MISSISSIPPI LEGISLATURE

2016 Regular Session

To: Ways and Means

By: Representatives Willis, Barker, Sykes, Wilson, Aguirre

House Bill 846

AN ACT TO AMEND SECTIONS 67-3-3, 67-3-17, 67-3-19, 67-3-22, 67-3-28, 67-3-45, 67-3-55, 27-71-301 AND 27-71-307, MISSISSIPPI CODE OF 1972, TO DEFINE THE TERMS "LARGE CRAFT BREWERY" AND "SMALL CRAFT BREWERY" AND TO REVISE THE DEFINITION OF THE TERM "BREWPUB" UNDER THE LAWS REGULATING THE MANUFACTURE AND SALE OF BEER AND LIGHT WINE; TO PROVIDE THAT A LARGE CRAFT BREWERY SHALL HAVE THE PRIVILEGE OF SELLING MALT BEVERAGES, BEER, AND LIGHT WINE PRODUCTS ON ITS LICENSED PREMISES AND A SMALL CRAFT BREWERY SHALL HAVE THE PRIVILEGE OF SELLING MALT BEVERAGES, BEER, AND LIGHT WINE PRODUCTS ON ITS LICENSED PREMISES AND AT ONE SECONDARY LOCATION; TO REVISE CERTAIN PRODUCTION LIMITS FOR BREWPUBS UNDER THE BEER LAWS AND LIGHT WINE LAWS; TO PROVIDE THAT LARGE CRAFT BREWERIES AND SMALL CRAFT BREWERIES MUST COMPLY WITH CERTAIN REPORTING AND TESTING REQUIREMENTS; TO PROVIDE THAT CERTAIN PROHIBITIONS RELATING TO MANUFACTURERS, DISTRIBUTORS AND WHOLESALERS SHALL NOT PROHIBIT A SMALL CRAFT BREWERY FROM OWNING A BREWPUB; TO PROVIDE THAT LARGE CRAFT BREWERIES AND SMALL CRAFT BREWERIES HAVING A PERMIT TO MANUFACTURE OR BREW BEER AND WHO OPERATE A BREWERY MAY SELL BEER, MALT BEVERAGE PRODUCTS, AND LIGHT WINE PRODUCED AT THE BREWERY FOR BOTH ON-PREMISES CONSUMPTION AND OFF-PREMISES CONSUMPTION, PROVIDED THAT SUCH BEER, MALT BEVERAGE PRODUCTS AND LIGHT WINE ARE ALSO MADE AVAILABLE FOR SALE TO WHOLESALERS; TO LIMIT THE AMOUNT OF SUCH SALES THAT MAY BE MADE BY LARGE CRAFT BREWERIES AND SMALL CRAFT BREWERIES; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 67-3-3, Mississippi Code of 1972, is amended as follows:

67-3-3. When used in this chapter, unless the context indicates otherwise:

(a) "Commissioner" means the Commissioner of Revenue of the Department of Revenue of the State of Mississippi, and his authorized agents and employees;

(b) "Person" means one or more persons, a company, a corporation, a partnership, a syndicate or an association;

(c) "Manufacturer" and "retailer" include brewpubs licensed pursuant to Article 3, Chapter 71, Title 27, Mississippi Code of 1972, unless otherwise clearly provided;

(d) "Beer" means a malt beverage as defined in the Federal Alcohol Administration Act and any rules and regulations adopted pursuant to such act of an alcoholic content of not more than eight percent (8%) by weight; and

(e) "Light wine" means wine of an alcoholic content of not more than five percent (5%) by weight.

(f) "Large craft brewery" means a manufacturer licensee that is actively and continuously engaged in the manufacture of malt beverages, beer and light wine on the manufacturer's licensed premises and manufactures more than two hundred twenty-five thousand (225,000) barrels of such malt beverages, beer and light wine per year in the aggregate.

(g) "Small craft brewery" means a manufacturer licensee that is actively and continuously engaged in the manufacture of malt beverages, beer and light wine on the manufacturer's licensed premises and manufactures not more than two hundred twenty-five thousand (225,000) barrels of such malt beverages, beer and light wine per year in the aggregate.

SECTION 2. Section 67-3-17, Mississippi Code of 1972, is amended as follows:

67-3-17. (1) Any person desiring to engage in any business taxable under Sections 27-71-303 through 27-71-317, Mississippi Code of 1972, either as a retailer, or as a wholesaler or distributor, or as a manufacturer, of light wines or beer, shall file with the commissioner an application for a permit allowing him to engage in such business. The application for a permit shall contain a statement showing the name of the business, and if a partnership, firm, association or limited liability company, the name of each partner or member, and if a corporation the names of two (2) principal officers, the post office address, and the nature of business in which engaged. In case any business is conducted at two (2) or more separate places, a separate permit for each place of business shall be required. The commissioner shall prescribe the form of the application and designate who is required to sign the application. The application shall be signed under penalty of perjury. Notwithstanding any provision of this section or any other law to the contrary, a large craft brewery shall have the privilege of selling malt beverages, beer, and light wine products on its licensed premises and a small craft brewery shall have the privilege of selling malt beverages, beer, and light wine products on its licensed premises and at one (1) secondary location. The secondary location of the small craft brewery can be located no further than the immediately adjacent county to the brewery premises.

(2) The application shall include a statement that the applicant will not, except as otherwise authorized in this chapter, allow any alcoholic beverages as defined in Section 67-1-5, any beer having an alcoholic content of more than eight percent (8%) by weight or any wine, having an alcoholic content of more than five percent (5%) by weight, to be kept, stored or secreted in or on the premises described in such permit or license, and that the applicant will not otherwise violate any law of this state, or knowingly allow any other person to violate any such law, while in or on such premises.

(3) Each application or filing made under this section shall include the social security number(s) of the applicant in accordance with Section 93-11-64, Mississippi Code of 1972.

SECTION 3. Section 67-3-19, Mississippi Code of 1972, is amended as follows:

67-3-19. Where application is made for a permit to engage in the business of a retailer of light wine or beer, the applicant shall show in his application that he possesses the following qualifications:

(a) Applicant must be a person at least twenty-one (21) years of age, of good moral character and a resident of the State of Mississippi.

(b) Applicant shall not have been convicted of a felony, or of pandering or of keeping or maintaining a house of prostitution, or have been convicted within two (2) years of the date of his application of any violation of the laws of this state or the laws of the United States relating to alcoholic liquor.

(c) Applicant shall not have had revoked, except for a violation of Section 67-3-52, within two (2) years next preceding his application, any license or permit issued to him pursuant to the laws of this state, or any other state, to sell alcoholic liquor of any kind.

(d) Applicant shall be the owner of the premises for which the permit is sought or the holder of an existing lease thereon.

(e) Applicant shall not be residentially domiciled with any person whose permit has been revoked for cause, except for a violation of Section 67-3-52, within two (2) years next preceding the date of the present application for a permit.

(f) The applicant has not had any license or permit to sell beer or light wine at retail revoked, within five (5) years next preceding his application, due to a violation of Section 67-3-52.

(g) Applicant shall not employ any person whose permit has been revoked when such person owned or operated the business on the premises for which a permit is sought or allow such person to have any financial interest in the business of the applicant, until such person is qualified to obtain a permit in his own name.

(h) The applicant is not indebted to the State of Mississippi for any taxes.

(i) If applicant is a partnership * * *If applicant is a partnership, all members of the partnership must be qualified to obtain a permit. Each member of the partnership must be a resident of the State of Mississippi. or limited liability company, all officers and any partners or members owning more than five percent (5%) of the outstanding partnership or membership interest shall possess all of the qualifications required herein for any individual permittee.

(j) If applicant is a corporation, all officers and directors thereof, and any stockholder owning more than five percent (5%) of the stock of such corporation, and the person or persons who shall conduct and manage the licensed premises for the corporation shall possess all the qualifications required herein for any individual permittee. However, the requirements as to residence shall not apply to officers, directors and stockholders of such corporation.

Any misstatement or concealment of fact in an application shall be ground for denial of the application or for revocation of the permit issued thereon.

The commissioner may refuse to issue a permit to an applicant for a place that is frequented by known criminals, prostitutes, or other law violators or troublemakers who disturb the peace and quietude of the community and frequently require the assistance of peace officers to apprehend such law violators or to restore order. The burden of proof of establishing the foregoing shall rest upon the commissioner.

SECTION 4. Section 67-3-22, Mississippi Code of 1972, is amended as follows:

67-3-22. (1) The production limits for a brewpub shall be based upon production as determined by the State Tax Commission pursuant to Section 27-71-307, Mississippi Code of 1972, and shall be limited as follows:

(a) A stand alone restaurant shall not manufacture more than sixty-two thousand (62,000) gallons of light wine or beer per calendar year.

( * * *(a)b) A stand-alone restaurant * * *or restaurant operated by a hospitality operator with less than fifty (50) guest rooms in the aggregate shall not manufacture more than forty thousand three hundred (40,300) gallons of light wine or beer per calendar year.

( * * *(b)c) A restaurant operated by a hospitality operator with fifty (50) or more guest rooms in the aggregate but less than five hundred (500) guest rooms in the aggregate shall not manufacture more than sixty thousand (60,000) gallons of light wine or beer per calendar year.

( * * *(c)d) A restaurant operated by a hospitality operator with five hundred (500) or more guest rooms in the aggregate but less than one thousand (1,000) guest rooms in the aggregate shall not manufacture more than seventy-five thousand (75,000) gallons of light wine or beer per calendar year.

( * * *(d)e) A restaurant operated by a hospitality operator with one thousand (1,000) or more guest rooms in the aggregate shall not manufacture more than ninety-nine thousand (99,000) gallons of light wine or beer per calendar year.

(2) Light wine or beer produced at a brewpub shall not be sold at a price less than it cost to manufacture such light wine or beer.

(3) Except for brewpubs described in subsection (1)(a)

of this section, light wine or beer manufactured by a brewpub shall not be sold away from the premises of such brewpub (as defined in Section 27-71-301, Mississippi Code of 1972) and shall not be packaged in any form that it may be carried away from the premises; provided, however, that the final one hundred (100) gallons of beer within a fermenting tank may be placed in kegs for sale on the premises to facilitate transition from one fermenting tank to another.

(4) A brewpub shall be required to offer for sale light wine or beer that is normally carried on the inventory of wholesalers or distributors of light wine or beer.

(5) As used in this section, the term "hospitality operator" means a business that operates guest rooms that at any one time will accommodate transient guests on a daily or weekly basis in conjunction with a brewpub at one (1) location or facility.

SECTION 5. Section 67-3-28, Mississippi Code of 1972, is amended as follows:

67-3-28. (1) Any person desiring to engage in business as a brewpub, any large craft brewery, and any small craft brewery shall file with the commissioner, along with the application required by Section 67-3-17, Mississippi Code of 1972, a certificate issued by a licensed testing laboratory indicating that such laboratory has tested a sample of the applicant's beer or light wine, or both, and that the alcohol content of such sample of beer does not exceed eight percent (8%) by weight and the alcoholic content of such light wine does not exceed five percent (5%) by weight.

(2) Every brewpub, every large craft brewery, and every small craft brewery shall be required to submit to random testing by the commissioner to determine whether any beer being manufactured, sold, kept, stored or secreted by the license holder contains an alcohol content greater than eight percent (8%) by weight and any light wine being manufactured, sold, kept, stored or secreted by the license holder contains an alcoholic content greater than five percent (5%) by weight. The commissioner shall establish and administer testing standards and procedures to be used in such random testing. The brewpub licensee shall be responsible for all costs incurred by the commissioner in conducting random testing under this section.

SECTION 6. Section 67-3-45, Mississippi Code of 1972, is amended as follows:

67-3-45. No manufacturer, distributor or wholesale dealer to whom or to which this chapter applies shall:

(a) Make any loan, directly or indirectly, or furnish any fixtures of any kind, directly or indirectly, to any retail dealer in light wines and/or beer;

(b) Have any interest, direct or indirect, in the business of or in the furnishings or fixtures or in the premises used by any such retail dealer in connection with his or its business;

(c) Have any lien on any such property of any such retail dealer; or

(d) Sell light wines and/or beer to any such retail dealer on credit.

This section shall not apply to a brewpub licensed pursuant to Article 3, Chapter 71, Title 27, Mississippi Code of 1972, and expressly permits any small craft brewery to own and operate a brewpub so long as both facilities fully comply with all applicable federal and state laws.

SECTION 7. The following shall be codified as Section 67-3-48, Mississippi Code of 1972:

67-3-48. (1) A large craft brewery having a permit to manufacture or brew beer under this chapter and who operates a brewery under this chapter may sell beer, malt beverage products and light wine produced by it at the brewery for both on-premises consumption and off-premises consumption, provided that such beer, malt beverage products and light wine are also made available for sale to wholesalers.

(2) A small craft brewery having a permit to manufacture or brew beer under this chapter and who operates a brewery under this chapter may:

(a) Sell beer, malt beverage products and light wine produced by it at the brewery and at a secondary retail location that is not part of the brewery premises for both on-premises consumption and off-premises consumption, provided that such beer, malt beverage products and light wine are also made available for sale to wholesalers;

(b) Transfer beer, malt beverage products and light wine between the brewery and the secondary location;

(c) Sell beer, malt beverage products and light wine manufactured by other manufacturers at its brewery and at its secondary location, provided that such beer, malt beverage products and light wine are purchased by the small craft brewery from a licensed wholesaler;

(d) Sell packaged beer, malt beverage products and light wine directly to consumers at local farmers' markets and festivals.

(3) Any large craft brewery and any small craft brewery:

(a) Shall only sell beer, malt beverage products and light wine to individuals twenty-one (21) years of age or older;

(b) May sell the greater of ten percent (10%) of its total gross production or two thousand (2,000) barrels of beer, malt beverage products and light wine in the aggregate at any licensed premises, provided that such is sold at a price approximating retail prices generally charged for identical beverages in the county where the licensed premises are located;

(c) Shall remit appropriate taxes to the Department of Revenue for beer, malt beverage products and light wine sales in an amount equal to and in the manner required for excise taxes assessed by the Department of Revenue;

(d) Shall remit appropriate sales and use taxes to the Department of Revenue for beer, malt beverage products and light wine sales;

(e) Ensure that beer, malt beverage products and light wine sold for off-premises consumption are being sold for personal use and not resale and not being sold to anyone holding a retail permit for the purpose of resale in their establishment.

SECTION 8. Section 67-3-55, Mississippi Code of 1972, is amended as follows:

67-3-55. (1) It shall be unlawful for any retailer to possess for purpose of sale, to sell, or to offer to sell any light wine or beer which was not purchased from a wholesaler in this state who has a permit to sell such light wine or beer, except for beer or light wine that was brewed on the premises of the retailer who holds a permit as a brewpub pursuant to Article 3, Chapter 71, Title 27, Mississippi Code of 1972. In addition, the prohibitions contained in this subsection shall not apply to a large craft brewery or a small craft brewery.

(2) It shall be unlawful for any wholesaler to possess for purpose of sale, to sell, or to offer to sell any light wine or beer which was not purchased from a manufacturer or importer of a foreign manufacturer authorized to sell such light wine or beer in this state.

(3) This section shall not apply to beer offered and provided on the premises of a brewery for the purpose of tasting or sampling as authorized in Section 67-3-47 nor shall it apply to beer offered for sale by a large craft brewery or a small craft brewery.

SECTION 9. Section 27-71-301, Mississippi Code of 1972, is amended as follows:

27-71-301. When used in this article the words and terms hereafter mentioned shall have the following definitions:

(a) "State Auditor" means the State Auditor of Public Accounts of the State of Mississippi or any legally appointed deputy, clerk or agent.

(b) "Person" includes all natural persons or corporations, a partnership, an association, a joint venture, an estate, a trust, or any other group or combination acting as a unit and shall include the plural as well as the singular unless an intention to give another meaning thereto is disclosed in the context.

(c) "Consumer" means a person who comes into the possession of beer or light wine, the sale of which is authorized by Chapter 3 of Title 67, Mississippi Code of 1972, for the purpose of consuming it, giving it away or otherwise disposing of it in any manner except by sale, barter or exchange.

(d) "Retailer" means any person who comes into the possession of such light wines or beer for the purpose of selling it to the consumer, or giving it away, or exposing it where it may be taken or purchased or acquired in any other manner by the consumer; however, the term "retailer" shall not include a person who offers and provides beer on the premises of a brewery for the purpose of tasting or sampling as authorized in Section 67-3-47.

(e) "Wholesaler" means any person who comes into possession of such light wine or beer for the purpose of selling, distributing, or giving it away to retailers or other wholesalers or dealers inside or outside of this state.

(f) "Commissioner" means the Commissioner of Revenue of the Department of Revenue or his duly appointed agents or employees.

(g) "Sale" includes the exchange of such light wines or beer for money, or giving away or distributing any such light wines or beer for anything of value; however, the term "sale" shall not include beer offered and provided on the premises of a brewery for the purpose of tasting or sampling as authorized in Section 67-3-47.

(h) "Light wines or beer" means beer and light wines legalized for sale by the provisions of Chapter 3 of Title 67, Mississippi Code of 1972.

(i) "Distributor" includes every person who receives either from within or from without this state, from a brewery, a winery or any other source, light wines or beer as defined in Chapter 3 of Title 67, Mississippi Code of 1972, for the purpose of distributing or otherwise disposing of such light wines or beer to a wholesaler or retailer of such light wines or beer.

(j) "Brewpub" means the premises of any restaurant, as defined in Section 67-1-5, Mississippi Code of 1972, in which light wine or beer is manufactured or brewed, subject to the production limitation imposed in Section 67-3-22 * * *, for consumption exclusively on the premises. "Premises," for the purpose of this paragraph (j) for a brewpub operated by a hospitality operator, means only those areas immediately adjacent and connected to the brewing facility where food is normally sold and consumed. "Premises," for the purposes of this paragraph (j) for a brewpub not operated by a hospitality operator, means those areas normally used by the brewpub to conduct business and shall include the selling areas, brewing areas and storage areas. For purposes of this paragraph (j), hospitality operator shall have the meaning ascribed to such term in Section 67-33-22.

(k) "Hospitality cart" means a mobile cart from which alcoholic beverages and light wine and beer are sold on a golf course and for which a hospitality cart permit has been issued under Section 67-1-51.

SECTION 10. Section 27-71-307, Mississippi Code of 1972, is amended as follows:

27-71-307. (1) (a) In addition to the specific tax imposed in Section 27-71-303, there is hereby imposed, levied, assessed and shall be collected, as hereinafter provided, an excise or privilege tax upon each person engaged or continuing in the business of wholesaler or distributor of light wines or beer equivalent to Forty-two and Sixty-eight One-hundredths Cents (42.68) per gallon upon all light wines and beer acquired for sale or distribution in this state. Such excise or privilege tax is also imposed at the same rate upon each gallon of light wine or beer manufactured by brewpubs, each of which shall accurately and reliably measure the quantity of light wine and beer produced by using a measuring device such as a meter or gauge glass or any other suitable method approved by the commissioner. Such tax is hereby imposed as an additional tax for the privilege of engaging or continuing in business.

(b) The excise tax imposed in this section shall be paid to the * * *State Tax Commission Department of Revenue monthly on or before the fifteenth day of the month following the month in which the beer or light wine was manufactured or received in this state. Monthly report forms shall be furnished by the commissioner to the wholesalers, distributors and brewpubs.

(c) Provided that persons operating a railroad dining car, club car or other car in interstate commerce upon which light wines or beer may be sold and who are licensed under the provisions of Section 67-3-27 and any other law relating to the sale of such beverages shall keep such records of the sales of such light wines and beer in this state as the commissioner shall prescribe and shall submit monthly reports of such sales to the commissioner within fifteen (15) days after the end of each month on a form prescribed therefor by the commissioner, and shall pay the tax due under the provisions of this section at the time such reports are filed.

No official crowns, lids, labels or stamps with the word "MISSISSIPPI" or "MS" imprinted thereon or any other evidence of tax payment is required by this section, or may be required under rule or regulation promulgated by the commissioner, to be affixed on or to any part of a beer, light wine or malt cooler bottle, can or other light wine or malt cooler container. For purposes of this section, malt cooler products shall be defined as a flavored malt beverage made from a base of malt beverage and flavored with fruit juices, aromatics and essences of other flavoring in quantities and proportions such that the resulting product possesses a character and flavor distinctive from the base malt beverage and distinguishable from other malt beverages.

(2) A licensed wholesaler or distributor of beer or light wine may not import beer or light wine from any source other than a brewer or importer authorized by the commissioner to sell such beer or light wine in Mississippi. Any person who violates the provisions of this subsection, upon conviction thereof, shall be punished by a fine of not more than One Thousand Dollars ($1,000.00) or by imprisonment in the county jail for not more than six (6) months, or by both such fine and imprisonment, in the discretion of the court and shall be subject to license forfeiture following an appropriate hearing before the * * *State Tax Commission Department of Revenue.

(3) The wholesaler or distributor shall be allowed credit for tax paid on beer or light wine which is no longer marketable and which is destroyed by same when such destruction is witnessed by an agent of the commissioner and when the amount of the excise tax exceeds One Hundred Dollars ($100.00). No other loss will be allowed.

A brewpub shall be allowed credit for light wine or beer which has passed through the meter, gauge glass or other approved measuring device and which has been soured or damaged. The brewpub shall record the removal of sour or damaged light wine or beer and may take credit after the destruction is witnessed by an agent of the commissioner and when the amount of excise tax exceeds Twenty-five Dollars ($25.00). No other loss shall be allowed.

(4) All manufacturers, brewers and importers of beer or light wine shall file monthly reports as prescribed by the commissioner listing direct sales by manufacturers and sales to each wholesaler or distributor by date, invoice number, quantity and container size, and any other information deemed necessary.

(5) All administrative provisions of the Mississippi Sales Tax Law, including those which fix damages, penalties and interest for nonpayment of taxes and for noncompliance with the provisions of such chapter, and all other requirements and duties imposed upon taxpayers, shall apply to all persons liable for taxes under the provisions of this chapter, and the commissioner shall exercise all the power and authority and perform all the duties with respect to taxpayers under this chapter as are provided in the sales tax law except where there is conflict, then the provisions of this chapter shall control.

SECTION 11. This act shall take effect and be in force from and after July 1, 2016.