Pennsylvania Act 2024-86 — LIQUOR CODE - OMNIBUS AMENDMENTS

Act text

Session of 2024

No. 2024-86

SB 688

AN ACT

Amending the act of April 12, 1951 (P.L.90, No.21), entitled "An act relating to alcoholic liquors, alcohol and malt and brewed beverages; amending, revising, consolidating and changing the laws relating thereto; regulating and restricting the manufacture, purchase, sale, possession, consumption, importation, transportation, furnishing, holding in bond, holding in storage, traffic in and use of alcoholic liquors, alcohol and malt and brewed beverages and the persons engaged or employed therein; defining the powers and duties of the Pennsylvania Liquor Control Board; providing for the establishment and operation of State liquor stores, for the payment of certain license fees to the respective municipalities and townships, for the abatement of certain nuisances and, in certain cases, for search and seizure without warrant; prescribing penalties and forfeitures; providing for local option, and repealing existing laws," in preliminary provisions, further providing for definitions; in Pennsylvania Liquor Stores, further providing for sales by Pennsylvania Liquor Stores; in licenses and regulations relating to liquor, alcohol and malt and brewed beverages, further providing for liquor importers' licenses, fees, privileges and restrictions, providing for ready-to-drink cocktail permit and for authority to acquire ready-to-drink cocktail permits and further providing for distributors' and importing distributors' restrictions on sales, storage, etc, for unlawful acts relative to malt or brewed beverages and licensees, for unlawful acts relative to liquor, malt and brewed beverages and licensees; and, in distilleries, wineries, bonded warehouses, bailees for hire and transporters for hire, further providing for limited distilleries and distilleries.

The General Assembly of the Commonwealth of Pennsylvania hereby enacts as follows:

Section 1. Section 102 of the act of April 12, 1951 (P.L.90, No.21), known as the Liquor Code, is amended by adding a definition to read:

Section 102. Definitions.--The following words or phrases, unless the context clearly indicates otherwise, shall have the meanings ascribed to them in this section:

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"Ready-to-drink cocktail" shall mean a beverage, composed in part of distilled liquor, combined with other nonalcoholic ingredients, carbonated or still, by whatever name the beverage may be called, premixed and packaged in original containers by the manufacturer, containing not more than sixteen ounces that is not mixed or adulterated on the licensed premises of a licensee. The term shall include any beverage consisting of at least one-half of one per centum, but not greater than twelve and one-half per centum, alcohol by volume. The term shall not include any beverage composed, in part, of wine or malt or brewed beverages. A ready-to-drink cocktail shall be considered liquor unless the context clearly indicates otherwise.

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Section 2. Section 305(b) of the act is amended and the section is amended by adding a subsection to read:

Section 305. Sales by Pennsylvania Liquor Stores.--* * *

(a.2) The following shall apply:

(1) Notwithstanding any provision of the law to the contrary, except as provided under paragraph (2), no product that meets the definition of a "ready-to-drink cocktail" may be sold as a special order.

(2) A product that meets the definition of a "ready-to-drink cocktail" may be sold as a special order to licensees that do not possess a ready-to-drink cocktail permit if the products are not sold for off-premises consumption.

(b) Every Pennsylvania Liquor Store shall sell liquors , including wine and ready-to-drink cocktails, at wholesale to hotels, restaurants, clubs, and railroad, pullman and steamship companies licensed under this act; and ready-to-drink cocktails to distributors and importing distributors that hold a ready-to- drink cocktail permit; and, under the regulations of the board, to pharmacists duly licensed and registered under the laws of the Commonwealth, and to manufacturing pharmacists, and to reputable hospitals approved by the board, or chemists. Sales to licensees shall be made at a price that includes a discount of ten per centum from the retail price; except that special order sales to licensees authorized in subsection (a) shall not be subject to the ten per centum discount. The board may sell to registered pharmacists only such liquors as conform to the Pharmacopoeia of the United States, the National Formulary, or the American Homeopathic Pharmacopoeia. The board may sell at special prices under the regulations of the board, to United States Armed Forces facilities which are located on United States Armed Forces installations and are conducted pursuant to the authority and regulations of the United States Armed Forces. All other sales by such stores shall be at retail, except that incentives, such as coupons or discounts on certain products, may be offered to unlicensed customers of the board as provided under sections 207(m) and 493(24)(ii)(B). A person entitled to purchase liquor at wholesale prices may purchase the liquor at any Pennsylvania Liquor Store upon tendering cash, check or credit card for the full amount of the purchase. For this purpose, the board shall issue a discount card to each licensee identifying such licensee as a person authorized to purchase liquor at wholesale prices. Such discount card shall be retained by the licensee. The board may contract through the Commonwealth bidding process for delivery to wholesale licensees at the expense of the licensee receiving the delivery.

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Section 3. Section 410(e) of the act is amended to read:

Section 410. Liquor Importers' Licenses; Fees; Privileges; Restrictions.--* * *

(e) Importers' licenses shall permit the holders thereof to bring or import liquor and ready-to-drink cocktails from other states, foreign countries, or insular possessions of the United States, and purchase liquor from manufacturers located within this Commonwealth, to be sold outside of this Commonwealth or to Pennsylvania Liquor Stores within this Commonwealth, or when in original containers of ten gallons or greater capacity, to licensed manufacturers within this Commonwealth.

All importations of liquor into Pennsylvania by the licensed importer shall be consigned to the board or the principal place of business or authorized place of storage maintained by the licensee.

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Section 4. The act is amended by adding a section to read:

Section 415.1. Ready-to-Drink Cocktail Permit.--(a) (1) The holder of a restaurant, hotel, distributor or importing distributor license may apply for a ready-to-drink cocktail permit. The board shall issue a ready-to-drink cocktail permit to the applicant if the applicant meets the requirements set forth in this act and the board's regulations and pays the appropriate fees.

(2) Nothing in this section shall be construed to affect the ability of an existing licensee to operate within the scope of its current license as authorized by this act, except that no sales of ready-to-drink cocktails for off-premises consumption may take place by a ready-to-drink cocktail permit holder after eleven o'clock postmeridian. Sales by restaurant and hotel license holders may occur on Sundays from the time the licensee may legally begin to sell alcohol that day until eleven o'clock postmeridian if the licensee has a permit authorized under sections 406(a)(3) and 432(f). Sales by distributor and importing distributor license holders may occur on Sundays between the hours of nine o'clock antemeridian and nine o'clock postmeridian if the licensee has a permit authorized under section 492.1(c).

(3) A ready-to-drink cocktail permit may not be issued to a license holder whose underlying license is subject to a pending objection by the director of the Bureau of Licensing or the board under section 470(a.1), until the matter is decided. Notwithstanding any other provision of law, a holder of a ready-to-drink cocktail permit may continue to normally operate under the permit if its underlying license is operational, notwithstanding if the underlying license is objected to by the director of the Bureau of Licensing or the board under section 470(a.1).

(4) If the board has approved the operation of another business which has an inside passage or communication to or with the licensed premises, the sale and purchase of ready-to-drink cocktails shall be confined strictly to the areas covered by the license. The payment for the purchase of goods obtained from the unlicensed area of the premises shall be permitted in the licensed area.

(5) For purposes of selling ready-to-drink cocktails for off-premises consumption, a holder of a ready-to-drink cocktail permit is not subject to section 493(14).

(6) A ready-to-drink cocktail permit holder shall comply with the responsible alcohol management provisions under section 471.1.

(7) A ready-to-drink cocktail permit holder may store ready-to-drink cocktails in a noncontiguous area that is not accessible to the public and is:

(i) locked at all times when not being accessed by the licensees' employees;

(ii) not accessible to employees under eighteen years of age; and

(iii) identified by dimensions and locations on forms submitted to the board.

(8) A ready-to-drink cocktail permit holder shall utilize a transaction scan device to verify the age of an individual who appears to be under thirty-five years of age before making a sale of a ready-to-drink cocktail. A ready-to-drink cocktail permit holder may not sell or share data from the use of a transaction scan device, provided that the licensee may use the data to show the enforcement bureau of the board that the licensee is in compliance with this act. As used in this paragraph, the term "transaction scan device" means a device capable of deciphering, in an electronically readable format, the information encoded on the magnetic strip or bar code of an identification card under section 495(a).

(9) A sale of ready-to-drink cocktails by a ready-to-drink cocktail permit holder shall be made through a register, which is located on the licensed premises, which is well designated with signage, which is staffed at all times when patrons are on the licensed premises. The actual sale shall be conducted by a person who is at least eighteen years of age and has been trained under section 471.1 and which utilizes a transaction scan device for the sale as set forth in paragraph (8). The sale of ready-to-drink cocktails may not occur at a point of sale where the customer scans the customer's own purchases. Sales of ready-to-drink cocktails must occur on the licensed premises.

(10) If a ready-to-drink cocktail permit holder has an interior connection to another business that it operates, the permit holder may use one or more of the registers in the other business to sell ready-to-drink cocktails for off-premises consumption under the following conditions:

(i) the building is eleven thousand (11,000) square feet or less;

(ii) the registers are located in the same building as the licensed premises;

(iii) the registers comply with the signage, staffing, training, carding, scanning and prohibition on the sharing of data provisions of paragraphs (8) and (9); and

(iv) the board has been provided notice of compliance with this paragraph by the ready-to-drink cocktail permit holder, including square footage of the building and the location of the specific registers to be used prior to their use.

(11) The registers used under paragraph (10) shall be deemed to be licensed areas but no formal application beyond notice to the board shall be required. The registers may be used by the other business.

(b) The application and renewal fee for a ready-to-drink cocktail permit shall be as follows:

(1) An initial application fee of two thousand and five hundred dollars ($2,500).

(2) An annual renewal fee equal to two per centum of the cost of ready-to-drink cocktails purchased for off-premises consumption.

(c) Notwithstanding the provisions of section 802, all fees paid to the board under this section shall be paid into the State Treasury for deposit as follows:

(1) All moneys shall be deposited into the State Stores Fund.

(2) Beginning June 1, 2025, and every June 1 thereafter, all moneys deposited under paragraph (1) shall be transferred to the General Fund.

(d) A restaurant or hotel license holder that is also a ready-to-drink cocktail permit holder may sell for off-premises consumption, in a single transaction, up to one hundred ninety-two fluid ounces. Ounces of ready-to-drink cocktails shall not be combined with wine or malt or brewed beverages for the purpose of calculating the sale restrictions applicable to each of those beverages. A distributor or importing distributor license holder that is also a ready-to-drink cocktail permit holder may sell ready-to-drink cocktails in any quantity. No ready-to-drink cocktail permit holder may sell ready-to-drink cocktails to a permit or license holder.

(e) (1) Ready-to-drink cocktail permit holders shall comply with the provisions of section 201(f), (k) and (o) of the act of March 4, 1971 (P.L.6, No.2), known as the "Tax Reform Code of 1971," regarding the purchase of ready-to-drink cocktails from a Pennsylvania Liquor Store.

(2) The sale of ready-to-drink cocktails by a ready-to-drink cocktail permit holder for off-premises consumption shall be considered a "purchase at retail" under section 201(f) of the "Tax Reform Code of 1971," a "sale at retail" under section 201(k) of the "Tax Reform Code of 1971" or a "use" under section 201(o) of the "Tax Reform Code of 1971."

(3) A ready-to-drink cocktail permit holder may, when filing its required returns under Article II of the "Tax Reform Code of 1971," request a refund of any taxes paid in accordance with paragraph (1) for ready-to-drink cocktails sold for off-premises consumption and for which taxes were remitted to the department under paragraph (2). The request for a refund shall include the original receipt from a Pennsylvania Liquor Store showing the amount of taxes paid under paragraph (1) for which the taxpayer is requesting a refund.

(4) The department shall refund the amount of taxes paid to a Pennsylvania Liquor Store by a ready-to-drink cocktail permit holder under paragraph (1) for which the taxpayer remitted taxes imposed under paragraph (2). The department may promulgate rules or regulations and prescribe forms as may be necessary to implement the provisions of this subsection.

(f) A ready-to-drink cocktail permit holder may not sell a ready-to-drink cocktail for off-premises consumption at a price less than the licensee's purchase price.

(g) A ready-to-drink cocktail permit holder may not sell a private label product.

(h) Holders of a ready-to-drink cocktail permit may also purchase ready-to-drink cocktails directly from a licensed Pennsylvania manufacturer for the purpose of reselling the ready-to-drink cocktail for off-premises consumption.

(i) As used in this section, the term "licensed Pennsylvania manufacturer" shall mean an entity that holds an active limited distillery license or held an active limited distillery license prior to July 1, 2024, and subsequently acquired a distillery license.

Section 5. The heading of Subdivision (B) of Article IV of the act is amended to read:

(B) Malt and Brewed Beverages and

Ready-to-Drink Cocktails (Including Manufacturers).

Section 6. The act is amended by adding a section to read:

Section 431.2. Authority to Acquire Ready-to-Drink Cocktail Permits.--The holder of a distributor or importing distributor license may acquire a ready-to-drink cocktail permit as set forth in section 415.1. The holder of a ready-to-drink cocktail permit may conduct tastings of ready-to-drink cocktails in accordance with the board's regulations pertaining to tastings for liquor. The ready-to-drink cocktails shall not be subject to the prohibitions set forth in section 492(13) and (14) which would otherwise prohibit distributors and importing distributors from selling, storing, possessing or interacting with liquor.

Section 7. Sections 441 and 492(13) and (14) of the act are amended to read:

Section 441. Distributors' and Importing Distributors' Restrictions on Sales, Storage, Etc.--(a) No distributor or importing distributor shall purchase, receive or resell any malt or brewed beverages and ready-to-drink cocktails, if a ready-to- drink cocktail permit is obtained, except:

(1) in the original containers as prepared for the market by the manufacturer at the place of manufacture;

(2) in the case of identical containers repackaged in the manner described by subsection (f); or

(3) as provided in section 431(b).

(b) (1) No distributor or importing distributor shall sell any malt or brewed beverages in quantities of less than a case or original containers containing one hundred twenty-eight ounces or more which may be sold separately: Provided, That no malt or brewed beverages sold or delivered shall be consumed upon the premises of the distributor or importing distributor, or in any place provided for such purpose by such distributor or importing distributor. Notwithstanding any other provision of this section or act, malt or brewed beverages and ready-to-drink cocktails which are part of a tasting conducted pursuant to the board's regulations may be consumed on licensed premises.

(2) Distributors and importing distributors that hold a ready-to-drink cocktail permit shall be permitted to sell ready-to-drink cocktails in any quantity, and all sales must be in original containers. Sales of ready-to-drink cocktails are limited to sales to nonlicensees, and sales of ready-to-drink cocktails for subsequent resale are prohibited.

(c) No distributor or importing distributor shall maintain or operate any place where sales are made other than that for which the license is granted.

(d) (1) No distributor shall maintain any place for the storage of malt or brewed beverages and ready-to-drink cocktails, except in the same municipality in which the licensed premises is located and unless the same has been approved by the board. In the event there is no place of cold storage in the same municipality, the board may approve a place of cold storage in the nearest municipality.

(2) No importing distributor shall maintain any place for the storage of malt or brewed beverages and ready-to-drink cocktails, except in the franchise territory in which the licensed premises is located and unless the same has been approved by the board. The board shall issue no more than four storage facilities license to an importing distributor. The storage location shall be designated solely as a storage facility, from which only sales to other licensees are permitted. Retail sales may be made at the licensed location pursuant to subsection (c). If the importing distributor maintains a storage location for cold storage in the same municipality in which the importing distributor is licensed or a nearby municipality, the importing distributor may continue to maintain that cold storage location in addition to another storage location within their franchise territory.

(e) No distributor or importing distributor shall purchase, sell, resell, receive or deliver any malt or brewed beverages, except in strict compliance with the provisions of subsection (b) of section 431 of this act.

(f) (1) To salvage one or more salable cases from one or more damaged cases, cartons or packages of malt or brewed beverages and ready-to-drink cocktails , a distributor or importing distributor may repackage consequent to inadvertent damage and sell a case, carton or package of identical units of malt or brewed beverages or ready-to-drink cocktails .

(2) Repackaging is permissible only to the extent made necessary by inadvertent damage. Repackaging not consequent to damage is prohibited.

(3) The term "identical units" as used in this subsection means undamaged bottles or cans of identical brand, package and volume.

(g) All malt or brewed beverages purchased by an importing distributor from a Pennsylvania manufacturer of malt or brewed beverages or from any person located outside this Commonwealth for resale shall be invoiced to the importing distributor, shall come physically into the possession of such importing distributor and shall be unloaded into and distributed from the licensed premises of such importing distributor. The board may act to further define and control the storage and distribution of malt or brewed beverages and ready-to-drink cocktails in conformity with this section and this act.

(h) As used in this section, the term "franchise territory" shall mean the geographically contiguous area in which an importing distributor has been given rights for the sale or resale of malt or brewed beverages.

(i) Notwithstanding any other provision to the contrary, when making a sale of malt or brewed beverages and ready-to- drink cocktails to a private individual, no distributor or importing distributor may be required to collect the name, address or any other identifying information of the private individual for the purpose of keeping a record of the quantity of cases or volume of malt or brewed beverages or ready-to-drink cocktails purchased.

Section 492. Unlawful Acts Relative to Malt or Brewed Beverages and Licensees.--

It shall be unlawful--

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(13) Possession or Storage of Liquor or Alcohol by Certain Licensees. For any distributor, importing distributor or retail dispenser, or his servants, agents or employes, to have in his possession, or to permit the storage of on the licensed premises or in any place contiguous or adjacent thereto accessible to the public or used in connection with the operation of the licensed premises, any alcohol or liquor. The provisions of this section shall not apply to the possession or storage of ready-to-drink cocktails that are purchased in compliance with section 441.

(14) Malt or Brewed Beverage Licensees Dealing in Liquor or Alcohol. For any malt or brewed beverage licensee, other than a distributor or importing distributor that possesses a ready-to- drink cocktail permit, a manufacturer, or the servants, agents or employes thereof, to manufacture, import, sell, transport, store, trade or barter in any liquor or alcohol.

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Section 8. Section 493 of the act is amended by adding a paragraph to read:

Section 493. Unlawful Acts Relative to Liquor, Malt and Brewed Beverages and Licensees.--The term "licensee," when used in this section, shall mean those persons licensed under the provisions of Article IV, unless the context clearly indicates otherwise.

It shall be unlawful--

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(36) (i) Ready-to-Drink Cocktails. For any licensee that does not hold a ready-to-drink cocktail permit to sell an alcoholic beverage that meets the definition of a "ready-to-drink cocktail" for off-premises consumption, except for an entity that meets the definition of a "licensed Pennsylvania manufacturer" under section 415.1(i).

(ii) For any licensee to acquire an alcoholic beverage that meets the definition of a "ready-to-drink cocktail" from anyone other than the board, or an entity that meets the definition of a "licensed Pennsylvania manufacturer" under section 415.1(i), except that a licensee may acquire an alcoholic beverage that meets the definition of a "ready-to-drink cocktail" from an entity licensed under section 505.4, if the purchasing licensee does not resell the alcoholic beverage for off-premises consumption.

(iii) For a licensee who acquired an alcoholic beverage that meets the definition of a "ready-to-drink cocktail" as a special order to sell the alcoholic beverage that meets the definition of a "ready-to-drink cocktail" for off-premises consumption regardless of whether the licensee holds a ready-to-drink cocktail permit.

Section 9. Section 505.4 of the act is amended by adding subsections to read:

Section 505.4. Limited Distilleries and Distilleries.--* * *

(d) An entity that meets the definition of a "licensed Pennsylvania manufacturer" under section 415.1(i) must, upon request, offer to sell to the board any ready-to-drink cocktail the licensed Pennsylvania manufacturer sells.

(e) An entity that meets the definition of a "licensed Pennsylvania manufacturer" under section 415.1(i) that sells ready-to-drink cocktails to licensees that hold a ready-to-drink cocktail permit shall report quarterly in writing to the board the following:

(1) The quantity of product sold to each permittee.

(2) The purchase price to permittees.

(3) The name or brand of the product sold.

Section 10. This act shall take effect in 60 days.

APPROVED--The 17th day of July, A.D. 2024.

JOSH SHAPIRO