S668 [Edition 4]

GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2003

S 4

SENATE BILL 668

Finance Committee Substitute Adopted 6/12/03

Third Edition Engrossed 6/18/03

House Committee Substitute Favorable 6/25/03

Short Title: Wine Shippers Permits and Brewery Permits.		(Public)
Sponsors:
Referred to:

April 2, 2003

A BILL TO BE ENTITLED

AN ACT to authorize the alcoholic beverage control commission to issue wine shippers permits to allow the direct shipment of wines to residents of north carolina and to establish a mechanism for collecting the taxes due on wine shipped to North Carolina, and to increase the ceiling that a small brewery may produce without being required to go through a malt beverage distributor.

The General Assembly of North Carolina enacts:

SECTION 1. G.S. 18B‑902(d) reads as rewritten:

"(d) Fees. – An application for an ABC permit shall be accompanied by payment of the following application fee:

(1) On‑premises malt beverage permit – $400.00.

(2) Off‑premises malt beverage permit – $400.00.

(3) On‑premises unfortified wine permit – $400.00.

(4) Off‑premises unfortified wine permit – $400.00.

(5) On‑premises fortified wine permit – $400.00.

(6) Off‑premises fortified wine permit – $400.00.

(7) Brown‑bagging permit – $400.00, unless the application is for a restaurant seating less than 50, in which case the fee shall be $200.00.

(8) Special occasion permit – $400.00.

(9) Limited special occasion permit – $50.00.

(10) Mixed beverages permit – $1,000.

(11) Culinary permit – $200.00.

(12) Unfortified winery permit – $300.00.

(13) Fortified winery permit – $300.00.

(14) Limited winery permit – $300.00.

(15) Brewery permit – $300.00.

(16) Distillery permit – $300.00.

(17) Fuel alcohol permit – $100.00.

(18) Wine importer permit – $300.00.

(19) Wine wholesaler permit – $300.00.

(20) Malt beverage importer permit – $300.00.

(21) Malt beverage wholesaler permit – $300.00.

(22) Bottler permit – $300.00.

(23) Salesman permit – $100.00.

(24) Vendor representative permit – $50.00.

(25) Nonresident malt beverage vendor permit – $100.00.

(26) Nonresident wine vendor permit – $100.00.

(27) Any special one‑time permit under G.S. 18B‑1002 – $50.00.

(28) Winery special event permit – $200.00.

(29) Mixed beverages catering permit – $200.00.

(30) Guest room cabinet permit – $1,000.

(31) Liquor importer/bottler permit – $500.00.

(32) Cider and vinegar manufacturer permit – $200.00.

(33) Brew on premises permit – $400.00.

(34) Wine producer permit – $300.00.

(35) Wine tasting permit – $100.00.

(36) Wine shipper permit – $100.00."

SECTION 2. Chapter 18B of the General Statutes is amended by adding a new section to read:

"§ 18B‑1001.1 Authorization of wine shipper permit.

(a) A winery holding a federal basic wine manufacturing permit located within or outside of the State may apply to the Commission for issuance of a wine shipper permit that shall authorize the shipment of brands of fortified and unfortified wines identified in the application. A wine shipper permittee may amend the brands of wines identified in the permit application but shall file any amendment with the Commission. Any winery that applies for a wine shipper permit shall notify in writing any wholesalers that have been authorized to distribute the winery's brands within the State that an application has been filed for a wine shipper permit. A wine shipper permittee may sell and ship not more than two cases of wine per month to any person in North Carolina to whom alcoholic beverages may be lawfully sold. All sales and shipments shall be for personal use only and not for resale. A case of wine shall mean any combination of packages containing not more than nine liters of wine.

(b) A wine shipper permittee that ships to addresses in the State more than 1,000 cases of wine in a calendar year must appoint at least one wholesaler to offer and sell the products of the wine shipper permittee under Article 12 of this Chapter if the wine shipper permittee is contacted by a wholesaler that wishes to sell the products of the wine shipper permittee. This provision shall not be construed to require the wine shipper permittee to appoint the wholesaler that originally contacted the wine shipper permittee. Wine purchased by a resident of the State at the premises of the wine shipper permittee and shipped to an address in the State under G.S. 18B‑109(b) shall not be included in calculating the total of 1,000 cases per year.

(c) The direct shipment of wine by wine shipper permittees made pursuant to this section shall be by approved common carrier only. Each common carrier shall apply to the Commission for approval to provide common carriage of wines shipped by holders of permits issued pursuant to this section.

Each common carrier making deliveries pursuant to this section shall:

(1) Require the recipient, upon delivery, to demonstrate that the recipient is at least 21 years of age by providing a form of identification specified in G.S. 18B‑302(d)(1).

(2) Require the recipient to sign an electronic or paper form or other acknowledgment of receipt as approved by the Commission.

(3) Refuse delivery when the proposed recipient appears to be under the age of 21 years and refuses to present valid identification as required by subdivision (1) of this subsection.

(4) Submit any other information that the Commission shall require.

All wine shipper permittees shipping wines pursuant to this section shall affix a notice in 26‑point type or larger to the outside of each package of wine shipped within or to the State in a conspicuous location stating: 'CONTAINS ALCOHOLIC BEVERAGES; SIGNATURE OF PERSON AGED 21 YEARS OR OLDER REQUIRED FOR DELIVERY'. Any delivery of wines to a person under 21 years of age by a common carrier shall constitute a violation of G.S. 18B‑302(a)(1) by the common carrier. The common carrier and the wine shipper permittee shall be liable only for their independent acts.

(d) A wine shipper permittee shall be subject to jurisdiction of the North Carolina courts by virtue of applying for a wine shipper permit and shall comply with any audit or other compliance requirements of the Commission and the Department of Revenue."

SECTION 3. Chapter 18B of the General Statutes is amended by adding a new section to read:

"§ 18B-1001.2. Additional wine shipping requirements.

(a) A wine shipper permittee shall:

(1) Compile and submit to the Commission quarterly a summary indicating all wine products shipped, including brand and price of each product, date of each shipment, quantity of each shipment, and amount of excise and sales tax remitted to the Department of Revenue.

(2) Register with the Department of Revenue as a wine shipper permittee and provide any additional information required by the Department.

(b) The Commission may adopt rules to carry out the provisions of this section and other related provisions governing the direct shipping of wine."

SECTION 4. G.S. 18B‑109 reads as rewritten:

"§ 18B‑109. Direct shipment of alcoholic beverages into State.

(a) General Prohibition. – No Except as provided in G.S. 18B-1001.1, no person shall have any alcoholic beverage mailed or shipped to him from outside this State unless he has the appropriate ABC permit.

(b) Armed Forces Installation. – No person shall have malt beverages or unfortified wine shipped directly from a point outside this State to an armed forces installation within this State if those alcoholic beverages are for resale on the installation.

(c) Wine Shipper Permittees. – It is unlawful for a wine shipper permittee to ship any wines except in compliance with this Chapter and Articles 2C and 5 of Chapter 105 of the General Statutes.

(d) On-Premises Purchases. – A person who purchases wine while visiting the premises of a winery, whether located within or outside the State, may authorize the winery to ship by common carrier, or may personally ship by common carrier, the purchased wine directly to addresses in the State in amounts that can be personally transported in accordance with the laws of this State and of the state in which the winery is located. A winery shipping wine pursuant to this subsection is not required to have a wine shipper permit."

SECTION 5. G.S. 18B‑1001 reads as rewritten:

"§ 18B‑1001. Kinds of ABC permits; places eligible.

When the issuance of the permit is lawful in the jurisdiction in which the premises are located, the Commission may issue the following kinds of permits:

…

(3) On‑Premises Unfortified Wine Permit. – An on‑premises unfortified wine permit authorizes the retail sale of unfortified wine for consumption on the premises, either alone or mixed with other beverages, and the retail sale of unfortified wine in the manufacturer's original container for consumption off the premises. It also authorizes the holder of the permit to ship unfortified wine in closed containers to individual purchasers inside and outside the State. Orders received by a winery by telephone, Internet, mail, facsimile, or other off-premises means of communication shall be shipped pursuant to a wine shipper permit and not pursuant to this subdivision. The permit may be issued for any of the following:

a. Restaurants;

b. Hotels;

c. Eating establishments;

d. Private clubs;

e. Convention centers;

f. Cooking schools;

g. Community theatres;

h. Wineries.

(4) Off‑Premises Unfortified Wine Permit. – An off‑premises unfortified wine permit authorizes the retail sale of unfortified wine in the manufacturer's original container for consumption off the premises and it authorizes the holder of the permit to ship unfortified wine in closed containers to individual purchasers inside and outside the State. The permit may be issued for retail businesses. The permit may also be issued for a winery for sale of its own unfortified wine. Orders received by a winery by telephone, Internet, mail, facsimile, or other off-premises means of communication shall be shipped pursuant to a wine shipper permit and not pursuant to this subdivision.

(5) On‑Premises Fortified Wine Permit. – An on‑premises fortified wine permit authorizes the retail sale of fortified wine for consumption on the premises, either alone or mixed with other beverages, and the retail sale of fortified wine in the manufacturer's original container for consumption off the premises. It also authorizes the holder of the permit to ship fortified wine in closed containers to individual purchasers inside and outside the State. Orders received by a winery by telephone, Internet, mail, facsimile, or other off-premises means of communication shall be shipped pursuant to a wine shipper permit and not pursuant to this subdivision. The permit may be issued for any of the following:

a. Restaurants;

b. Hotels;

c. Private clubs;

d. Community theatres;

e. Wineries;

f. Convention centers.

(6) Off‑Premises Fortified Wine Permit. – An off‑premises fortified wine permit authorizes the retail sale of fortified wine in the manufacturer's original container for consumption off the premises and it authorizes the holder of the permit to ship fortified wine in closed containers to individual purchasers inside and outside the State. The permit may be issued for food businesses. The permit may also be issued for a winery for sale of its own fortified wine. Orders received by a winery by telephone, Internet, mail, facsimile, or other off-premises means of communication shall be shipped pursuant to a wine shipper permit and not pursuant to this subdivision.

…"

SECTION 6. G.S. 18B‑1101(3) reads as rewritten:

"(3) Ship its wine in closed containers to individual purchasers inside and outside this ~~State;~~State in accordance with the provisions of G.S. 18B‑1001, 18B-1001.1, and 18B-1001.2 and other applicable provisions of this Chapter;".

SECTION 7. G.S. 18B‑1102(3) reads as rewritten:

"(3) Ship its wine in closed containers to individual purchasers inside and outside this ~~State;~~ State in accordance with the provisions of G.S. 18B‑1001, 18B-1001.1, and 18B-1001.2 and other applicable provisions of this Chapter;".

SECTION 8. G.S. 105‑113.68 is amended by adding a new subdivision to read:

"(15) 'Wine shipper permittee' means a winery that holds a wine shipper permit issued by the ABC Commission under G.S. 18B-1001.1."

SECTION 9. G.S. 105‑113.73 reads as rewritten:

"§ 105‑113.73. Misdemeanor.

Except as otherwise expressly provided, violation of a provision of ~~the ABC law~~ this Article is a Class 1 misdemeanor."

SECTION 10. G.S. 105‑113.83(b) reads as rewritten:

"(b) Beer and Wine. – The excise taxes on malt beverages and wine levied under G.S. 105‑113.80(a) and (b), respectively, are payable to the Secretary by the resident wholesaler or importer who first handles the beverages in this State. The excise taxes on wine levied under G.S. 105-113.80(b) shipped directly to consumers pursuant to G.S. 18B-1001.1 must be paid by the wine shipper permittee. The taxes on malt beverages and wine shall be paid only once on the same beverages. The tax shall be paid on or before the 15th day of the month following the month in which the beverage is first sold or otherwise disposed of in this State by the ~~wholesaler or importer.~~wholesaler, importer, or wine shipper permittee. When excise taxes are paid on wine or malt beverages, the ~~wholesaler or importer~~wholesaler, importer, or wine shipper permittee shall submit to the Secretary verified reports on forms provided by the Secretary detailing sales records for the month for which the taxes are paid. The report shall indicate the amount of excise tax due, contain the information required by the Secretary, and indicate separately any transactions to which the excise tax does not apply."

SECTION 11. G.S. 105‑113.84 reads as rewritten:

"§ 105‑113.84. Report of resident brewery, resident winery, or nonresident ~~vendor.~~vendor, or wine shipper permittee.

A resident brewery, resident winery, ~~and~~ nonresident ~~vendor~~ vendor, and wine shipper permittee must file a monthly report with the Secretary. The report must list the amount of beverages delivered to North Carolina ~~wholesalers and importers~~wholesalers, importers, and purchasers under G.S. 18B-1001.1 during the month. The report is due by the 15th day of the month following the month covered by the report. The report must be filed on a form approved by the Secretary and must contain the information required by the Secretary."

SECTION 12. G.S. 105‑164.3(9) reads as rewritten:

"(9) Engaged in business. – Maintaining, occupying or using permanently or temporarily, directly or indirectly, or through a subsidiary or agent, by whatever name called, any office, place of distribution, sales or sample room or place, warehouse or storage place, or other place of business, for the selling or delivering of tangible personal property for storage, use or consumption in this State, or permanently or temporarily, directly or through a subsidiary, having any representative, agent, salesman, canvasser or solicitor operating in this State in such selling or delivering, and the fact that any corporate retailer, agent or subsidiary engaged in business in this State may not be legally domesticated or qualified to do business in this State is immaterial. It also means maintaining in this State, either permanently or temporarily, directly or through a subsidiary, tangible personal property for the purpose of lease or rental. It also means making a mail order sale, as defined in this section, if one of the conditions listed in G.S. 105‑164.8(b) is met. It also means the direct shipment of wine to a purchaser in this State by a wine shipper permittee under G.S. 18B‑1001.1."

SECTION 13. G.S. 105‑164.8(b) reads as rewritten:

"(b) Mail Order Sales. – A retailer who makes a mail order sale is engaged in business in this State and is subject to the tax levied under this Article if at least one of the following conditions is met:

(1) The retailer is a corporation engaged in business under the laws of this State or a person domiciled in, a resident of, or a citizen of, this ~~State;~~State.

(2) The retailer maintains retail establishments or offices in this State, whether the mail order sales thus subject to taxation by this State result from or are related in any other way to the activities of such establishments or ~~offices;~~offices.

(3) The retailer has representatives in this State who solicit business or transact business on behalf of the retailer, whether the mail order sales thus subject to taxation by this State result from or are related in any other way to such solicitation or transaction of ~~business;~~business.

(4) Repealed by Session Laws 1991, c. 45, s. 16.

(5) The retailer, by purposefully or systematically exploiting the market provided by this State by any media‑assisted, media‑facilitated, or media‑solicited means, including direct mail advertising, distribution of catalogs, computer‑assisted shopping, television, radio or other electronic media, telephone solicitation, magazine or newspaper advertisements, or other media, creates nexus with this ~~State;~~State.

(6) Through compact or reciprocity with another jurisdiction of the United States, that jurisdiction uses its taxing power and its jurisdiction over the retailer in support of this State's taxing ~~power; or~~power.

(7) The retailer consents, expressly or by implication, to the imposition of the tax imposed by this Article. For purposes of this subdivision, evidence that a retailer engaged in the activity described in subdivision (5) shall be prima facie evidence that the retailer consents to the imposition of the tax imposed by this Article.

(8) The retailer is a holder of a wine shipper permit issued by the ABC Commission pursuant to G.S. 18B-1001.1."

SECTION 14. G.S. 18B‑1104 reads as rewritten:

"§ 18B‑1104. Authorization of brewery permit.

The holder of a brewery permit may:

(1) Manufacture malt beverages;

(2) Purchase malt, hops and other ingredients used in the manufacture of malt beverages;

(3) Sell, deliver and ship malt beverages in closed containers to wholesalers licensed under this Chapter as authorized by the ABC laws, except that malt beverages may be sold to exporters and nonresident wholesalers only when the purchase is not for resale in this State;

(4) Receive malt beverages manufactured by the permittee in some other state for transshipment to dealers in other states;

(5) Furnish or sell marketable malt beverage products, or packages which do not conform to the manufacturer's marketing standards, if State taxes have been or will be paid, to its employees for the use of the employees or their families and guests in this State;

(6) Give its products to its employees and guests for consumption on its premises;

(7) In areas where the sale is legal, sell the brewery's malt beverages at the brewery upon receiving a permit under G.S. 18B‑1001(1). The brewery also may obtain a malt beverage wholesaler permit to sell, deliver, and ship at wholesale only malt beverages manufactured by the brewery. The authorization of this subdivision applies to a brewery that sells, to consumers at the brewery, to wholesalers, to retailers, and to exporters, fewer than ~~310,000 gallons~~50,000 barrels of malt beverages produced by it per year.

A sale or gift under subdivision (5) or (6) shall not be considered a retail or wholesale sale under the ABC laws."

SECTION 15. Sections 14 and 15 of this act are effective when it becomes law. The remainder of this act becomes effective October 1, 2003.