Relates to the shipment of alcoholic beverages into the state

Summary of provisions

Section 1 of the bill would add a new section 101-c to the Alcoholic Beverage Control Law. The subdivisions of this new section would provide as follows:

Subdivision 1 defines the term "primary source of supply".

Subdivision 2 requires the "primary source of supply" to submit documentation to the Authority which identifies the particular product, the licensed wholesalers in this state authorized to sell the product at wholesale, and the entities responsible for complying with the state's brand label registration and price posting laws with respect to the product.

Subdivision 3 requires that the form containing the documentation provided for in subdivision 2 must be filed, with certain exceptions, at least 30 days before the product is shipped into, or sold in this state.

Subdivision 4 requires that the form containing the documentation must be amended when certain changes are made to the information that has already been submitted.

Subdivision 5 requires the forms be submitted electronically to the Authority and be available on-line.

Subdivision 6 exempts those selling privately held wine and liquor, alcohol at auction, alcohol sold under a liquidation permit and out-of-state wineries shipping directing to consumers from compliance with the provisions of the new section.

Subdivision 7 advises licensed wholesalers that they cannot sell an alcoholic beverage unless they purchase alcohol from the primary source of supply.

Subdivision 8 advised licensed retailers that they cannot buy an alcoholic beverage unless it is purchased from a wholesaler who is listed an authorized distributor in the form submitted by the primary source of supply.

Subdivision 9 imposes limited record keeping requirements on the primary source of supply with respect to the licensees in this state who purchased alcoholic beverages from the primary source of supply.

Subdivision 10 gives rule making power to the Authority to assist in the administration of this section.

Section 2 of the bill would make the new section effective 180 days signature.

Justification

There are quantities of alcoholic beverages being imported into, or sold in this state. These products are either counterfeit versions of the genuine alcoholic beverage produced by the manufacturer, or the genuine product that has been obtained by a wholesaler from a person who was not authorized to distribute the product.

Both scenarios are a cause of concern. With respect to counterfeit products, there is no assurance that the alcoholic beverage is safe for human consumption. The product, because of its packaging, appears to the consumer be the genuine product. However, the consumer will have no idea that the product may be something of lesser quality or, more importantly, something that may pose a serious, immediate health risk to the consumer.

With respect to genuine products distributed by unauthorized wholesalers, such activity undermines the "three tier system" in place in this state. Sale of alcoholic beverages by such wholesalers can result in unpaid excise taxes and a disruption in the orderly distribution of alcoholic beverages, one of the stated purposes of the Alcoholic Beverage Control Law.

Initially, those unfamiliar with the "primary source of supply" concept may be concerned that it is an attempt to require manufactures to have franchise agreements with wholesalers, thus restricting the number of wholesalers who can sell the product. The proposed statute specifically states that manufacturers are not required to limit the number of wholesalers that can market their products. They need only identify the wholesalers who will be carrying their products.

Legislative history

2011-12: S.4499-A Finance/No Same as

There is no current statute specifically addressing this issue. Existing sections of the Alcoholic Beverage Control Law, with respect to brand label registration and price posting, provide limited means to track whether alcoholic beverages are being distributed by authorized wholesalers.

Fiscal implications

Increased revenue from the collection of excise taxes.

Effective date

This act shall take effect on the one hundred eightieth day after it shall have become a law.