103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB3730

 

Introduced 2/9/2024, by Sen. Cristina Castro

 

SYNOPSIS AS INTRODUCED:
 
235 ILCS 5/6-9.10
235 ILCS 5/6-9.15

    Amends the Liquor Control Act of 1934. Provides that a licensee with a combined on-premises and off-premises license may make purchases for on-premises use only through an on-premises cooperative purchase group and may make purchases for off-premises use only through an off-premises cooperative purchase group. Provides that neither a cooperative agent nor a cooperative purchase group may receive cash or anything of value from a retail licensee or an importing distributor or distributor, non-resident dealer, or manufacturer as part of a cooperative purchasing agreement. Removes language providing that a cooperative agent that is compliant with certain provisions may receive cash or anything of value from both the retail licensee and an importing distributor or distributor, non-resident dealer or manufacturers as part of a cooperative purchase group agreement. Provides that cooperative agents and cooperative purchase groups may not have an ownership interest, direct or indirect, in any business or enterprise that provides marketing services or activities on behalf of manufacturers, non-resident dealers, foreign importers, importing distributors, and distributors. Provides that it is the duty of every cooperative agent and cooperative purchase group to make books and records available upon reasonable notice for the purpose of investigation and control by the Illinois Liquor Control Commission or any local liquor commission having jurisdiction over a licensee member of a cooperative purchase group. Makes changes concerning the surety bond a cooperative purchase group is required to retain. Changes references from "cooperative purchasing group" to "cooperative purchase group" to conform to the defined term.


LRB103 38678 RPS 68815 b

 

 

A BILL FOR

 

SB3730LRB103 38678 RPS 68815 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 6-9.10 as follows:
 
6    (235 ILCS 5/6-9.10)
7    Sec. 6-9.10. Cooperative purchasing agreements.
8    (a) A cooperative purchasing agreement shall only be valid
9if the following conditions are met:
10        (1) the agreement is in writing and signed by all
11    parties to the agreement;
12        (2) the agreement contains the complete license
13    information for all parties to the agreement, including
14    State and local license numbers and expiration dates as
15    well as the date on which the retail member joined the
16    cooperative purchase group;
17        (3) a retail licensee that is a party to the agreement
18    must not be a party to any other related cooperative
19    purchasing agreement;
20        (4) the agreement identifies and designates the name
21    and address of the agent or agents with the authority to
22    contract for the purchase and delivery of wine or spirits
23    on behalf of the cooperative purchase group;

 

 

SB3730- 2 -LRB103 38678 RPS 68815 b

1        (5) a copy of the executed agreement, including any
2    amendments, deletions, or additions, is kept on the
3    premises of each party to the agreement for a period of 3
4    years;
5        (6) a copy of the executed agreement, including any
6    amendments, deletions, or additions, is delivered to the
7    relevant licensee with distribution privileges and to the
8    State Commission before making any purchases under the
9    agreement; any amendments, deletions, or additions must be
10    submitted to the State Commission within 7 business days
11    after the amendment, deletion, or addition is executed;
12    and
13        (7) the agreement must designate whether the
14    cooperative purchase purchasing group is comprised of
15    retail licenses engaged in the sale of wine or spirits on
16    or off the premises.
17    (b) A retail licensee may, pursuant to a cooperative
18purchasing agreement, make purchases as a member of a
19cooperative purchase group or independently of any such group.
20Nothing in this Section or any other Section of this Act shall
21be construed to prohibit commonly or not commonly owned retail
22licensees from making purchases separate and apart from any
23membership in a cooperative purchase group.
24    (c) A retailer may only be a member of one cooperative
25purchase group at a time. A retail licensee may change to a
26different cooperative purchase group no more than twice in a

 

 

SB3730- 3 -LRB103 38678 RPS 68815 b

112-month period. However, if an existing cooperative purchase
2group member purchases a retail location from a member of
3another cooperative purchase group, the new owner of the
4retail location may move the membership of the retail licensee
5to a different cooperative purchase purchasing group.
6    (d) When a retail licensee joins an existing cooperative
7purchase purchasing group, the new member must be a member for
8a period of 7 days before being able to participate in any
9quantity discount programs.
10    (e) Cooperative purchase purchasing group members must be
11either all on-premises retail licensees or all off-premises
12retail licensees. A licensee with a combined on-premises and
13off-premises license may make purchases for on-premises use
14only through an on-premises cooperative purchase group and may
15make purchases for off-premises use only through an
16off-premises cooperative purchase group.
17    (f) Any individual retail licensee that is a member of a
18cooperative purchase group that fails to comply with the terms
19and conditions of this Section may be deemed to be in violation
20of Section 6-5. Any distributor or importing distributor that
21fails to comply with this Section may be deemed to be in
22violation of Section 6-5.
23    (g) The State Commission shall keep a list of the members
24of each cooperative purchase group and shall make that list
25available on its website.
26    (h) A retail licensee that is a member of a cooperative

 

 

SB3730- 4 -LRB103 38678 RPS 68815 b

1purchase group shall not have an ownership interest, directly
2or indirectly, in any entity licensed by this Act other than a
3retailer.
4    (i) It is unlawful for a distributor or importing
5distributor to furnish, give, or lend money or anything of
6value to a cooperative agent.
7    (j) It is the duty of each retail licensee of the
8cooperative purchase group to make books and records available
9upon reasonable notice for the purpose of investigation and
10control by the State Commission or any local liquor control
11commission having jurisdiction over the retail licensee of the
12cooperative purchase group.
13    (k) A cooperative agent shall not have an ownership
14interest, directly or indirectly, in an entity licensed under
15any other license category under this Act.
16    (l) A retailer, manufacturer, importing distributor,
17distributor, or cooperative agent shall remain in compliance
18with federal law pursuant to the prohibitions and exceptions
19provided in 27 CFR Part 6 and any promulgated rules thereof.
20Neither a A cooperative agent nor a cooperative purchase group
21may that is compliant with Sections 6-5 and 6-6 shall not
22receive cash or anything of value from a both the retail
23licensee or and an importing distributor or distributor,
24non-resident dealer, or manufacturer manufacturers as part of
25a cooperative purchasing group agreement. Cooperative agents
26and cooperative purchase groups may not have an ownership

 

 

SB3730- 5 -LRB103 38678 RPS 68815 b

1interest, direct or indirect, in any business or enterprise
2that provides marketing services or activities on behalf of
3manufacturers, non-resident dealers, foreign importers,
4importing distributors, and distributors. Cooperative agents
5and cooperative purchase groups and owners thereof are
6strictly prohibited from, directly or indirectly, accepting
7things of value from, or providing marketing services or
8activities on behalf of, manufacturers, non-resident dealers,
9foreign importers, importing distributors, and distributors.
10Cooperative agents and cooperative purchase groups, as agents
11of retail licensees, are subject to the obligations and
12restrictions of retail licensees, including, but not limited
13to, Section 6-5, Section 6-6, Section 10-3, and 11 Ill. Adm.
14Code 100.500.
15    (m) It is the duty of every cooperative agent and
16cooperative purchase group to make books and records available
17upon reasonable notice for the purpose of investigation and
18control by the State Commission or any local liquor commission
19having jurisdiction over a licensee member of a cooperative
20purchase group.
21(Source: P.A. 102-442, eff. 8-20-21.)
 
22    Section 10. The Liquor Control Act of 1934 is amended by
23changing Section 6-9.15 as follows:
 
24    (235 ILCS 5/6-9.15)

 

 

SB3730- 6 -LRB103 38678 RPS 68815 b

1    Sec. 6-9.15. Quantity discounting terms for wine or
2spirits cooperative purchase agreements.
3    (a) All wine or spirits quantity discount programs offered
4to consumption off the premises retailers must be offered to
5all consumption off the premises cooperative groups and
6cooperative agents, and all quantity discount programs offered
7to consumption on the premises retailers shall be offered to
8all consumption on the premises cooperative groups and
9cooperative agents. Quantity discount programs shall:
10        (1) be open and available for acceptance for 7
11    business days;
12        (2) be designed and implemented to produce product
13    volume growth with retail licensees;
14        (3) be based on the volume of product purchased;
15    however, discounts may include price reductions, cash, and
16    credits, and no-charge wine or spirits products may be
17    given instead of a discount;
18        (4) be documented on related sales invoices or credit
19    memoranda;
20        (5) not require a retail licensee to take and dispose
21    of any quota of wine or spirits; however, bona fide
22    quantity discounts shall not be deemed to be quota sales;
23    and
24        (6) not require a retail licensee to purchase one
25    product in order to purchase another; this includes
26    combination sales if one or more products may be purchased

 

 

SB3730- 7 -LRB103 38678 RPS 68815 b

1    only in combination with other products and not
2    individually.
3    (b) A distributor or importing distributor that makes
4quantity discount sales to participating members of a
5cooperative purchase group shall issue customary invoices to
6each participating retail licensee itemizing the wine or
7spirit sold and delivered as part of a quantity discount
8program to each participating retail licensee.
9    (c) If a distributor or importing distributor offers a
10quantity discount for wine or spirits, excluding any product
11fermented with malt or any substitute for malt, cooperative
12purchase groups shall purchase a minimum of 250 cases in each
13quantity discount program. Each individual participating
14member of a cooperative purchase group purchasing product
15through a quantity discount program may be required to
16purchase the following minimum amounts:
17        (1) 2% of cases of any quantity discount program of
18    500 or fewer cases.
19        (2) 1.5% of cases of any quantity discount program of
20    at least 501 and not more than 2,000 cases.
21        (3) 1% of cases of any quantity discount program of
22    2,001 or more cases.
23    (d) The cooperative agent shall place each cooperative
24purchase order under the name of the cooperative purchase
25group and shall identify each participating retail member
26involved with the purchase, the quantity of product purchased,

 

 

SB3730- 8 -LRB103 38678 RPS 68815 b

1the price attributable to each retailer member's purchase, and
2a requested delivery date. A retail licensee may make
3purchases through a cooperative purchase purchasing group or
4independently of such group. Nothing in this Section shall be
5construed to prohibit retail licensees from making purchases
6separate and apart from any cooperative purchase purchasing
7group.
8    (e) Each distributor or importing distributor shall
9separately invoice each participating cooperative purchase
10group member for the purchase made on behalf of such
11participating member.
12    (f) A cooperative purchase purchasing group shall maintain
13the records of each cooperative purchase order placed for 90
14days. The records shall include:
15        (1) the date the cooperative purchase purchasing group
16    order was placed and the date of any amendments to the
17    order;
18        (2) the distributor or importing distributor with
19    which the cooperative purchase purchasing group placed the
20    order;
21        (3) the names and license numbers of each cooperative
22    purchase purchasing group member participating in the
23    order;
24        (4) the price discounts and net price of all wine or
25    spirits ordered by each cooperative purchase group member;
26    and

 

 

SB3730- 9 -LRB103 38678 RPS 68815 b

1        (5) the requested delivery date for the order.
2    (g) A cooperative purchase group is subject to the books
3and records requirements of Section 6-10 and subsection (e) of
411 Ill. Adm. Code 100.130.
5    (h) A cooperative purchase purchasing group shall retain a
6surety bond in favor of each distributor with which it
7conducts business at all times for no less than $250,000. The
8bond shall provide a street address at which bond claims may be
9submitted. If a cooperative purchase purchasing group member
10is delinquent in payment pursuant to Section 6-5 on a purchase
11made through a cooperative purchase group or directly between
12the cooperative member and a distributor, the surety shall
13immediately pay the importing distributor or distributor the
14delinquent amount, unless the delinquent member submits a bona
15fide dispute to the State Commission within 5 business days.
16The surety bond required by this Section may be acquired from a
17company, agent, or broker of the cooperative purchase group's
18choice. If the surety bond does not cure the indebtedness
19within 5 business days after receipt of the demand and if the
20delinquent member has not submitted a bona fide dispute to the
21State Commission, the 30-day merchandising credit requirements
22of Section 6-5 shall apply jointly to each cooperative
23purchase purchasing group until the indebtedness is cured. The
24cooperative purchase purchasing group is responsible for all
25costs and fees related to the surety bond.
26    (i) Any licensee that fails to comply with the terms and

 

 

SB3730- 10 -LRB103 38678 RPS 68815 b

1conditions of this Section may be deemed to be in violation of
2this Act.
3    (j) Nothing in this Section shall apply to quantity
4discount programs offered for any product fermented with malt
5or any substitute for malt. Nothing in this Section shall be
6construed to prohibit, limit, or interfere with quantity
7discount, credit, or rebate programs offered for any product
8fermented with malt or any substitute for malt.
9(Source: P.A. 102-442, eff. 8-20-21; 103-154, eff. 6-30-23.)