Kansas Attorney General Opinion 2018-003

January 19, 2018
ATTORNEY GENERAL OPINION NO. 2018- 3
Debbi Beavers, Director
Alcoholic Beverage Control Division
Kansas Department of Revenue
915 S.W. Harrison St.
Topeka, KS 66625-3512
Re: 	Intoxicating 	Liquors 	and 	Beverages—Division 	of 	Alcoholic 	Beverage
Control—Market Impact Study of Sale of Beer By Persons Licensed as
Cereal Malt Beverage Retailers; Oversight By Director and Promulgation of
Rules and Regulations
Synopsis: 	The Division of Alcoholic Beverage Control may promulgate administrative
rules 	and 	regulations 	to 	implement 	amendments 	to 	the 	Cereal 	Malt
Beverage Act, K.S.A. 2017 Supp. 41-2701 et seq. This authority extends to
regulating trade practices and below-cost sales of beer containing not more
than 6.0 percent alcohol by volume as well as such necessary and
appropriate matters as recordkeeping and inspections. The Legislature did
not provide for a separate licensing scheme for cereal malt beverage
retailers that sell beer containing not more than 6.0 percent alcohol by
volume, nor did the Legislature provide new enforcement mechanisms.
Cited herein: 	K.S.A. 2017 Supp. 41-212; 41-1101a; 41-2702; 41-2726;
K.S.A. 41-2726; 41-2727.
* 	* 	*
Dear Director Beavers:
As Director of the Division of Alcoholic Beverage Control (ABC), you request our opinion
on two questions arising from the passage of 2017 Senate Bill 13 (SB 13), 1 which grants
1 L. 2017, Ch. 56.

Debbi Beavers
Page 2
“oversight over the sale of beer containing not more than 6% alcohol by volume by
persons licensed as cereal malt beverage retailers” to ABC. 2 You inquire how ABC may
lawfully enforce rules and regulations against persons to whom it does not issue licenses,
and whether the legislative direction to adopt administrative rules and regulations is
legally sustainable.
Broadly speaking, SB 13 will allow persons licensed to sell cereal malt beverage (CMB)
to sell beer containing not more than 6.0 percent alcohol by volume; 3 in addition, any
person with a retailer’s license to sell alcoholic liquor will also be allowed to sell CMB, and
the prohibition against selling CMB next to alcoholic liquor is repealed. The provisions of
SB 13 will go into effect on April 1, 2019 and the Legislature has directed ABC to
promulgate rules and regulations on or before July 1, 2018 to administer the bill. Although
the Legislature has granted “oversight” to ABC over the “the sale of beer containing not
more than 6% alcohol by volume by persons licensed as cereal malt beverage retailers,”
SB 13 does not contain provisions granting ABC explicit licensing authority over CMB
retailers, 4 	raising 	several 	related 	questions 	about 	the 	extent 	of 	ABC’s 	authority.
Specifically, you ask:
1. 	Notwithstanding the language contained in [K.S.A. 2017 Supp. 41-212(b)], can
ABC actually promulgate administrative rules and regulations governing entities
that it does not possess legal regulatory authority over?
2. 	If ABC can in fact promulgate such regulations, what authority does it have over
CMB retailers if a violation is subsequently discovered?
a. 	Regarding 	ABC’s 	authority 	specifically, 	since 	the 	suspension 	and
revocation of CMB licenses is explicitly delegated to cities and counties
under K.S.A. 41-2708, does the language contained in [K.S.A. 2017 Supp.
41-212(b)] also provide ABC with the authority to suspend or revoke a
license?
b. 	The most common method of discipline against a liquor licensee is the
imposition of a fine, pursuant to K.S.A. 41-2633a and K.S.A. 41-328.
Despite not being the licensing authority for CMB retailers, does the
language contained in New Section 3 of SB 13 allow ABC to issue civil or
administrative fines to CMB licensees? 5
Your first question requires us to characterize the nature of the grant of authority to ABC
to exercise oversight over the sale of certain beers by CMB retailers. K.S.A. 2017 Supp.
41-212(b) states:
The director shall have oversight over the sale of beer containing not more
than 6% alcohol by volume by persons licensed as cereal malt beverage
2 K.S.A. 2017 Supp. 41-212(b).
3 K.S.A. 2017 Supp. 41-1101a(b).
4 As you note in your letter, a non-railway car CMB retailer is licensed by the city or county in which its
place of business is located.
5 Debbi Beavers, Correspondence, August 4, 2017 (emphasis in original).

Debbi Beavers
Page 3
retailers pursuant to K.S.A. 41-2702, and amendments thereto, to ensure
that such sales promote an orderly market. For such purpose, the director
may adopt such rules and regulations as the director deems necessary and
appropriate, including rules and regulations making applicable to cereal
malt beverage retailers selling beer containing not more than 6% alcohol by
volume such provisions of the existing rules and regulations concerning
industry trade practices as are necessary and appropriate. The rules and
regulations authorized by this section shall be promulgated by the director
on or before July 1, 2018.6
We first note ABC’s existing regulatory authority over CMB retailers is statutorily limited
to: (1) issuing licenses to CMB retailers located within railway cars; 7 (2) collecting a $25
fee and affixing a state stamp to licenses issues by a county or city; 8 (3) authorizing below-
cost sales of CMB;9 and (4) approving CMB retailers’ self-compliance programs involving
the use of persons under the legal age for consumption of CMB.10 The only changes
made by the Legislature within these four grants of authority were to include beer
containing not more than 6.0 percent alcohol by volume within ABC’s direct licensing
authority for railway cars and to ABC’s below-cost permitting authority for CMB retailers.11
The “oversight” authority over CMB retailers granted by K.S.A. 2017 Supp. 41-212(b) is
limited at the outset by the direction to “promote an orderly market.” To that end, the
Legislature provided the example regulatory category of “trade practices,” which we
assume without deciding includes such matters as inducement to purchase, storage,
advertising, and promotions. 12 Although the Legislature granted ABC the authority to
adopt such rules and regulations as may be “necessary and appropriate,” the Legislature
did not repeal KSA 41-2702(a)—which grants exclusive licensing authority over non-
railway car CMB retailers to cities and counties.
We therefore conclude the grant of authority to exercise “oversight over the sale of beer
containing not more than 6% alcohol by volume by persons licensed as cereal malt
beverage retailers” is a grant of regulatory authority to ABC that may be implemented
outside of a typical licensing paradigm. While we cannot develop an exhaustive list of the
matters that might fall within the umbra of this authority, it is clear that regulating trade
practices and below-cost sales of beer containing not more than 6.0 percent alcohol by
volume are covered by the Legislature’s grant of authority. Additionally, the grant of
authority to promulgate administrative rules and regulations that are “necessary and
appropriate” for carrying out the purpose of ensuring an orderly market would allow ABC
6 Id.
7 K.S.A. 2017 Supp. 41-2702(a).
8 K.S.A. 2016 Supp. 41-2702(e).
9 K.S.A. 41-2726(b).
10 K.S.A. 41-2727(b)(3).
11 K.S.A. 2017 Supp. 41-2726(b).
12 See 27 C.F.R. Part 6, adopted by reference in K.A.R. 14-10-17.

Debbi Beavers
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to promulgate administrative rules and regulations governing, inter alia, recordkeeping
and inspection requirements to ensure compliance. 13
We cannot conclude, however, that the Legislature intended to disturb the existing
licensing arrangement whereby a non-railway car CMB retailer is licensed by the city or
county in which its place of business is located. Although SB 13 amended K.S.A. 2017
Supp. 41-2702 (applying for a CMB retailer license), 41-2703 (issuing a CMB retailer
license) and 41-2708 (disciplinary action against CMB retailers), the Legislature did not
grant 	ABC 	authority within 	those 	statutes 	to 	issue 	additional 	licenses 	or 	to 	take
disciplinary action against CMB retailers licensed by cities or counties. Nor did the
Legislature add CMB retailers selling beer containing not more than 6.0 percent alcohol
by volume to the provisions of K.S.A. 2017 Supp. 41-2633a (civil fines for violations of the
Club and Drinking Establishment Act) or K.S.A. 41-328 (civil fines for violations of the
Liquor Control Act). ABC may, however, refer violations of K.S.A. 41-2701 et seq. for
criminal prosecution 14 to the relevant city or county attorney, or to the governing body of
the city or county that issued the license for disciplinary action.
In summary, the Legislature has granted ABC sufficient legal authority to promulgate
administrative rules and regulations governing CMB retailers who sell beer containing not
more than 6.0 percent alcohol by volume. The ambit of that authority, however, does not
extend to establishing a licensing program for CMB retailers licensed by cities and
counties, nor does it allow ABC to fine or revoke or suspend the licenses of CMB retailers
who violate the Cereal Malt Beverage Act. Instead, ABC must rely on local prosecutors
to pursue criminal violations and on the governing bodies of the city and county that
issued the license for disciplinary action.
Sincerely,
Derek Schmidt
Kansas Attorney General
Craig Paschang
Assistant Attorney General
DS:AA:CP:sb
13 Although we can find no other statute directing a state agency to adopt rules and regulations necessary
and appropriate to promote an orderly market, the Kansas Supreme Court has observed that the Legislature
may “grant state agencies discretion to fill in details if the legislature establishes reasonable and definite
standards to govern the exercise of this authority.” Vakas v. Kansas Bd. of Healing Arts, 248 Kan. 589, 594
(1991).
14 K.S.A. 41-2711 makes it a misdemeanor to violate any portion of the Cereal Malt Beverage Act.