HB2606 EngrossedLRB098 09027 MGM 39163 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 6-2 and by adding Sections 6-1.5 and 6-4.5 as
6follows:
 
7    (235 ILCS 5/6-1.5 new)
8    Sec. 6-1.5. Three-tier regulatory system; public policy
9and rule of statutory construction. The General Assembly hereby
10restates that it is the policy of this State that the primary
11purpose of this Act is to protect the health, safety, and
12welfare of this State through the sound and careful control and
13regulation of the manufacture, distribution, and sale of
14alcoholic liquor through a 3-tier regulatory system. To ensure
15and maintain a 3-tier regulatory system, the General Assembly
16finds that it is the obligation and duty of the State
17Commission to construe the provisions of this Act in a manner
18that conforms to State policy and this Act's primary purpose as
19articulated in this Section and to exercise its statutory
20authority in a manner consistent with that purpose whether or
21not the provisions of this Act are unambiguous or capable of
22one or more reasonable constructions.
 

 

 

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1    (235 ILCS 5/6-2)  (from Ch. 43, par. 120)
2    Sec. 6-2. Issuance of licenses to certain persons
3prohibited.
4    (a) Except as otherwise provided in subsection (b) of this
5Section and in paragraph (1) of subsection (a) of Section 3-12,
6no license of any kind issued by the State Commission or any
7local commission shall be issued to:
8        (1) A person who is not a resident of any city, village
9    or county in which the premises covered by the license are
10    located; except in case of railroad or boat licenses.
11        (2) A person who is not of good character and
12    reputation in the community in which he resides.
13        (3) A person who is not a citizen of the United States.
14        (4) A person who has been convicted of a felony under
15    any Federal or State law, unless the Commission determines
16    that such person has been sufficiently rehabilitated to
17    warrant the public trust after considering matters set
18    forth in such person's application and the Commission's
19    investigation. The burden of proof of sufficient
20    rehabilitation shall be on the applicant.
21        (5) A person who has been convicted of keeping a place
22    of prostitution or keeping a place of juvenile
23    prostitution, promoting prostitution that involves keeping
24    a place of prostitution, or promoting juvenile
25    prostitution that involves keeping a place of juvenile
26    prostitution.

 

 

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1        (6) A person who has been convicted of pandering or
2    other crime or misdemeanor opposed to decency and morality.
3        (7) A person whose license issued under this Act has
4    been revoked for cause.
5        (8) A person who at the time of application for renewal
6    of any license issued hereunder would not be eligible for
7    such license upon a first application.
8        (9) A copartnership, if any general partnership
9    thereof, or any limited partnership thereof, owning more
10    than 5% of the aggregate limited partner interest in such
11    copartnership would not be eligible to receive a license
12    hereunder for any reason other than residence within the
13    political subdivision, unless residency is required by
14    local ordinance.
15        (10) A corporation or limited liability company, if any
16    member, officer, manager or director thereof, or any
17    stockholder or stockholders owning in the aggregate more
18    than 5% of the stock of such corporation, would not be
19    eligible to receive a license hereunder for any reason
20    other than citizenship and residence within the political
21    subdivision.
22        (10a) A corporation or limited liability company
23    unless it is incorporated or organized in Illinois, or
24    unless it is a foreign corporation or foreign limited
25    liability company which is qualified under the Business
26    Corporation Act of 1983 or the Limited Liability Company

 

 

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1    Act to transact business in Illinois. The Commission shall
2    permit and accept from an applicant for a license under
3    this Act proof prepared from the Secretary of State's
4    website that the corporation or limited liability company
5    is in good standing and is qualified under the Business
6    Corporation Act of 1983 or the Limited Liability Company
7    Act to transact business in Illinois.
8        (11) A person whose place of business is conducted by a
9    manager or agent unless the manager or agent possesses the
10    same qualifications required by the licensee.
11        (12) A person who has been convicted of a violation of
12    any Federal or State law concerning the manufacture,
13    possession or sale of alcoholic liquor, subsequent to the
14    passage of this Act or has forfeited his bond to appear in
15    court to answer charges for any such violation.
16        (13) A person who does not beneficially own the
17    premises for which a license is sought, or does not have a
18    lease thereon for the full period for which the license is
19    to be issued.
20        (14) Any law enforcing public official, including
21    members of local liquor control commissions, any mayor,
22    alderman, or member of the city council or commission, any
23    president of the village board of trustees, any member of a
24    village board of trustees, or any president or member of a
25    county board; and no such official shall have a direct
26    interest in the manufacture, sale, or distribution of

 

 

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1    alcoholic liquor, except that a license may be granted to
2    such official in relation to premises that are not located
3    within the territory subject to the jurisdiction of that
4    official if the issuance of such license is approved by the
5    State Liquor Control Commission and except that a license
6    may be granted, in a city or village with a population of
7    50,000 or less, to any alderman, member of a city council,
8    or member of a village board of trustees in relation to
9    premises that are located within the territory subject to
10    the jurisdiction of that official if (i) the sale of
11    alcoholic liquor pursuant to the license is incidental to
12    the selling of food, (ii) the issuance of the license is
13    approved by the State Commission, (iii) the issuance of the
14    license is in accordance with all applicable local
15    ordinances in effect where the premises are located, and
16    (iv) the official granted a license does not vote on
17    alcoholic liquor issues pending before the board or council
18    to which the license holder is elected. Notwithstanding any
19    provision of this paragraph (14) to the contrary, an
20    alderman or member of a city council or commission, a
21    member of a village board of trustees other than the
22    president of the village board of trustees, or a member of
23    a county board other than the president of a county board
24    may have a direct interest in the manufacture, sale, or
25    distribution of alcoholic liquor as long as he or she is
26    not a law enforcing public official, a mayor, a village

 

 

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1    board president, or president of a county board. To prevent
2    any conflict of interest, the elected official with the
3    direct interest in the manufacture, sale, or distribution
4    of alcoholic liquor shall not participate in any meetings,
5    hearings, or decisions on matters impacting the
6    manufacture, sale, or distribution of alcoholic liquor.
7    Furthermore, the mayor of a city with a population of
8    50,000 or less or the president of a village with a
9    population of 50,000 or less may have an interest in the
10    manufacture, sale, or distribution of alcoholic liquor as
11    long as the council or board over which he or she presides
12    has made a local liquor control commissioner appointment
13    that complies with the requirements of Section 4-2 of this
14    Act.
15        (15) A person who is not a beneficial owner of the
16    business to be operated by the licensee.
17        (16) A person who has been convicted of a gambling
18    offense as proscribed by any of subsections (a) (3) through
19    (a) (11) of Section 28-1 of, or as proscribed by Section
20    28-1.1 or 28-3 of, the Criminal Code of 1961 or the
21    Criminal Code of 2012, or as proscribed by a statute
22    replaced by any of the aforesaid statutory provisions.
23        (17) A person or entity to whom a federal wagering
24    stamp has been issued by the federal government, unless the
25    person or entity is eligible to be issued a license under
26    the Raffles Act or the Illinois Pull Tabs and Jar Games

 

 

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1    Act.
2        (18) A person who intends to sell alcoholic liquors for
3    use or consumption on his or her licensed retail premises
4    who does not have liquor liability insurance coverage for
5    that premises in an amount that is at least equal to the
6    maximum liability amounts set out in subsection (a) of
7    Section 6-21.
8        (19) A person who is licensed by any licensing
9    authority as a manufacturer of beer, or any partnership,
10    corporation, limited liability company, or trust or any
11    subsidiary, affiliate, or agent thereof, or any other form
12    of business enterprise licensed as a manufacturer of beer,
13    having any legal, equitable, or beneficial interest,
14    directly or indirectly, in a person licensed in this State
15    as a distributor or importing distributor. For purposes of
16    this paragraph (19), a person who is licensed by any
17    licensing authority as a "manufacturer of beer" shall also
18    mean a brewer and a non-resident dealer who is also a
19    manufacturer of beer, including a partnership,
20    corporation, limited liability company, or trust or any
21    subsidiary, affiliate, or agent thereof, or any other form
22    of business enterprise licensed as a manufacturer of beer.
23        (20) A person who is licensed in this State as a
24    distributor or importing distributor, or any partnership,
25    corporation, limited liability company, or trust or any
26    subsidiary, affiliate, or agent thereof, or any other form

 

 

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1    of business enterprise licensed in this State as a
2    distributor or importing distributor having any legal,
3    equitable, or beneficial interest, directly or indirectly,
4    in a person licensed as a manufacturer of beer by any
5    licensing authority, or any partnership, corporation,
6    limited liability company, or trust or any subsidiary,
7    affiliate, or agent thereof, or any other form of business
8    enterprise, except for a person who owns, on or after the
9    effective date of this amendatory Act of the 98th General
10    Assembly, no more than 5% of the outstanding shares of a
11    manufacturer of beer whose shares are publicly traded on an
12    exchange within the meaning of the Securities Exchange Act
13    of 1934. For the purposes of this paragraph (20), a person
14    who is licensed by any licensing authority as a
15    "manufacturer of beer" shall also mean a brewer and a
16    non-resident dealer who is also a manufacturer of beer,
17    including a partnership, corporation, limited liability
18    company, or trust or any subsidiary, affiliate, or agent
19    thereof, or any other form of business enterprise licensed
20    as a manufacturer of beer.
21    (b) A criminal conviction of a corporation is not grounds
22for the denial, suspension, or revocation of a license applied
23for or held by the corporation if the criminal conviction was
24not the result of a violation of any federal or State law
25concerning the manufacture, possession or sale of alcoholic
26liquor, the offense that led to the conviction did not result

 

 

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1in any financial gain to the corporation and the corporation
2has terminated its relationship with each director, officer,
3employee, or controlling shareholder whose actions directly
4contributed to the conviction of the corporation. The
5Commission shall determine if all provisions of this subsection
6(b) have been met before any action on the corporation's
7license is initiated.
8(Source: P.A. 96-1551, eff. 7-1-11; 97-1059, eff. 8-24-12;
997-1150, eff. 1-25-13.)
 
10    (235 ILCS 5/6-4.5 new)
11    Sec. 6-4.5. Prohibited ownership interests in a
12distributor, importing distributor, manufacturer of beer, or
13non-resident dealer.
14    (a) The General Assembly finds, consistent with Section
156-1.5, that the 3-tier regulatory system is designed to prevent
16a manufacturer of beer as described in paragraph (19) of
17subsection (a) of Section 6-2 from exercising vertical
18integration between a manufacturer of beer and a distributor or
19importing distributor through any ownership interest, or
20through control of the distributor or importing distributor.
21The General Assembly further finds, consistent with Section
226-1.5, that the 3-tier regulatory system is designed to prevent
23a distributor or importing distributor as described in
24paragraph (20) of subsection (a) of Section 6-2 from having any
25ownership interest in a manufacturer of beer as described in

 

 

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1paragraph (20) of subsection (a) of Section 6-2 except for the
2ownership of no more than 5% of the outstanding shares of a
3manufacturer of beer whose shares are publicly traded on an
4exchange within the meaning of the Securities Exchange Act of
51934. The General Assembly further finds that it is necessary
6to have the State Commission undertake an expedited
7investigation, in accordance with procedural due process, to
8determine whether any existing manufacturer of beer described
9in paragraph (19) of subsection (a) of Section 6-2 or any
10existing distributor or importing distributor described in
11paragraph (20) of subsection (a) of Section 6-2 owns a
12prohibited ownership interest, and an orderly process by which
13an existing manufacturer of beer, distributor, or importing
14distributor may divest itself of or sever the prohibited
15ownership interest by no later than January 1, 2015.
16    (b) Notwithstanding any provision of this Act to the
17contrary, no person licensed as a manufacturer of beer as
18described in paragraph (19) of subsection (a) of Section 6-2
19shall have any prohibited ownership interest, directly or
20indirectly, in a person licensed as a distributor or importing
21distributor. Any person who holds a prohibited ownership
22interest in a person licensed as a distributor or importing
23distributor prior to this amendatory Act of the 98th General
24Assembly shall, in accordance with paragraph (19) of subsection
25(a) of Section 6-2, be ineligible to receive or hold any
26license issued by the State Commission, unless that person

 

 

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1complies with the provisions of this Section.
2    (c) Notwithstanding any provision of this Act to the
3contrary, no person licensed in this State as a distributor or
4importing distributor as described in paragraph (20) of
5subsection (a) of Section 6-2 shall have any prohibited
6ownership interest, directly or indirectly, in a person
7licensed as a manufacturer of beer as described in paragraph
8(20) of subsection (a) of Section 6-2. Any person who holds an
9interest in a person licensed as a distributor or importing
10distributor in this State prior to this amendatory Act of the
1198th General Assembly shall, in accordance with paragraph (20)
12of subsection (a) of Section 6-2, be ineligible to receive or
13hold a license by the State Commission, unless the person
14complies with the provisions of this Section. This subsection
15(c) shall not apply to a person who owns, on or after the
16effective date of this amendatory Act of the 98th General
17Assembly, no more than 5% of the outstanding shares of a
18manufacturer of beer whose shares are publicly traded on an
19exchange within the meaning of the Securities Exchange Act of
201934.
21    (d) Within 30 days after the effective date of this
22amendatory Act of the 98th General Assembly, the State
23Commission shall notify in writing all persons licensed by the
24State Commission as a manufacturer of beer, as described in
25paragraph (19) of subsection (a) of Section 6-2 of the
26prohibited ownership interest provision set forth in

 

 

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1subsection (b) of this Section and paragraph (19) of subsection
2(a) of Section 6-2. Also within 30 days after the effective
3date of this amendatory Act of the 98th General Assembly, the
4State Commission shall notify in writing all persons licensed
5by the State Commission as a distributor or importing
6distributor of the prohibited ownership interest provision set
7forth in subsection (c) of this Section and paragraph (20) of
8subsection (a) of Section 6-2. The notice provided by the State
9Commission shall also state for a manufacturer of beer, as
10described in paragraph (19) of subsection (a) of Section 6-2,
11that it is required to disclose in writing any ownership
12interest it directly or indirectly possesses in a distributor
13or importing distributor, as described in paragraph (20) of
14subsection (a) of Section 6-2, the type and amount of ownership
15interest possessed by it, the length of time the manufacturer
16of beer has held the ownership interest in the distributor or
17importing distributor, and any other information specified by
18the State Commission in its written notice. The notice provided
19by the State Commission shall also state for a distributor or
20importing distributor, as described in paragraph (20) of
21subsection (a) of Section 6-2, that it is required to disclose
22in writing any ownership interest it directly or indirectly
23possesses in a manufacturer of beer, as described in paragraph
24(19) of subsection (a) of Section 6-2, the type and amount of
25ownership interest possessed by it, the length of time the
26manufacturer of beer has held the ownership interest in the

 

 

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1distributor or importing distributor, and any other
2information specified by the State Commission in its written
3notice.
4    (e) Within 60 days after the effective date of this
5amendatory Act of the 98th General Assembly, each manufacturer
6of beer, distributor, or importing distributor subject to
7notification under subsection (d) of this Section shall
8disclose in writing and under oath the relevant ownership
9interest and other required information specified in the
10notification provided by the State Commission pursuant to that
11subsection. The written disclosure shall, as a mandatory
12obligation, be tendered to the State Commission by either
13personal service or via certified or registered mail at the
14State Commission's Springfield or Chicago office on or before
15the 60th day during regular business hours. Failure to tender
16the required written disclosure shall result in the immediate
17entry of an order by the State Commission suspending the
18licensee's license within 5 days after the 60th day, and the
19initiation of proceedings by the State Commission to enter an
20order to permanently revoke the licensee's license no later
21than 45 days after providing the licensee with notice and an
22opportunity for a hearing. Whenever the State Commission has
23reason to believe that a person has failed to comply with the
24Commission notice under this Section, it shall notify the
25Department of Revenue and the Attorney General, and shall file
26a complaint with the State's Attorney of the county where the

 

 

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1alcoholic liquor was delivered or with appropriate law
2enforcement officials. Failure to make the written disclosure
3required under this subsection shall constitute a business
4offense for which the person shall be fined not more than
5$5,000 for a first offense, not more than $10,000 for a second
6offense, and not more than $15,000 for a third or subsequent
7offense.
8    (f) Within 180 days after the effective date of this
9amendatory Act of the 98th General Assembly, the State
10Commission shall review each of the disclosures tendered to the
11State Commission by licensees pursuant to subsection (e) and
12enter an order determining whether or not each licensee is in
13compliance with subsection (b) or (c) of this Section,
14whichever is applicable, after providing each licensee with
15notice and an opportunity for a hearing. As part of making its
16determination, the State Commission shall also consider any
17information otherwise admissible under Section 10-40 of the
18Illinois Administrative Procedure Act.
19    (g) If the State Commission determines, based on a
20preponderance of record evidence, that a manufacturer of beer,
21distributor, or importing distributor has no prohibited
22ownership interest in a licensee in violation of subsection (b)
23or (c) of this Section, then the State Commission shall enter
24an order finding that the manufacturer of beer, distributor, or
25importing distributor is in compliance with this Section,
26record the matter as closed, and serve a copy of the order of

 

 

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1compliance on the licensee and each person with an ownership
2interest in the licensee.
3    If the State Commission determines, based on a
4preponderance of record evidence, that a manufacturer of beer,
5as described in paragraph (19) of subsection (a) of Section
66-2, has a prohibited ownership interest as set forth in
7subsection (b) of this Section, then the State Commission shall
8enter an order finding that the manufacturer of beer is not in
9compliance with this Section and that the manufacturer of beer
10shall divest itself of that interest on or before January 1,
112015, subject to the State Commission's approval of the
12successive owner pursuant to the State Commission's authority
13provided in this Act. In addition, the State Commission shall
14find that the relevant distributor or importing distributor is
15not in compliance with this Section and that the distributor or
16importing distributor is required to sever the prohibited
17ownership interest possessed by the relevant manufacturer of
18beer on or before January 1, 2015, subject to the State
19Commission's approval of the successive owner pursuant to the
20State Commission's authority provided in this Act.
21    If the State Commission determines, based on a
22preponderance of record evidence, that a distributor or
23importing distributor, as described in paragraph (20) of
24subsection (a) of Section 6-2, has a prohibited ownership
25interest as set forth in subsection (c) of this Section, then
26the State Commission shall enter an order finding that the

 

 

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1relevant distributor or importing distributor is not in
2compliance with this Section and that the relevant distributor
3or importing distributor shall divest itself of that interest
4on or before January 1, 2015, subject to the State Commission's
5approval of the successive owner pursuant to the State
6Commission's authority provided in this Act. In addition, the
7State Commission shall find that the manufacturer of beer is
8not in compliance with this Section and that the manufacturer
9of beer shall sever the prohibited ownership interest possessed
10by the distributor or importing distributor on or before
11January 1, 2015, subject to the State Commission's approval of
12the successive owner pursuant to the State Commission's
13authority provided in this Act.
14    The State Commission's order shall further find that the
15continued ownership of the prohibited ownership interest
16beyond January 1, 2015 by the manufacturer of beer,
17distributor, or importing distributor is against the public
18interest and a violation of this Section and Section 6-1.5 of
19the Act.
20    The State Commission's order shall further find for a
21manufacturer of beer, as described in paragraph (19) of
22subsection (a) of Section 6-2, found in non-compliance with
23subsection (b) of this Section that its license is revoked on
24January 16, 2015 as to the transport, transfer, or sale of any
25alcoholic liquor to the relevant distributor or importing
26distributor that the manufacturer of beer has a prohibited

 

 

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1ownership interest in if that interest is not properly divested
2on January 1, 2015, subject to the State Commission's approval
3of the successive owner pursuant to the State Commission's
4authority provided in this Act. In addition, the State
5Commission shall find that the license of a distributor or
6importing distributor that is subject to the prohibited
7ownership interest of the manufacturer of beer is revoked on
8January 16, 2015 as to the transport, transfer, or sale of
9alcoholic liquor from the relevant manufacturer of beer to any
10retailer if that ownership interest is not properly severed on
11January 1, 2015, subject to the State Commission's approval of
12the successive owner pursuant to the State Commission's
13authority provided in this Act.
14    The State Commission's order shall further find for a
15distributor or importing distributor, as described in
16paragraph (20) of subsection (a) of Section 6-2, found in
17non-compliance with subsection (c) of this Section, that its
18license is revoked on January 16, 2015 as to the transport,
19transfer, or sale of any alcoholic liquor from the relevant
20manufacturer of beer to any retailer if that prohibited
21ownership interest in the manufacturer of beer is not properly
22divested on January 1, 2015, subject to the State Commission's
23approval of the successive owner pursuant to the State
24Commission's authority provided in this Act. In addition, the
25State Commission shall find that the license of the
26manufacturer of beer that is subject to the prohibited

 

 

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1ownership interest of a distributor or importing distributor is
2revoked on January 16, 2015 as to the transport, transfer, or
3sale of alcoholic liquor to the distributor or importing
4distributor if that ownership interest is not properly severed
5on January 1, 2015, subject to the State Commission's approval
6of the successive owner pursuant to the State Commission's
7authority provided in this Act.
8    The State Commission shall serve a copy of the order of
9non-compliance on the licensee and each person with an
10ownership interest in the licensee.
11    (h) If a person with a prohibited ownership interest in a
12licensee under subsection (b) or (c) of this Section succeeds
13in divesting itself of or severing that interest and obtains
14the State Commission's approval of the successive owner
15pursuant to its authority provided in this Act on or before
16January 1, 2015, then the State Commission shall enter an order
17finding that the licensee is in compliance, record the matter
18as closed, and serve a copy of the order of compliance on the
19licensee and each person with an ownership interest in the
20licensee.
21    If a person with a prohibited ownership interest in
22violation of subsection (b) or (c) of this Section fails to
23divest itself of or sever that interest and obtain the State
24Commission's approval of the successive owner pursuant to the
25State Commission's authority provided in this Act on or before
26January 1, 2015, then the State Commission shall, after notice

 

 

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1and an opportunity for a hearing, revoke each licensee's
2license as specified in subsection (g) of this Section on
3January 16, 2015. The State Commission, when entering the
4order, shall give notice to the person by certified mail to
5cease and desist all shipments of alcoholic liquor into or
6within this State and to withdraw from this State within 5
7working days after receipt of the notice all shipments of
8alcoholic liquor in transit. Whenever the State Commission has
9reason to believe that a person has failed to comply with the
10State Commission's notice under this Section, it shall notify
11the Department of Revenue and the Attorney General, and shall
12file a complaint with the State's Attorney of the county where
13the alcoholic liquor was delivered, or with appropriate law
14enforcement officials. Failure to comply with the notice issued
15by the State Commission under this Section is against the
16public interest and constitutes a business offense for which
17the person shall be fined not more than $5,000 for a first
18offense, not more than $10,000 for a second offense, and not
19more than $15,000 for a third or subsequent offense. Each
20shipment or transfer of alcoholic liquor in violation of the
21cease and desist notice shall constitute a separate offense.
22    (i) The power and authority granted to the State Commission
23under this Section is in addition to any existing power or
24authority the State Commission has under this Act and its
25exercise shall be accorded precedence on the State Commission's
26meeting agenda so as to fully accommodate the schedule for any

 

 

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1proceeding under the provisions of this Section. Nothing in
2this Act shall be construed as limiting or otherwise impairing
3the ability of the State Commission to conduct future
4investigations and proceedings sua sponte or pursuant to a
5complaint to ensure compliance with this Section or paragraph
6(19) or (20) of subsection (a) of Section 6-2 of this Act. Any
7future investigations and proceedings shall be conducted by the
8State Commission on an expedited basis and pursuant to an
9initiating order entered by the State Commission. The State
10Commission shall enter its initiating order within 30 days
11after the receipt of a complaint. The initiating order shall
12set forth a schedule by which the required notices,
13disclosures, determinations, or orders specified in
14subsections (d), (e), (f), (g), and (h) shall be made or
15entered, and the period of time by which a licensee shall
16divest itself of or sever a prohibited ownership interest,
17which shall be no later than 540 days after the entry of the
18initiating order.
19    (j) Any association or non-profit corporation representing
20beer distributors in this State shall have standing to
21intervene and otherwise participate as a party in any
22proceeding undertaken by the State Commission under this
23Section to review and determine compliance or non-compliance
24with this Section.
25    (k) For purposes of this Section, the term "ownership
26interest" means a legal, equitable, or beneficial interest

 

 

HB2606 Engrossed- 21 -LRB098 09027 MGM 39163 b

1recognized under Illinois law. The term "prohibited ownership
2interest" means an ownership interest in a distributor,
3importing distributor, or manufacturer of beer as specified in
4this Section.
 
5    Section 99. Effective date. This Act takes effect upon
6becoming law.