BILL REQ. #:  H-4212.2 

Read first time 01/23/2006.   Referred to Committee on Commerce & Labor.

     AN ACT Relating to the shipment of wine and beer from wine and beer manufacturers directly to Washington retailers; amending RCW 66.24.206, 66.24.210, 66.24.270, and 66.24.290; reenacting and amending RCW 66.28.070; creating a new section; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   The purpose of this act is to grant certificate of approval holders the same distribution rights granted to domestic wineries under RCW 66.24.170 and to domestic breweries under RCW 66.24.240.

Sec. 2   RCW 66.24.206 and 2004 c 160 s 4 are each amended to read as follows:
     (1)(a) A United States winery or manufacturer of wine located outside the state of Washington must hold a certificate of approval to allow sales and shipment of the certificate of approval holder's wine to licensed Washington wine retailers as specified in subsection (3) of this section and to licensed Washington wine distributors or importers.
     (b) Authorized representatives must hold a certificate of approval to allow sales and shipment of United States produced wine to licensed Washington wine retailers as specified in subsection (3) of this section and to licensed Washington wine distributors or importers.
     (c) Authorized representatives must also hold a certificate of approval to allow sales and shipments of foreign produced wine to licensed Washington wine retailers as specified in subsection (3) of this section and to licensed Washington wine distributors or importers.
     (2) The certificate of approval shall not be granted unless and until such winery or manufacturer of wine or authorized representative shall have made a written agreement with the board to furnish to the board, on or before the twentieth day of each month, a report under oath, on a form to be prescribed by the board, showing the quantity of wine sold or delivered to each licensed wine retailer as specified in subsection (3) of this section and to each licensed wine distributor or importer, during the preceding month, and shall further have agreed with the board, that such wineries, manufacturers, or authorized representatives, and all general sales corporations or agencies maintained by them, and all of their trade representatives, shall and will faithfully comply with all laws of the state of Washington pertaining to the sale of intoxicating liquors and all rules and regulations of the Washington state liquor control board. A violation of the terms of this agreement will cause the board to take action to suspend or revoke such certificate.
     (3) Any winery or manufacturer of wine holding a certificate of approval may also act as a distributor of wine of its own production, and any authorized representative holding a certificate of approval may also act as a distributor of wine produced by the winery or manufacturer it represents. Any certificate of approval holder operating as a distributor under this subsection: (a) May use a common carrier to deliver wine of its own production to licensed Washington wine retailers as specified in this subsection; and (b) shall comply with the applicable laws and rules relating to distributors.
     (4) The fee for the certificate of approval, issued pursuant to the provisions of this title, shall be from time to time established by the board at a level that is sufficient to defray the costs of administering the certificate of approval program. The fee shall be fixed by rule by the board in accordance with the provisions of the administrative procedure act, chapter 34.05 RCW.

Sec. 3   RCW 66.24.210 and 2001 c 124 s 1 are each amended to read as follows:
     (1) There is hereby imposed upon all wines except cider sold to wine retailers by certificate of approval holders as specified in RCW 66.24.206(3) and to wine distributors and the Washington state liquor control board((,)) within the state a tax at the rate of twenty and one-fourth cents per liter. There is hereby imposed on all cider sold to wine distributors and the Washington state liquor control board within the state a tax at the rate of three and fifty-nine one-hundredths cents per liter((: PROVIDED, HOWEVER, That)). However, wine sold or shipped in bulk from one winery to another winery shall not be subject to such tax. The tax provided for in this section shall be collected by direct payments based on wine purchased by wine retailers from certificate of approval holders as specified in RCW 66.24.206(3) and by wine distributors. Except as otherwise provided in this subsection, every person purchasing wine under the provisions of this section shall on or before the twentieth day of each month report to the board all purchases during the preceding calendar month in such manner and upon such forms as may be prescribed by the board, and with such report shall pay the tax due from the purchases covered by such report unless the same has previously been paid. Any such purchaser of wine whose applicable tax payment is not postmarked by the twentieth day following the month of purchase will be assessed a penalty at the rate of two percent a month or fraction thereof. The board may require that every such person shall execute to and file with the board a bond to be approved by the board, in such amount as the board may fix, securing the payment of the tax. If any such person fails to pay the tax when due, the board may forthwith suspend or cancel the license until all taxes are paid. Certificate of approval holders acting as distributors as specified in RCW 66.24.206(3) and domestic wineries acting as distributors shall pay taxes imposed by this section.
     (2) An additional tax is imposed equal to the rate specified in RCW 82.02.030 multiplied by the tax payable under subsection (1) of this section. All revenues collected during any month from this additional tax shall be transferred to the state general fund by the twenty-fifth day of the following month.
     (3) An additional tax is imposed on wines subject to tax under subsection (1) of this section, at the rate of one-fourth of one cent per liter for wine sold after June 30, 1987. After June 30, 1996, such additional tax does not apply to cider. An additional tax of five one-hundredths of one cent per liter is imposed on cider sold after June 30, 1996. All revenues collected under this subsection (3) shall be disbursed quarterly to the Washington wine commission for use in carrying out the purposes of chapter 15.88 RCW.
     (4) An additional tax is imposed on all wine subject to tax under subsection (1) of this section. The additional tax is equal to twenty-three and forty-four one-hundredths cents per liter on fortified wine as defined in RCW 66.04.010(((38))) (39) when bottled or packaged by the manufacturer, one cent per liter on all other wine except cider, and eighteen one-hundredths of one cent per liter on cider. All revenues collected during any month from this additional tax shall be deposited in the violence reduction and drug enforcement account under RCW 69.50.520 by the twenty-fifth day of the following month.
     (5)(a) An additional tax is imposed on all cider subject to tax under subsection (1) of this section. The additional tax is equal to two and four one-hundredths cents per liter of cider sold after June 30, 1996, and before July 1, 1997, and is equal to four and seven one-hundredths cents per liter of cider sold after June 30, 1997.
     (b) All revenues collected from the additional tax imposed under this subsection (5) shall be deposited in the health services account under RCW 43.72.900.
     (6) For the purposes of this section, "cider" means table wine that contains not less than one-half of one percent of alcohol by volume and not more than seven percent of alcohol by volume and is made from the normal alcoholic fermentation of the juice of sound, ripe apples or pears. "Cider" includes, but is not limited to, flavored, sparkling, or carbonated cider and cider made from condensed apple or pear must.

Sec. 4   RCW 66.24.270 and 2004 c 160 s 8 are each amended to read as follows:
     (1) Every person, firm or corporation, holding a license to manufacture malt liquors or strong beer within the state of Washington, shall, on or before the twentieth day of each month, furnish to the Washington state liquor control board, on a form to be prescribed by the board, a statement showing the quantity of malt liquors and strong beer sold for resale during the preceding calendar month to each beer distributor within the state of Washington.
     (2)(a) A United States brewery or manufacturer of beer or strong beer((,)) located outside the state of Washington((,)) must hold a certificate of approval to allow sales and shipment of the certificate of approval holder's beer or strong beer to licensed Washington beer retailers as specified in subsection (4) of this section and to licensed Washington beer distributors or importers.
     (b) Authorized representatives must hold a certificate of approval to allow sales and shipment of United States produced beer or strong beer to licensed Washington beer retailers as specified in subsection (4) of this section and to licensed Washington beer distributors or importers.
     (c) Authorized representatives must also hold a certificate of approval to allow sales and shipments of foreign produced beer or strong beer to licensed Washington beer retailers as specified in subsection (4) of this section and to licensed Washington beer distributors or importers.
     (3) The certificate of approval shall not be granted unless and until such brewer or manufacturer of beer or strong beer or authorized representative shall have made a written agreement with the board to furnish to the board, on or before the twentieth day of each month, a report under oath, on a form to be prescribed by the board, showing the quantity of beer and strong beer sold or delivered to each licensed Washington beer retailer as specified in subsection (4) of this section and to each licensed beer distributor or importer during the preceding month, and shall further have agreed with the board, that such brewer or manufacturer of beer or strong beer or authorized representative and all general sales corporations or agencies maintained by them, and all of their trade representatives, corporations, and agencies, shall and will faithfully comply with all laws of the state of Washington pertaining to the sale of intoxicating liquors and all rules and regulations of the Washington state liquor control board. A violation of the terms of this agreement will cause the board to take action to suspend or revoke such certificate.
     (4) Any brewery or manufacturer of beer or strong beer holding a certificate of approval, except for a brand owner of malt beverages under RCW 66.04.010(6), may also act as a distributor of beer of its own production, and any authorized representative holding a certificate of approval may also act as a distributor of beer produced by the brewery or manufacturer it represents. Any certificate of approval holder operating as a distributor under this subsection: (a) May use a common carrier to deliver beer of its own production to licensed Washington beer retailers as specified in this subsection; and (b) shall comply with the applicable laws and rules relating to distributors.
     (5) The fee for the certificate of approval, issued pursuant to the provisions of this title, shall be from time to time established by the board at a level that is sufficient to defray the costs of administering the certificate of approval program. The fee shall be fixed by rule by the board in accordance with the provisions of the administrative procedure act, chapter 34.05 RCW.

Sec. 5   RCW 66.24.290 and 2003 c 167 s 5 are each amended to read as follows:
     (1) Any microbrewer or domestic brewery or beer distributor licensed under this title and any certificate of approval holder as specified in RCW 66.24.270(4) may sell and deliver beer and strong beer to holders of authorized licenses direct, but to no other person, other than the board((; and)). Every such brewery or beer distributor and every such certificate of approval holder shall report all sales to the board monthly, pursuant to the regulations, and shall pay to the board as an added tax for the privilege of manufacturing and selling the beer and strong beer within the state a tax of one dollar and thirty cents per barrel of thirty-one gallons on sales to licensees within the state and on sales to licensees within the state of bottled and canned beer, including strong beer, shall pay a tax computed in gallons at the rate of one dollar and thirty cents per barrel of thirty-one gallons. Any brewery or beer distributor and any certificate of approval holder whose applicable tax payment is not postmarked by the twentieth day following the month of sale will be assessed a penalty at the rate of two percent per month or fraction thereof. Beer and strong beer shall be sold by breweries and distributors or by certificate of approval holders in sealed barrels or packages. The moneys collected under this subsection shall be distributed as follows: (a) Three-tenths of a percent shall be distributed to border areas under RCW 66.08.195; and (b) of the remaining moneys: (i) Twenty percent shall be distributed to counties in the same manner as under RCW 66.08.200; and (ii) eighty percent shall be distributed to incorporated cities and towns in the same manner as under RCW 66.08.210.
     (2) An additional tax is imposed on all beer and strong beer subject to tax under subsection (1) of this section. The additional tax is equal to two dollars per barrel of thirty-one gallons. All revenues collected during any month from this additional tax shall be deposited in the violence reduction and drug enforcement account under RCW 69.50.520 by the twenty-fifth day of the following month.
     (3)(a) An additional tax is imposed on all beer and strong beer subject to tax under subsection (1) of this section. The additional tax is equal to ninety-six cents per barrel of thirty-one gallons through June 30, 1995, two dollars and thirty-nine cents per barrel of thirty-one gallons for the period July 1, 1995, through June 30, 1997, and four dollars and seventy-eight cents per barrel of thirty-one gallons thereafter.
     (b) The additional tax imposed under this subsection does not apply to the sale of the first sixty thousand barrels of beer each year by breweries that are entitled to a reduced rate of tax under 26 U.S.C. Sec. 5051, as existing on July 1, 1993, or such subsequent date as may be provided by the board by rule consistent with the purposes of this exemption.
     (c) All revenues collected from the additional tax imposed under this subsection (3) shall be deposited in the health services account under RCW 43.72.900.
     (4) An additional tax is imposed on all beer and strong beer that is subject to tax under subsection (1) of this section that is in the first sixty thousand barrels of beer and strong beer by breweries that are entitled to a reduced rate of tax under 26 U.S.C. Sec. 5051, as existing on July 1, 1993, or such subsequent date as may be provided by the board by rule consistent with the purposes of the exemption under subsection (3)(b) of this section. The additional tax is equal to one dollar and forty-eight and two-tenths cents per barrel of thirty-one gallons. By the twenty-fifth day of the following month, three percent of the revenues collected from this additional tax shall be distributed to border areas under RCW 66.08.195 and the remaining moneys shall be transferred to the state general fund.
     (5) The board may make refunds for all taxes paid on beer and strong beer exported from the state for use outside the state.
     (6) The board may require filing with the board of a bond to be approved by it, in such amount as the board may fix, securing the payment of the tax. If any licensee fails to pay the tax when due, the board may forthwith suspend or cancel his or her license until all taxes are paid.

Sec. 6   RCW 66.28.070 and 1994 c 201 s 5 and 1994 c 63 s 2 are each reenacted and amended to read as follows:
     (1) Except as provided in subsection (2) of this section, it shall be unlawful for any retail beer or wine licensee to purchase beer or wine, except from a certificate of approval holder as specified in RCW 66.24.206(3) or 66.24.270(4), a duly licensed wholesaler, or the board, and it shall be unlawful for any brewer, winery, or beer or wine wholesaler to purchase beer or wine, except from a duly licensed beer or wine wholesaler or importer.
     (2) A beer or wine retailer licensee may purchase beer or wine from a government agency which has lawfully seized beer or wine from a licensed beer or wine retailer, or from a board-authorized retailer, or from a licensed retailer which has discontinued business if the wholesaler has refused to accept beer or wine from that retailer for return and refund. Beer and wine purchased under this subsection shall meet the quality standards set by its manufacturer.
     (3) Special occasion licensees ((holding either a class G or J license)) may only purchase beer or wine from a beer or wine retailer duly licensed to sell beer or wine for off-premises consumption, the board, or from a duly licensed beer or wine wholesaler.

NEW SECTION.  Sec. 7   This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately.