Recently, in June 2023, the Wisconsin Assembly passed Assembly Bill 304 (the bill is numbered SB 332 in the Wisconsin Senate). That bill makes several significant changes to how the state regulates its storied and substantial alcohol industry. The proposed law affects nearly every level of the Wisconsin alcohol industry from the licensing, producing, selling, and distribution of alcoholic beverages. For instance, bartenders will now have to be licensed by the state instead of by their local municipality.
Navigating those changes can be challenging for the industry’s players, and the consequences of getting it wrong can be severe. For instance, the failure to comply with these new laws can lead to fines, the revocation of a license/permit, and potentially a lawsuit in circuit court (i.e. the proposed law permits the Wisconsin attorney general to prosecute violations of the law).
Currently, the proposed law enjoys broad bi-partisan support, it passed the Assembly by a 90-4 vote, and is expected to pass the Senate and be signed by Governor Tony Evers. This article will broadly outline the specific impacts this law would have on various players within Wisconsin’s, arguably, most well-known industry.
The Creation of a Division of Alcohol Beverages
The law creates a powerful new division within the Wisconsin Department of Revenue called the Division of Alcohol Beverages (the “Division”). The bill states that the Division shall “administer this chapter and have jurisdiction over alcohol beverages regulation, enforcement, and education in this state.” It is entrusted with duties such as: “administering regulatory programs; promoting regulatory transparency; promoting statutory changes to create clarity, consistency, and simplicity in alcohol beverage regulatory requirements; and ensuring active, consistent enforcement of alcohol beverage laws.”
To fulfill these duties, the law gives a number of powers to the Division (and its agents), including:
- The power to employ no fewer than 10 alcohol beverage field agents to perform enforcement activities;
- All the general police powers necessary to prevent violations of the law and regulations;
- The power to enter any licensed premises, and examine the books, papers, and records of the license holder (furthermore, if a license holder does not permit such an inspection during normal business hours, that is sufficient grounds for the Division to revoke or suspend any license or permit it issued to them); and
- The ability to promulgate rules consistent with this chapter to carry out the Division’s duties.
Furthermore, the Administrator of the Division may appoint special agents and other employees, as necessary, to carry out the duties imposed by the Division. However, employees of the Division may not be employed by or have a financial interest in the alcohol beverage industry.
Because the Division of Alcoholic Beverages is (1) new and (2) solely focused on enforcing these new laws and regulations, it is expected that there will be a more robust oversight of the industry and a more aggressive enforcement of these laws and regulations than in the past.
Perhaps the most discussed portion of the law is its potential impact on part-time event venues such as “wedding barns.” Typically, wedding barn operators do not serve their own alcohol, but they allow a renter to bring their own alcohol and serve it at the venue.
The proposed law creates “a no-sale event venue permit,” which limits venues, such as wedding barns, to hosting events where alcohol is served to only 6 days a year and no more than once a month. Furthermore, the “no-sale event venue permit” is limited to only wine and beer. Thus, venues of this kind that wish to operate more than 6 days a year or allow their renters to serve liquor are required to obtain what is known as a Class B alcohol license.
Unfortunately, the process for acquiring a Class B liquor license can result in substantial expenses such as application fees, legal consultations, and administrative costs. While the process does vary from municipality to municipality, here are some of the broad requirements:
- The payment of a $10,000 initial issuance fee;
- Obtain a seller’s permit from the Wisconsin Department of Revenue;
- Complete a responsible beverage server training course; and
- Comply with the local municipal requirements and local application process.
Persons seeking these licenses would do well to be aware of two things: (1) there are only a limited number of licenses available, and that number depends on the municipalities’ population; and (2) the local municipal application can vary from municipality to municipality, which necessitates a custom, careful approach for each person seeking a license.
Owners and operators of craft and small-scale breweries are likely to be supportive of these proposed laws, as, the bill doubles the amount of beer a craft brewery may produce from 10,000 to 20,000 barrels per year.
Additionally, it eliminates the requirement that a craft brewery must manufacture its beer entirely on-site. Furthermore, craft breweries would be permitted to operate stand-alone retail stores and to sell products from other out-of-state breweries.
The bill also requires common carriers to obtain a permit before transporting or delivering alcohol within Wisconsin. One requirement to obtain the permit is paying an annual $1,000 fee.
More importantly, it also places reporting requirements on the common carrier. Thus, the common carrier is required to submit monthly reports to the Division detailing information for each shipment of alcoholic beverages during the preceding month. The information that needs to be reported includes, among other things: the date, the tracking number, the type and quality of alcoholic beverages, the name and address of the consignee of the shipment, and the name and address of the manufacturer of the beverage.
Failure to comply with these requirements can lead to up to a $10,000 fine and, potentially, a revocation of the necessary permit.
This bill (which is expected to become law), makes significant changes to Wisconsin’s legal landscape in the alcohol space. While these changes impact different players in the industry differently, the key takeaway is that Wisconsin’s alcohol industry is highly regulated. Failure to comply with these regulations can lead to significant adverse consequences.
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