SB1855 98TH GENERAL ASSEMBLY

LRB098 07888 MGM 37973 b

98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
SB1855

Introduced 2/15/2013, by Sen. Antonio Muņoz - Terry Link - Kirk W. Dillard - Ira I. Silverstein - Dale A. Righter

SYNOPSIS AS INTRODUCED:

235 ILCS 5/1-3.39 new
235 ILCS 5/6-2	from Ch. 43, par. 120
235 ILCS 5/6-4.5 new

Amends the Liquor Control Act of 1934. Provides that no person licensed as a manufacturer of beer by any licensing authority, or any partnership, corporation, subsidiary, limited liability company, trust, agent, affiliate, or other form of business enterprise thereof, shall have any interest, directly or indirectly, in a holder of a distributor's license or importing distributor's license. Provides that the Illinois Liquor Control Commission shall notify all persons licensed by the State Commission as a manufacturer of beer, brewer, or non-resident dealer of the required written disclosures prescribed by the Commission. Provides a process for revocation of licenses for violation of these provisions. Defines "Person" for the purposes of the Act. Effective immediately.

A BILL FOR

AN ACT concerning liquor.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Liquor Control Act of 1934 is amended by changing Section 6-2 and by adding Sections 1-3.39 and 6-4.5 as follows:

(235 ILCS 5/1-3.39 new)

Sec. 1-3.39. "Person" defined. For the purposes of this Act, "person" means a natural person, partnership, corporation, subsidiary, limited liability company, trust, agent, affiliate, or other form of business enterprise. "Person" also includes heirs, assigns, personal representatives, and guardians.

(235 ILCS 5/6-2) (from Ch. 43, par. 120)

Sec. 6-2. Issuance of licenses to certain persons prohibited.

(a) Except as otherwise provided in subsection (b) of this Section and in paragraph (1) of subsection (a) of Section 3-12, no license of any kind issued by the State Commission or any local commission shall be issued to:

(1) A person who is not a resident of any city, village or county in which the premises covered by the license are located; except in case of railroad or boat licenses.

(2) A person who is not of good character and reputation in the community in which he resides.

(3) A person who is not a citizen of the United States.

(4) A person who has been convicted of a felony under any Federal or State law, unless the Commission determines that such person has been sufficiently rehabilitated to warrant the public trust after considering matters set forth in such person's application and the Commission's investigation. The burden of proof of sufficient rehabilitation shall be on the applicant.

(5) A person who has been convicted of keeping a place of prostitution or keeping a place of juvenile prostitution, promoting prostitution that involves keeping a place of prostitution, or promoting juvenile prostitution that involves keeping a place of juvenile prostitution.

(6) A person who has been convicted of pandering or other crime or misdemeanor opposed to decency and morality.

(7) A person whose license issued under this Act has been revoked for cause.

(8) A person who at the time of application for renewal of any license issued hereunder would not be eligible for such license upon a first application.

(9) A copartnership, if any general partnership thereof, or any limited partnership thereof, owning more than 5% of the aggregate limited partner interest in such copartnership would not be eligible to receive a license hereunder for any reason other than residence within the political subdivision, unless residency is required by local ordinance.

(10) A corporation or limited liability company, if any member, officer, manager or director thereof, or any stockholder or stockholders owning in the aggregate more than 5% of the stock of such corporation, would not be eligible to receive a license hereunder for any reason other than citizenship and residence within the political subdivision.

(10a) A corporation or limited liability company unless it is incorporated or organized in Illinois, or unless it is a foreign corporation or foreign limited liability company which is qualified under the Business Corporation Act of 1983 or the Limited Liability Company Act to transact business in Illinois. The Commission shall permit and accept from an applicant for a license under this Act proof prepared from the Secretary of State's website that the corporation or limited liability company is in good standing and is qualified under the Business Corporation Act of 1983 or the Limited Liability Company Act to transact business in Illinois.

(11) A person whose place of business is conducted by a manager or agent unless the manager or agent possesses the same qualifications required by the licensee.

(12) A person who has been convicted of a violation of any Federal or State law concerning the manufacture, possession or sale of alcoholic liquor, subsequent to the passage of this Act or has forfeited his bond to appear in court to answer charges for any such violation.

(13) A person who does not beneficially own the premises for which a license is sought, or does not have a lease thereon for the full period for which the license is to be issued.

(14) Any law enforcing public official, including members of local liquor control commissions, any mayor, alderman, or member of the city council or commission, any president of the village board of trustees, any member of a village board of trustees, or any president or member of a county board; and no such official shall have a direct interest in the manufacture, sale, or distribution of alcoholic liquor, except that a license may be granted to such official in relation to premises that are not located within the territory subject to the jurisdiction of that official if the issuance of such license is approved by the State Liquor Control Commission and except that a license may be granted, in a city or village with a population of 50,000 or less, to any alderman, member of a city council, or member of a village board of trustees in relation to premises that are located within the territory subject to the jurisdiction of that official if (i) the sale of alcoholic liquor pursuant to the license is incidental to the selling of food, (ii) the issuance of the license is approved by the State Commission, (iii) the issuance of the license is in accordance with all applicable local ordinances in effect where the premises are located, and (iv) the official granted a license does not vote on alcoholic liquor issues pending before the board or council to which the license holder is elected. Notwithstanding any provision of this paragraph (14) to the contrary, an alderman or member of a city council or commission, a member of a village board of trustees other than the president of the village board of trustees, or a member of a county board other than the president of a county board may have a direct interest in the manufacture, sale, or distribution of alcoholic liquor as long as he or she is not a law enforcing public official, a mayor, a village board president, or president of a county board. To prevent any conflict of interest, the elected official with the direct interest in the manufacture, sale, or distribution of alcoholic liquor shall not participate in any meetings, hearings, or decisions on matters impacting the manufacture, sale, or distribution of alcoholic liquor. Furthermore, the mayor of a city with a population of 50,000 or less or the president of a village with a population of 50,000 or less may have an interest in the manufacture, sale, or distribution of alcoholic liquor as long as the council or board over which he or she presides has made a local liquor control commissioner appointment that complies with the requirements of Section 4-2 of this Act.

(15) A person who is not a beneficial owner of the business to be operated by the licensee.

(16) A person who has been convicted of a gambling offense as proscribed by any of subsections (a) (3) through (a) (11) of Section 28-1 of, or as proscribed by Section 28-1.1 or 28-3 of, the Criminal Code of 1961, or as proscribed by a statute replaced by any of the aforesaid statutory provisions.

(17) A person or entity to whom a federal wagering stamp has been issued by the federal government, unless the person or entity is eligible to be issued a license under the Raffles Act or the Illinois Pull Tabs and Jar Games Act.

(18) A person who intends to sell alcoholic liquors for use or consumption on his or her licensed retail premises who does not have liquor liability insurance coverage for that premises in an amount that is at least equal to the maximum liability amounts set out in subsection (a) of Section 6-21.

(19) A person who is licensed by any licensing authority as a manufacturer of beer, or any partnership, corporation, subsidiary, limited liability company, trust, agent or affiliate, or any other form of business enterprise thereof, having any interest, directly or indirectly, in a person licensed in this State as a distributor or importing distributor.

(20) A person who is licensed in this State as a distributor or importing distributor having any interest, directly or indirectly, in a person licensed as a manufacturer of beer by any licensing authority, or any partnership, corporation, subsidiary, limited liability company, trust, agent or affiliate, or any other form of business enterprise thereof, except for persons who own no more than 5% of the outstanding shares of a manufacturer of beer whose shares are publicly traded on an exchange within the meaning of the Securities Exchange Act of 1934.

(b) A criminal conviction of a corporation is not grounds for the denial, suspension, or revocation of a license applied for or held by the corporation if the criminal conviction was not the result of a violation of any federal or State law concerning the manufacture, possession or sale of alcoholic liquor, the offense that led to the conviction did not result in any financial gain to the corporation and the corporation has terminated its relationship with each director, officer, employee, or controlling shareholder whose actions directly contributed to the conviction of the corporation. The Commission shall determine if all provisions of this subsection (b) have been met before any action on the corporation's license is initiated.

(Source: P.A. 96-1551, eff. 7-1-11; 97-1059, eff. 8-24-12.)

(235 ILCS 5/6-4.5 new)

Sec. 6-4.5. Manufacturers with an interest in a distributor or importing distributor.

(a) The General Assembly hereby restates its commitment to the primary purpose of the Liquor Control Act of 1934, which is to protect the health, safety, and welfare of the People of Illinois through the sound and careful control and regulation of the manufacture, distribution, and sale of alcoholic liquor through independent licensees in a 3-tier regulatory system. The State's 3-tier regulatory system is designed to prevent a manufacturer or non-resident dealer, if the non-resident dealer is also the manufacturer of alcoholic liquors, including a partnership, corporation, subsidiary, limited liability company, trust, agent, affiliate, or other form of business enterprise thereof, from exercising vertical integration between a manufacturer or non-resident dealer, if the non-resident dealer is also the manufacturer of alcoholic liquors, and a distributor, importing distributor, or retailer through any ownership interest or through control.

(b) Notwithstanding any provision of this Act, no person licensed as a manufacturer of beer by any licensing authority, or any partnership, corporation, subsidiary, limited liability company, trust, agent, affiliate, or other form of business enterprise thereof, shall have any interest, directly or indirectly, in a holder of a distributor's license or importing distributor's license. Any such person who holds an interest in a holder of a distributor's license or importing distributor's license prior to this amendatory Act of the 98th General Assembly shall, in accordance with paragraph (19) of subsection (a) of Section 6-2, be ineligible to receive or hold a license issued by the State Commission.

(c) The State Commission shall, within 30 days after the effective date of this amendatory Act of the 98th General Assembly, notify all persons licensed by the State Commission as a manufacturer of beer, brewer, or non-resident dealer of the provisions of subsection (b) of this Section. Such manufacturer of beer, brewer, or non-resident dealer shall, within 30 days after receiving the notice, file a written disclosure with the Commission of all such interests in the manner and form prescribed by the Commission. Any manufacturer of beer, brewer, or non-resident dealer, who is also the manufacturer of beer, who has disclosed any interest in a distributor or importing distributor may request in its written disclosure an additional period of time to divest such interest. If such interest is not divested by the agreed time by such manufacturer of beer, brewer, or non-resident dealer, who is also the manufacturer of beer, the State Commission shall, after notice and hearing, revoke the license upon the State Commission's determination of a violation of subsection (b) of this Section. The State Commission shall enter its order within 90 days after the date of issuance of the notice of revocation of the license. The State Commission may, upon good cause, grant an extension to divest such interest for a reasonable period of time not to exceed 24 months from the effective date of this amendatory Act of the 98th General Assembly.

In the event a timely request for a hearing is not received and the manufacturer of beer, brewer, or non-resident dealer, who is also the manufacturer of beer, is found in violation of subsection (b) of this Section, such license issued to the manufacturer of beer, brewer, or non-resident dealer, who is also the manufacturer of beer, shall expire without further action.

(d) Notwithstanding any provision of this Act, no person licensed as a distributor or importing distributor shall have any interest, directly or indirectly, in a person licensed as a manufacturer of beer by any licensing authority, or any partnership, corporation, subsidiary, limited liability company, trust, agent or affiliate, or any other form of business enterprise thereof, except for ownership of no more than 5% of the outstanding shares of a manufacturer of beer whose shares are publicly traded on an exchange within the meaning of the Securities Exchange Act of 1934. Any person who holds such an interest in a person licensed as a manufacturer of beer by any licensing authority or any partnership, corporation, subsidiary, limited liability company, trust, agent or affiliate, or any other form of business enterprise thereof, except for ownership of no more than 5% of the outstanding shares of a manufacturer of beer whose shares are publicly traded on an exchange within the meaning of the Securities Exchange Act of 1934 prior to this amendatory Act of the 98th General Assembly, shall, in accordance with paragraph (20) of subsection (a) of Section 6-2, be ineligible to receive or hold a license issued by the State Commission.

(e) The State Commission shall, within 30 days after the effective date of this amendatory Act of the 98th General Assembly, notify all persons licensed by the State Commission as a distributor or importing distributor of the provisions of subsection (d) of this Section. Such distributors or importing distributors shall, within 30 days after receiving the notice, file a written disclosure with the Commission of all such interests greater than permitted by the provisions of subsection (d) of this Section in the manner and form prescribed by the Commission. Any distributor or importing distributor who has disclosed any interest greater than permitted by the provisions of subsection (d) may indicate in its written disclosure a request for an additional period of time to divest such interest. If such interest is not divested by the agreed time by such distributor or importing distributor, the State Commission, after notice and hearing, shall revoke the license upon the State Commission's determination of a violation of subsection (d) of this Section. The State Commission shall enter its order within 90 days of the date of issuance of the notice of revocation of the license. The State Commission may, upon good cause, grant an extension to divest such interest for a reasonable period of time not to exceed 24 months from the effective date of this amendatory Act of the 98th General Assembly.

In the event that a timely request for a hearing is not received and the distributor or importing distributor is found in violation of subsection (d) of this Section, such license issued to the distributor or importing distributor shall expire without further action.

Section 99. Effective date. This Act takes effect upon becoming law.