Summary

The Illinois legislature adjourns on May 31st, so the next couple of weeks will determine what fails and what becomes law. Before the session heats up, I wanted to provide a synopsis of the major liquor bills.

Before I get into individual bills, I wanted to provide an introduction to what I am seeing. There are some bold legislative proposals out there this session. This includes legislation to either eliminate self-distribution limits for wineries, or significantly increase limits. There is also a bill to increase privileges for craft distillers including DTC shipping and creating a new license type with enhanced privileges.

There is no doubt that some legislators want to challenge the status quo, whether they are successful remains to be seen.

HB 1086/SB2085

These companion bills would change the definition of “alcoholic liquor” to not include frozen desserts containing alcoholic liquor. The bill states that “frozen desserts containing alcoholic liquor” means ice cream or other frozen desserts that are made with liquor, wine, beer, cider, or any combination thereof and that contain more than 0.5% but not more than 5% of alcohol by volume.

HB-1089

Bottle deposit bill

Provides for a deposit value of 10 cents to be paid by consumers on each beverage container sold in the State by a dealer for consumption.

SB0207

In Illinois, traditionally a husband and wife living together could not operate or own businesses in different tiers. SB0207 carves out a small exception. Under this exception, an immediate family member of a retailer could be issued a wine manufacturer’s license, on the condition that the family member is not named on the retail license and does not have any ownership or other interest in that family member’s licensed business. To qualify for the exception three criteria must be followed: “ (i) each spouse independently operates his or her licensed business separately in compliance with the 3-tier regulatory system, (ii) each spouse’s ownership is independent, and (iii) neither spouse exercises control or has a financial interest over the other’s operations in a manner inconsistent with the Act or the 3-tier regulatory system.”

HB1738

This bill would impose a requirement that a bar offer for sale or provide to the bar’s customers drug testing devices at a cost not to exceed a reasonable amount based on the wholesale cost of the devices or free of charge

SB 1618 HB3694

SB 1618 is ambitious legislation which would create a distillery shipper’s license, a class 3 craft distiller license, and a spirits showcase permit.

Under present Illinois law a Class 1 craft distiller can manufacturer up to 50,000 gallons and can make sales to retail licensees (self-distribute), a class 2 craft distiller can manufacturer up to 100,000 gallons but can’t self-distribute.

Under the legislation a Class 3 craft distiller can produce up to 100,000 gallons and self-distribute.

The spirits showcase permit would allow a craft distiller or its distributor to transfer spirits from an existing license premises to a specific event. This would provide distillers with the same privileges breweries recently gained, the right to provide its product to events such as a farmer’s market.

Finally, this bill would allow a distillery operating in Illinois or another state to ship spirits directly to Illinois residents.

SB1622 HB2556

These companion bills increase privileges for class 3 brewers. Class 3 brewers are essentially brewpubs that can self-distribute. Under the current law, a class 3 brewer can manufacture less than 465,000 gallons and self-distribute no more than 6,200 gallons of beer.

This bill proposes raising the self-distribution limit from 6,200 gallons on each premise, which shall not exceed 18,600 gallons in the aggregate to 77,500 from each premises, not to exceed 232,500. The bills also allows the Class 3 brewer the right to special event and special use permits.

Finally, the legislation would allow retailers and a manufacturer with retail privileges to operate a loyalty program, rewards program, or a mug club, which the retailer can incentivize. This may cause a conflict with Illinois happy hours laws on permissible discounts.

SB1766

This bill attempts to have a middle-tier takeover of the intoxicating hemp beverage space. The bill would implement the three-tier model into the hemp space and ban the DTC shipping of hemp beverages to customers in Illinois.

HB 2859 SB1870

Companion bills that require wholesalers to deliver within a geographic area, wine or spirits, if a retailer located in the area, agrees to purchase $200 of wine or spirits. Under the present law the requirement is $50 for a retailer located in a county with a population of less than 3,000,000 that is not adjacent to a county with a population of at least 3,000,000 inhabitants. This legislation would eliminate the $50 requirement and replace it.

HB 2860 SB1871

Companion bills create a cooperative agent license. A cooperative agent license shall allow the holder to act on behalf of a cooperative purchase group, and requires a licensing fee. If you maintain a combination license and want to utilize the cooperative purchase group, you would need separate licenses for the on-premises and off-premise accounts.

Retail rules on tied-house and books and records apply to cooperative agents.

HB 2956

HB 2956 attempts to write in an exception to the Illinois tied-house statute. It would make it legally permissible for any manufacturer, importing distributor, or distributor to provide tap handles, kegs, or barrels to a retailer pursuant to a written deposit agreement. In the agreement the deposit is in an amount equal to or less than the actual amount of money required to be paid by the manufacturer, distributor, or importing distributor to the manufacturer or supplier of any tap handles, kegs, or barrels, and any customary and reasonable delivery or freight fees. Further, it would be unlawful for a retailer, but not for any other licensee, to fail to return tap handles, bottles, cases, kegs, or barrels provided to a retailer pursuant to a written deposit.

HB3107

A very ambitious bill that would eliminate self-distribution limits for wineries, and would increase the winemaker premise licenses from 2 to 3.

Presently in Illinois, only wineries producing less than 25,000 gallons could self-distribute less than 5,000 gallons. This bill would eliminate both the production and self-distribution limits.

SB 2052

Would make cocktails-to-go permanent.

HB3172

This bill would establish a third-class wine-maker’s license. Presently, there is a first-class wine maker’s license, which allows the license holder to manufacture up to 50,000 gallons per year, a second-class wine maker’s license which allows production up to 150,000 gallons per year. Each of these classes maintain self-distribution privileges, 5,000 gallons to self-distribute if they produce under 25,000, and they enjoy the privilege of obtaining a wine-maker’s premises license, which allows these wineries to sell beer and spirits at their locations.

A third-class wine maker’s license would allow a licensee to manufacture up to 250,000 gallons of wine, and may allow the licensee to self-distribute up to 25,000 gallons of wine.

There are no changes to the self-distribution privileges for the other classes.

Again, an ambitious bill to challenge the status quo.