H. B. 2546
(By Delegates Ashcraft and Mezzatesta, By Request)
[Introduced March 11, 1993; referred to the
Committee on the Judiciary.]
A BILL to amend and reenact sections two, three, twenty-two,
twenty-eight, thirty and thirty-two, article eight, chapter
sixty of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, relating to the sale of
wines; contracts between wineries and distributors; dock
sales; charitable auction licenses; redefining certain
terms; prohibiting exclusive franchise agreements; and
prohibiting credit sales.
Be it enacted by the Legislature of West Virginia:
That sections two, three, twenty-two, twenty-eight, thirty
and thirty-two, article eight, chapter sixty of the code of West
Virginia, one thousand nine hundred thirty-one, as amended, be
amended and reenacted to read as follows:
ARTICLE 8. SALE OF WINES.
§60-8-2. Definitions.
Unless the context in which used clearly requires a
different meaning, as used in this article:
"Commissioner" or "commission" means the West Virginia
alcohol beverage control commissioner.
"Distributor" means any person whose principal place of
business is within the state of West Virginia, and who is engaged
in selling or distributing wine to retailers, licensed private
club or private wine restaurants and selling or distributing
port, sherry and Madeira wines to wine specialty shops under
authority of this article and actually maintains a warehouse in
this state for the distribution of wine with a representative
inventory of wine that actually transfers to the West Virginia
warehouse before it is delivered to the retailer, private wine
restaurants or wine speciality shops or licensed private clubs.
"Fortified wine" shall mean any wine to which brandy or
other alcohol has been added and shall include dessert wines
which are not fortified.
"Grocery store" means any retail establishment, commonly
known as a grocery store, supermarket, delicatessen, caterer or
party supply store, where food, food products and supplies for
the table are sold for consumption off the premises with average
monthly sales (exclusive of sales of wine) of not less than five
hundred dollars and an average monthly inventory (exclusive of
inventory of wine) of not less than three thousand dollars. The
term "grocery store" shall also include and mean a separate and
segregated portion of any other retail store which is dedicated
solely to the sale of food, food products and supplies for the
table for consumption off the premises with average monthly saleswith respect to such separate or segregated portion (exclusive of
sales of wine) of not less than three thousand dollars and an
average monthly inventory (exclusive of inventory of wine) of not
less than three thousand dollars.
"Licensee" means the holder of a license granted under the
provisions of this article.
"Private wine restaurant" means a restaurant which: (1) Is
a partnership, limited partnership, corporation, unincorporated
association or other business entity which has as its principal
purpose the business of serving meals on its premises to its
members and their guests; (2) is licensed under the provisions of
this article as to all of its premises or as to a separate
segregated portion of its premises to serve wine to its members
and their guests when such sale accompanies the serving of food
or meals; and (3) admits only duly elected and approved dues
paying members and their guests while in the company of a member,
and does not admit the general public.
"Retailer" means any person licensed to sell wine at retail
to the public at his established place of business for off-
premises consumption and who is licensed to do so under authority
of this article.
"Supplier" means any manufacturer, producer, processor,
distributor or supplier of wine who sells or offers to sell or
solicits or negotiates the sale of wine to any licensed West
Virginia distributor.
"Tax" includes within its meaning interest, additions to taxand penalties.
"Taxpayer" means any person liable for any tax, interest,
additions to tax or penalty under the provisions of this article
and any person claiming a refund of tax.
"Varietal wine" means any wine labeled according to the
grape variety from which such wine is made.
"Vintage wine" or "vintage-dated wine" means wines from
which the grapes used to produce such wine are harvested during
a particular year or wines produced from the grapes of a
particular harvest in a particular region of production.
"Wine" means any beverage obtained by the fermentation of
the natural content of fruits, or other agricultural products or
honey containing sugar, and includes, but is not limited to,
still wines, champagne and other sparkling wines, carbonated
wines, imitation wines, vermouth, cider, perry, sake, port,
sherry, Madeira or other products offered for sale or sold as
wine containing not less than seven percent nor more than
twenty-four percent alcohol by volume and shall exclude any
product defined as or embraced within the definition of
nonintoxicating beer:
Provided,
That for the purposes of these
regulations, wine shall include wine coolers and similar
beverages containing not less than one half of one percent nor
more than seven percent alcohol by volume.
"Wine" means any alcoholic beverage obtained by the natural
fermentation of the natural content of grapes, other fruits or
honey or other agricultural products containing sugar and towhich no alcohol has been added and shall include table wine, and
shall exclude fortified wine and shall also exclude any product
defined as or embraced within the definition of nonintoxicating
beer under the provisions of article sixteen, chapter eleven of
this code.
"Wine specialty shop" means a retailer who shall deal
principally in the sale of table wine, certain fortified wines,
wine accessories and food or foodstuffs normally associated with
wine and (1) who shall maintain a representative number of such
wines for sale in his inventory which are designated by label as
varietal wine, vintage, generic and/or according to region of
production and the inventory shall contain not less than fifteen
percent vintage or vintage-dated wine by actual bottle count and
(2) who, any other provisions of this code to the contrary
notwithstanding, may maintain an inventory of port, sherry and
Madiera wines having an alcoholic content of not more than
twenty-two percent alcohol by volume and which have been matured
in wooden barrels or casks.
§60-8-3. Licenses; fees; general restrictions.
(a) Except as to farm wineries as defined by section five-a,
article one of this chapter, no person may engage in business in
the capacity of a distributor, retailer or private wine
restaurant without first obtaining a license from the
commissioner, nor shall a person continue to engage in any such
activity after his license has expired, been suspended or
revoked. No person may be licensed simultaneously as adistributor and a retailer, as a distributor and a private wine
restaurant, or as a retailer and a private wine restaurant.
(b) The commissioner shall collect an annual fee for
licenses issued under this article, as follows:
(1) Twenty-five hundred dollars per year for a distributor's
license and each separate warehouse or other facility from which
a distributor sells, transfers or delivers wine shall be
separately licensed and there shall be collected with respect to
each such location the annual license fee of twenty-five hundred
dollars as herein provided.
(2) One hundred fifty dollars per year for a retailer's
license.
(3) Fifty dollars per year for a wine tasting license.
(4) Fifty dollars for each sales representative of or
employed by a licensed distributor.
(5) Two hundred fifty dollars per year for a private wine
restaurant license, and each separate restaurant from which a
licensee sells wine shall be separately licensed and there shall
be collected with respect to each such location the annual
license fee of two hundred fifty dollars as herein provided.
(6) Twenty-five dollars per year for a West Virginia wine
retailer's license, and each separate retail outlet from which a
West Virginia wine retailer sells West Virginia wine shall be
separately licensed and there shall be collected with respect to
each such location the annual license fee of twenty-five dollars
as herein provided. The holder of such a license may sell nowines except those produced by West Virginia farm wineries as
defined by section five-a, article one of this chapter. Except
for the amount of the license fee and the restriction to sales of
West Virginia wines, a West Virginia wine retailer is subject to
all other provisions of this article which are applicable to a
retailer as defined in section two of this article.
(c) The license period shall begin on the first day of July
of each year and end on the thirtieth day of June of the
following year, and if granted for a less period, the same shall
be computed semiannually in proportion to the remainder of the
fiscal year.
(d) No retailer may be licensed as a private club as
provided by article seven of this chapter.
(e) No retailer may be licensed as a Class A retail dealer
in nonintoxicating beer as provided by article sixteen, chapter
eleven of this code:
Provided,
That a delicatessen, a caterer or
party supply store which is a grocery store as defined in section
two of this article and which is licensed as a Class A retail
dealer in nonintoxicating beer may be a retailer under this
article:
Provided, however,
That any delicatessen, caterer or
party supply store licensed in both such capacities must maintain
average monthly sales exclusive of sales of wine and
nonintoxicating beer which exceed the average monthly sales of
nonintoxicating beer.
(f) A retailer under this article may also hold a wine
tasting license authorizing such retailer to serve complimentarysamples of wine in moderate quantities for tasting. Such
retailer shall organize a winetaster's club, which has at least
fifty duly elected or approved dues paying members in good
standing. Such club shall meet on the retailer's premises not
more than one time per week and shall either meet at a time when
the premises are closed to the general public, or shall meet in
a separate segregated facility on the premises to which the
general public is not admitted. Attendance at tastings shall be
limited to duly elected or approved dues paying members and their
guests.
(g) A retailer who has more than one place of retail
business shall obtain a license for each separate retail
establishment. A retailer's license may be issued only to the
proprietor or owner of a bona fide grocery store or wine
specialty shop.
(h) The commissioner may issue a special license for the
retail sale of wine at any festival or fair which is endorsed or
sponsored by the governing body of a municipality or a county
commission. Such special license shall be issued for a term of
no longer than ten consecutive days and the fee therefor shall be
two hundred fifty dollars regardless of the term of the license
unless the applicant is the manufacturer of said wine on a farm
winery as defined in section five-a, article one of this chapter,
in which event the fee shall be twenty-five dollars. The
application for such license shall contain such information as
the commissioner may reasonably require and shall be submitted tothe commissioner at least thirty days prior to the first day when
wine is to be sold at such festival or fair. A farm winery
licensed under this subsection may exhibit, conduct tastings, not
to exceed a reasonable serving, and may sell wine only for
consumption off the premises of such festival or fair. A special
license issued other than to a farm winery may be issued to a
"wine club" as defined hereinbelow. The festival or fair
committee or the governing body shall designate a person to
organize a club under a name which includes the name of the
festival or fair and the words "wine club". The license shall be
issued in the name of the wine club. A licensee may not commence
the sale of wine as provided for in this subsection until the
wine club has at least fifty dues paying members who have been
enrolled and to whom membership cards have been issued.
Thereafter, new members may be enrolled and issued membership
cards at any time during the period for which the license is
issued. A wine club licensed under the provisions of this
subsection may sell wine only to its members, and in portions not
to exceed eight ounces per serving. Such sales shall take place
on premises or in an area cordoned or segregated so as to be
closed to the general public, and the general public shall not be
admitted to such premises or area. A wine club licensee under
the provisions of this subsection shall be authorized to serve
complimentary samples of wine in moderate quantities for tasting.
A license issued under the provisions of this subsection and
the licensee holding such license shall be subject to all otherprovisions of this article and the rules, regulations and orders
of the commissioner relating to such special license:
Provided,
That the commissioner may by rule, regulation, or order provide
for certain waivers or exceptions with respect to such
provisions, rules, regulations, or orders as the circumstances of
each such festival or fair may require, including, without
limitation, the right to revoke or suspend any license issued
pursuant to this section prior to any notice or hearing
notwithstanding the provisions of section twelve of this article:
Provided, however,
That under no circumstances shall the
provisions of subsection (c) or (d), section twenty of this
article be waived nor shall any exception be granted with respect
thereto.
A license issued under the provisions of this subsection and
the licensee holding such license shall not be subject to the
provisions of subsection (g) of this section.
(i) A license to sell wine granted to a private wine
restaurant under the provisions of this article entitles the
operator to sell and serve wine, for consumption on the premises
of the licensee, when such sale accompanies the serving of food
or a meal to its members and their guests in accordance with the
provisions of this article. Such licensees are authorized to
keep and maintain on their premises a supply of wine in such
quantities as may be appropriate for the conduct of operations
thereof. Any sale of wine so made shall be subject to all
restrictions set forth in section twenty of this article. Aprivate wine restaurant may also be licensed as a Class A retail
dealer in nonintoxicating beer as provided by article sixteen,
chapter eleven of this code.
(j) With respect to subsections (h) and (i) of this section,
the commissioner shall promulgate legislative rules in accordance
with the provisions of chapter twenty-nine-a of this code with
regard to the form of the applications, the suitability of both
the applicant and location of the licensed premises and such
other legislative rules deemed necessary to carry the provisions
of such subsections into effect.
(k) The commissioner shall promulgate legislative rules in
accordance with the provisions of chapter twenty-nine-a of this
code to allow restaurants to serve West Virginia wine with meals,
but not to sell the wine by the bottle. Each restaurant so
licensed shall be charged a fee less than that charged for a wine
license to a retail outlet, such fees to be set forth in the
aforementioned rules promulgated pursuant to this subsection.
(l) The commissioner shall establish guidelines to permit
West Virginia wines to be sold in state stores.
(m) Farm wineries as defined in section one-a of this
article may advertise off premises as provided in section seven,
article twenty-two, chapter seventeen and in any other media,
including, but not limited to, newspaper, radio, television,
magazines and direct mail solicitation.
The commissioner may issue a special license for the retail
sale of wine at a charitable auction which is endorsed orsponsored by a nonprofit organization for the express purpose of
raising funds for a bona fide, legitimate charity. Such special
license shall be issued for a term of no longer then ten
consecutive days and the fee therefore shall be two hundred fifty
dollars, regardless of the term of the license. Such sales shall
take place on premises with an area that can be cordoned or
segregated so as to be closed to the general public. Such sales
can be held in a private club or private wine restaurant. A
licensee under the provisions of this subsection shall be
authorized to serve samples of wine in moderate quantities for
tasting. All taxes collected when wine is sold at retail also is
imposed upon wine sold at auction.
§60-8-22. Sales on credit prohibited; exception.
It shall be unlawful for a distributor to sell or offer to
sell, or a retailer to purchase or receive, any wine except on a
cash basis, and no right of action exists to collect any claims
for credit extended contrary to the provisions of this
subdivision:
Provided,
That nothing herein prohibits, as a
credit on any subsequent sale, the crediting of the purchase
price charged for wine returned by the purchaser because of
damage, spoilage, erroneous shipments or orders, and other such
reasons customary in the trade:
Provided, however,
That
consignment sales are considered to be credit sales and therefore
prohibited to the extent, but not limited to, the exchanging of
product on display at the end of one selling period for another
product to be put on display at the beginning of another sellingperiod.
§60-8-28. Registration of labels.
Every distributor and farm winery offering wine for sale
under this article shall register with the tax commissioner each
label offered for sale in the state and shall pay a fee of three
dollars for the registration of such label. No wine may be sold
under this article unless its label has been registered.
Every manufacturer, supplier, winery, or importer offering
wine for sale to a distributor under this article shall register
with the department of tax and revenue each label offered for
sale within the state and shall pay a flat fee of twenty-five
dollars for the registration of such label inclusive for all
distributors representing the wine. Only one registration shall
be required irrespective of the number of various sizes or
vintage changes. Label registration shall consist of the sole
submittal of the B.A.T.F. form number 1649:
Provided,
That a
product which does not require B.A.T.F. form number 1649 can be
registered with an unattached label.
§60-8-30. Exclusive franchise agreements prohibited.
It shall be illegal for any manufacturer to enter into any
exclusive franchise agreement with any distributor whereby any
such distributor is given the exclusive right within this state
or in any given territory within this state to distribute the
product or products of such manufacturer which are to be sold or
distributed pursuant to the provisions of this article:
Provided,
That it shall be unlawful for any supplier ormanufacturer to transfer or deliver to a distributor or in-state
West Virginia suppliers any wine or fortified wine without first
having entered into an equitable sales agreement with such
distributor, which sales agreement shall be in writing, shall be
identical as to terms and conditions with all other sales
agreements between such suppliers and manufacturers and its other
distributors or in-state West Virginia supplier in this state and
which shall contain a provision in substance or effect as
follows:
The sales agreement will only designate a distributor's
primary area of responsibility. Nothing contained herein
provides for exclusive franchised areas, as these franchised
areas are expressly prohibited by section thirty, article eight
of chapter sixty. The supplier or manufacturer recognized that
the distributor or in-state West Virginia supplier is free to
manage his business in a manner the distributor or in-state West
Virginia supplier deems best, and that this perogative rests in
the distributor or in-state West Virginia supplier the exclusive
right to establish his selling prices, to select the brands of
wine or fortified wines he wishes to handle, and to determine the
efforts and resources which the distributor or in-state West
Virginia supplier will exert to develop and promote the sale of
the supplier's or manufacturer's products handled by the
distributor or in-state West Virginia supplier.
Whenever the manufacturing, bottling production or import
rights for the sale of wine or fortified wine at wholesale of anysupplier or manufacturer is acquired by another supplier or
manufacturer, the distributor or in-state West Virginia supplier
of the selling manufacturer or supplier shall be entitled to
continue distributing the selling manufacturers or suppliers wine
or fortified wine products as authorized in the distributors or
in-state West Virginia supplier existing sales agreement, and the
acquiring supplier of manufacturer shall market all the selling
supplier or manufacturers wine or fortified wine products through
the distributor or in-state West Virginia suppliers as though the
acquiring manufacturer or supplier had made the sale agreement.
It is unlawful for any supplier or manufacturer or
distributor, or in-state West Virginia supplier, or any officer,
agent, or representative of any supplier, or manufacturer or
distributor or in-state West Virginia supplier, to cancel,
terminate or rescind without due regard for the equities of such
supplier, manufacturer, distributor or in-state West Virginia
supplier, and without just cause, any sales agreement. The
cancellation, termination or rescission of any such sales
agreement shall not become effective for at least ninety days
after written notice of such cancellation, termination or
rescission has been served on the affected party by certified
mail, return receipt requested:
Provided,
That the ninety-day
period and the notice of cancellation, termination or rescission
is agreed to in writing by both the supplier or manufacturer and
the distributor or in-state West Virginia supplier involved.
Whenever a supplier, manufacturer, distributor or in-stateWest Virginia supplier cancels, terminates or rescinds the sales
agreement, the supplier or manufacturer must purchase back at
laid in cost which includes freight and taxes all wine or
fortified wine inventory currently held at the distributor's or
in-state West Virginia supplier's warehouse. In addition, the
supplier or manufacturer must purchase back point of sale
material purchased by the distributor or in-state West Virginia
supplier.
§60-8-32. Where wine may be sold at retail.
Except as to sales permitted to be made by farm wineries as
defined by section five-a, article one of this chapter, wine sold
pursuant to this article may be sold at retail only by the
commissioner and in and by grocery stores and wine specialty
shops as defined by section two of this article:
Provided,
That
if grocery stores or wine speciality shops do not stock fine
vintage and estate bottled wine, the distributor may sell the
wine at retail from the distributor's warehouse. The
distributors are responsible for remitting all taxes that would
have been collected at the retail level on the sale of the wine.
NOTE: The purpose of this bill is to modify current
statutes relating to the sale of wine. The bill changes the
definition of wine; provides for issuance of a special license
for charitable wine auctions; permits some sales of wine at the
warehouse, and prohibits consignment sales. The bill places a
fee for registration if a winery, manufacturer, supplier or
importer of wine and it prohibits exclusive franchise agreements.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new languagethat would be added.