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ARIZONA STATE SENATE
Fifty-Sixth Legislature, Second Regular Session
AMENDED
liquor; policies; procedures
Purpose
Makes various changes related to liquor regulatory statutes.
Background
DLLC, which consists of the State Liquor Board and the Office of the Director of DLLC (Director), regulates the manufacture, distribution and sale of liquor in Arizona through the issuance of a series of licenses and investigating licensee compliance with liquor laws. A separate license is required for each specific type of business and is issued only after a satisfactory showing of the capability, qualifications and reliability of the applicant and that the public convenience requires and that the best interest of the community will be substantially served by the issuance (A.R.S. §§ 4-111 and 4-203).
An on-sale liquor licensee may apply to DLLC to extend the licensed premises on a regularly recurring basis or on an individual day or hour basis. At least 60 days prior to applying for an extension of premises, an applicant must submit a copy of the application to the local governing body. The local governing body may provide advisory recommendations to the Director (A.R.S. § 4-207.03).
Laws 2021, Chapter
375 allowed a bar or liquor store to sell mixed cocktails for
off-premises consumption (to-go mixed cocktails) and allowed restaurants to
apply for to-go mixed cocktails leases from a bar or liquor store through
December 31, 2025, and for to-go mixed cocktails permits beginning January 1,
2026. A to-go mixed cocktail must be prepared by the licensee on the premises
and sold in a container with a maximum capacity of 32 ounces and a tamper-proof
seal. To-go mixed cocktails sold by a restaurant licensee must be accompanied
by food sales. The off-sale use of a restaurant with a to-go mixed cocktails lease
or off-sale privileges lease is limited to 30 percent of the on premises liquor
sales (A.R.S. §§ 4-203.06;
4-206.01;
and 4-244).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
Liquor Licensee Extension of Premises
1. Deems a permit for an extended premises valid for six consecutive months or less, which is calculated from the first date of the extended premises to the last date of the extended premises.
2. Allows a liquor licensee with on-sale retail privileges to apply to extend the licensed premises on an ongoing limited use basis to contiguous private property that is owned or leased by the licensee or to public or private property that the licensee has permission to use.
3. Allows the Director to include noncontiguous private property on the extended premises if the property meets the requirements of DLLC rules applicable to regularly licensed premises.
4. Prohibits a liquor licensee from modifying the physical arrangement of the extended premises to use additional or different space and from modifying the location of ingress or egress or the security to be provided without notifying the local governing body and DLLC at least 10 days in advance of the proposed modification.
5. Allows DLLC to consult with the local governing body and approve, reject or modify the proposed modification.
6. Specifies that further compliance with the requirements for an initial extension of premises application are not required if the only proposed modification is to reduce the size of the extended premises.
7. Allows a local governing body to conduct an optional safety inspection of an extended premises on the day of the event, before the event if the extended premises are ready for use or before the local governing body or designee has made its recommendations, whichever is soonest.
8. Requires the Director to determine the appropriate security measurers that the applicant liquor licensee must use to control spirituous liquor service on the extended premises and to protect public health and safety.
9. Requires an applicant liquor licensee to include in the application for an extension of premises:
a) the proposed days and times that the extended premises will be used; and
b) the location of ingress and egress from the extended premises and other features of the extended premises as required by the Director or as required to conform with applicable building code and fire safety requirements.
10. Requires the security plan included in the application for an extension of premises to be designed in a manner to ensure that security and oversight of the extended premises is provided by the applicant licensee.
11. Requires an applicant liquor licensee to provide at least 10 days written notice of any schedule modification to the local governing body.
12. Removes the requirement for an extension of premises application to be on a DLLC-prescribed form.
13. Specifies that the extended premises requirements do not:
a) exempt an applicant liquor licensee from complying with any local governing body event permit requirements; or
b) apply to a permanent change in the premises and do not prevent DLLC, together with a city, town or county, from waiving the extended premises requirements for an application or event.
To-Go Mixed Cocktails Lease Addendums
14. Requires DLLC to provide for an addendum to a to-go mixed cocktails lease between a bar or liquor store licensee and a restaurant licensee that derives at least 90 percent of gross revenue from food sales and that has off-sale spirituous liquor sales that exceed 30 percent of total spirituous liquor sales in either 2023 or 2024.
15. Allows an eligible restaurant licensee to apply to DLLC for an addendum on the restaurant licensee's lease renewal date.
16. Requires an eligible restaurant licensee to pay DLLC any lease addendum payments in full, in advance.
17. Requires DLLC to establish a process to facilitate and approve an addendum and to govern:
a) a standard lease addendum form;
b) that the lease addendum term must be the same as the restaurant licensee's renewed lease term;
c) the amount of the lease addendum, which may be equal to any dollar amount determined by the Director for a to-go mixed cocktails lease;
d) that during the lease addendum term, the licensee is not subject to the statutory limit on off-sale use;
e) that a lease addendum is also transferred if the underlying to-go mixed cocktails lease is transferred to another restaurant licensee;
f) the privileges conveyed to the lessee during the lease addendum term will continue if the bar or liquor store lessor has its license suspended or revoked;
g) that liquor regulations and rules apply to both the lessor and lessee; and
h) during the term of the lease addendum, all violations and liability for liquor service under the lease is attributed only to the restaurant licensee with a to-go mixed cocktails lease, except the licensee is not responsible for violations committed by the lessor.
18. Specifies that the procedure to pay the lease addendum amount to the lessor is the same as the procedure to pay the underlying lease amount to the lessor.
19. Exempts, from the statutory limit on off-sale use, a restaurant licensee that has a to-go mixed cocktails lease, derives at least 90 percent of gross revenue from food sales and has off-sale spirituous liquor sales that exceed 30 percent of total spirituous liquor sales in either 2023 or 2024.
Special Event Liquor Licenses
20. Requires, before the Director may issue a temporary special event license, the president of a university under the jurisdiction of the Arizona Board of Regents to approve the license if the event is to be held on the university's property.
21. Allows the Director to issue a special event license concurrently with a microbrewery festival license.
22. Removes the authorization for the Director to approve the location of a wine festival license within an excluded area of a special event license.
Miscellaneous
23. Removes the requirement for a producer or wholesaler to designate and separate a sampling area in the portion of the licensed premises where spirituous liquor is primarily displayed when providing samples to retail consumers on an off-sale retailer's premises.
24. Allows the Director to issue a new license in the same series and county for every surrendered license.
25. Allows the Director to issue a bar license to the holder of a liquor store license issued simultaneously at the same premises and allows the applicant to consolidate the application and apply for both licenses at the same time.
26. Requires a liquor store license and a bar license on the same premises to be owned by and issued to the same licensee.
27. Makes technical and conforming changes.
28. Becomes effective on the general effective date.
Amendments Adopted by Additional Committee of the Whole
· Removes the specification that, beginning January 1, 2024, a restaurant licensee that derives at least 90 percent of gross revenue from food sales and that has off-sale spirituous liquor sales that exceed 30 percent of total spirituous liquor sales is not in violation of the statutory limit on off-sale use.
House Action Senate Action
COM 1/30/24 DPA 10-0-0-0 FICO 3/4/24 DP 6-0-1
3rd Read 2/20/24 57-0-2-0-1
Prepared by Senate Research
April 2, 2024
MG/cs