UNOFFICIAL COPY AS OF 11/15/1806 REG. SESS.06 RS SB 82/HCS
AN ACT relating to wineries.
Be it enacted by the General Assembly of the Commonwealth of Kentucky:
Page 1 of 31
SB008230.100-1065HOUSE COMMITTEE SUB
UNOFFICIAL COPY AS OF 11/15/1806 REG. SESS.06 RS SB 82/HCS
Section 1. KRS 243.155 is amended to read as follows:
(1)Any in-state or out-of-state small farm winery may apply for a small farm winery license. In addition to all other licensing requirements, an applicant for a small farm winery license shall submit with its application a copy of the small farm winery's federal basic permit and proof documenting its annual wine production. An out-of-state winery shall submit additional documentation evidencing its resident state. As part of the application process, an out-of-state winery shall publish its notice of intent, as required by KRS 243.360, in the Kentucky newspaper of highest circulation. The office shall promulgate administrative regulations establishing the form the documentation of proof of production shall take.
(2)A small farm winery license shall authorize the licensee to perform the following functions without having to obtain separate licenses, except that each small farm winery off-premises retail site shall be separately licensed:
(a)Manufacture wines and bottle wines produced by that small farm winery[ in an amount not to exceed fifty thousand (50,000) gallons in one (1) year];
(b)Bottle wines produced by another small farm winery;
(c)Serve on the premises or at small farm winery off-premise retail sites complimentary samples of wine produced by it in amounts not to exceed six (6) ounces per patron per day, if the small farm winery or its off-premise retail site is located in wet territory;
(d)[(c)]Sell by the drink or by the package on premises, at small farm winery off-premise retail sites, and at fairs, festivals, and other similar types of events, wine produced on the premises of the small farm winery or produced by a licensed small farm winery, at retail to consumers if all sales sites are located in wet territory;
(e)[(d)]Sell and transport wine produced on the premises of the small farm winery to wholesale license holders and small farm wineries[to retail package or retail drink] license holders[, if the wine has been offered for sale to wholesale license holders and the wine is sold at the wholesale price to the retail package or retail drink license holders];
(f)[(e)]Consume on the premises wine produced by the small farm winery or a licensed small farm winery and purchased by the drink or by the package at the licensed premises, if the small farm winery is located in wet territory; and
(g)[(f)]Ship to a customer wine produced by a small farm winery[ or a farm winery] if:
1.The wine is purchased by the customer in person at the small farm winery;
2.The wine is shipped by licensed common carrier; and
3.The amount of wine shipped is limited to two (2) cases per customer per visit.
[(2)In accordance with administrative regulations promulgated by the board, the holder of a small winery license or farm winery license, upon affidavit filed with the board that grapes, grape juice, other fruits, other fruit juices, or honey produced in Kentucky are not obtainable, may apply for a permit to import these products. The burden of proof shall be upon the applicant to show that the grapes, grape juice, other fruits, other fruit juices, or honey are not available from any other source within the Commonwealth of Kentucky.]
(3)If a licensed small farm winery is located in a dry territory, KRS 242.230 to 242.430 shall apply, unless a local option election is held in accordance with the provisions of this subsection. A limited sale precinct election may be held in a precinct containing a licensed small farm winery or a proposed small farm winery located in a dry territory. The election shall be held in the same manner as prescribed by KRS 242.010 to 242.040 and 242.060 to 242.120. If the precinct contains a licensed small farm winery, the proposition to be voted on shall state, "Are you in favor of the sale of wine at the (name of the licensed small farm winery or wineries)?" If the precinct contains a proposed small farm winery or wineries, the proposition voted on shall state, "Are you in favor of the sale of wine at the (name of the proposed small farm winery or wineries)?" If the proposition is approved, a licensed small farm winery within the precinct may sell wine in accordance with subsection (2)[(1)] of this section.
(4)Other provisions of this chapter and KRS Chapter 244 notwithstanding, a small farm winery license holder may also hold a restaurant wine license and a retail malt beverage license, provided the issuance of these licenses is in connection with the establishment and operation of a restaurant, hotel, inn, bed and breakfast, conference center, or any similar business enterprise the purpose of which is to promote viticulture, enology, and tourism. The retail malt beverage license issued under this subsection shall limit the licensee to the sale of malt beverages for consumption on the premises only.
(5)This section shall not exempt the holder of a small farm winery license from the provisions of KRS Chapters 241, 242, 243, and 244, nor from the administrative regulations of the board, nor from regulation by the board at all premises licensed by the small farm winery, except as expressly stated in this section.
(6)Nothing contained in this section shall exempt a licensed out-of-state winery from obeying the laws of its resident state.
(7)Any person previously licensed as a small or farm winery under this chapter prior to the effective date of this Act shall hereby be authorized to conduct business as a small farm winery licensee, until such time as the term of his or her small or farm winery license expires. Upon the expiration of the term remaining on his or her small or farm winery license, a licensee who is in good standing shall be issued a small farm winery license as part of the renewal process after he or she submits to the office the winery's federal basic permit and proof of its annual wine production.
Section 2. KRS 244.165 is amended to read as follows:
(1)Except as provided in subsection (2) of this section, it shall be unlawful for any person in the business of selling alcoholic beverages in another state or country to ship or cause to be shipped any alcoholic beverage directly to any Kentucky resident who does not hold a valid wholesaler or distributor license issued by the Commonwealth of Kentucky.
(2)A small farm winery located in another state may ship wine to a customer in Kentucky if:
(a)The wine is purchased by the customer in person at the winery;
(b)The wine is shipped by licensed common carrier; and
(c)The amount of wine shipped is limited to two (2) cases per customer per visit.
(3)Any person who violates subsection (1) of this section shall, for the first offense, be mailed a certified letter by the office ordering that person to cease and desist any shipments of alcoholic beverages to Kentucky residents, and for the second and each subsequent offense, be guilty of a Class D felony.
Section 3. KRS 260.166 is amended to read as follows:
(1)The Kentucky Grape and Wine Council, created in KRS 260.165 to promote and facilitate the development of a grape, grape products, and wine industry, may:
(a)Conduct and contract with others to conduct research on grapes, grape products, and wine in Kentucky and elsewhere for use in Kentucky, including but not limited to:
1.Methods of marketing, market development, and distribution;
2.Methods of storage, refrigeration, processing, and transportation;
3.Methods of production and product development;
4.Methods of agronomic, enological, and viticultural practices to improve these practices in Kentucky; and
5.Economic benefits and impact from the industry;
(b)Publish and provide and contract with others to publish and provide wholesalers and retailers in the Kentucky grape, grape products, and wine industry with information on proper methods of handling and selling grapes, grape products, and wine;
(c)Publish and provide and contract with others to publish and provide producers of Kentucky grapes, grape products, and wine, as well as the general public, with information relating to Kentucky grapes, grape products, and wine; and
(d)Design and implement or contract with others to design and implement activities relating to Kentucky grapes, grape products, and wine, including but not limited to:
1.Market surveys and analyses;
2.Industry promotion programs;
3.Market maintenance and expansion plans;
4.Education programs;
5.Public relations programs;
6.Economic impact analyses; and
7.Other analysis or research relating to the promotion and sale of Kentucky grapes, grape products, and wine.
(2)The Kentucky Grape and Wine Council, to the extent that funds are available, shall:
(a)Promote the sale of grapes, grape products, and wine for the purpose of maintaining and expanding present markets and creating new markets for Kentucky grapes, grape products, and wine for the maximum economic impact on the agricultural economy of Kentucky;
(b)Inform the public, producers, and vendors about Kentucky grapes, grape products, and wine, including uses and benefits of these products;
(c)Advise the Commissioner to:
1.Expend moneys from the Kentucky Grape and Wine Council fund created in KRS 260.168 to carry out the duties and recommendations of the council; and
2.Hire staff to carry out the duties and recommendations of the council; and
3.Promulgate administrative regulations to carry out the duties and recommendations of the council;
(d)Coordinate with the Kentucky Department of Agriculture and other state agencies in carrying out these duties;[ and]
(e)Report annually to the Governor and the General Assembly on the activities of the Kentucky Grape and Wine Council; and
(f)Report by November 1 of each year to the Interim Joint Committee on Licensing and Occupations of the Kentucky General Assembly and the Agricultural Development Board on the coordination between Kentucky wineries and Kentucky wholesalers to promote the availability of Kentucky wine to retailers.
SECTION 4. A NEW SECTION OF KRS CHAPTER 260 IS CREATED TO READ AS FOLLOWS:
(1)The Kentucky small farm wineries support fund is created as a separate revolving fund. The support fund shall consist of amounts transferred to the fund pursuant to the provisions of subsection (2) of this section and any other proceeds from grants, contributions, appropriations, or other moneys made available for the purposes of the fund. Fund amounts not expended at the close of the fiscal year shall not lapse but shall be carried forward into the next fiscal year. Any interest earnings of the fund shall become a part of the fund and shall not lapse.
(2)A total of four hundred thousand dollars ($400,000) shall be deposited in the Kentucky small farm wineries support fund each fiscal year from the general fund. The funds shall be used by the Kentucky Grape and Wine Council as follows:
(a)Two hundred thousand dollars ($200,000) of these funds shall be used for the promotion, advertising, and marketing in Kentucky of wine produced by small farm wineries located in Kentucky. The Grape and Wine Council shall collaborate with the Kentucky Department of Agriculture and the Kentucky Department of Tourism to develop a marketing plan that shall include brand development, direct mail and e-marketing, Web site development, collateral brochures and maps, advertising, familiarization trips, a retail program, and any other topics that the marketing plan developers deem appropriate or that may be established through the promulgation of administrative regulations;
(b)One hundred thousand dollars ($100,000) of these funds shall be used by the Grape and Wine Council, in collaboration with the Kentucky Department of Agriculture and the Kentucky Department of Tourism, to establish a local marketing cost-share program. For the purposes of this section, "local marketing cost-share program" means a mechanism to provide Kentucky small farm wineries with access to matching funds reimbursements for projects that promote and market their products. Standards for the application for, and receipt of, matching funds reimbursements authorized in this section shall be established through the promulgation of administrative regulations;
(c)Twenty-five thousand dollars ($25,000) of these funds shall be used for funding the administrative costs of the Kentucky Grape and Wine Council. The costs shall include but not be limited to reimbursement for the council's appointed members' travel expenses while attending meetings of the council;
(d)Seventy-five thousand dollars ($75,000) shall be used for the payment of fees to licensed wholesalers who apply to the Kentucky Grape and Wine Council to participate in a wine distribution program established by the Kentucky Grape and Wine Council. A licensed wholesaler shall apply and shall be eligible for consideration for the program. The licensed wholesaler shall agree to distribute the wine produced by small farm wineries licensed under Section 1 of this Act and shall agree to sell the wine to retailers for the same price the wholesaler paid for the wine; and
(e)The funds allocated to each purpose under paragraphs (a) to (d) of this subsection shall be used exclusively for the purpose designated. Use of the funds designated for each purpose shall be strictly adhered to, and the funds shall not be used to support any other purpose. If, at the end of any fiscal year funds designated for one (1) of the purposes are unused, the unused funds shall not lapse and shall be carried forth to the succeeding year for the original purpose designated.
(3)The Kentucky Grape and Wine Council shall advise the Commissioner of the Department of Agriculture regarding promulgation of administrative regulations necessary to carry out the provisions and purposes of subsection (2) of this section. The Department of Agriculture shall collaborate with the Department of Tourism and the Kentucky Grape and Wine Council in developing any administrative regulations promulgated under the authority of this section.
Section 5. KRS 260.165 is amended to read as follows:
(1)The Kentucky Grape and Wine Council is hereby created within the Department of Agriculture. The purpose of the council shall be to promote and facilitate the development of a Kentucky-based grape industry in the Commonwealth of Kentucky.
(2)The council shall be composed of the Commissioner of Agriculture, or his designee, and nine (9) members appointed by the Governor. Of the nine (9) gubernatorial appointments, the Governor shall appoint one (1) from a list of three (3) candidates submitted by the director of the University of Kentucky Agriculture Experiment Station, one (1) from a list of three (3) candidates submitted by the secretary of the Commerce Cabinet, three (3) winery operators from a list of six (6) candidates submitted by the Commissioner of Agriculture,[ and] two (2) grape producers from a list of four (4)[ten (10)] candidates submitted by the Commissioner of Agriculture, and two (2) citizens at large[Kentucky Vineyard Society and the Kentucky Grape and Wine Council].
(3)Of the members appointed after January 1, 2007, three (3) members shall serve a term of one (1) year, two (2) shall serve a term of two (2) years, two (2) shall serve a term of three (3) years, and two (2) shall serve a term of four (4) years, as the Governor designates. Thereafter,[The] appointed members shall serve[ for] terms of four (4) years and until their successors are appointed and qualify. A vacancy in an unexpired term shall be filled for the unexpired portion of the term in the same manner as the original appointment to that term.
(4)The council shall select a chairman and shall meet at least once every three (3) months at the times and places the chairman[that he] designates. Six (6)[Five (5)] members present at any meeting shall constitute a quorum. Upon the written request of any five (5) members, the chairman shall call a meeting of the council at the time and place requested.
(5)The council may enact bylaws concerning the conduct of the council's business and other administrative procedures as the council deems necessary.
(6)[(4)]Members shall receive no compensation but shall be reimbursed, payable from the Kentucky Grape and Wine Council fund, for any actual travel expense incurred while attending meetings of the council.
Section 6. KRS 241.010 is amended to read as follows:
As used in this chapter and in KRS Chapters 242 and 243, unless the context requires otherwise:
(1)"Alcohol" means ethyl alcohol, hydrated oxide of ethyl or spirit of wine, from whatever source or by whatever process it is produced.
(2)"Alcoholic beverage" means every liquid or solid, whether patented or not, containing alcohol in an amount in excess of more than one percent (1%) of alcohol by volume, which is fit for beverage purposes. It includes every spurious or imitation liquor sold as, or under any name commonly used for, alcoholic beverages, whether containing any alcohol or not. It does not include the following products:
(a)Medicinal preparations manufactured in accordance with formulas prescribed by the United States Pharmacopoeia, National Formulary, or the American Institute of Homeopathy;