Illinois General Assembly - Full Text of HB2606
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Full Text of HB2606  98th General Assembly

HB2606ham001 98TH GENERAL ASSEMBLY

Rep. Frank J. Mautino

Filed: 4/11/2013

 

 


 

 


 
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1
AMENDMENT TO HOUSE BILL 2606

2    AMENDMENT NO. ______. Amend House Bill 2606 by replacing
3everything after the enacting clause with the following:
 
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

 

 

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

 

 

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

 

 

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1    other than citizenship and residence within the political
2    subdivision.
3        (10a) A corporation or limited liability company
4    unless it is incorporated or organized in Illinois, or
5    unless it is a foreign corporation or foreign limited
6    liability company which is qualified under the Business
7    Corporation Act of 1983 or the Limited Liability Company
8    Act to transact business in Illinois. The Commission shall
9    permit and accept from an applicant for a license under
10    this Act proof prepared from the Secretary of State's
11    website that the corporation or limited liability company
12    is in good standing and is qualified under the Business
13    Corporation Act of 1983 or the Limited Liability Company
14    Act to transact business in Illinois.
15        (11) A person whose place of business is conducted by a
16    manager or agent unless the manager or agent possesses the
17    same qualifications required by the licensee.
18        (12) A person who has been convicted of a violation of
19    any Federal or State law concerning the manufacture,
20    possession or sale of alcoholic liquor, subsequent to the
21    passage of this Act or has forfeited his bond to appear in
22    court to answer charges for any such violation.
23        (13) A person who does not beneficially own the
24    premises for which a license is sought, or does not have a
25    lease thereon for the full period for which the license is
26    to be issued.

 

 

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1        (14) Any law enforcing public official, including
2    members of local liquor control commissions, any mayor,
3    alderman, or member of the city council or commission, any
4    president of the village board of trustees, any member of a
5    village board of trustees, or any president or member of a
6    county board; and no such official shall have a direct
7    interest in the manufacture, sale, or distribution of
8    alcoholic liquor, except that a license may be granted to
9    such official in relation to premises that are not located
10    within the territory subject to the jurisdiction of that
11    official if the issuance of such license is approved by the
12    State Liquor Control Commission and except that a license
13    may be granted, in a city or village with a population of
14    50,000 or less, to any alderman, member of a city council,
15    or member of a village board of trustees in relation to
16    premises that are located within the territory subject to
17    the jurisdiction of that official if (i) the sale of
18    alcoholic liquor pursuant to the license is incidental to
19    the selling of food, (ii) the issuance of the license is
20    approved by the State Commission, (iii) the issuance of the
21    license is in accordance with all applicable local
22    ordinances in effect where the premises are located, and
23    (iv) the official granted a license does not vote on
24    alcoholic liquor issues pending before the board or council
25    to which the license holder is elected. Notwithstanding any
26    provision of this paragraph (14) to the contrary, an

 

 

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1    alderman or member of a city council or commission, a
2    member of a village board of trustees other than the
3    president of the village board of trustees, or a member of
4    a county board other than the president of a county board
5    may have a direct interest in the manufacture, sale, or
6    distribution of alcoholic liquor as long as he or she is
7    not a law enforcing public official, a mayor, a village
8    board president, or president of a county board. To prevent
9    any conflict of interest, the elected official with the
10    direct interest in the manufacture, sale, or distribution
11    of alcoholic liquor shall not participate in any meetings,
12    hearings, or decisions on matters impacting the
13    manufacture, sale, or distribution of alcoholic liquor.
14    Furthermore, the mayor of a city with a population of
15    50,000 or less or the president of a village with a
16    population of 50,000 or less may have an interest in the
17    manufacture, sale, or distribution of alcoholic liquor as
18    long as the council or board over which he or she presides
19    has made a local liquor control commissioner appointment
20    that complies with the requirements of Section 4-2 of this
21    Act.
22        (15) A person who is not a beneficial owner of the
23    business to be operated by the licensee.
24        (16) A person who has been convicted of a gambling
25    offense as proscribed by any of subsections (a) (3) through
26    (a) (11) of Section 28-1 of, or as proscribed by Section

 

 

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1    28-1.1 or 28-3 of, the Criminal Code of 1961 or the
2    Criminal Code of 2012, or as proscribed by a statute
3    replaced by any of the aforesaid statutory provisions.
4        (17) A person or entity to whom a federal wagering
5    stamp has been issued by the federal government, unless the
6    person or entity is eligible to be issued a license under
7    the Raffles Act or the Illinois Pull Tabs and Jar Games
8    Act.
9        (18) A person who intends to sell alcoholic liquors for
10    use or consumption on his or her licensed retail premises
11    who does not have liquor liability insurance coverage for
12    that premises in an amount that is at least equal to the
13    maximum liability amounts set out in subsection (a) of
14    Section 6-21.
15        (19) A person who is licensed by any licensing
16    authority as a manufacturer of beer, or any partnership,
17    corporation, subsidiary, limited liability company, trust,
18    agent, affiliate, or any other form of business enterprise
19    licensed as a manufacturer of beer, having any legal,
20    equitable, or beneficial interest, directly or indirectly,
21    in a person licensed in this State as a distributor or
22    importing distributor. For purposes of this paragraph
23    (19), "manufacturer of beer" shall also mean a brewer and a
24    non-resident dealer who is also a manufacturer of beer,
25    including a partnership, corporation, limited liability
26    company, or trust or any subsidiary, affiliate, or agent

 

 

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

 

 

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1for the denial, suspension, or revocation of a license applied
2for or held by the corporation if the criminal conviction was
3not the result of a violation of any federal or State law
4concerning the manufacture, possession or sale of alcoholic
5liquor, the offense that led to the conviction did not result
6in any financial gain to the corporation and the corporation
7has terminated its relationship with each director, officer,
8employee, or controlling shareholder whose actions directly
9contributed to the conviction of the corporation. The
10Commission shall determine if all provisions of this subsection
11(b) have been met before any action on the corporation's
12license is initiated.
13(Source: P.A. 96-1551, eff. 7-1-11; 97-1059, eff. 8-24-12;
1497-1150, eff. 1-25-13.)
 
15    (235 ILCS 5/6-4.5 new)
16    Sec. 6-4.5. Prohibited ownership interests in a
17distributor, importing distributor, manufacturer of beer, or
18non-resident dealer.
19    (a) The General Assembly finds, consistent with Section
206-1.5, that the 3-tier regulatory system is designed to prevent
21a manufacturer of beer as described in paragraph (19) of
22subsection (a) of Section 6-2 from exercising vertical
23integration between a manufacturer of beer and a distributor or
24importing distributor through any ownership interest, or
25through control of the distributor or importing distributor.

 

 

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1The General Assembly further finds, consistent with Section
26-1.5, that the 3-tier regulatory system is designed to prevent
3a distributor or importing distributor as described in
4paragraph (20) of subsection (a) of Section 6-2 from having any
5ownership interest in a manufacturer of beer as described in
6paragraph (20) of subsection (a) of Section 6-2 except for the
7ownership of no more than 5% of the outstanding shares of a
8manufacturer of beer whose shares are publicly traded on an
9exchange within the meaning of the Securities Exchange Act of
101934. The General Assembly further finds that it is necessary
11to have the State Commission undertake an expedited
12investigation, in accordance with procedural due process, to
13determine whether any existing manufacturer of beer described
14in paragraph (19) of subsection (a) of Section 6-2 or any
15existing distributor or importing distributor described in
16paragraph (20) of subsection (a) of Section 6-2 owns a
17prohibited ownership interest, and an orderly process by which
18an existing manufacturer of beer, distributor, or importing
19distributor may divest itself of or sever the prohibited
20ownership interest by no later than January 1, 2015.
21    (b) Notwithstanding any provision of this Act to the
22contrary, no person licensed as a manufacturer of beer as
23described in paragraph (19) of subsection (a) of Section 6-2
24shall have any prohibited ownership interest, directly or
25indirectly, in a person licensed as a distributor or importing
26distributor. Any person who holds a prohibited ownership

 

 

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1interest in a person licensed as a distributor or importing
2distributor prior to this amendatory Act of the 98th General
3Assembly shall, in accordance with paragraph (19) of subsection
4(a) of Section 6-2, be ineligible to receive or hold any
5license issued by the State Commission, unless that person
6complies with the provisions of this Section.
7    (c) Notwithstanding any provision of this Act to the
8contrary, no person licensed in this State as a distributor or
9importing distributor as described in paragraph (20) of
10subsection (a) of Section 6-2 shall have any prohibited
11ownership interest, directly or indirectly, in a person
12licensed as a manufacturer of beer as described in paragraph
13(20) of subsection (a) of Section 6-2. Any person who holds an
14interest in a person licensed as a distributor or importing
15distributor in this State prior to this amendatory Act of the
1698th General Assembly shall, in accordance with paragraph (20)
17of subsection (a) of Section 6-2, be ineligible to receive or
18hold a license by the State Commission, unless the person
19complies with the provisions of this Section. This subsection
20(c) shall not apply to a person who owns, on or after the
21effective date of this amendatory Act of the 98th General
22Assembly, no more than 5% of the outstanding shares of a
23manufacturer of beer whose shares are publicly traded on an
24exchange within the meaning of the Securities Exchange Act of
251934.
26    (d) Within 30 days after the effective date of this

 

 

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

 

 

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

 

 

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1opportunity for a hearing. Whenever the State Commission has
2reason to believe that a person has failed to comply with the
3Commission notice under this Section, it shall notify the
4Department of Revenue and the Attorney General, and shall file
5a complaint with the State's Attorney of the county where the
6alcoholic liquor was delivered or with appropriate law
7enforcement officials. Failure to make the written disclosure
8required under this subsection shall constitute a business
9offense for which the person shall be fined not more than
10$5,000 for a first offense, not more than $10,000 for a second
11offense, and not more than $15,000 for a third or subsequent
12offense.
13    (f) Within 120 days after the effective date of this
14amendatory Act of the 98th General Assembly, the State
15Commission shall review each of the disclosures tendered to the
16State Commission by licensees pursuant to subsection (e) and
17enter an order determining whether or not each licensee is in
18compliance with subsection (b) or (c) of this Section,
19whichever is applicable, after providing each licensee with
20notice and an opportunity for a hearing. As part of making its
21determination, the State Commission shall also consider any
22information otherwise admissible under Section 10-40 of the
23Illinois Administrative Procedure Act.
24    (g) If the State Commission determines, based on a
25preponderance of record evidence, that a manufacturer of beer,
26distributor, or importing distributor has no prohibited

 

 

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1ownership interest in a licensee in violation of subsection (b)
2or (c) of this Section, then the State Commission shall enter
3an order finding that the manufacturer of beer, distributor, or
4importing distributor is in compliance with this Section,
5record the matter as closed, and serve a copy of the order of
6compliance on the licensee and each person with an ownership
7interest in the licensee.
8    If the State Commission determines, based on a
9preponderance of record evidence, that a manufacturer of beer,
10as described in paragraph (19) of subsection (a) of Section
116-2, has a prohibited ownership interest as set forth in
12subsection (b) of this Section, then the State Commission shall
13enter an order finding that the manufacturer of beer is not in
14compliance with this Section and that the manufacturer of beer
15shall divest itself of that interest on or before January 1,
162015, subject to the State Commission's approval of the
17successive owner pursuant to the State Commission's authority
18provided in this Act. In addition, the State Commission shall
19find that the relevant distributor or importing distributor is
20not in compliance with this Section and that the distributor or
21importing distributor is required to sever the prohibited
22ownership interest possessed by the relevant manufacturer of
23beer on or before January 1, 2015, subject to the State
24Commission's approval of the successive owner pursuant to the
25State Commission's authority provided in this Act.
26    If the State Commission determines, based on a

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1proceeding undertaken by the State Commission under this
2Section to review and determine compliance or non-compliance
3with this Section.
4    (k) For purposes of this Section, the term "ownership
5interest" means a legal, equitable, or beneficial interest
6recognized under Illinois law. The term "prohibited ownership
7interest" means an ownership interest in a distributor,
8importing distributor, or manufacturer of beer as specified in
9this Section.
 
10    Section 99. Effective date. This Act takes effect upon
11becoming law.".