SB-0667, As Passed Senate, February 18, 2016

SUBSTITUTE FOR

SENATE BILL NO. 667

     A bill to amend 1998 PA 58, entitled

"Michigan liquor control code of 1998,"

by amending section 609 (MCL 436.1609), as amended by 2014 PA 353,

and by adding sections 609a and 609b.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 609. (1) Except as provided in this section and sections

605 and 1029, a manufacturer, mixed spirit drink manufacturer,

warehouser, wholesaler, outstate seller of beer, outstate seller of

wine, outstate seller of mixed spirit drink, or vendor of spirits

shall not aid or assist any other vendor by gift, loan of money or

property of any description, or other valuable thing, or by the

giving of premiums or rebates, and a vendor shall not accept the

same. However, if manufacturers of spirits reduce the price of

their products, the manufacturer of spirits may refund the amount

of the price reductions to specially designated distributor

licensees in a manner prescribed by the commission.

     (2) A manufacturer, mixed spirit drink manufacturer,

warehouser, wholesaler, outstate seller of beer, outstate seller of

wine, outstate seller of mixed spirit drink, or vendor of spirits

may, in a manner consistent with rules, regulations, and orders

made by the commission, provide another licensee with an

advertising items item that promote promotes the brands and prices

of alcoholic liquor produced by the manufacturer; sold by the

outstate seller of beer, the outstate seller of wine, or the

outstate seller of mixed spirit drink; or distributed by the

wholesaler. Except as otherwise provided allowed under subsection

(3), (4), or (5), or (6), the advertising items item shall not have

any use or value beyond the actual advertising of brands and prices

of the alcoholic liquor.

     (3) Except for those orders that were approved for specific

sponsorships or festivals, a manufacturer, mixed spirit drink

manufacturer, warehouser, wholesaler, outstate seller of beer,

outstate seller of wine, outstate seller of mixed spirit drink, or

vendor of spirits may provide goods and services to another

licensee that were approved by the commission pursuant to under

rules or orders adopted prior to before January 1, 2014 and the

following items:

     (a) Alcoholic liquor recipes literature.

     (b) Calendars and matchbooks.

     (c) Removable tap markers or signs.

     (d) Table tents.

     (e) Shelf talkers.

     (f) Bottle neckers.

     (g) Cooler stickers.

     (h) Buttons, blinking and nonblinking.

     (i) Menu clip-ons.

     (j) Mirrors.

     (k) Napkin holders.

     (l) Spirits cold shot tap machines.

     (m) Alcoholic liquor drink menus.

     (n) Keg couplers that are lent to an on-premises retailer.

     (o) Sporting event or entertainment tickets.

     (p) Suction cups.

     (q) Cooler door attachments.

     (r) Tear pad holders.

     (4) A wholesaler may sell brand logoed items to an off-

premises licensee if those brand logoed items are contained within

the packaging of an alcoholic liquor product that is to be sold to

a consumer.

     (5) A retailer shall not use or possess, at its licensed

premises, advertising items that have a use or value beyond the

actual advertising of brands and prices of alcoholic liquor except

for those items allowed in subsections subsection (3), and (4), or

(6), or as otherwise provided in allowed under this subsection. A

retailer may possess and use brand logoed barware that advertises

spirits as long as those if the items are purchased from a

manufacturer of spirits, vendor of spirits, salesperson, broker, or

barware retailer. A retailer may possess and use brand logoed

barware that advertises beer or wine as long as those if the items

are purchased from a barware retailer. A retailer shall maintain

the receipts of all purchased brand logoed barware for at least 3

years and shall make those receipts available for inspection by the

commission as provided in section 217. Beginning in the 2015

licensing year, a retailer shall disclose, in a manner as

prescribed by the commission on the application for renewal of an

existing license, if any barware was purchased by the retailer

during the immediately preceding license year.

     (6) A manufacturer, outstate seller, or vendor of spirits may

provide brand logoed merchandise to an on-premises retailer and

off-premises retailer to promote the brand and price of its

products under R 436.1321(1) to (3) of the Michigan administrative

code if all of the following conditions are complied with:

     (a) Brand logoed merchandise must be used for display purposes

only.

     (b) Brand logoed merchandise may only provide brand

advertising when used in a display.

     (c) Brand logoed merchandise must be returned to the alcoholic

beverage supplier or wholesaler on completion of the display.

     (d) Brand logoed merchandise shall not be given to the retail

licensee or the retail licensee's staff or any other person for

their personal use.

     (e) The value of the brand logoed merchandise on display may

not exceed $200.00 per item.

     (f) Brand logoed merchandise that a licensee could use in the

daily operation of the licensee's business is prohibited.

     (g) Brand logoed merchandise must be unilluminated.

     (h) Brand logoed merchandise may not be more than 3,500 square

inches in dimension.

     (i) Brand logoed merchandise must be owned by the manufacturer

or supplier. The ownership of brand logoed merchandise may not be

transferred to the retail licensee, the retail licensee's employee,

or any other person.

     (j) A wholesaler may deliver and install a display using brand

logoed merchandise provided without charge by a manufacturer,

outstate seller of beer, outstate seller of wine, or outstate

seller of mixed drink.

(7) (6) In addition to the penalties provided under section

903, a manufacturer of beer or wine, mixed spirit drink

manufacturer, warehouser, wholesaler, outstate seller of beer,

outstate seller of wine, or outstate seller of mixed spirit drink

that provides or sells barware and is not authorized to provide or

sell barware is subject to a fine in an amount of up to $2,500.00

as determined by the commission. Multiple violations resulting from

the same incident may be treated as a single violation for purposes

of issuance of any penalty imposed under this act.

(8) (7) An on-premises retailer that hosts an on-premises

brand promotional event conducted by a wholesaler or supplier has

14 days after the event to remove from the premises any brand

logoed merchandise from the event to maintain compliance with this

section.

(9) (8) This act and rules promulgated under this act do not

prevent a retailer that holds an off-premises license only from

purchasing brand logoed inventory and selling that inventory to its

customers.

(10) (9) Beginning after September 25, 2015, the commission

may, by rule, add an item to or remove an item from the definition

of barware. The commission shall not add or remove more than 1 item

per rule and shall not promulgate more than 1 rule at a time on the

definition of barware. The commission shall not issue a rule that

adds refrigerator systems, draft systems, or furniture to the

definition of barware. A rule, regulation, or order adopted after

January 1, 2014 that is not adopted in accordance with this

subsection and that is not consistent with this section or is in

conflict with this section is void and unenforceable.

(11) (10) As used in this section:

     (a) "Barware" means the following brand logoed items:

     (i) Trays.

     (ii) Coasters.

     (iii) Napkins.

     (iv) Shirts.

     (v) Hats.

     (vi) Pitchers.

     (vii) Drinkware that is intended to be reused.

     (viii) Bar mats.

     (ix) Buckets.

     (x) Bottle openers.

     (xi) Stir rods.

     (xii) Patio umbrellas.

     (xiii) Any packaging used to hold and deliver the alcoholic

liquor purchased by the retailer.

     (xiv) Any other items that have been added by the commission

pursuant to under subsection (9).(10).

     (b) "Barware retailer" means a person that offers brand logoed

barware for sale to retailers, whether or not it is in their

ordinary course of business, and that is not licensed as, or

directly or indirectly affiliated with, a manufacturer of beer or

wine, mixed spirit drink manufacturer, warehouser, wholesaler,

outstate seller of beer, outstate seller of wine, or outstate

seller of mixed spirit drink. For purposes of this subdivision, a

licensing agreement that authorizes use of a brand logo does is not

constitute a direct or indirect affiliation.

     (c) "Broker" means a person, other than an individual, that is

licensed by the commission and that is employed or otherwise

retained by a manufacturer of spirits or a vendor of spirits to

sell, promote, or otherwise assist in the sale or promotion of

spirits.

     (d) "Indirectly affiliated" means, for purposes of this

section only, that a person owns 5% or more of the voting interest

of another person.

     (e) "Other valuable thing" means any goods, services, a good,

service, or intangible goods good that are is given, loaned,

leased, or sold to another licensee that have has value regardless

of whether the value is nominal and includes, but is not limited

to, goods, services, a good, service, or intangible goods good that

provided any a benefit, regardless of how nominal, to the licensee

other than advertising the brands and prices of alcoholic liquor

produced by the manufacturer; , sold by the outstate seller of

beer, the outstate seller of wine, or the outstate seller of mixed

spirit drink; , or distributed by the wholesaler, except for

consumable goods and those goods, services, or intangible goods

approved by rule or order of the commission prior to before January

1, 2014.

     (f) "Salesperson" means, for purposes of this subsection only,

a person who is employed by a vendor of spirits or a broker and who

is licensed by the commission to sell, deliver, or promote, or

otherwise assist in the sale of, spirits in this state.

     Sec. 609a. (1) A manufacturer or wholesaler shall file with

the commission a schedule of net cash prices to the retail licensee

for all brands of case and keg beer for its market area.

     (2) A manufacturer or wholesaler shall file with the

commission a beer package price reduction for its market area. The

manufacturer or wholesaler shall file the price reduction before

its effective date. A price reduction under this subsection must

continue for at least 90 days after the effective date.

     (3) The beer package price for a market area may be increased

during the 90-day period described in subsection (2) for any of the

following reasons:

     (a) To reflect a tax increase in the market area.

     (b) To reflect a general industry price increase in the market

area.

     (4) The beer package price for a market area may be decreased

during the 90-day period described in subsection (2) if both of the

following conditions are met:

     (a) The price reduction is not greater on a cents-per-case

basis than the price reduction filed by the competition.

     (b) The price reduction continues for the balance of the 90

days filed by the competition.

     (5) A manufacturer or wholesaler shall not sell beer at a

quantity discount.

     (6) A net cash price filed under subsection (1) and a price

reduction filed under subsection (2) are exempt from disclosure

under section 13 of the freedom of information act, 1976 PA 442,

MCL 15.243, until 1 year after the net cash price or price

reduction is filed, as applicable.

     (7) The commission shall periodically compare a manufacturer's

or wholesaler's filing under subsection (1) or (2) with the

manufacturer's or wholesaler's tax filing under section 409.

     (8) The regulation described in this section is necessary for

both of the following reasons:

     (a) To promote temperance and the public health and welfare.

     (b) To promote a stable 3-tier distribution system with

orderly markets for wine and malt beverage products in which there

is no price discrimination by a wholesaler in its sales to

retailers within the wholesaler's sales territory.

     Sec. 609b. (1) A vendor representative and salesperson of a

vendor of spirits, manufacturer of beer, manufacturer of wine,

outstate seller of beer, outstate seller of wine, or wholesaler

shall maintain accurate records of expenditures for each call on a

retail licensee. The records must be maintained for 4 years and

must be made available for commission inspection.

     (2) A vendor representative or salesperson of spirits or wine,

for promotional purposes, may purchase 1 drink for each customer of

an on-premises licensee. A drink purchased under this subsection

must be of the brand represented by the vendor representative or

salesperson.

     (3) A vendor representative or salesperson of a manufacturer

of beer, a wholesaler of beer, or an outstate seller of beer, for

promotional purposes, may purchase 1 drink for each customer of an

on-premises retail licensee subject to a total spending limit of

$100.00 per day. A drink purchased under this subsection must be of

the brand represented by the vendor representative or salesperson.

     (4) A vendor representative or salesperson of a manufacturer

of beer, a wholesaler of beer, or an outstate seller of beer shall

not purchase a drink under subsection (3) more than twice per month

at the same on-premises retail licensed location.

     (5) A licensee employed to deliver alcoholic liquor shall not

purchase a drink of alcoholic liquor for a retail licensee while on

duty or in the course of employment.