HB2878 EngrossedLRB100 09902 RPS 20073 b

1    AN ACT concerning liquor.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Liquor Control Act of 1934 is amended by
5changing Section 3-12 as follows:
6    (235 ILCS 5/3-12)
7    Sec. 3-12. Powers and duties of State Commission.
8    (a) The State commission shall have the following powers,
9functions, and duties:
10        (1) To receive applications and to issue licenses to
11    manufacturers, foreign importers, importing distributors,
12    distributors, non-resident dealers, on premise consumption
13    retailers, off premise sale retailers, special event
14    retailer licensees, special use permit licenses, auction
15    liquor licenses, brew pubs, caterer retailers,
16    non-beverage users, railroads, including owners and
17    lessees of sleeping, dining and cafe cars, airplanes,
18    boats, brokers, and wine maker's premises licensees in
19    accordance with the provisions of this Act, and to suspend
20    or revoke such licenses upon the State commission's
21    determination, upon notice after hearing, that a licensee
22    has violated any provision of this Act or any rule or
23    regulation issued pursuant thereto and in effect for 30



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1    days prior to such violation. Except in the case of an
2    action taken pursuant to a violation of Section 6-3, 6-5,
3    or 6-9, any action by the State Commission to suspend or
4    revoke a licensee's license may be limited to the license
5    for the specific premises where the violation occurred. An
6    action for a violation of this Act shall be commenced by
7    the State Commission within 2 years after the date the
8    State Commission becomes aware of the violation.
9        In lieu of suspending or revoking a license, the
10    commission may impose a fine, upon the State commission's
11    determination and notice after hearing, that a licensee has
12    violated any provision of this Act or any rule or
13    regulation issued pursuant thereto and in effect for 30
14    days prior to such violation.
15        For the purpose of this paragraph (1), when determining
16    multiple violations for the sale of alcohol to a person
17    under the age of 21, a second or subsequent violation for
18    the sale of alcohol to a person under the age of 21 shall
19    only be considered if it was committed within 5 years after
20    the date when a prior violation for the sale of alcohol to
21    a person under the age of 21 was committed.
22        The fine imposed under this paragraph may not exceed
23    $500 for each violation. Each day that the activity, which
24    gave rise to the original fine, continues is a separate
25    violation. The maximum fine that may be levied against any
26    licensee, for the period of the license, shall not exceed



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1    $20,000. The maximum penalty that may be imposed on a
2    licensee for selling a bottle of alcoholic liquor with a
3    foreign object in it or serving from a bottle of alcoholic
4    liquor with a foreign object in it shall be the destruction
5    of that bottle of alcoholic liquor for the first 10 bottles
6    so sold or served from by the licensee. For the eleventh
7    bottle of alcoholic liquor and for each third bottle
8    thereafter sold or served from by the licensee with a
9    foreign object in it, the maximum penalty that may be
10    imposed on the licensee is the destruction of the bottle of
11    alcoholic liquor and a fine of up to $50.
12        Any notice issued by the State Commission to a licensee
13    for a violation of this Act or any notice with respect to
14    settlement or offer in compromise shall include the field
15    report, photographs, and any other supporting
16    documentation necessary to reasonably inform the licensee
17    of the nature and extent of the violation or the conduct
18    alleged to have occurred.
19        (2) To adopt such rules and regulations consistent with
20    the provisions of this Act which shall be necessary to
21    carry on its functions and duties to the end that the
22    health, safety and welfare of the People of the State of
23    Illinois shall be protected and temperance in the
24    consumption of alcoholic liquors shall be fostered and
25    promoted and to distribute copies of such rules and
26    regulations to all licensees affected thereby.



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1        (3) To call upon other administrative departments of
2    the State, county and municipal governments, county and
3    city police departments and upon prosecuting officers for
4    such information and assistance as it deems necessary in
5    the performance of its duties.
6        (4) To recommend to local commissioners rules and
7    regulations, not inconsistent with the law, for the
8    distribution and sale of alcoholic liquors throughout the
9    State.
10        (5) To inspect, or cause to be inspected, any premises
11    in this State where alcoholic liquors are manufactured,
12    distributed, warehoused, or sold. Nothing in this Act
13    authorizes an agent of the Commission to inspect private
14    areas within the premises without reasonable suspicion or a
15    warrant during an inspection. "Private areas" include, but
16    are not limited to, safes, personal property, and closed
17    desks.
18        (5.1) Upon receipt of a complaint or upon having
19    knowledge that any person is engaged in business as a
20    manufacturer, importing distributor, distributor, or
21    retailer without a license or valid license, to notify the
22    local liquor authority, file a complaint with the State's
23    Attorney's Office of the county where the incident
24    occurred, or initiate an investigation with the
25    appropriate law enforcement officials.
26        (5.2) To issue a cease and desist notice to persons



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1    shipping alcoholic liquor into this State from a point
2    outside of this State if the shipment is in violation of
3    this Act.
4        (5.3) To receive complaints from licensees, local
5    officials, law enforcement agencies, organizations, and
6    persons stating that any licensee has been or is violating
7    any provision of this Act or the rules and regulations
8    issued pursuant to this Act. Such complaints shall be in
9    writing, signed and sworn to by the person making the
10    complaint, and shall state with specificity the facts in
11    relation to the alleged violation. If the Commission has
12    reasonable grounds to believe that the complaint
13    substantially alleges a violation of this Act or rules and
14    regulations adopted pursuant to this Act, it shall conduct
15    an investigation. If, after conducting an investigation,
16    the Commission is satisfied that the alleged violation did
17    occur, it shall proceed with disciplinary action against
18    the licensee as provided in this Act.
19        (6) To hear and determine appeals from orders of a
20    local commission in accordance with the provisions of this
21    Act, as hereinafter set forth. Hearings under this
22    subsection shall be held in Springfield or Chicago, at
23    whichever location is the more convenient for the majority
24    of persons who are parties to the hearing.
25        (7) The commission shall establish uniform systems of
26    accounts to be kept by all retail licensees having more



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1    than 4 employees, and for this purpose the commission may
2    classify all retail licensees having more than 4 employees
3    and establish a uniform system of accounts for each class
4    and prescribe the manner in which such accounts shall be
5    kept. The commission may also prescribe the forms of
6    accounts to be kept by all retail licensees having more
7    than 4 employees, including but not limited to accounts of
8    earnings and expenses and any distribution, payment, or
9    other distribution of earnings or assets, and any other
10    forms, records and memoranda which in the judgment of the
11    commission may be necessary or appropriate to carry out any
12    of the provisions of this Act, including but not limited to
13    such forms, records and memoranda as will readily and
14    accurately disclose at all times the beneficial ownership
15    of such retail licensed business. The accounts, forms,
16    records and memoranda shall be available at all reasonable
17    times for inspection by authorized representatives of the
18    State commission or by any local liquor control
19    commissioner or his or her authorized representative. The
20    commission, may, from time to time, alter, amend or repeal,
21    in whole or in part, any uniform system of accounts, or the
22    form and manner of keeping accounts.
23        (8) In the conduct of any hearing authorized to be held
24    by the commission, to appoint, at the commission's
25    discretion, hearing officers to conduct hearings involving
26    complex issues or issues that will require a protracted



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1    period of time to resolve, to examine, or cause to be
2    examined, under oath, any licensee, and to examine or cause
3    to be examined the books and records of such licensee; to
4    hear testimony and take proof material for its information
5    in the discharge of its duties hereunder; to administer or
6    cause to be administered oaths; for any such purpose to
7    issue subpoena or subpoenas to require the attendance of
8    witnesses and the production of books, which shall be
9    effective in any part of this State, and to adopt rules to
10    implement its powers under this paragraph (8).
11        Any Circuit Court may by order duly entered, require
12    the attendance of witnesses and the production of relevant
13    books subpoenaed by the State commission and the court may
14    compel obedience to its order by proceedings for contempt.
15        (9) To investigate the administration of laws in
16    relation to alcoholic liquors in this and other states and
17    any foreign countries, and to recommend from time to time
18    to the Governor and through him or her to the legislature
19    of this State, such amendments to this Act, if any, as it
20    may think desirable and as will serve to further the
21    general broad purposes contained in Section 1-2 hereof.
22        (10) To adopt such rules and regulations consistent
23    with the provisions of this Act which shall be necessary
24    for the control, sale or disposition of alcoholic liquor
25    damaged as a result of an accident, wreck, flood, fire or
26    other similar occurrence.



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1        (11) To develop industry educational programs related
2    to responsible serving and selling, particularly in the
3    areas of overserving consumers and illegal underage
4    purchasing and consumption of alcoholic beverages.
5        (11.1) To license persons providing education and
6    training to alcohol beverage sellers and servers for
7    mandatory and non-mandatory training under the Beverage
8    Alcohol Sellers and Servers Education and Training
9    (BASSET) programs and to develop and administer a public
10    awareness program in Illinois to reduce or eliminate the
11    illegal purchase and consumption of alcoholic beverage
12    products by persons under the age of 21. Application for a
13    license shall be made on forms provided by the State
14    Commission.
15        (12) To develop and maintain a repository of license
16    and regulatory information.
17        (13) On or before January 15, 1994, the Commission
18    shall issue a written report to the Governor and General
19    Assembly that is to be based on a comprehensive study of
20    the impact on and implications for the State of Illinois of
21    Section 1926 of the federal Federal ADAMHA Reorganization
22    Act of 1992 (Public Law 102-321). This study shall address
23    the extent to which Illinois currently complies with the
24    provisions of P.L. 102-321 and the rules promulgated
25    pursuant thereto.
26        As part of its report, the Commission shall provide the



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1    following essential information:
2            (i) the number of retail distributors of tobacco
3        products, by type and geographic area, in the State;
4            (ii) the number of reported citations and
5        successful convictions, categorized by type and
6        location of retail distributor, for violation of the
7        Prevention of Tobacco Use by Minors and Sale and
8        Distribution of Tobacco Products Act and the Smokeless
9        Tobacco Limitation Act;
10            (iii) the extent and nature of organized
11        educational and governmental activities that are
12        intended to promote, encourage or otherwise secure
13        compliance with any Illinois laws that prohibit the
14        sale or distribution of tobacco products to minors; and
15            (iv) the level of access and availability of
16        tobacco products to individuals under the age of 18.
17        To obtain the data necessary to comply with the
18    provisions of P.L. 102-321 and the requirements of this
19    report, the Commission shall conduct random, unannounced
20    inspections of a geographically and scientifically
21    representative sample of the State's retail tobacco
22    distributors.
23        The Commission shall consult with the Department of
24    Public Health, the Department of Human Services, the
25    Illinois State Police and any other executive branch
26    agency, and private organizations that may have



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1    information relevant to this report.
2        The Commission may contract with the Food and Drug
3    Administration of the U.S. Department of Health and Human
4    Services to conduct unannounced investigations of Illinois
5    tobacco vendors to determine compliance with federal laws
6    relating to the illegal sale of cigarettes and smokeless
7    tobacco products to persons under the age of 18.
8        (14) On or before April 30, 2008 and every 2 years
9    thereafter, the Commission shall present a written report
10    to the Governor and the General Assembly that shall be
11    based on a study of the impact of Public Act 95-634 this
12    amendatory Act of the 95th General Assembly on the business
13    of soliciting, selling, and shipping wine from inside and
14    outside of this State directly to residents of this State.
15    As part of its report, the Commission shall provide all of
16    the following information:
17            (A) The amount of State excise and sales tax
18        revenues generated.
19            (B) The amount of licensing fees received.
20            (C) The number of cases of wine shipped from inside
21        and outside of this State directly to residents of this
22        State.
23            (D) The number of alcohol compliance operations
24        conducted.
25            (E) The number of winery shipper's licenses
26        issued.



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1            (F) The number of each of the following: reported
2        violations; cease and desist notices issued by the
3        Commission; notices of violations issued by the
4        Commission and to the Department of Revenue; and
5        notices and complaints of violations to law
6        enforcement officials, including, without limitation,
7        the Illinois Attorney General and the U.S. Department
8        of Treasury's Alcohol and Tobacco Tax and Trade Bureau.
9        (15) As a means to reduce the underage consumption of
10    alcoholic liquors, the Commission shall conduct alcohol
11    compliance operations to investigate whether businesses
12    that are soliciting, selling, and shipping wine from inside
13    or outside of this State directly to residents of this
14    State are licensed by this State or are selling or
15    attempting to sell wine to persons under 21 years of age in
16    violation of this Act.
17        (16) The Commission shall, in addition to notifying any
18    appropriate law enforcement agency, submit notices of
19    complaints or violations of Sections 6-29 and 6-29.1 by
20    persons who do not hold a winery shipper's license under
21    this amendatory Act to the Illinois Attorney General and to
22    the U.S. Department of Treasury's Alcohol and Tobacco Tax
23    and Trade Bureau.
24        (17) (A) A person licensed to make wine under the laws
25    of another state who has a winery shipper's license under
26    this amendatory Act and annually produces less than 25,000



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1    gallons of wine or a person who has a first-class or
2    second-class wine manufacturer's license, a first-class or
3    second-class wine-maker's license, or a limited wine
4    manufacturer's license under this Act and annually
5    produces less than 25,000 gallons of wine may make
6    application to the Commission for a self-distribution
7    exemption to allow the sale of not more than 5,000 gallons
8    of the exemption holder's wine to retail licensees per
9    year.
10            (B) In the application, which shall be sworn under
11        penalty of perjury, such person shall state (1) the
12        date it was established; (2) its volume of production
13        and sales for each year since its establishment; (3)
14        its efforts to establish distributor relationships;
15        (4) that a self-distribution exemption is necessary to
16        facilitate the marketing of its wine; and (5) that it
17        will comply with the liquor and revenue laws of the
18        United States, this State, and any other state where it
19        is licensed.
20            (C) The Commission shall approve the application
21        for a self-distribution exemption if such person: (1)
22        is in compliance with State revenue and liquor laws;
23        (2) is not a member of any affiliated group that
24        produces more than 25,000 gallons of wine per annum or
25        produces any other alcoholic liquor; (3) will not
26        annually produce for sale more than 25,000 gallons of



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1        wine; and (4) will not annually sell more than 5,000
2        gallons of its wine to retail licensees.
3            (D) A self-distribution exemption holder shall
4        annually certify to the Commission its production of
5        wine in the previous 12 months and its anticipated
6        production and sales for the next 12 months. The
7        Commission may fine, suspend, or revoke a
8        self-distribution exemption after a hearing if it
9        finds that the exemption holder has made a material
10        misrepresentation in its application, violated a
11        revenue or liquor law of Illinois, exceeded production
12        of 25,000 gallons of wine in any calendar year, or
13        become part of an affiliated group producing more than
14        25,000 gallons of wine or any other alcoholic liquor.
15            (E) Except in hearings for violations of this Act
16        or Public Act 95-634 amendatory Act or a bona fide
17        investigation by duly sworn law enforcement officials,
18        the Commission, or its agents, the Commission shall
19        maintain the production and sales information of a
20        self-distribution exemption holder as confidential and
21        shall not release such information to any person.
22            (F) The Commission shall issue regulations
23        governing self-distribution exemptions consistent with
24        this Section and this Act.
25            (G) Nothing in this subsection (17) shall prohibit
26        a self-distribution exemption holder from entering



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1        into or simultaneously having a distribution agreement
2        with a licensed Illinois distributor.
3            (H) It is the intent of this subsection (17) to
4        promote and continue orderly markets. The General
5        Assembly finds that in order to preserve Illinois'
6        regulatory distribution system it is necessary to
7        create an exception for smaller makers of wine as their
8        wines are frequently adjusted in varietals, mixes,
9        vintages, and taste to find and create market niches
10        sometimes too small for distributor or importing
11        distributor business strategies. Limited
12        self-distribution rights will afford and allow smaller
13        makers of wine access to the marketplace in order to
14        develop a customer base without impairing the
15        integrity of the 3-tier system.
16        (18) (A) A class 1 brewer licensee, who must also be
17    either a licensed brewer or licensed non-resident dealer
18    and annually manufacture less than 930,000 gallons of beer,
19    may make application to the State Commission for a
20    self-distribution exemption to allow the sale of not more
21    than 232,500 gallons of the exemption holder's beer to
22    retail licensees per year.
23            (B) In the application, which shall be sworn under
24        penalty of perjury, the class 1 brewer licensee shall
25        state (1) the date it was established; (2) its volume
26        of beer manufactured and sold for each year since its



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1        establishment; (3) its efforts to establish
2        distributor relationships; (4) that a
3        self-distribution exemption is necessary to facilitate
4        the marketing of its beer; and (5) that it will comply
5        with the alcoholic beverage and revenue laws of the
6        United States, this State, and any other state where it
7        is licensed.
8            (C) Any application submitted shall be posted on
9        the State Commission's website at least 45 days prior
10        to action by the State Commission. The State Commission
11        shall approve the application for a self-distribution
12        exemption if the class 1 brewer licensee: (1) is in
13        compliance with the State, revenue, and alcoholic
14        beverage laws; (2) is not a member of any affiliated
15        group that manufactures manufacturers more than
16        930,000 gallons of beer per annum or produces any other
17        alcoholic beverages; (3) shall not annually
18        manufacture for sale more than 930,000 gallons of beer;
19        (4) shall not annually sell more than 232,500 gallons
20        of its beer to retail licensees; and (5) has
21        relinquished any brew pub license held by the licensee,
22        including any ownership interest it held in the
23        licensed brew pub.
24            (D) A self-distribution exemption holder shall
25        annually certify to the State Commission its
26        manufacture of beer during the previous 12 months and



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1        its anticipated manufacture and sales of beer for the
2        next 12 months. The State Commission may fine, suspend,
3        or revoke a self-distribution exemption after a
4        hearing if it finds that the exemption holder has made
5        a material misrepresentation in its application,
6        violated a revenue or alcoholic beverage law of
7        Illinois, exceeded the manufacture of 930,000 gallons
8        of beer in any calendar year or became part of an
9        affiliated group manufacturing more than 930,000
10        gallons of beer or any other alcoholic beverage.
11            (E) The State Commission shall issue rules and
12        regulations governing self-distribution exemptions
13        consistent with this Act.
14            (F) Nothing in this paragraph (18) shall prohibit a
15        self-distribution exemption holder from entering into
16        or simultaneously having a distribution agreement with
17        a licensed Illinois importing distributor or a
18        distributor. If a self-distribution exemption holder
19        enters into a distribution agreement and has assigned
20        distribution rights to an importing distributor or
21        distributor, then the self-distribution exemption
22        holder's distribution rights in the assigned
23        territories shall cease in a reasonable time not to
24        exceed 60 days.
25            (G) It is the intent of this paragraph (18) to
26        promote and continue orderly markets. The General



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1        Assembly finds that in order to preserve Illinois'
2        regulatory distribution system, it is necessary to
3        create an exception for smaller manufacturers in order
4        to afford and allow such smaller manufacturers of beer
5        access to the marketplace in order to develop a
6        customer base without impairing the integrity of the
7        3-tier system.
8    (b) On or before April 30, 1999, the Commission shall
9present a written report to the Governor and the General
10Assembly that shall be based on a study of the impact of Public
11Act 90-739 this amendatory Act of 1998 on the business of
12soliciting, selling, and shipping alcoholic liquor from
13outside of this State directly to residents of this State.
14    As part of its report, the Commission shall provide the
15following information:
16        (i) the amount of State excise and sales tax revenues
17    generated as a result of Public Act 90-739 this amendatory
18    Act of 1998;
19        (ii) the amount of licensing fees received as a result
20    of Public Act 90-739 this amendatory Act of 1998;
21        (iii) the number of reported violations, the number of
22    cease and desist notices issued by the Commission, the
23    number of notices of violations issued to the Department of
24    Revenue, and the number of notices and complaints of
25    violations to law enforcement officials.
26(Source: P.A. 98-401, eff. 8-16-13; 98-939, eff. 7-1-15;



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198-941, eff. 1-1-15; 99-78, eff. 7-20-15; 99-448, eff. 8-24-15;
2revised 9-13-16.)
3    Section 99. Effective date. This Act takes effect upon
4becoming law.