Senate Bill No. 268

(By Senator Sharpe)

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[Introduced March 10, 1997; referred to the Committee
on the Judiciary; and then to the Committee on Finance.]
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A BILL to amend and reenact sections six, twenty-eight, thirty and thirty-one, article eight, chapter sixty of the code of West Virginia, one thousand nine hundred thirty-one, as amended, all relating to wine sales; eliminating the two cases of wine per month exemption; registration of labels; requiring all wine and fortified wine suppliers and manufacturers to enter into a sales agreement with West Virginia distributors; and adding additional unlawful acts.

Be it enacted by the Legislature of West Virginia:
That sections six, twenty-eight, thirty and thirty-one, article eight, chapter sixty of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted, all to read as follows:
ARTICLE 8. SALE OF WINES.

§60-8-6. License or registration required for sale or shipment of wine.

(a) Except as to the commissioner and except as provided in subsection (b) of this section, no person may offer for sale or sell wine in this state or offer wine for shipment into this state, except to a distributor who is duly licensed under this article. Every person, whether resident or nonresident in this state, who is engaged in or desires to engage in the sale or shipment of wine to a distributor for resale under this article shall, prior to engaging in such activities, register with the commissioner. If any such person violates the provisions of this article, he shall not be permitted to sell, ship or deliver any wine to a distributor or to the commissioner, or otherwise engage in the wine business in this state for a period of one year from the date a notice is mailed to such the person by the commissioner of the fact that such the person has violated the provisions of this article. During such a one-year period, it shall be unlawful for any distributor within this state to buy or receive wine from such the person or to have any dealings with such the person with respect thereto. Hearings and appeals on such the notices may be had in the same manner as in the case of revocations of licenses under this article.
(b) Notwithstanding the provisions of this chapter or any other law to the contrary, an adult resident or a duly licensed retailer or distributor of alcoholic beverages in a state or nation which affords adults and duly licensed retailers and distributors of this state an equal reciprocal shipping privilege may ship, for personal use and not for resale, not more than two cases of wine per month, not to exceed eighteen liters of wine in any month to any adult resident in this state. Delivery of a shipment pursuant to this section shall not be deemed to constitute a sale in this state. The shipping container of any wine sent into or out of this state under this subsection shall be clearly labeled to indicate that the package cannot be delivered to any person under the age of twenty-one or to an intoxicated person. No adult resident or duly licensed retailer or distributor may advertise the availability of wines by shipment to residents of this state.
§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 five dollars for the registration of the label inclusive for each distributor 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 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 by any supplier or manufacturer to transfer or deliver to a distributor or in-state West Virginia suppliers any wine or fortified wine without first having entered into any 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 or her business in a manner the distributor or in- state West Virginia supplier deems best and that this prerogative rests in the distributor or in-state West Virginia supplier the exclusive right to establish his or her selling prices, to select the brands of wine or fortified wines he or she 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 any supplier 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 or manufacturer shall market all the selling suppliers 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, manufacturer, distributor or in-state West Virginia supplier or any officer, agent or representative of any supplier, manufacturer, 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 request: 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-state West 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.
§60-8-31. Other unlawful acts.
It is unlawful:
(a) For a distributor to discriminate in price, sales agreements, terms or services offered to retailers or to any licensee under article seven of this chapter. "Discriminate" as used in this section means the granting of more favorable prices, agreements, terms or services to one person than to another.
(b) For a distributor, his agents, servants or employees to transport or deliver wine to any retail licensee or to any licensee under article seven of this chapter on Sunday or any general election day.
(c) For a distributor to sell wines authorized by this article to licensees under article seven of this chapter at a price which is greater than the price at which such wines are sold and distributed to retailers under this article.
(d) For a retailer not to pass on to the consumer fifty percent of all promotional post-offs from the distributor during a promotional period.
(e) For a supplier/manufacturer to sell to a distributor at any other FOB price that is higher than any other FOB established elsewhere in the United States.


NOTE: This bill requires all wine and fortified wine suppliers and manufacturers to enter into a sales agreement with West Virginia distributors to sell their products in West Virginia. The sales agreements provide for an area of primary responsibility. The bill eliminates the two cases of wine exemption, adds requirements for labeling and adds additional unlawful acts.

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