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HF 791

as introduced - 90th Legislature (2017 - 2018) Posted on 02/02/2017 01:28pm

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to liquor; regulating and providing for direct ship wineries; amending
Minnesota Statutes 2016, sections 295.75, subdivision 4; 297A.83, subdivision 1;
297G.07, subdivision 1; 299A.706; 340A.304; 340A.417; proposing coding for
new law in Minnesota Statutes, chapter 340A.

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

Section 1.

Minnesota Statutes 2016, section 295.75, subdivision 4, is amended to read:


Subd. 4.

Tax collection required.

A liquor retailer with nexus in Minnesotanew text begin or a direct
ship winery as defined in section 340A.550
new text end, who is not subject to tax under subdivision 2,
is required to collect the tax imposed under subdivision 3 from the purchaser of the liquor
and give the purchaser a receipt for the tax paid. The tax collected must be remitted to the
commissioner in the same manner prescribed for the taxes imposed under chapter 297A.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales and purchases occurring on or
after June 30, 2017.
new text end

Sec. 2.

Minnesota Statutes 2016, section 297A.83, subdivision 1, is amended to read:


Subdivision 1.

Persons applying.

(a) A retailer required to collect and remit sales taxes
under section 297A.66new text begin or a direct ship winery as defined under section 340A.550new text end shall file
with the commissioner an application for a permitnew text begin under this sectionnew text end.

(b) A retailer making retail sales from outside this state to a destination within this state
who is not required to obtain a permit under paragraph (a) may nevertheless voluntarily file
an application for a permit.

(c) The commissioner may require any person or class of persons obligated to file a use
tax return under section 289A.11, subdivision 3, to file an application for a permit.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for permits applied for after June 30,
2017.
new text end

Sec. 3.

Minnesota Statutes 2016, section 297G.07, subdivision 1, is amended to read:


Subdivision 1.

Exemptions.

The following are not subject to the excise tax:

(1) Sales by a manufacturer, brewer, or wholesaler for shipment outside the state in
interstate commerce.

(2) Alcoholic beverages sold or transferred between Minnesota wholesalers.

(3) Sales to common carriers engaged in interstate transportation of passengers, except
as provided in this chapter.

(4) Malt beverages served by a brewery for on-premise consumption at no charge, or
distributed to brewery employees for on-premise consumption under a labor contract.

deleted text begin (5) Shipments of wine to Minnesota residents under section 340A.417.
deleted text end

deleted text begin (6)deleted text endnew text begin (5)new text end Fruit juices naturally fermented or beer naturally brewed in the home for family
use and not sold or offered for sale.

deleted text begin (7)deleted text endnew text begin (6)new text end Sales of wine for sacramental purposes under section 340A.316.

deleted text begin (8)deleted text endnew text begin (7)new text end Alcoholic beverages sold to authorized manufacturers of food products or
pharmaceutical firms. The alcoholic beverage must be used exclusively in the manufacture
of food products or medicines. For purposes of this clause, "manufacturer" means a person
who manufactures food products intended for sale to wholesalers or retailers for ultimate
sale to the consumer.

deleted text begin (9)deleted text endnew text begin (8)new text end Liqueur-filled candy.

deleted text begin (10)deleted text endnew text begin (9)new text end Sales to a federal agency, that the state of Minnesota is prohibited from taxing
under the Constitution or laws of the United States or under the Constitution of Minnesota.

deleted text begin (11)deleted text endnew text begin (10)new text end Sales to Indian tribes as defined in section 297G.08.

deleted text begin (12)deleted text endnew text begin (11)new text end Shipments of intoxicating liquor from foreign countries to diplomatic personnel
of foreign countries assigned to service in this state.

deleted text begin (13)deleted text endnew text begin (12)new text end Shipments of bulk distilled spirits or bulk wine to farm wineries licensed under
section 340A.315 for input to the final product.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2017.
new text end

Sec. 4.

Minnesota Statutes 2016, section 299A.706, is amended to read:


299A.706 ALCOHOL ENFORCEMENT ACCOUNT; APPROPRIATION.

(a) An alcohol enforcement account is created in the special revenue fund, consisting
of money credited to the account by law. Money in the account may be appropriated by law
for (1) costs of the Alcohol and Gambling Division related to administration and enforcement
of sections 340A.403, subdivision 4; 340A.414, subdivision 1a; deleted text beginanddeleted text end 340A.504, subdivision
7
;new text begin 340A.550, subdivisions 2, 4, 5, and 6; and 340A.560,new text end and (2) costs of the State Patrol.

(b) The commissioner shall transfer from the account to the trunk highway fund
$3,500,000 in fiscal year 2004 and $3,700,000 in fiscal year 2005, or so much thereof as is
necessary to pay costs of adding State Patrol positions.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2017.
new text end

Sec. 5.

Minnesota Statutes 2016, section 340A.304, is amended to read:


340A.304 LICENSE SUSPENSION AND REVOCATION.

The commissioner shall revoke, or suspend for up to 60 days, a license issued under
section 340A.301 deleted text beginordeleted text endnew text begin,new text end 340A.302,new text begin or 340A.550,new text end or impose a fine of up to $2,000 for each
violation, on a finding that the licensee has violated a state law or rule of the commissioner
relating to the possession, sale, transportation, or importation of alcoholic beverages. A
license revocation or suspension under this section is a contested case under sections 14.57
to 14.69 of the Administrative Procedure Act.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2017.
new text end

Sec. 6.

Minnesota Statutes 2016, section 340A.417, is amended to read:


340A.417 SHIPMENTS INTO MINNESOTA.

(a) Notwithstanding section 297G.07, subdivision 2, or any provision of this chapternew text begin
except for section 340A.550
new text end, a winery licensed in a state other than Minnesota, or a winery
located in Minnesota, may ship, for personal use and not for resale, not more than two cases
of wine, containing a maximum of nine liters per case, in any calendar year to any resident
of Minnesota age 21 or over. deleted text beginDelivery of a shipment under this section may not be deemed
a sale in this state.
deleted text end

(b) The shipping container of any wine sent under this section must be clearly marked
"Alcoholic Beverages: adult signature (over 21 years of age) required."

(c) It is not the intent of this section to impair the distribution of wine through distributors
or importing distributors, but only to permit shipments of wine for personal use.

(d) new text beginExcept for a violation of section 295.75, or chapters 297A and 297G, new text endno criminal
penalty may be imposed on a person for a violation of this sectionnew text begin or section 340A.550 or
340A.560
new text end other than a violation described in paragraph (e) or (f). Whenever it appears to
the commissioner that any person has engaged in any act or practice constituting a violation
of this sectiondeleted text begin,deleted text endnew text begin or section 340A.550 or 340A.560new text end and the violation is not within two years
of any previous violation of this section, the commissioner shall issue and cause to be served
upon the person an order requiring the person to cease and desist from violating this section.
The order must give reasonable notice of the rights of the person to request a hearing and
must state the reason for the entry of the order. Unless otherwise agreed between the parties,
a hearing shall be held not later than deleted text beginsevendeleted text endnew text begin 20new text end days after the request for the hearing is
received by the commissioner after which and within 20 days after the receipt of the
administrative law judge's report and subsequent exceptions and argument, the commissioner
shall issue an order vacating the cease and desist order, modifying it, or making it permanent
as the facts require. If no hearing is requested within 30 days of the service of the order, the
order becomes final and remains in effect until modified or vacated by the commissioner.
All hearings shall be conducted in accordance with the provisions of chapter 14. If the
person to whom a cease and desist order is issued fails to appear at the hearing after being
duly notified, the person shall be deemed in default, and the proceeding may be determined
against the person upon consideration of the cease and desist order, the allegations of which
may be deemed to be true.

(e) Any person who violates this sectionnew text begin or section 340A.550 or 340A.560new text end within two
years of a violation for which a cease and desist order was issued under paragraph (d), is
guilty of a misdemeanor.

(f) Any person who commits a third or subsequent violation of this sectionnew text begin or section
340A.550 or 340A.560
new text end within any subsequent two-year period is guilty of a gross
misdemeanor.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2017.
new text end

Sec. 7.

new text begin [340A.550] PROHIBITION ON UNAUTHORIZED DIRECT SHIPMENTS
OF WINE.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) "Direct ship purchaser" means a person who purchases
wine for personal use and not for resale from a winery located in a state other than Minnesota
for delivery to a Minnesota address.
new text end

new text begin (b) "Direct ship winery" means a winery licensed in a state other than Minnesota that
manufactures and makes a retail sale of wine and ships the wine to a direct ship purchaser
as authorized under section 340A.417.
new text end

new text begin (c) "Third-party provider" means a person, other than a common carrier, authorized by
a direct ship winery to ship wine to a direct ship purchaser on the direct ship winery's behalf.
new text end

new text begin Subd. 2. new text end

new text begin License requirements. new text end

new text begin (a) A direct ship winery must apply to the commissioner
for a direct ship license. The commissioner must not issue a license under this section unless
the applicant:
new text end

new text begin (1) is a licensed winery in a state other than Minnesota and provides a copy of its current
license in any state in which it is licensed to manufacture wine;
new text end

new text begin (2) provides a shipping address list, including all addresses from which it intends to ship
wine;
new text end

new text begin (3) provides the name and address of any third-party provider, other than a common
carrier, authorized to ship wine on behalf of the direct ship winery, and provides a copy of
the appointment of the third-party provider;
new text end

new text begin (4) agrees to comply with the requirements of subdivision 5; and
new text end

new text begin (5) consents to the jurisdiction of the Departments of Public Safety and Revenue, the
courts of this state, and any statute, law, or rule in this state related to the administration or
enforcement of this section, including any provision authorizing the commissioners of public
safety and revenue to audit a direct ship winery for compliance with this and any related
section.
new text end

new text begin (b) A direct ship winery obtaining a license under this section must annually renew its
license by January 1 of each year and must inform the commissioner at the time of renewal
of any changes to the information previously provided in paragraph (a).
new text end

new text begin (c) The application fee for a license is $....... The fee for a license renewal is $....... The
commissioner must deposit all fees received under this subdivision in the alcohol enforcement
account in the special revenue fund established under section 299A.706.
new text end

new text begin Subd. 3. new text end

new text begin Direct ship wineries; restrictions. new text end

new text begin (a) A direct ship winery may only ship
wine from an address provided to the commissioner in subdivision 2, paragraph (a), clause
(2), or through a third-party provider whose name and address the licensee provided to the
commissioner in subdivision 2, paragraph (a), clause (3).
new text end

new text begin (b) Only wine from a direct ship winery's own production may be shipped by a direct
ship winery or the direct ship winery's third-party provider.
new text end

new text begin (c) A direct ship winery must not ship wine to a direct ship purchaser if it does not control
all winery operations.
new text end

new text begin Subd. 4. new text end

new text begin Third-party providers. new text end

new text begin (a) A third-party provider is an agent of the direct ship
winery and the direct ship winery is responsible for the third-party provider's compliance
with this section.
new text end

new text begin (b) A third-party provider must not ship wine to a direct ship purchaser if it controls the
operation of a direct ship winery.
new text end

new text begin (c) Unless the direct ship winery has supplied the required statement to the commissioner,
a third-party provider must provide a monthly statement to the commissioner, on a form
prescribed by the commissioner, detailing each shipment of wine made to a resident of this
state and any other information required by the commissioner.
new text end

new text begin (d) Before shipping wine to a direct ship purchaser, a third-party provider must verify
that a direct ship winery has obtained the proper license from the commissioner as required
under this section and that the direct ship winery appears on the licensed direct ship wineries
list required in subdivision 6.
new text end

new text begin Subd. 5. new text end

new text begin Taxation. new text end

new text begin A direct ship winery must:
new text end

new text begin (1) collect and remit the liquor gross receipts tax as required in section 295.75;
new text end

new text begin (2) apply for a permit as required in section 297A.83 and collect and remit as required
the sales and use tax imposed in chapter 297A;
new text end

new text begin (3) remit the tax as required in chapter 297G; and
new text end

new text begin (4) provide a statement to the commissioner, on a form prescribed by the commissioner,
detailing each shipment of wine made to a resident of this state and any other information
required by the commissioner.
new text end

new text begin Subd. 6. new text end

new text begin Common carriers; shipments prohibited. new text end

new text begin The commissioner must maintain
a licensed direct ship wineries list, including addresses, of persons who are authorized to
ship wine into Minnesota. The list must not include persons whose licenses were suspended
or revoked under section 340A.304 in the prior month and any third-party providers who
have failed to comply with the requirements of this section in the prior month. The
commissioner must provide this list on a monthly basis to any common carrier or third-party
provider doing business in this state. A common carrier must not deliver a package to a
Minnesota address if it contains an alcoholic beverage and the package is shipped from a
person or address not on the list.
new text end

new text begin Subd. 7. new text end

new text begin Private or nonpublic data; classification and sharing. new text end

new text begin (a) Data collected,
created, or maintained by the commissioner as required under this section are classified as
private data on individuals or nonpublic data, as defined in section 13.02, subdivisions 9
and 12.
new text end

new text begin (b) The commissioner must share data classified as private or nonpublic under this
section with the commissioner of revenue, for purposes of administering section 295.75
and chapters 289A, 297A, and 297G.
new text end

new text begin Subd. 8. new text end

new text begin Enforcement; penalties. new text end

new text begin Section 340A.417, paragraphs (d), (e), and (f), apply
to this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2017.
new text end

Sec. 8.

new text begin [340A.560] BOOTLEGGING PROHIBITED.
new text end

new text begin Subdivision 1. new text end

new text begin Direct shipments prohibited. new text end

new text begin (a) No person may ship an alcoholic
beverage for personal use, and not for resale, to a Minnesota address unless:
new text end

new text begin (1) the person shipping the alcoholic beverage obtains a license as required in section
340A.405 or 340A.550; or
new text end

new text begin (2) the shipment originates from a person holding a license as required in clause (1).
new text end

new text begin (b) A person making a shipment under paragraph (a) must provide a statement to the
commissioner, on a form prescribed by the commissioner, detailing each shipment of an
alcoholic beverage made to a resident of this state and any other information required by
the commissioner.
new text end

new text begin (c) Nothing in this section prohibits a person from shipping an alcoholic beverage to a
wholesaler licensed in section 340A.3021.
new text end

new text begin Subd. 2. new text end

new text begin Enforcement; penalties. new text end

new text begin Section 340A.417, paragraphs (d), (e), and (f), apply
to this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2017.
new text end