Proposed Illinois Liquor Legislation

Friends, welcome to my first blog post. In this blog I will provide valuable information on the liquor and hospitality industry. Never hesitate to contact me or engage me!

This first post represents a synopsis of some of the major Illinois liquor bills introduced. This is not an exhaustive list of bills introduced.

In the bills featured, I provide what I considered major points of the legislation. The “chances of becoming law” section is a prediction based on my analysis and is not a 100% guarantee of the future. Happy reading and email me at sean.oleary@olearylpgroup.com with any questions.

 

  1. SB2286-Allows a self-distribution exception for craft distillers.

Unlike their cohorts from wine and beer, there is no self-distribution exception for spirits producers. This bill would provide them this privilege.

The Wine Spirits Distributors of Illinois are dead set against this bill. Further, this is not the main initiative for the Craft Distillers Association.

Chances of Becoming Law: Dead in the water.

 

  1. SB2970/HB4897-Expanding the market for brewers and expanding the beer offerings at breweries.

The present law restricts a brewer to selling only their own beer manufactured on-site in its tap rooms. Further, present law restricts brewers from selling their product to other brewers.

These bills change the status quo by eliminating the exclusivity restrictions and as a result expand markets for brewers. These bills would allow a brewer to sell beer from other brewers in their tap room. Additionally, the bill’s provisions would open new markets for brewers by allowing them to sell their product to other brewers.

The Craft Brewers Guild has pushed hard for this bill and the distributors don’t seem to have a strong objection.

Chances of Becoming Law: Positive.

 

  1. SB2436-Allows the local government to make their own licensing decisions

The present state law does not allow the sale of alcohol at retail within 100 feet of a church, school, hospital, home for the aged, or home for veterans. Because these restrictions mainly apply only to municipalities with over 500,000 persons, Chicago businesses are really the only ones affected by the statutory restrictions.

To overcome these restrictions a Chicago business is required to obtain a specific statutory exemption to state law. Obtaining an exemption results in a Chicago business incurring an excessive delay in opening and incurring added lobbying expenses.

SB2436’s purpose is to negate the need for Chicago businesses to go through the burdensome state process. SB2436 allows an exemption if a local ordinance or rule authorizes a specific exemption. The excessive delays in opening and additional lobbying cost would be significantly reduced by this law.

Everyone seems to think this statute is a great idea. The business community is strongly behind this law. The small business community has strongly lobbied for this statutory change and in his State of the State address, Governor Rauner specifically mentioned how he wanted to target this specific statutory restriction.  Further, with 75 specific statutory amendments, this process has created an administrative nightmare.

Although it passed the Senate unanimously, it has stalled in the House. It seems like Speaker Madigan likes this law as it gets his membership, Chicago legislators, heavily involved in the process.  And it allows them control the process rather than the City Alderman.

Chances of Becoming Law: Slim.

 

  1. SB3019-Changes to importation in bulk practices, changes in signage requirements.

The manufacturer’s license allows the privilege to import in bulk. In some instances, an in-state brewer will manufacture in Illinois, however it imports in bulk alcoholic liquor produced in another state and subsequently bottles the liquor here. Importing in bulk allows the manufacturer to skip out on legal requirements that would occur, if the product was packaged and shipped into the state from out of state.

To deter the importation in bulk practice, the proposed bill requires the beer manufacturer that imports or transfers beer into this state to comply with the reporting and tax requirements of the Illinois Liquor Control Act.

The second part of the Bill changes the signage requirements. For outside signs, it changes the limits on signage requirements from the number of signs allowed to strict dollar amount limitations. The dollar limits are $3,000 per manufacturer for permanent signs and $1,000 for temporary signs. For inside signs, the dollar amount limitations are $6,000 for permanent signs and $1,000 for temporary signs.

Further, the statute dictates that all neon, illuminated signs, clocks, table lamps, mirrors, and tap handles are property of the manufacturer and shall be returned to the manufacturer upon its request.

This is a major initiative of the Associated Beer Distributors of Illinois (ABDI) who are concerned with breweries using the importation in bulk practice to get around stricter legal requirements. Further, changing the requirements would ensure that the beer is actually manufactured on-site as opposed to having a situation where 10% could be brewed here and 90% could be imported in bulk.

 Chances of Becoming Law: Very high.

 

  1. SB3022-Reorganization of the Illinois Liquor Control Commission

Under Executive Order 2003-9 the functions of the Illinois Liquor Control Commission (ILCC) were transferred to the Department of Revenue. The ILCC became a division of the Department of Revenue.

This bill would suspend Executive Order 2003-9 and transfer the functions back to the ILCC and ILCC would become an independent agency separate and apart from the Department of Revenue.

The Executive Director would be subject to Senate confirmation for a four-year term.

Further, the ILCC board would function independently of the Governor.

Besides the reorganization issue, there are a couple other important provisions in this bill.

Under this bill a liquor violation will be dismissed, if the supporting required documents such as the field investigation report, photographs, and other supporting documentation are not included with the notice of violation.

Additionally, this bill changes the tax examination requirements and dictates that the Department of Revenue cannot exam a return until 90 days after the return is filed.

This is the most interesting bill of the session! If enacted this bill would radically restructure the ILCC and provide it with more powers. The distributors seem to be on board with this change, it seems a matter of when rather than if the change will occur.

The other minor issue brings up an interesting scenario. A law passed last year requiring that photos and reports be sent with any notice of violation. The industry must not be happy with how this law was implemented, because they introduced language calling for dismissal of a violation that does not contain photos or reports. Which brings up the interesting scenario, if there is a computer glitch and required items don’t get sent out, then the licensee has automatic grounds for dismissal no matter how egregious the violation.

Chances of Becoming Law: Good, but not a slam dunk. But I would put my money on it passing.

 

  1. HB4987-Increases the liquor limits for craft distiller tasting rooms and allows the sale of other alcoholic liquor in these tasting rooms.

Under current law a craft distiller can sell only 2,500 gallons of its own product in its tasting room. This bill would increase this limit to 5,000 and further it would allow craft distillers to sell any form of alcoholic liquor purchased from a distributor.

This is the major initiative of the Illinois Craft Distillers Association and there does not seem to be strong opposition from the distributors as there is with the craft distiller self-distribution bill. The bill makes business sense in that it allowing other forms of alcohol for sale makes a craft distillery a more attractive place and hence increases business.

Chances of Becoming Law: Good, but I wouldn’t bet the house on it!

 

 

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