Senate Bill No. 365

(By Senator Chernenko)

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[Introduced February 17, 1994; referred to the Committee
on the Judiciary.]

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A BILL to amend article sixteen, chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding thereto a new section, designated section nine-a; and to amend and reenact sections eighteen, twenty and twenty-two of said article, all relating to requiring a minimum price markup on the retail sale of nonintoxicating beers and coolers for off-premise consumption; defining procedures for calculating the minimum markup; incorporating the minimum retail price markup requirement into the commissioner's authority; and penalizing parties within the distribution system for violations.

Be it enacted by the Legislature of West Virginia:
That article sixteen, chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new section, designated section nine- a, and that sections eighteen, twenty and twenty-two of said article be amended and reenacted, all to read as follows:
ARTICLE 16. NONINTOXICATING BEER.

§11-16-9a. Minimum retail price and markup for off-premise consumption.

All license holders who are authorized to sell nonintoxicating beers and coolers at retail for off-premise consumption shall be required to establish a minimum retail selling price that is fixed at not less than a minimum markup of twenty-five percent above cost. The minimum markup shall be computed on the cost, adjusted to the nearest cent and added to the license holder's cost, to determine the minimum retail selling price. The minimum retail selling price, regardless of whether sold by sealed bottle, can, container, case or allowable barrel portion, shall be determined in the following manner:
(1) A minimum markup of not less than twenty-five percent will be added to the wholesale invoice price as is consistently applied for the same produce and brand in the original sealed shipping container.
(2) Deposit charges for the original sealed shipping container may not be included as part of the cost or included in any computation for determining the minimum retail selling price with respect to any class of license holder.
(3) The minimum selling price of each individual sealed portion in an original shipping carton, case or other container shall be computed, to the nearest cent, by dividing the number of sealed portions into the original shipping carton, case or container's minimum retail selling price, as computed herein.
It is the intent of the Legislature that imposition of a minimum markup on the retail price of nonintoxicating beers and coolers sold for off-premise consumption will avoid the economic and social consequences which flow from unfair competition and improper practices in sales to retail licensees by all parties within the distribution system which includes, but is not limited to, distributors, manufacturers, brewers, brewbpubs and retailers. Any violation of this section shall constitute a violation that is subject to license revocation and suspension provisions of section twenty-three of this article and shall constitute an unlawful act that subjects a violator to such criminal and civil sanctions as are provided by law or regulation.
§11-16-18. Unlawful acts of licensees; criminal penalties.

(a) It shall be unlawful:
(1) For any licensee, his, her, its or their servants, agents or employees to sell, give or dispense, or any individual to drink or consume, in or on any licensed premises or in any rooms directly connected therewith, nonintoxicating beer or cooler on weekdays between the hours of two o'clock a.m. and seven o'clock a.m., or between the hours of two o'clock a.m. and one o'clock p.m., on any Sunday, except in private clubs licensed under the provisions of article seven, chapter sixty of this code, where the hours shall conform with the hours of sale of alcoholic liquors;
(2) For any licensee, his, her, its or their servants,agents or employees, to sell, furnish or give any nonintoxicating beer as defined in this article to any person visibly or noticeably intoxicated, or to any person known to be insane or known to be a habitual drunkard;
(3) For any licensee, his, her, its or their servants, agents or employees, to sell, furnish or give any nonintoxicating beer as defined in this article to any person who is less than twenty-one years of age;
(4) For any distributor to sell or offer to sell, or any retailer to purchase or receive, any nonintoxicating beer as defined in this article, except for cash; and no right of action shall exist to collect any claims for credit extended contrary to the provisions of this subdivision. Nothing herein contained shall prohibit a licensee from crediting to a purchaser the actual price charged for packages or containers returned by the original purchaser as a credit on any sale, or from refunding to any purchaser the amount paid or deposited for such containers when title is retained by the vendor;
(5) For any brewer or distributor or brewpub or his, her, its or their agents, to transport or deliver nonintoxicating beer as defined in this article to any retail licensee on Sunday;
(6) For any brewer or distributor to give, furnish, rent or sell any equipment, fixtures, signs or supplies directly or indirectly or through a subsidiary or affiliate to any licensee engaged in selling products of the brewing industry at retail, or to offer any prize, premium, gift or other similar inducement,except advertising matter of nominal value, to either trade or consumer buyers: Provided, That a distributor may offer, for sale or rent, tanks of carbonic gas. Nothing herein contained shall prohibit a brewer from sponsoring any professional or amateur athletic event or from providing prizes or awards for participants and winners in any such events: Provided, however, That no such event shall be sponsored which permits actual participation by athletes or other persons who are minors, unless specifically authorized by the commissioner;
(7) For any licensee to permit in his premises any lewd, immoral or improper entertainment, conduct or practice;
(8) For any licensee except the holder of a license to operate a private club issued under the provisions of article seven, chapter sixty of this code, or a holder of a license or a private wine restaurant issued under the provisions of article eight of said chapter sixty, to possess a federal license, tax receipt or other permit entitling, authorizing or allowing such licensee to sell liquor or alcoholic drinks other than nonintoxicating beer;
(9) For any licensee to obstruct the view of the interior of his premises by enclosure, lattice, drapes or any means which would prevent plain view of the patrons occupying such premises. The interior of all licensed premises shall be adequately lighted at all times: Provided, That provisions of this subdivision shall not apply to the premises of a Class B retailer, the premises of a private club licensed under the provisions ofarticle seven, chapter sixty of this code, or the premises of a private wine restaurant licensed under the provisions of article eight of said chapter sixty;
(10) For any licensee to manufacture, import, sell, trade, barter, possess or acquiesce in the sale, possession or consumption of any alcoholic liquors on the premises covered by such license or on premises directly or indirectly used in connection therewith: Provided, That the prohibition contained in this subdivision with respect to the selling or possessing or to the acquiescence in the sale, possession or consumption of alcoholic liquors shall not be applicable with respect to the holder of a license to operate a private club issued under the provisions of article seven, chapter sixty of this code, nor shall the prohibition be applicable to a private wine restaurant licensed under the provisions of article eight of said chapter insofar as such private wine restaurant is authorized serve wine;
(11) For any retail licensee to sell or dispense nonintoxicating beer, as defined in this article, purchased or acquired from any source other than a distributor, brewer or manufacturer licensed under the laws of this state;
(12) For any licensee to permit loud, boisterous or disorderly conduct of any kind upon his or her premises or to permit the use of loud musical instruments if either or any of the same may disturb the peace and quietude of the community wherein such business is located: Provided, That no licensee shall have in connection with his or her place of business anyloudspeaker located on the outside of the licensed premises that broadcasts or carries music of any kind;
(13) For any person whose license has been revoked, as in this article provided, to obtain employment with any retailer within the period of one year from the date of such revocation, or for any retailer to employ knowingly any such person within such time;
(14) For any distributor to sell, possess for sale, transport or distribute nonintoxicating beer except in the original container;
(15) For any licensee to knowingly permit any act to be done upon the licensed premises, the commission of which constitutes a crime under the laws of this state;
(16) For any Class B retailer to permit the consumption of nonintoxicating beer upon his licensed premises;
(17) For any Class A licensee, his, her, its or their servants, agents or employees, or for any licensee by or through such servants, agents or employees, to allow, suffer or permit any person less than eighteen years of age to loiter in or upon any licensed premises; except, however, that the provisions of this subdivision shall not apply where such person under the age of eighteen years is in or upon such premises in the immediate company of his or her parent or parents, or where and while such person under the age of eighteen years is in or upon such premises for the purpose of and actually making a lawful purchase of any items or commodities therein sold, or for the purchase ofand actually receiving any lawful service therein rendered, including the consumption of any item of food, drink or soft drink therein lawfully prepared and served or sold for consumption on such premises;
(18) For any distributor to sell, offer for sale, distribute or deliver any nonintoxicating beer outside the territory assigned to such distributor by the brewer or manufacturer of such nonintoxicating beer or to sell, offer for sale, distribute or deliver any such nonintoxicating beer to any retailer whose principal place of business or licensed premises is within the assigned territory of another distributor of such nonintoxicating beer: Provided, That nothing herein shall be deemed to prohibit sales of convenience between distributors licensed in this state wherein one such distributor sells, transfers or delivers to another such distributor a particular brand or brands for sale at wholesale;
(19) For any licensee or any agent, servant or employee of any such licensee to sell, trade or furnish or to offer to sell, trade or furnish nonintoxicating beers and coolers at retail for off-premise consumption in contravention of the minimum retail price and markup required by section nine-a of this article; and
(19) (20) For any licensee or any agent, servant or employee of any such licensee to knowingly violate any rule or regulation lawfully promulgated by the commissioner in accordance with the provisions of chapter twenty-nine-a of this code.
(b) Any person who violates any provision of this articleincluding, but not limited to, any provision of this section, or any rule, regulation, or order lawfully promulgated by the commissioner, or who makes any false statement concerning any material fact in submitting application for license or for a renewal of a license or in any hearing concerning the revocation thereof, or who commits any of the acts herein declared to be unlawful, shall be guilty of a misdemeanor, and shall be punished for each offense by a fine of not less than twenty-five nor more than five hundred dollars, or imprisoned in the county jail for not less than thirty days or more than six months, or by both fine and imprisonment in the discretion of the court. Magistrates shall have concurrent jurisdiction with the circuit court, and any other courts having criminal jurisdiction in their county, for the trial of all misdemeanors arising under this article.
(c) Nothing in this article nor any rule or regulation of the commissioner shall prevent or be deemed to prohibit any licensee from employing any person who is at least eighteen years of age to serve in such licensee's lawful employ, including the sale or delivery of nonintoxicating beer as defined in this article. With the prior approval of the commissioner, a licensee whose principal business is the sale of food or consumer goods or the providing of recreational activities, including, but not limited to, nationally franchised fast food outlets, family-oriented restaurants, bowling alleys, drug stores, discount stores, grocery stores, and convenience stores, mayemploy persons who are less than eighteen years of age but at least sixteen years of age: Provided, That such person's duties shall not include the sale or delivery of nonintoxicating beer or alcoholic liquors: Provided, however, That the authorization to employ such persons under the age of eighteen years shall be clearly indicated on the licensee's license.
§11-16-20. Unlawful acts of brewers or manufacturers; criminal penalties.

(a) It shall be unlawful:
(1) For any brewer or manufacturer, or any other person, firm or corporation engaging in the business of selling nonintoxicating beer, ale or other malt beverage or cooler to a distributor or wholesaler, to discriminate in price, allowance, rebate, refund, commission, discount or service between distributors or wholesalers licensed in West Virginia. "Discriminate," as used in this section, shall mean granting of more favorable prices, allowances, rebates, refunds, commissions, discounts or services to one West Virginia distributor or wholesaler than to another.
(2) For any brewer or manufacturer, or any other person, firm or corporation engaged in the business of selling nonintoxicating beer, ale or other malt beverage or malt cooler to a distributor or wholesaler, to sell or deliver nonintoxicating beer, ale or other malt beverage or malt cooler to any licensed distributor or wholesaler unless and until such brewer, manufacturer, person, firm or corporation, as the casemay be, shall have filed the brewery or dock price of such beer, ale or other malt beverage or malt cooler, by brands and container sizes, with the commissioner. No price schedule shall be put into effect until fourteen days after receipt of same by the commissioner: Provided, That any price reductions shall remain in effect not less than thirty days.
(3) For any distributor, manufacturer, brewer, brewpub or any other person, firm or corporation engaged in the business of selling nonintoxicating beer, ale or other malt beverage or malt cooler to a distributor or wholesaler, to encourage, permit, condone or participate in any activity that would result in the sale at retail of nonintoxicating beers or coolers for off- premise consumption at a price in contravention of the minimum retail price and markup required in section nine-a of this article.
(b) The violation of any provision of this section by any brewer or manufacturer shall constitute grounds for the forfeiture of the bond furnished by such brewer or manufacturer in accordance with the provisions of section twelve of this article.
§11-16-22. Powers of the commissioner; rules, or orders.

(a) In addition to all other powers conferred upon the commissioner and in order to effectively carry out the provisions, intent and purposes of this article, the commissioner shall have the power and authority to adopt, promulgate, repeal, rescind and amend, in accordance with the provisions of chaptertwenty-nine-a of this code, rules, standards, requirements and orders, including, but not limited to, the following:
(1) Prescribing records and accounts, pertaining to the manufacture, distribution and sales of nonintoxicating beer, to be kept by the licensee and the form thereof;
(2) Requiring the reporting of such information by licensees as may be necessary for the effective administration of this article;
(3) Regulating the branding and labeling of packages, bottles or other containers in which nonintoxicating beer may be sold; and, in his discretion, requiring the collection of all taxes provided for under section thirteen of this article;
(4) Prohibiting shipment into the state and sale within the state of low grade or under-standard nonintoxicating beer;
(5) Referring to licenses and the issuance and revocation of the same;
(6) Establishing the suitability of businesses and locations for licensure, and requiring licensees to keep their places of business where nonintoxicating beer is sold at retail, and the equipment used in connection therewith, clean and in a sanitary condition;
(7) The establishment of advertising guidelines, prohibitions and prior permissions generally, including, but not limited to, (i) the use of posters, placards, mirrors, windows, doors or indoor and outdoor signs generally, and print and electronic advertising of retail licensees specifically, (ii) thesponsoring of athletic events or contests by licensees and restrictions relating thereto, (iii) the use of equipment, fixtures or supplies in advertising, (iv) false advertising with respect to any product of or sold by any licensee, including, but not limited to, draft beer and coolers and (v) the extent, if any, to which free goods and other inducements may be utilized by any licensee;
(8) Wholesale prices or price changes, including, but not limited to, the regulation and extent, if any, of any temporary price markoff or markdown, temporary wholesale price change downward or price discount, sometimes referred to as "post downs" or as "posting down" or any other price change, the express purpose of which is to put into effect a temporary price reduction, as well as the duration of time during which such temporary price reduction is to remain in effect: Provided, That rules shall be adopted to give effect to the minimum retail price and markup required by section nine-a of this article for the sale of nonintoxicating beers and coolers for off-premise consumption and that no rule may be adopted or remain in effect that supersedes or contravenes the minimum retail price and minimum markup calculation requirements set forth therein.
(9) Restrictions upon West Virginia distributors or other licensees with respect to the purchase of any nonintoxicating beer or malt coolers from manufacturers or brewers whether within or without the state who have failed to qualify for manufacture or shipment of any such product in the state; and
(10) Regulating, restricting or prohibiting a distributor from selling, offering for sale, distributing or delivering nonintoxicating beer to any retailer whose principal place of business, residence or licensed premises is located without or beyond the assigned territory of such distributor of such nonintoxicating beer.
(b) Any rule or order heretofore adopted by the commissioner and currently in effect upon the convening of the regular session of the Legislature held in the year one thousand nine hundred eighty-six shall remain in effect until changed by the commissioner in the manner prescribed by article three, chapter twenty-nine-a of this code, irrespective of whether specific authority for such currently effective rule existed prior to such date.



NOTE: The purpose of this bill is to require a minimum retail price, based on a minimum markup of 25% over the wholesale invoice price, on all retail sales of nonintoxicating beers and coolers for off-premise consumption and to impose administrative and criminal penalties on any party within the distribution system that attempts to violate or contravene the requirements.

Section nine-a is new; therefore, strike-throughs and underscoring have been omitted.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.