customer of the employer, if the employer sells primarily merchandise other than spirituous liquor.

11. For an on-sale retailer to employ a person under eighteen years of age in any capacity connected with the handling of spirituous liquors. This paragraph does not prohibit the employment by an on-sale retailer of a person under eighteen years of age who cleans up the tables on the premises for reuse, removes dirty dishes, keeps a ready supply of needed items and helps clean up the premises.

12. For a licensee, when engaged in waiting on or serving customers, to consume spirituous liquor or for a licensee or on-duty employee to be on or about the licensed premises while in an intoxicated or disorderly condition.

13. For an employee of a retail licensee, during that employee's working hours or in connection with such employment, to give to or purchase for any other person, accept a gift of, purchase for the employee or consume spirituous liquor, except that:

(a) An employee of a licensee, during that employee's working hours or in connection with the employment, while the employee is not engaged in waiting on or serving customers, may give spirituous liquor to or purchase spirituous liquor for any other person.

(b) An employee of an on-sale retail licensee, during that employee's working hours or in connection with the employment, while the employee is not engaged in waiting on or serving customers, may taste samples of beer or wine of not more than four ounces per day or distilled spirits of not more than two ounces per day provided by an employee of a wholesaler or distributor who is present at the time of the sampling.

(c) An employee of an on-sale retail licensee, under the supervision of a manager as part of the employee's training and education, while not engaged in waiting on or serving customers may taste samples of distilled spirits of not more than two ounces per educational session or beer or wine of not more than four ounces per educational session, and provided that a licensee does not have more than two educational sessions in any thirty-day period.

(d) An unpaid volunteer who is a bona fide member of a club and who is not engaged in waiting on or serving spirituous liquor to customers may purchase for himself and consume spirituous liquor while participating in a scheduled event at the club. An unpaid participant in a food competition may purchase for himself and consume spirituous liquor while participating in the food competition.

(e) An unpaid volunteer of a special event licensee under section 4-203.02 may purchase and consume spirituous liquor while not engaged in waiting on or serving spirituous liquor to customers at the special event. This subdivision does not apply to an unpaid volunteer whose responsibilities include verification of a person's legal drinking age, security or the operation of any vehicle or heavy machinery.

14. For a licensee or other person to serve, sell or furnish spirituous liquor to a disorderly or obviously intoxicated person, or for a licensee or employee of the licensee to allow or permit a disorderly or obviously intoxicated person to come into or remain on or about the premises, except that a licensee or an employee of the licensee may allow an obviously intoxicated person to remain on the premises for not more than thirty minutes after the state of obvious intoxication is known or should be known to the licensee for a nonintoxicated person to transport the obviously intoxicated person from the premises. For the purposes of this section, "obviously intoxicated" means inebriated to the extent that a person's physical faculties are substantially impaired and the impairment is shown by significantly uncoordinated physical action or significant physical dysfunction that would have been obvious to a reasonable person.

15. For an on-sale or off-sale retailer or an employee of such retailer or an alcohol delivery contractor to sell, dispose of, deliver or give spirituous liquor to a person between the hours of 2:00 a.m. and 6:00 a.m., except that a retailer with off-sale privileges may receive and process orders, accept payment or package, load or otherwise prepare spirituous liquor for delivery at any time, if the actual deliveries to customers are made between the hours of 6:00 a.m. and 2:00 a.m., at which time section 4-241, subsections A and K apply.

16. For a licensee or employee to knowingly permit allow any person on or about the licensed premises to give or furnish any spirituous liquor to any person under twenty-one years of age or knowingly permit allow any person under twenty-one years of age to have in the person's possession spirituous liquor on the licensed premises.

17. For an on-sale retailer or an employee of such retailer to allow a person to consume or possess spirituous liquors on the premises between the hours of 2:30 a.m. and 6:00 a.m.

18. For an on-sale retailer to permit allow an employee or for an employee to solicit or encourage others, directly or indirectly, to buy the employee drinks or anything of value in the licensed premises during the employee's working hours. An on-sale retailer shall not serve employees or allow a patron of the establishment to give spirituous liquor to, purchase liquor for or drink liquor with any employee during the employee's working hours.

19. For an off-sale retailer or employee to sell spirituous liquor except in the original unbroken container, to permit allow spirituous liquor to be consumed on the premises or to knowingly permit allow spirituous liquor to be consumed on adjacent property under the licensee's exclusive control.

20. For a person to consume spirituous liquor in a public place, thoroughfare or gathering. The license of a licensee permitting allowing a violation of this paragraph on the premises shall be subject to revocation. This paragraph does not apply to the sale of spirituous liquors on the premises of and by an on-sale retailer. This paragraph also does not apply to a person consuming beer or wine from a broken package in a public recreation area or on private property with permission of the owner or lessor or on the walkways surrounding such private property or to a person consuming beer or wine from a broken package in a public recreation area as part of a special event or festival that is conducted under a license secured pursuant to section 4-203.02 or 4-203.03.

21. For a person to have possession of or to transport spirituous liquor that is manufactured in a distillery, winery, brewery or rectifying plant contrary to the laws of the United States and this state. Any property used in transporting such spirituous liquor shall be forfeited to the state and shall be seized and disposed of as provided in section 4-221.

22. For an on-sale retailer or employee to allow a person under the legal drinking age to remain in an area on the licensed premises during those hours in which its primary use is the sale, dispensing or consumption of alcoholic beverages after the licensee, or the licensee's employees, know or should have known that the person is under the legal drinking age. An on-sale retailer may designate an area of the licensed premises as an area in which spirituous liquor will not be sold or consumed for the purpose of allowing underage persons on the premises if the designated area is separated by a physical barrier and at no time will underage persons have access to the area in which spirituous liquor is sold or consumed. A licensee or an employee of a licensee may require a person who intends to enter a licensed premises or a portion of a licensed premises where persons under the legal drinking age are prohibited under this section to exhibit an instrument of identification that is acceptable under section 4-241 as a condition of entry or may use a biometric identity verification device to determine the person's age as a condition of entry. The director, or a municipality, may adopt rules to regulate the presence of underage persons on licensed premises provided the rules adopted by a municipality are more stringent than those adopted by the director. The rules adopted by the municipality shall be adopted by local ordinance and shall not interfere with the licensee's ability to comply with this paragraph. This paragraph does not apply:

(a) If the person under the legal drinking age is accompanied by a spouse, parent or legal guardian of legal drinking age or is an on-duty employee of the licensee.

(b) If the owner, lessee or occupant of the premises is a club as defined in section 4-101, paragraph 8, subdivision (a) and the person under the legal drinking age is any of the following:

(i) An active duty military service member.

(ii) A veteran.

(iii) A member of the United States army national guard or the United States air national guard.

(iv) A member of the United States military reserve forces.

23. For an on-sale retailer or employee to conduct drinking contests, to sell or deliver to a person an unlimited number of spirituous liquor beverages during any set period of time for a fixed price, to deliver more than fifty ounces of beer, one liter of wine or four ounces of distilled spirits in any spirituous liquor drink to one person at one time for that person's consumption or to advertise any practice prohibited by this paragraph. The provisions of this paragraph do not prohibit an on-sale retailer or employee from selling and delivering an opened, original container of distilled spirits if:

(a) Service or pouring of the spirituous liquor is provided by an employee of the on-sale retailer.

(b) The employee of the on-sale retailer monitors consumption to ensure compliance with this paragraph. Locking devices may be used, but are not required.

24. For a licensee or employee to knowingly permit allow the unlawful possession, use, sale or offer for sale of narcotics, dangerous drugs or marijuana on the premises. For the purposes of this paragraph, "dangerous drug" has the same meaning prescribed in section 13-3401.

25. For a licensee or employee to knowingly permit allow prostitution or the solicitation of prostitution on the premises.

26. For a licensee or employee to knowingly permit allow unlawful gambling on the premises.

27. For a licensee or employee to knowingly permit allow trafficking or attempted trafficking in stolen property on the premises.

28. For a licensee or employee to fail or refuse to make the premises or records available for inspection and examination as provided in this title or to comply with a lawful subpoena issued under this title.

29. For any person other than a peace officer while on duty or off duty or a member of a sheriff's volunteer posse while on duty who has received firearms training that is approved by the Arizona peace officer standards and training board, a retired peace officer as defined in section 38-1113 or an honorably retired law enforcement officer who has been issued a certificate of firearms proficiency pursuant to section 13-3112, subsection T, the licensee or an employee of the licensee acting with the permission of the licensee to be in possession of a firearm while on the licensed premises of an on-sale retailer. This paragraph does not include a situation in which a person is on licensed premises for a limited time in order to seek emergency aid and such person does not buy, receive, consume or possess spirituous liquor. This paragraph does not apply to:

(a) Hotel or motel guest room accommodations.

(b) The exhibition or display of a firearm in conjunction with a meeting, show, class or similar event.

(c) A person with a permit issued pursuant to section 13-3112 who carries a concealed handgun on the licensed premises of any on-sale retailer that has not posted a notice pursuant to section 4-229.

30. For a licensee or employee to knowingly permit allow a person in possession of a firearm other than a peace officer while on duty or off duty or a member of a sheriff's volunteer posse while on duty who has received firearms training that is approved by the Arizona peace officer standards and training board, a retired peace officer as defined in section 38-1113 or an honorably retired law enforcement officer who has been issued a certificate of firearms proficiency pursuant to section 13-3112, subsection T, the licensee or an employee of the licensee acting with the permission of the licensee to remain on the licensed premises or to serve, sell or furnish spirituous liquor to a person in possession of a firearm while on the licensed premises of an on-sale retailer. It is a defense to action under this paragraph if the licensee or employee requested assistance of a peace officer to remove such person. This paragraph does not apply to:

(a) Hotel or motel guest room accommodations.

(b) The exhibition or display of a firearm in conjunction with a meeting, show, class or similar event.

(c) A person with a permit issued pursuant to section 13-3112 who carries a concealed handgun on the licensed premises of any on-sale retailer that has not posted a notice pursuant to section 4-229.

31. For any person in possession of a firearm while on the licensed premises of an on-sale retailer to consume spirituous liquor. This paragraph does not prohibit the consumption of small amounts of spirituous liquor by an undercover peace officer on assignment to investigate the licensed establishment.

32. For a licensee or employee to knowingly permit allow spirituous liquor to be removed from the licensed premises, except in the original unbroken package. This paragraph does not apply to any of the following:

(a) A person who removes a bottle of wine that has been partially consumed in conjunction with a purchased meal from licensed premises if a cork is inserted flush with the top of the bottle or the bottle is otherwise securely closed.

(b) A person who is in licensed premises that have noncontiguous portions that are separated by a public or private walkway or driveway and who takes spirituous liquor from one portion of the licensed premises across the public or private walkway or driveway directly to the other portion of the licensed premises.

(c) A licensee of a bar, beer and wine bar, liquor store, beer and wine store, microbrewery or restaurant that has a permit pursuant to section 4-205.02, subsection H that dispenses beer only in a clean container composed of a material approved by a national sanitation organization with a maximum capacity that does not exceed one gallon and not for consumption on the premises if:

(i) The licensee or the licensee's employee fills the container at the tap at the time of sale.

(ii) The container is sealed and displays a government warning label.

(iii) The dispensing of that beer is not done through a drive-through or walk-up service window.

(d) A bar or liquor store licensee THAT PREPARES A MIXED COCKTAIL or a restaurant licensee that leases the privilege to sell mixed cocktails for consumption off the licensed premises pursuant to section 4-203.06 or holds a permit pursuant to section 4-203.07 and section 4-205.02, subsection K and that prepares a mixed cocktail AND TRANSFERS IT TO A CLEAN CONTAINER COMPOSED OF A MATERIAL APPROVED BY A NATIONAL SANITATION ORGANIZATION WITH A MAXIMUM CAPACITY THAT DOES NOT EXCEED thirty-two OUNCES AND NOT FOR CONSUMPTION ON THE PREMISES IF all of the following apply:

(i) THE LICENSEE OR LICENSEE'S EMPLOYEE FILLS THE CONTAINER WITH THE MIXED COCKTAIL ON THE LICENSED PREMISES of the bar, liquor store or restaurant.

(ii) THE CONTAINER IS tamper proof sealed by the licensee or the licensee's employee AND DISPLAYS A GOVERNMENT WARNING LABEL.

(iii) the container clearly displays the bar's, liquor store's or restaurant's logo or name.

(iv) for a restaurant licensee licensed pursuant to section 4-205.02, the sale of mixed cocktails for consumption off the licensed premises is accompanied by the sale of menu food items for consumption on or off the licensed premises.

33. For a person who is obviously intoxicated to buy or attempt to buy spirituous liquor from a licensee or employee of a licensee or to consume spirituous liquor on licensed premises.

34. For a person under twenty-one years of age to drive or be in physical control of a motor vehicle while there is any spirituous liquor in the person's body.

35. For a person under twenty-one years of age to operate or be in physical control of a motorized watercraft that is underway while there is any spirituous liquor in the person's body. For the purposes of this paragraph, "underway" has the same meaning prescribed in section 5-301.

36. For a licensee, manager, employee or controlling person to purposely induce a voter, by means of alcohol, to vote or abstain from voting for or against a particular candidate or issue on an election day.

37. For a licensee to fail to report an occurrence of an act of violence to either the department or a law enforcement agency.

38. For a licensee to use a vending machine for the purpose of dispensing spirituous liquor.

39. For a licensee to offer for sale a wine carrying a label including a reference to Arizona or any Arizona city, town or geographic location unless at least seventy-five percent by volume of the grapes used in making the wine were grown in Arizona.

40. For a retailer to knowingly allow a customer to bring spirituous liquor onto the licensed premises, except that an on-sale retailer may allow a wine and food club to bring wine onto the premises for consumption by the club's members and guests of the club's members in conjunction with meals purchased at a meeting of the club that is conducted on the premises and that at least seven members attend. An on-sale retailer that allows wine and food clubs to bring wine onto its premises under this paragraph shall comply with all applicable provisions of this title and any rules adopted pursuant to this title to the same extent as if the on-sale retailer had sold the wine to the members of the club and their guests. For the purposes of this paragraph, "wine and food club" means an association that has more than twenty bona fide members paying at least $6 per year in dues and that has been in existence for at least one year.

41. For a person under twenty-one years of age to have in the person's body any spirituous liquor. In a prosecution for a violation of this paragraph:

(a) Pursuant to section 4-249, it is a defense that the spirituous liquor was consumed in connection with the bona fide practice of a religious belief or as an integral part of a religious exercise and in a manner not dangerous to public health or safety.

(b) Pursuant to section 4-226, it is a defense that the spirituous liquor was consumed for a bona fide medicinal purpose and in a manner not dangerous to public health or safety.

42. For an employee of a licensee to accept any gratuity, compensation, remuneration or consideration of any kind to either:

(a) Permit Allow a person who is under twenty-one years of age to enter any portion of the premises where that person is prohibited from entering pursuant to paragraph 22 of this section.

(b) Sell, furnish, dispose of or give spirituous liquor to a person who is under twenty-one years of age.

43. For a person to purchase, offer for sale or use any device, machine or process that mixes spirituous liquor with pure oxygen or another gas to produce a vaporized product for the purpose of consumption by inhalation or to allow patrons to use any item for the consumption of vaporized spirituous liquor.

44. For a retail licensee or an employee of a retail licensee to sell spirituous liquor to a person if the retail licensee or employee knows the person intends to resell the spirituous liquor.

45. Except as authorized by paragraph 32, subdivision (c) of this section, for a person to reuse a bottle or other container authorized for use by the laws of the United States or any agency of the United States for the packaging of distilled spirits or for a person to increase the original contents or a portion of the original contents remaining in a liquor bottle or other authorized container by adding any substance.

46. For a direct shipment licensee, a farm winery licensee or an employee of those licensees to sell, dispose of, deliver or give spirituous liquor to an individual purchaser between the hours of 2:00 a.m. and 6:00 a.m., except that a direct shipment licensee or a farm winery licensee may receive and process orders, accept payment, package, load or otherwise prepare wine for delivery at any time without complying with section 4-241, subsections A and K, if the actual deliveries to individual purchasers are made between the hours of 6:00 a.m. and 2:00 a.m. and in accordance with section 4-203.04 for direct shipment licensees and section 4-205.04 for farm winery licensees. END_STATUTE

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.