Brief Description: Addressing retail liquor licenses.

Sponsors: Senate Committee on Ways & Means (originally sponsored by Senators Kohl-Welles, Prentice, Clements and Murray; by request of Liquor Control Board).

Hearing Date: 3/23/07

Staff: Joan Elgee (786-7106).

Background:

Number of spirits, beer, and wine restaurant licenses. The number of spirits, beer, and wine restaurant licenses that the Liquor Control Board (Board) may issue is limited by a population formula. The original formula, part of the 1949 initiative that authorized the sale of liquor by the drink, was one license for every 1,500 people in the state. In 2006, the Legislature changed the formula to one license for every 1,450 people in the state.

Eligibility for special occasion licenses. A special occasion license authorizes a society or organization to sell spirits, beer, and wine at a specified event. A society or organization is a not-for-profit group organized and operated solely for charitable, religious, social, political, educational, civic, fraternal, athletic, or benevolent purposes. Registration with the Secretary of State or the Internal Revenue Service may be submitted as proof of not-for-profit status.

A number of organizations are exempt from federal income tax under Section 501(c). Many of the organizations eligible for a special occasion license fall under subsection (3) of section 501(c). Subsection (6) includes business leagues.

Under Washington's three-tier system for the sale and distribution of beer and wine, generally the manufacturer, distributor, and retailer tiers are separate. An exception to this tied-house law allows an organization registered under section 501(c)(3) to hold a special occasion license although it has an officer, director, owner, or employee of a winery on its board of directors.

Catering/storage. A restaurant with a spirits, beer, and wine license or a beer and/or wine license may remove liquor from the premises to cater an event. Current law does not allow storage of liquor off the premises of the restaurant.

Brewery/microbrewery restaurant locations. Exceptions to the tied-house law allow a brewery and microbrewery to hold a spirits, beer, and wine or a beer and/or wine restaurant license on the brewery or microbrewery premises.

Time period for summary suspension of liquor licenses and permits. The Board has authority to suspend and revoke liquor licenses and permits and to summarily suspend without a prior hearing if the Board finds that public health, safety, or welfare imperatively require emergency action. The summary suspension period is limited to 180 days.

Hotel license. Current law does not provide for a separate hotel liquor license. Hotels may obtain a spirits, beer, and wine restaurant license. A "hotel" is a building or other structure that offers food and 20 or more sleeping accommodations in the same building or buildings. To hold the restaurant license, the hotel must prepare, cook, and serve complete meals.

The spirits, beer, and wine license allows the sale of liquor by the individual glass for consumption on the premises, the sale of liquor by the bottle to registered guests for consumption in guest rooms and hospitality rooms, and catering of events under certain conditions. Hotels may conduct other activities by obtaining additional licenses. These activities include the sale of beer and wine in hotel stores and the service of complimentary beer and wine by the individual serving to overnight guests at specified regular events.

Summary of Bill:

Number of spirits, beer, and wine restaurant licenses. The number of spirits, beer, and wine restaurant licenses is increased from one for every 1,450 people to one for every 1,300 people in the state.

Eligibility for special occasion licenses. The list of organizations eligible for a special occasion license is expanded to include a local wine industry association registered under section 501(c)(6) of the Internal Revenue Code. The exception to the tied-house law for special occasion licensees is expanded to include local wine industry associations.

Catering/storage. A restaurant with a catering endorsement as part of a spirits, beer and wine license may store liquor on the premises of another not licensed by the Board. There must be a written agreement between the restaurant and the other party to provide for ongoing catering services, the agreement must not contain any exclusivity clauses regarding the liquor to be served, and the agreement must be filed with the Board.

A restaurant with a spirits, beer, and wine license or a beer and/or wine license that does catering may store liquor on other premises operated by the restaurant that it owns or controls by a leasehold interest, and may store liquor at wineries and on passenger vessels for which it does catering.

The Board must establish conditions for the storage of liquor.

Brewery/microbrewery restaurant locations. A brewery or microbrewery holding a spirits, beer, and wine or a beer and/or wine restaurant license for a restaurant on the premises may hold a second restaurant license for a location separate from the brewery or microbrewery.

Time period for summary suspension of liquor licenses. An administrative law judge may extend the summary suspension period to up to one calendar year if the proceedings for revocation or other action cannot be completed in 180 days because of actions by the licensee or permittee.

Hotel license. A new liquor retailer "hotel" license is created. A spirits, beer, and wine restaurant license no longer includes hotels. A "hotel" means buildings, structures, and grounds having facilities for preparing, cooking, and serving food and offering 20 or more sleeping rooms. The various properties must be adjacent and owned or leased by the same person. No license may be issued to a hotel offering rooms on a hourly basis.

Activities allowed under current law for hotels under various licenses that would be permitted under the hotel license are the:

• Sale of spirits, beer, and wine by the individual glass for consumption on the premises. The sale is allowed at dining places at the hotel.
• Sale of liquor in individual units from locked honor bars. The licensee must require proof of age from the guest and the guest must execute an affidavit verifying that no one under 21 will have access to the liquor. The units may not exceed 50 milliliters for spirits, 12 ounces for beer, and 385 milliliters for wine.
• Sale of liquor in the manufacturer's sealed container or by the individual drink to guests through room service.
• Catering at events sponsored by specified societies or organizations or member-only events and at domestic wineries.
• Providing without additional charge to overnight guests spirits, beer and wine by the individual serving at a specified regular date, time and place as may be fixed by the Board. Self-service is not allowed.

Activities not allowed under current law that would be permitted under the hotel license are:

• Providing complimentary spirits, in addition to beer and wine, at fixed date/time events. (Service of spirits at events is allowed under some circumstances for persons not licensed.)
• Providing room service to occupants of private residential units.
• Providing a complimentary bottle of beer or wine in a manufacturer-sealed container in guest rooms at check-in and advertising this service.

If facilities for alcohol service and food service are operated under contract or joint venture agreement, the operator may hold a license that is separate from the hotel license. Food and beverage inventory may not be shared by the licensees.

All on-premises service must be done by an alcohol server. The hotel may furnish liquor to employees for purposes of instruction.

Minors may be allowed in all areas of the hotel where alcohol may be consumed if the consumption is incidental to the primary purpose of the area. These areas include tennis courts, hotel lobbies, and swimming pool areas. If an area is primarily used for alcohol service, the area must be restricted to access by minors.

The hotel provisions take effect July 1, 2008.

Rules Authority: The Liquor Control Board would be required to adopt rules with respect to the hotel license. No other required rule-making authority is specified.

Appropriation: None.

Fiscal Note: Requested on March 14, 2007.

Effective Date: The bill takes effect 90 days after adjournment of session in which bill is passed.