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Public Act 098-0021


 

Public Act 0021 98TH GENERAL ASSEMBLY

  
  
  

 


 
Public Act 098-0021
 
HB2606 EnrolledLRB098 09027 MGM 39163 b

    AN ACT concerning liquor.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Liquor Control Act of 1934 is amended by
changing Section 6-2 and by adding Sections 6-1.5 and 6-4.5 as
follows:
 
    (235 ILCS 5/6-1.5 new)
    Sec. 6-1.5. Three-tier regulatory system; public policy
and rule of statutory construction. The General Assembly hereby
restates that it is the policy of this State that the primary
purpose of this Act is to protect the health, safety, and
welfare of this State through the sound and careful control and
regulation of the manufacture, distribution, and sale of
alcoholic liquor through a 3-tier regulatory system. To ensure
and maintain a 3-tier regulatory system, the General Assembly
finds that it is the obligation and duty of the State
Commission to construe the provisions of this Act in a manner
that conforms to State policy and this Act's primary purpose as
articulated in this Section and to exercise its statutory
authority in a manner consistent with that purpose whether or
not the provisions of this Act are unambiguous or capable of
one or more reasonable constructions.
 
    (235 ILCS 5/6-2)  (from Ch. 43, par. 120)
    Sec. 6-2. Issuance of licenses to certain persons
prohibited.
    (a) Except as otherwise provided in subsection (b) of this
Section and in paragraph (1) of subsection (a) of Section 3-12,
no license of any kind issued by the State Commission or any
local commission shall be issued to:
        (1) A person who is not a resident of any city, village
    or county in which the premises covered by the license are
    located; except in case of railroad or boat licenses.
        (2) A person who is not of good character and
    reputation in the community in which he resides.
        (3) A person who is not a citizen of the United States.
        (4) A person who has been convicted of a felony under
    any Federal or State law, unless the Commission determines
    that such person has been sufficiently rehabilitated to
    warrant the public trust after considering matters set
    forth in such person's application and the Commission's
    investigation. The burden of proof of sufficient
    rehabilitation shall be on the applicant.
        (5) A person who has been convicted of keeping a place
    of prostitution or keeping a place of juvenile
    prostitution, promoting prostitution that involves keeping
    a place of prostitution, or promoting juvenile
    prostitution that involves keeping a place of juvenile
    prostitution.
        (6) A person who has been convicted of pandering or
    other crime or misdemeanor opposed to decency and morality.
        (7) A person whose license issued under this Act has
    been revoked for cause.
        (8) A person who at the time of application for renewal
    of any license issued hereunder would not be eligible for
    such license upon a first application.
        (9) A copartnership, if any general partnership
    thereof, or any limited partnership thereof, owning more
    than 5% of the aggregate limited partner interest in such
    copartnership would not be eligible to receive a license
    hereunder for any reason other than residence within the
    political subdivision, unless residency is required by
    local ordinance.
        (10) A corporation or limited liability company, if any
    member, officer, manager or director thereof, or any
    stockholder or stockholders owning in the aggregate more
    than 5% of the stock of such corporation, would not be
    eligible to receive a license hereunder for any reason
    other than citizenship and residence within the political
    subdivision.
        (10a) A corporation or limited liability company
    unless it is incorporated or organized in Illinois, or
    unless it is a foreign corporation or foreign limited
    liability company which is qualified under the Business
    Corporation Act of 1983 or the Limited Liability Company
    Act to transact business in Illinois. The Commission shall
    permit and accept from an applicant for a license under
    this Act proof prepared from the Secretary of State's
    website that the corporation or limited liability company
    is in good standing and is qualified under the Business
    Corporation Act of 1983 or the Limited Liability Company
    Act to transact business in Illinois.
        (11) A person whose place of business is conducted by a
    manager or agent unless the manager or agent possesses the
    same qualifications required by the licensee.
        (12) A person who has been convicted of a violation of
    any Federal or State law concerning the manufacture,
    possession or sale of alcoholic liquor, subsequent to the
    passage of this Act or has forfeited his bond to appear in
    court to answer charges for any such violation.
        (13) A person who does not beneficially own the
    premises for which a license is sought, or does not have a
    lease thereon for the full period for which the license is
    to be issued.
        (14) Any law enforcing public official, including
    members of local liquor control commissions, any mayor,
    alderman, or member of the city council or commission, any
    president of the village board of trustees, any member of a
    village board of trustees, or any president or member of a
    county board; and no such official shall have a direct
    interest in the manufacture, sale, or distribution of
    alcoholic liquor, except that a license may be granted to
    such official in relation to premises that are not located
    within the territory subject to the jurisdiction of that
    official if the issuance of such license is approved by the
    State Liquor Control Commission and except that a license
    may be granted, in a city or village with a population of
    50,000 or less, to any alderman, member of a city council,
    or member of a village board of trustees in relation to
    premises that are located within the territory subject to
    the jurisdiction of that official if (i) the sale of
    alcoholic liquor pursuant to the license is incidental to
    the selling of food, (ii) the issuance of the license is
    approved by the State Commission, (iii) the issuance of the
    license is in accordance with all applicable local
    ordinances in effect where the premises are located, and
    (iv) the official granted a license does not vote on
    alcoholic liquor issues pending before the board or council
    to which the license holder is elected. Notwithstanding any
    provision of this paragraph (14) to the contrary, an
    alderman or member of a city council or commission, a
    member of a village board of trustees other than the
    president of the village board of trustees, or a member of
    a county board other than the president of a county board
    may have a direct interest in the manufacture, sale, or
    distribution of alcoholic liquor as long as he or she is
    not a law enforcing public official, a mayor, a village
    board president, or president of a county board. To prevent
    any conflict of interest, the elected official with the
    direct interest in the manufacture, sale, or distribution
    of alcoholic liquor shall not participate in any meetings,
    hearings, or decisions on matters impacting the
    manufacture, sale, or distribution of alcoholic liquor.
    Furthermore, the mayor of a city with a population of
    50,000 or less or the president of a village with a
    population of 50,000 or less may have an interest in the
    manufacture, sale, or distribution of alcoholic liquor as
    long as the council or board over which he or she presides
    has made a local liquor control commissioner appointment
    that complies with the requirements of Section 4-2 of this
    Act.
        (15) A person who is not a beneficial owner of the
    business to be operated by the licensee.
        (16) A person who has been convicted of a gambling
    offense as proscribed by any of subsections (a) (3) through
    (a) (11) of Section 28-1 of, or as proscribed by Section
    28-1.1 or 28-3 of, the Criminal Code of 1961 or the
    Criminal Code of 2012, or as proscribed by a statute
    replaced by any of the aforesaid statutory provisions.
        (17) A person or entity to whom a federal wagering
    stamp has been issued by the federal government, unless the
    person or entity is eligible to be issued a license under
    the Raffles Act or the Illinois Pull Tabs and Jar Games
    Act.
        (18) A person who intends to sell alcoholic liquors for
    use or consumption on his or her licensed retail premises
    who does not have liquor liability insurance coverage for
    that premises in an amount that is at least equal to the
    maximum liability amounts set out in subsection (a) of
    Section 6-21.
        (19) A person who is licensed by any licensing
    authority as a manufacturer of beer, or any partnership,
    corporation, limited liability company, or trust or any
    subsidiary, affiliate, or agent thereof, or any other form
    of business enterprise licensed as a manufacturer of beer,
    having any legal, equitable, or beneficial interest,
    directly or indirectly, in a person licensed in this State
    as a distributor or importing distributor. For purposes of
    this paragraph (19), a person who is licensed by any
    licensing authority as a "manufacturer of beer" shall also
    mean a brewer and a non-resident dealer who is also a
    manufacturer of beer, including a partnership,
    corporation, limited liability company, or trust or any
    subsidiary, affiliate, or agent thereof, or any other form
    of business enterprise licensed as a manufacturer of beer.
        (20) A person who is licensed in this State as a
    distributor or importing distributor, or any partnership,
    corporation, limited liability company, or trust or any
    subsidiary, affiliate, or agent thereof, or any other form
    of business enterprise licensed in this State as a
    distributor or importing distributor having any legal,
    equitable, or beneficial interest, directly or indirectly,
    in a person licensed as a manufacturer of beer by any
    licensing authority, or any partnership, corporation,
    limited liability company, or trust or any subsidiary,
    affiliate, or agent thereof, or any other form of business
    enterprise, except for a person who owns, on or after the
    effective date of this amendatory Act of the 98th General
    Assembly, no more than 5% of the outstanding shares of a
    manufacturer of beer whose shares are publicly traded on an
    exchange within the meaning of the Securities Exchange Act
    of 1934. For the purposes of this paragraph (20), a person
    who is licensed by any licensing authority as a
    "manufacturer of beer" shall also mean a brewer and a
    non-resident dealer who is also a manufacturer of beer,
    including a partnership, corporation, limited liability
    company, or trust or any subsidiary, affiliate, or agent
    thereof, or any other form of business enterprise licensed
    as a manufacturer of beer.
    (b) A criminal conviction of a corporation is not grounds
for the denial, suspension, or revocation of a license applied
for or held by the corporation if the criminal conviction was
not the result of a violation of any federal or State law
concerning the manufacture, possession or sale of alcoholic
liquor, the offense that led to the conviction did not result
in any financial gain to the corporation and the corporation
has terminated its relationship with each director, officer,
employee, or controlling shareholder whose actions directly
contributed to the conviction of the corporation. The
Commission shall determine if all provisions of this subsection
(b) have been met before any action on the corporation's
license is initiated.
(Source: P.A. 96-1551, eff. 7-1-11; 97-1059, eff. 8-24-12;
97-1150, eff. 1-25-13.)
 
    (235 ILCS 5/6-4.5 new)
    Sec. 6-4.5. Prohibited ownership interests in a
distributor, importing distributor, manufacturer of beer, or
non-resident dealer.
    (a) The General Assembly finds, consistent with Section
6-1.5, that the 3-tier regulatory system is designed to prevent
a manufacturer of beer as described in paragraph (19) of
subsection (a) of Section 6-2 from exercising vertical
integration between a manufacturer of beer and a distributor or
importing distributor through any ownership interest, or
through control of the distributor or importing distributor.
The General Assembly further finds, consistent with Section
6-1.5, that the 3-tier regulatory system is designed to prevent
a distributor or importing distributor as described in
paragraph (20) of subsection (a) of Section 6-2 from having any
ownership interest in a manufacturer of beer as described in
paragraph (20) of subsection (a) of Section 6-2 except for the
ownership of no more than 5% of the outstanding shares of a
manufacturer of beer whose shares are publicly traded on an
exchange within the meaning of the Securities Exchange Act of
1934. The General Assembly further finds that it is necessary
to have the State Commission undertake an expedited
investigation, in accordance with procedural due process, to
determine whether any existing manufacturer of beer described
in paragraph (19) of subsection (a) of Section 6-2 or any
existing distributor or importing distributor described in
paragraph (20) of subsection (a) of Section 6-2 owns a
prohibited ownership interest, and an orderly process by which
an existing manufacturer of beer, distributor, or importing
distributor may divest itself of or sever the prohibited
ownership interest by no later than January 1, 2015.
    (b) Notwithstanding any provision of this Act to the
contrary, no person licensed as a manufacturer of beer as
described in paragraph (19) of subsection (a) of Section 6-2
shall have any prohibited ownership interest, directly or
indirectly, in a person licensed as a distributor or importing
distributor. Any person who holds a prohibited ownership
interest in a person licensed as a distributor or importing
distributor prior to this amendatory Act of the 98th General
Assembly shall, in accordance with paragraph (19) of subsection
(a) of Section 6-2, be ineligible to receive or hold any
license issued by the State Commission, unless that person
complies with the provisions of this Section.
    (c) Notwithstanding any provision of this Act to the
contrary, no person licensed in this State as a distributor or
importing distributor as described in paragraph (20) of
subsection (a) of Section 6-2 shall have any prohibited
ownership interest, directly or indirectly, in a person
licensed as a manufacturer of beer as described in paragraph
(20) of subsection (a) of Section 6-2. Any person who holds an
interest in a person licensed as a distributor or importing
distributor in this State prior to this amendatory Act of the
98th General Assembly shall, in accordance with paragraph (20)
of subsection (a) of Section 6-2, be ineligible to receive or
hold a license by the State Commission, unless the person
complies with the provisions of this Section. This subsection
(c) shall not apply to a person who owns, on or after the
effective date of this amendatory Act of the 98th General
Assembly, no more than 5% of the outstanding shares of a
manufacturer of beer whose shares are publicly traded on an
exchange within the meaning of the Securities Exchange Act of
1934.
    (d) Within 30 days after the effective date of this
amendatory Act of the 98th General Assembly, the State
Commission shall notify in writing all persons licensed by the
State Commission as a manufacturer of beer, as described in
paragraph (19) of subsection (a) of Section 6-2 of the
prohibited ownership interest provision set forth in
subsection (b) of this Section and paragraph (19) of subsection
(a) of Section 6-2. Also within 30 days after the effective
date of this amendatory Act of the 98th General Assembly, the
State Commission shall notify in writing all persons licensed
by the State Commission as a distributor or importing
distributor of the prohibited ownership interest provision set
forth in subsection (c) of this Section and paragraph (20) of
subsection (a) of Section 6-2. The notice provided by the State
Commission shall also state for a manufacturer of beer, as
described in paragraph (19) of subsection (a) of Section 6-2,
that it is required to disclose in writing any ownership
interest it directly or indirectly possesses in a distributor
or importing distributor, as described in paragraph (20) of
subsection (a) of Section 6-2, the type and amount of ownership
interest possessed by it, the length of time the manufacturer
of beer has held the ownership interest in the distributor or
importing distributor, and any other information specified by
the State Commission in its written notice. The notice provided
by the State Commission shall also state for a distributor or
importing distributor, as described in paragraph (20) of
subsection (a) of Section 6-2, that it is required to disclose
in writing any ownership interest it directly or indirectly
possesses in a manufacturer of beer, as described in paragraph
(19) of subsection (a) of Section 6-2, the type and amount of
ownership interest possessed by it, the length of time the
manufacturer of beer has held the ownership interest in the
distributor or importing distributor, and any other
information specified by the State Commission in its written
notice.
    (e) Within 60 days after the effective date of this
amendatory Act of the 98th General Assembly, each manufacturer
of beer, distributor, or importing distributor subject to
notification under subsection (d) of this Section shall
disclose in writing and under oath the relevant ownership
interest and other required information specified in the
notification provided by the State Commission pursuant to that
subsection. The written disclosure shall, as a mandatory
obligation, be tendered to the State Commission by either
personal service or via certified or registered mail at the
State Commission's Springfield or Chicago office on or before
the 60th day during regular business hours. Failure to tender
the required written disclosure shall result in the immediate
entry of an order by the State Commission suspending the
licensee's license within 5 days after the 60th day, and the
initiation of proceedings by the State Commission to enter an
order to permanently revoke the licensee's license no later
than 45 days after providing the licensee with notice and an
opportunity for a hearing. Whenever the State Commission has
reason to believe that a person has failed to comply with the
Commission notice under this Section, it shall notify the
Department of Revenue and the Attorney General, and shall file
a complaint with the State's Attorney of the county where the
alcoholic liquor was delivered or with appropriate law
enforcement officials. Failure to make the written disclosure
required under this subsection shall constitute a business
offense for which the person shall be fined not more than
$5,000 for a first offense, not more than $10,000 for a second
offense, and not more than $15,000 for a third or subsequent
offense.
    (f) Within 180 days after the effective date of this
amendatory Act of the 98th General Assembly, the State
Commission shall review each of the disclosures tendered to the
State Commission by licensees pursuant to subsection (e) and
enter an order determining whether or not each licensee is in
compliance with subsection (b) or (c) of this Section,
whichever is applicable, after providing each licensee with
notice and an opportunity for a hearing. As part of making its
determination, the State Commission shall also consider any
information otherwise admissible under Section 10-40 of the
Illinois Administrative Procedure Act.
    (g) If the State Commission determines, based on a
preponderance of record evidence, that a manufacturer of beer,
distributor, or importing distributor has no prohibited
ownership interest in a licensee in violation of subsection (b)
or (c) of this Section, then the State Commission shall enter
an order finding that the manufacturer of beer, distributor, or
importing distributor is in compliance with this Section,
record the matter as closed, and serve a copy of the order of
compliance on the licensee and each person with an ownership
interest in the licensee.
    If the State Commission determines, based on a
preponderance of record evidence, that a manufacturer of beer,
as described in paragraph (19) of subsection (a) of Section
6-2, has a prohibited ownership interest as set forth in
subsection (b) of this Section, then the State Commission shall
enter an order finding that the manufacturer of beer is not in
compliance with this Section and that the manufacturer of beer
shall divest itself of that interest on or before January 1,
2015, subject to the State Commission's approval of the
successive owner pursuant to the State Commission's authority
provided in this Act. In addition, the State Commission shall
find that the relevant distributor or importing distributor is
not in compliance with this Section and that the distributor or
importing distributor is required to sever the prohibited
ownership interest possessed by the relevant manufacturer of
beer on or before January 1, 2015, subject to the State
Commission's approval of the successive owner pursuant to the
State Commission's authority provided in this Act.
    If the State Commission determines, based on a
preponderance of record evidence, that a distributor or
importing distributor, as described in paragraph (20) of
subsection (a) of Section 6-2, has a prohibited ownership
interest as set forth in subsection (c) of this Section, then
the State Commission shall enter an order finding that the
relevant distributor or importing distributor is not in
compliance with this Section and that the relevant distributor
or importing distributor shall divest itself of that interest
on or before January 1, 2015, subject to the State Commission's
approval of the successive owner pursuant to the State
Commission's authority provided in this Act. In addition, the
State Commission shall find that the manufacturer of beer is
not in compliance with this Section and that the manufacturer
of beer shall sever the prohibited ownership interest possessed
by the distributor or importing distributor on or before
January 1, 2015, subject to the State Commission's approval of
the successive owner pursuant to the State Commission's
authority provided in this Act.
    The State Commission's order shall further find that the
continued ownership of the prohibited ownership interest
beyond January 1, 2015 by the manufacturer of beer,
distributor, or importing distributor is against the public
interest and a violation of this Section and Section 6-1.5 of
the Act.
    The State Commission's order shall further find for a
manufacturer of beer, as described in paragraph (19) of
subsection (a) of Section 6-2, found in non-compliance with
subsection (b) of this Section that its license is revoked on
January 16, 2015 as to the transport, transfer, or sale of any
alcoholic liquor to the relevant distributor or importing
distributor that the manufacturer of beer has a prohibited
ownership interest in if that interest is not properly divested
on January 1, 2015, subject to the State Commission's approval
of the successive owner pursuant to the State Commission's
authority provided in this Act. In addition, the State
Commission shall find that the license of a distributor or
importing distributor that is subject to the prohibited
ownership interest of the manufacturer of beer is revoked on
January 16, 2015 as to the transport, transfer, or sale of
alcoholic liquor from the relevant manufacturer of beer to any
retailer if that ownership interest is not properly severed on
January 1, 2015, subject to the State Commission's approval of
the successive owner pursuant to the State Commission's
authority provided in this Act.
    The State Commission's order shall further find for a
distributor or importing distributor, as described in
paragraph (20) of subsection (a) of Section 6-2, found in
non-compliance with subsection (c) of this Section, that its
license is revoked on January 16, 2015 as to the transport,
transfer, or sale of any alcoholic liquor from the relevant
manufacturer of beer to any retailer if that prohibited
ownership interest in the manufacturer of beer is not properly
divested on January 1, 2015, subject to the State Commission's
approval of the successive owner pursuant to the State
Commission's authority provided in this Act. In addition, the
State Commission shall find that the license of the
manufacturer of beer that is subject to the prohibited
ownership interest of a distributor or importing distributor is
revoked on January 16, 2015 as to the transport, transfer, or
sale of alcoholic liquor to the distributor or importing
distributor if that ownership interest is not properly severed
on January 1, 2015, subject to the State Commission's approval
of the successive owner pursuant to the State Commission's
authority provided in this Act.
    The State Commission shall serve a copy of the order of
non-compliance on the licensee and each person with an
ownership interest in the licensee.
    (h) If a person with a prohibited ownership interest in a
licensee under subsection (b) or (c) of this Section succeeds
in divesting itself of or severing that interest and obtains
the State Commission's approval of the successive owner
pursuant to its authority provided in this Act on or before
January 1, 2015, then the State Commission shall enter an order
finding that the licensee is in compliance, record the matter
as closed, and serve a copy of the order of compliance on the
licensee and each person with an ownership interest in the
licensee.
    If a person with a prohibited ownership interest in
violation of subsection (b) or (c) of this Section fails to
divest itself of or sever that interest and obtain the State
Commission's approval of the successive owner pursuant to the
State Commission's authority provided in this Act on or before
January 1, 2015, then the State Commission shall, after notice
and an opportunity for a hearing, revoke each licensee's
license as specified in subsection (g) of this Section on
January 16, 2015. The State Commission, when entering the
order, shall give notice to the person by certified mail to
cease and desist all shipments of alcoholic liquor into or
within this State and to withdraw from this State within 5
working days after receipt of the notice all shipments of
alcoholic liquor in transit. Whenever the State Commission has
reason to believe that a person has failed to comply with the
State Commission's notice under this Section, it shall notify
the Department of Revenue and the Attorney General, and shall
file a complaint with the State's Attorney of the county where
the alcoholic liquor was delivered, or with appropriate law
enforcement officials. Failure to comply with the notice issued
by the State Commission under this Section is against the
public interest and constitutes a business offense for which
the person shall be fined not more than $5,000 for a first
offense, not more than $10,000 for a second offense, and not
more than $15,000 for a third or subsequent offense. Each
shipment or transfer of alcoholic liquor in violation of the
cease and desist notice shall constitute a separate offense.
    (i) The power and authority granted to the State Commission
under this Section is in addition to any existing power or
authority the State Commission has under this Act and its
exercise shall be accorded precedence on the State Commission's
meeting agenda so as to fully accommodate the schedule for any
proceeding under the provisions of this Section. Nothing in
this Act shall be construed as limiting or otherwise impairing
the ability of the State Commission to conduct future
investigations and proceedings sua sponte or pursuant to a
complaint to ensure compliance with this Section or paragraph
(19) or (20) of subsection (a) of Section 6-2 of this Act. Any
future investigations and proceedings shall be conducted by the
State Commission on an expedited basis and pursuant to an
initiating order entered by the State Commission. The State
Commission shall enter its initiating order within 30 days
after the receipt of a complaint. The initiating order shall
set forth a schedule by which the required notices,
disclosures, determinations, or orders specified in
subsections (d), (e), (f), (g), and (h) shall be made or
entered, and the period of time by which a licensee shall
divest itself of or sever a prohibited ownership interest,
which shall be no later than 540 days after the entry of the
initiating order.
    (j) Any association or non-profit corporation representing
beer distributors in this State shall have standing to
intervene and otherwise participate as a party in any
proceeding undertaken by the State Commission under this
Section to review and determine compliance or non-compliance
with this Section.
    (k) For purposes of this Section, the term "ownership
interest" means a legal, equitable, or beneficial interest
recognized under Illinois law. The term "prohibited ownership
interest" means an ownership interest in a distributor,
importing distributor, or manufacturer of beer as specified in
this Section.
 
    Section 99. Effective date. This Act takes effect upon
becoming law.

Effective Date: 06/13/2013