Sweeping Changes to CT Liquor Laws

The Connecticut General Assembly made significant changes to the Connecticut General Statutes concerning licensing and compliance of liquor permits.  I have attached an analysis of the changes. Give me a call to discuss.

OLR Bill Analysis

sSB 647 (File 592, as amended by Senate “A”)*

AN ACT STREAMLINING THE LIQUOR CONTROL ACT.

SUMMARY

This bill makes various unrelated changes to the Liquor Control Act

as described in the section-by-section analysis below. The bill does the

following:

1. increases, from nine liters to nine gallons, the daily per person

amount of beer certain beer manufacturer permittees may sell for

off-premises consumption (§ 4);

2. allows cider manufacturer permittees to sell cider and apple

wine for on-premises consumption (§ 4);

3. combines the coliseum and coliseum concession permits and

among other things, allows soccer stadiums to receive such a

permit (§ 20);

4. allows manufacturers to sell non-uniform cases of alcoholic

liquor (e.g., spirits, wine, and beer) (§§ 2, 8 & 9); and

5. increases, from four to eight, the maximum number of times the

Department of Consumer Protection (DCP) commissioner may

allow an entity to sell cases with less than the statutory

minimum number of bottles or quantity of units (§ 2).

It also, beginning (1) July 1, 2019, creates an out-of-state retailers

shipper’s permit for wine to allow direct shipments of wine to in-state

consumers, subject to existing regulations on direct shipments (§ 26)

and (2) January 1, 2020, decreases the excise tax exemption for beer

manufacturer permittees for beer sold for on-premises consumption by

requiring them to pay excise tax for amounts over 15 barrels annually

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(§ 1).

Beginning July 1, 2020, the bill:

1. (a) consolidates four manufacturer beer permits into one; (b)

limits manufacturer permits to producing spirits; (c) creates a

new wine, cider, and mead permit with requirements and

abilities substantially similar to a farm winery permittee; and (d)

establishes certain agricultural designations for alcoholic liquor

(§§ 3, 5 & 23);

2. establishes a Connecticut craft cafe permit which allows

manufacturer permittees to, among other things, sell other

Connecticut manufactured alcohol for on-premises consumption

(§ 18);

3. allows alcoholic liquor permittees to hold both a manufacturer

permit and a Connecticut craft cafe permit or a restaurant permit

(§ 16);

4. consolidates various permits for on-premises consumption and

allows a permittee with a permit that is being consolidated to

continue to hold such permit until it becomes due for renewal or

until a replacement permit becomes available for the permit

holder to obtain (§§ 19, 21, 22, 24 & 27);

5. consolidates the farmers’ market wine sales and beer sales

permits into one farmers’ market sales permit (§§ 15 & 27);

6. allows gift basket retailer permittees to sell gift baskets with beer

(§§ 6 & 7);

7. requires in-state transporter permittees to keep certain records of

deliveries from outside the state into Connecticut (§ 11); and

8. prohibits DCP from adopting regulations requiring effective

separation for restaurants and cafes (§ 25).

The bill also makes minor, conforming, and technical changes in

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consolidating the permits (§§ 10-17).

*Senate Amendment “A” changes the underlying bill’s effective

date from January 1, 2020, to various dates (see below) and adds

provisions that (1) increase the amount of beer certain manufacturers

may sell; (2) allow cider manufacturers to sell for on-premises

consumption; (3) increase the times DCP may allow lower quantity

cases; (4) restore the farm winery permit, which the underlying bill

eliminated; (5) require manufacturers to assemble non-uniform cases,

rather than wholesalers as under the underlying bill; (6) require instate transporters to keep certain delivery records; (7) consolidate

various permits, including the farmers’ market permits and various

other permits for on-premises consumption; (8) create a Connecticut

craft cafe permit; (9) allow manufacturer permittees to also hold a

Connecticut craft cafe or restaurant permit; (10) establish certain

agricultural designations for Connecticut alcoholic liquor; (11) prohibit

DCP from requiring effective separation in restaurants and cafes; (12)

create an out-of-state retailer permit for wine; and (13) make various

other minor, technical, and conforming changes.

EFFECTIVE DATE: July 1, 2020; except the provisions allowing beer

manufacturers to sell more beer for off-premises consumption, cider

manufacturers to sell for on-premises consumption, lower quantity

and non-uniform cases, and coliseum provisions are effective upon

passage; the out-of-state retailers permit provision is effective July 1,

2019; and the excise tax provision is effective January 1, 2020.

§ 1 — ALCOHOLIC BEVERAGES TAX

The bill requires beer manufacturer permittees to pay the state

alcoholic beverages tax (i.e., excise tax) on malt beverages (e.g., beer)

they produce and sell for on-premises consumption for amounts over

15 barrels annually. Current law exempts all such beer produced and

sold for on-premises consumption from the tax. By law, a “barrel” is at

least 28 but not more than 31 gallons, and beer is taxed at $7.20 per

barrel (CGS §§ 12-433 & 435).

By law, the alcoholic beverages tax is generally levied on

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distributors (i.e., wholesaler or manufacturer permittees) before they

sell their product to retailers or consumers. The distributors must

make monthly reports to the Department of Revenue Services (DRS)

on the total number of gallons of each alcoholic beverage sold during

the month, their opening and closing inventories, and the amount of

tax due (CGS § 12-437).

§ 2 — LOWER QUANTITY CASES

By law, alcoholic liquor, other than beer, cordials, cocktails, wines,

and prepared mixed drinks, must generally be sold and delivered in

cases with statutorily mandated bottle numbers or quantity units. The

bill increases, from four to eight, the maximum number of times DCP

may allow a person or entity to have a lower case bottle number or

quantity in a calendar year.

§ 4 — INCREASED BEER SALES AMOUNT

Until July 1, 2020, the bill increases, from nine liters to nine gallons

(approximately 34 liters or three cases of 16 ounce beers (i.e., 72 cans)),

the amount that permittees with a manufacturer permit for beer, brew

pub, beer and brew pub, and farm brewery may sell, daily per person,

for off-premises consumption. On July 1, 2020, the bill consolidates the

four permits into one, but keeps the same beer sale threshold (see

below).

§ 4 — MANUFACTURER PERMIT FOR CIDER

Until July 1, 2020, the bill allows cider manufacturer permittees to

sell cider and apple wine by the glass and bottle to visitors for onpremises consumption. As is the case under existing law for tastings, a

permittee may sell for on-premises consumption between 10:00 a.m.

and 8:00 p.m., Monday through Saturday, and 11:00 a.m. and 8:00 p.m.

on Sunday (CGS § 30-16(c)). On July 1, 2020, the bill creates a new

wine, cider, and mead permit that also allows these sales for onpremises consumption (see below).

§§ 3, 5, 16, 17, 18 & 23 — MANUFACTURER PERMIT

CONSOLIDATION AND ADDITIONAL PERMITS FOR ONPREMISES CONSUMPTION

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Beginning January 1, 2020, the bill (1) limits manufacturer permits to

producing spirits; (2) consolidates four manufacturer beer permits into

one; (3) creates a new wine, cider, and mead permit with requirements

and abilities substantially similar to a farm winery permittee; (4)

allows manufacturer permittees to hold either a restaurant permit or a

Connecticut craft cafe permit to allow them to sell other types of

alcoholic liquor for on-premises consumption; and (5) allows

manufacturers to apply for certain agricultural designations (e.g.,

“Connecticut Grown”).

Manufacturer Permit for Spirits (§ 5)

The bill limits the current manufacturer permit to just

manufacturing and selling spirits rather than alcoholic liquor (e.g.,

spirits, wine, or beer). It also eliminates the manufacturer permit for a

farm distillery, which, among other things, currently allows

Connecticut farms to manufacture, store, bottle, wholesale distribute,

and sell spirits they produce on their property.

By law, “spirits” means any beverage that contains alcohol obtained

by distillation mixed with drinkable water and other substances in

solution, including brandy, rum, whiskey, and gin.

The bill applies to a manufacturer permit for spirits, all

requirements that currently apply to a manufacturer permit with two

exceptions.

Off-premises Sales. The bill increases the (1) annual gallonage

threshold, from up to 25,000 to up to 50,000 gallons, for which a

permittee may still sell spirits for off-premises consumption and (2)

amount, from 1.5 liters to three liters, per person per day. As under

existing law, the permittee may only sell (1) up to five gallons in any

two-month period and (2) between 10:00 a.m. and 6:00 p.m. on

Sundays and 8:00 a.m. and 10:00 p.m. Monday to Saturday.

Free Samples. The bill allows a spirits manufacturer to offer free

samples of spirits distilled on the premises in combination with a

nonalcoholic beverage as part of the free samples. As under existing

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law, a permittee may provide tastings of up to two ounces per patron

per day between 11:00 a.m. and 8:00 p.m. on Sundays and 10:00 a.m.

and 8:00 p.m. Monday to Saturday.

Consolidation of Beer Permits (§ 5)

The bill consolidates the manufacturer permits for beer, brew pub,

beer and brew pub, and farm brewery into one permit. As under

current law for all the manufacturer permits that produce beer, the

consolidated beer permit allows for the manufacture, storage, and

bottling of beer with DCP’s approval.

Self-Distribution. The consolidated beer permit allows the

permittee to wholesale distribute to other alcoholic liquor permittees,

which except for the brew pub permittee, the other three beer

permittees can do under current law. Under the bill, if the consolidated

beer permittee does wholesale distribute, he or she must make the beer

available to all package store and grocery store permittees in the

geographical region where they distribute, subject to reasonable

limitations, as DCP determines.

On-premises Sales. Under the bill, the consolidated beer permit

allows retail beer sales for on-premises consumption, with or without

selling food. Under current law, the manufacturer permit for beer

cannot sell beer for on-premises consumption, while a farm brewery

can, and the manufacturer permits for brew pub and beer and brew

pub can sell all alcoholic liquor for on-premises consumption, with or

without the sale of food.

Off-premises Sales. Under the bill, the consolidated beer permit

allows retail beer sales for off-premises consumption of up to nine

gallons per person per day. Current law limits all such manufacturer

beer sales to nine liters per person per day.

Production Limits and Requirements. The bill also requires

permittees to annually produce at least 5,000 gallons of beer before

they can sell beer through a wholesaler. Current law only imposes this

minimum gallonage requirement on brew pubs and beer and brew

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pub permittees.

Under current law, a farm brewery permittee may only annually

produce up to 75,000 gallons of beer and must, among other things,

use a certain minimum percentage of materials grown or malted in the

state for the beer to be advertised and sold as “Connecticut Craft

Beer.” The consolidated beer permit does not have either requirement.

Hours. As under current law for permittees that manufacture beer,

consolidated permittees may sell beer for off-premises consumption

between 10:00 a.m. and 6:00 p.m. on Sunday and 8:00 a.m. and 10:00

p.m. Monday through Saturday. Under the bill, a permittee may sell

beer for on-premises consumption between 9:00 a.m. and 1:00 a.m. the

next morning on Monday through Thursday, 9:00 a.m. and 2:00 a.m.

the next morning for Friday and Saturday, and 11:00 a.m. and 1:00 a.m.

the next morning on Sunday.

Permit Fees. Under the bill, the annual fee for the consolidated

manufacturer permit for beer is $1,400. Under current law, the annual

fee for the manufacturer permit for (1) beer is $1,000; (2) brew pub is

$300; (3) beer and brew pub is $1,500; and (4) farm brewery is $300.

Wine, Cider, and Mead Permit (§§ 3 & 5)

The bill creates a new manufacturer permit for wine, cider, and

mead and eliminates the current cider and apple brandy

manufacturing permits. It allows the new permittee to manufacture

those products in addition to wine and mead.

Allowed Products. The bill allows a wine, cider, and mead

permittee to manufacture wine, cider not exceeding

New-State of CT Liquor-Bill

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