Highlights

The legislative season is heating up in Illinois and proposed legislation could drastically impact the liquor regulatory scheme.

Below I provide a summary of the most crucial bills, but before I dive in, I wanted to provide highlights.

A proposed bill would create a third-party retail delivery license and effectively create a 4th tier. The licensee would be subject to Illinois “of value” provisions and the licensee could not own an interest in another tier.

Another bill would provide an exception to Illinois Happy Hour law pricing schemes.

A third bill would create greater rights for distillers and provide them the right to ship products.

Bills

SB 3359-Issuance of a third-party retail delivery license. This bill would drastically change the status quo of retail delivery in Illinois. A retailer could no longer rely on independent contractors to deliver alcohol. All third-party delivery companies must now be licensed under the bill and the exemption, which would allow an 18 year old to make deliveries would be removed.

The new bill would consider delivery personnel, as alcohol servers and would require all personnel to be BASSET certified.

Delivery could only be performed for off-premise retailers, delivery for manufacturers and on-premise retailers is prohibited.

The delivery fee is limited to what one could charge for non-alcoholic products and a fee can’t be calculated as a percentage of alcoholic liquor sales.

The third-party delivery service is required to perform background checks on employees and must carry liability insurance.

The licensee would also be subject to the same Illinois of value regulations as the other three-tiers and the bill restricts them from maintaining an ownership interest in another licensed tier.

In addition, this bill would change the types of cocktails that are permitted to be delivered. Containers filled and labeled by the manufacturer and secured by its original unbroken seal would not be permitted.

The bill would prohibit third-party retailer licensees from delivering cocktails.

HB 4775-would alter the state happy hours laws, under the current regime, discounts must be uniform and discounts based on specific categories are not permitted. This bill would permit a licensed retailer or a manufacturer with retail privileges to offer a consumer loyalty and reward program. The programs would allow the consumer to access rewards for purchases made. Some of the benefits would include, products at a discount for promotional purposes, targeted discounts, membership programs offering discounts, point accumulation programs, and membership in privilege clubs such as a mug club.

Any retailer or manufacturer would be allowed to offer discounts as part of its loyalty program, and may offer benefits and reward programs that are not offered to other customers. For example, the retailer could offer specialty glassware as part of a program and offer a discount on additional purchases based on using the glassware.

Clearly this bill has provisions at odds with present Happy Hour rules and there would need to be reconciliation between the two provisions.

In another provision unrelated to this, this bill would allow special use or special event licensees the ability to sell alcohol for off-premise consumption.

SB 3358-This bill creates a distillery shipper’s license for class 1 (under 50K production) or class 2 (under 100K production) craft distillers. The shipping amount would be limited to 12 cases per year. It also provides rights for a distilling pub to ship, to deliver alcohol within 12 hours from the time it leaves a distilling pub premises and to transfer product.

SB 2756 creates a class 3 craft distiller license and distiller showcase permit, increases the production limits for a distilling pub licenses from 5,000 to 10,000 gallons.

The spirits show case permit would allow a craft distiller to transfer product from its premises to a designated site for a special event. Beer and wine maintain these privileges, spirits do not, this is a parody play.

Creates a class 3 craft distiller license for those manufacturing less than 100,000 gallons, the license would allow for 5,000 gallons of self-distributed product, full retail privileges at its facility, and the ability to transfer 5,000 gallons worth of product.

SB 3161-HB 4701 attempts to implement the Uniform Alcohol Direct-Shipping Compliance Act into Illinois law. Would require fulfilment houses and other third-party providers register with the state and requires them to adhere to record and compliance requirements, even though the registration requirement is constitutionally suspect.

Would allow Illinois to prosecute its own licensees if they believe they violate the shipping laws of another state. Illinois authorities would judge according to the laws of the state they believe was violated.

SB 3245 would expand full retail privileges to a Class 1 and Class 2 Brewers by allowing them to sell wine and spirits. Presently, their sales are limited to beer, cider, or mead.

Allows a brewer to contract with a management company to run its operations, even if the management company holds a retail license. Any agreement must be approved by the ILCC and the contact cannot be utilized as a way to get around providing a prohibited thing of value.

SB 2625-This bill expands the definition of alcoholic liquor and includes provision dealing with co-branded products, and a store’s responsibility with regards to placement.

The bill proposes to include alcohol-infused products, which the bill defines as frozen or unfrozen, solid or semi-solid food in the form other than liquid into the definition of “alcoholic liquor”

Co-branded alcoholic beverages are defined as alcoholic liquor “containing the same or similar brand name, logo, or packaging as a non-alcoholic beverage.”

Co-Branded products for a retailer with a space exceeding 2,500 square feet, cannot be displayed by products such as soft drinks, ice cream or snack food portraying cartoon images. Any co-branded products adjacent to the snack aisle, in order to alleviate confusion, must maintain a sign indicating that these products contain alcohol.