Date Requested:March 06, 2013
Time Requested:01:43 PM
Agency: Alcohol Beverage Control Administration
CBD Number: Version: Bill Number: Resolution Number:
2013R2521 Introduced HB2834
CBD Subject: NON-PROFIT ORGANIZATION SERVE ALCOHOL
FUND(S)
General Revenue
Sources of Revenue
General Fund
Legislation creates:
Neither Program nor Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

    This bill, as drafted, is in W.Va. Code Section 60-6-7 would apply to what it terms a “valid nonprofit organization”. The bill does not specify, define or authorize any definition of what such an entity would be. There are many so-called nonprofits that pay large salaries to employees and very little to any charity but may be a nonprofit. Is a nonprofit a political action committee? The bill provides the undefined "nonprofit" the ability to hold a fundraiser with food and a meal and serve without a charge beer, wine & liquor to those persons making a tax deductible contribution. In other words, the undefined "nonprofit” could operate as a private club without any need to obtain a WVABCA license.
    
    This bill lacks any control aspects and would permit unfettered and unregulated sales of liquor, wine and beer. The bill has no criteria and no mechanism to verify, certify or check what is a “valid nonprofit organization”? There would also be no oversight or regulatory authority with respect to underage being served and consuming alcohol or over-intoxicated individuals being served alcohol. There would be no requirements on a “non-profit” to abide by any WVABCA or state law requirements. Cities and municipalities would not be required to verify zoning or approve/disapprove any such “nonprofit” events within their city limits. Such “nonprofit” events could include multi-day fairs and festivals. Furthermore, there would be no limit on the hours of operation, so an event could run all day and night long. The Legislature has delegated these issues to the WVABCA to address and regulate all aspect of the alcohol industry and this bill would contravene stated legislative purposes.
    
    The undefined "nonprofit" would be bestowed by the bill the ability to serve and essentially sell liquor, wine and beer at a non-licensed establishment without any oversight or control by the WVABCA or any city, county or state entity. This is a privilege granted to private clubs under the Private Club Act (W. Va. Code 60-7-1 et seq.). Private Clubs must meet requirements for licensure, pay a license fee, purchase liquor, wine and beer within the 3 Tier System, and pay all applicable sales and excise taxes. This "nonprofit" tax exemption would not require any such information be collected. The bill’s exemption would violate the W.Va. Constitution. The bill would also provide a loss of tax dollars generated from sales of liquor, wine and beer at retail. Furthermore, such undefined “nonprofits” would be selling beer, wine and liquor even with a tax deductible contribution since the sale is imputed by the payment of the tax deductible contribution for the benefit of food and alcoholic drinks.
    
    This bill would create a “free for all” and anyone with a so called "nonprofit" could essentially run a private club or any other on-premise license serving liquor, wine or beer while serving food without a WVABCA license. This would eliminate the need to obtain a tavern, private club or other on-premise license from the WVABCA.
    
    The General Revenue Fund could possibly have a loss of on-premise licensing revenue of up to $1 million The estimate excludes Limited Video Lottery retailers who are required by the WV lottery to maintain a WVABCA license and as a rough estimate reduces the estimate for some chain restaurants which may not bother with using a “nonprofit” in order to avoid obtaining a WVABCA license.
    

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2013
Increase/Decrease
(use"-")
2014
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 -1,451,426 -1,451,426
3. Explanation of above estimates (including long-range effect):
    The estimated above numbers are based on FY 2012 licensing data number for on-premise licenses excluding Limited Video Lottery retailers who are required by the WV lottery to maintain a WVABCA license and does include chain restaurants, however they may not bother with using a “nonprofit” in order to avoid obtaining a WVABCA license.
    
    Again, the bill as drafted would be in violation of the W. Va. Constitution and eliminate the need to obtain an on-premise license from the WVABCA, thus resulting in loss of the licensing revenue to the General Revenue Fund. Moreover the lack of any control, regulation and/or oversight would result in a free for all with unregulated public “nonprofit” saloons all over the state.
    


Memorandum
Person submitting Fiscal Note:
Anoop Bhasin on behalf of the WVABCA
Email Address:
Anoop.K.Bhasin@wv.gov
    This bill is drafted in the wrong code section as well as violating the W. Va. Constitution.
    
    This bill, as drafted, is in W.Va. Code Section 60-6-7 would apply to what it terms a “valid nonprofit organization”. The bill does not specify, define or authorize any definition of what such an entity would be. There are many so-called nonprofits that pay large salaries to employees and very little to any charity but may be a nonprofit. Is a nonprofit a political action committee? The bill provides the undefined "nonprofit" the ability to hold a fundraiser with food and a meal and serve without a charge beer, wine & liquor to those persons making a tax deductible contribution. In other words, the undefined "nonprofit” could operate as a private club without any need to obtain a WVABCA license.
    
    This bill lacks any control aspects and would permit unfettered and unregulated sales of liquor, wine and beer. The bill has no criteria and no mechanism to verify, certify or check what is a “valid nonprofit organization”? There would also be no oversight or regulatory authority with respect to underage being served and consuming alcohol or over-intoxicated individuals being served alcohol. There would be no requirements on a “non-profit” to abide by any WVABCA or state law requirements. Cities and municipalities would not be required to verify zoning or approve/disapprove any such “nonprofit” events within their city limits. Such “nonprofit” events could include multi-day fairs and festivals. Furthermore, there would be no limit on the hours of operation, so an event could run all day and night long. The Legislature has delegated these issues to the WVABCA to address and regulate all aspect of the alcohol industry and this bill would contravene stated legislative purposes.
    
    The undefined "nonprofit" would be bestowed by the bill the ability to serve and essentially sell liquor, wine and beer at a non-licensed establishment without any oversight or control by the WVABCA or any city, county or state entity. This is a privilege granted to private clubs under the Private Club Act (W. Va. Code 60-7-1 et seq.). Private Clubs must meet requirements for licensure, pay a license fee, purchase liquor, wine and beer within the 3 Tier System, and pay all applicable sales and excise taxes. This "nonprofit" tax exemption would not require any such information be collected. The bill’s exemption would violate the W.Va. Constitution. The bill would also provide a loss of tax dollars generated from sales of liquor, wine and beer at retail. Furthermore, such undefined “nonprofits” would be selling beer, wine and liquor even with a tax deductible contribution since the sale is imputed by the payment of the tax deductible contribution for the benefit of food and alcoholic drinks.
    
    This bill would create a “free for all” and anyone with a so called "nonprofit" could essentially run a private club or any other on-premise license serving liquor, wine or beer while serving food without a WVABCA license. This would eliminate the need to obtain a tavern, private club or other on-premise license from the WVABCA.
    
    The General Revenue Fund could possibly have a loss of on-premise licensing revenue of up to $1 million The estimate excludes Limited Video Lottery retailers who are required by the WV lottery to maintain a WVABCA license and as a rough estimate reduces the estimate for some chain restaurants which may not bother with using a “nonprofit” in order to avoid obtaining a WVABCA license.