Senate File 2374

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Senate File 2374

On June 7, 2022, Governor Reynolds signed SF2374 into law at Revelton Distilling in Osceola, Iowa. The bill streamlines alcohol licensing processes for in-state and out-of-state alcoholic beverage manufacturers, wholesalers, and retailers, making it easier to conduct business in Iowa. In addition, the bill creates parity in the license fee structure and privileges granted to those businesses engaged in the alcoholic beverage industry in the state.

ABD has determined that changes related to Senate File 2374 that do not require modifications to ABD’s eLAPS licensing system or the Iowa Department of Revenue’s GovConnectIowa system will be implemented in accordance with the transition provisions on a rolling basis at ABD’s discretion.

Governor Reynolds Signs SF2374

Gov. Reynolds signing SF2374

ABD Implementation

Native distilleries, native wineries, and native breweries may apply for 2 class "C" retail alcohol licenses at 2 manufacturing locations.

What does this mean to you??

  • As a native manufacturer, you may apply now through eLAPS for a class "C" retail alcohol license.
  • PLEASE NOTE: The fee changes (system changes) associated with the class "C" retail alcohol license have not been implemented into eLAPS which means you will be paying the current class “C” liquor license fee applicable to your location along with a Sunday Sales fee, if you choose to operate on Sunday.

What are your options if you choose not to apply for a Class C retail alcohol license at this time?

  • You can wait until January 1st, 2023, when the new fee structure has been implemented into eLAPS, to apply for a class "C" retail alcohol license.

What if you don’t want to give up your current retail permit/license at your site of manufacturing?

  • Your current retail license or permit, if currently due and eligible for renewal, can be renewed prior to January 1, 2023. Your current retail license or permit will remain in full force and effect until the expiration date on your license or permit.
  • After January 1, 2023, you may not renew or apply for a new class "C" native wine permit, class "C" native distilled spirits liquor license, or class "B" beer permit. If you want to conduct on-premises retail sales, you must apply for a class "C" retail alcohol license.

If you have any questions or wish to discuss your options, please contact our native manufacturing team.

PDF format: Native distilleries, native wineries, and native breweries may apply for 2 class "C" retail alcohol licenses at 2 manufacturing locations.

Class "C" and special class "C" liquor license holders are allowed to purchase not more than 5 cases of beer from a class "E" liquor license holder with a beer subpermit within a 24 hour period of time.

Effective August 8, 2022, class "C" and special class "C" liquor license holders (name will be changing to retail alcohol license) are allowed to purchase not more than 5 cases of beer from a class "E" (off-premises retailer such as a grocery store) liquor license holder with a beer subpermit (holding a TTB Basic Permit to wholesale to retailers) within a 24 hour period of time.

Class "C" and special class "C" liquor licensees - what does this mean to you??

  • You may purchase up to 5 cases of beer (definition of beer includes high alcoholic content beer and canned cocktails) in a 24 hour period of time from a class "E" retailer with a beer subpermit. (Note: This is 5 total cases not 5 cases per brand in a 24 hour period.)
  • The class "E" retailer with a beer subpermit that you purchase from must hold a TTB Basic Permit to resale at wholesale to you.
  • You are required to maintain records of your purchases of alcoholic beverages for resale to patrons at your establishment. The receipts/records for the above mentioned beer purchases must be maintained, accessible, and available for inspection upon request by the ABD.

Class "E" licensees - what does this mean to you??

  • If you have a beer subpermit and you hold a TTB Basic Permit to resale at wholesale, you can sell up to 5 cases of beer (definition of beer includes high alcoholic content beer and canned cocktails) in a 24 hour period of time to a class "C" and special class "C" liquor licensee.
  • You are required to maintain records of your sales of alcoholic beverages to class "C" and special class "C" liquor licensees. The receipts/records for the above mentioned beer sales must be maintained, accessible, and available for inspection upon request by the ABD.

Note: A Class A Beer permittee shall be held harmless concerning any beer resold under this provision of the law.

If you have questions, please email education@iowaabd.com.

PDF format: 5 case allowance for beer purchases.

Delivery by the Class "E" is not allowed for the 5 case beer allowance.

On August 8, 2022, ABD sent out the following correspondence to class "C", special class "C", and class "E" liquor license holders:

Effective August 8, 2022, class "C" and special class "C" liquor license holders (name will be changing to retail alcohol license) are allowed to purchase not more than 5 cases of beer from a Class "E" (off-premises retailer such as a grocery store, convenience store, and independent liquor store) liquor license holder with a beer subpermit (holding a TTB Basic Permit to wholesale to retailers) within a 24 hour period of time.

Since then, we have received numerous questions regarding delivery of beer by Class E liquor license holders to bars and restaurants. Upon review of SF2374 and all of Iowa Code Chapter 123, ABD has determined that delivery by the Class "E" is not allowed for the 5 case beer allowance.

The rationale for this decision is based partially on our understanding of the legislative intent behind this allowance. It is our understanding that these provisions were inserted in the code to allow a limited amount of beer to be purchased when/if a bar or restaurant runs low and needs to obtain some beer to make it through the evening. A similar provision exists for wine (less than a case of each brand in a 24 hour period). Allowing a Class "C" to place an order for beer from a Class "E" in advance with their liquor order is contrary to the legislative intent.

Additionally, ABD is relying on these code sections to justify its decision not to allow this type of delivery:

  • Class "E" sales to Restaurants, Bars, etc. - 123.28 Restrictions on transportation
    • Class “E” liquor control licensees may deliver alcoholic liquor purchased by class “C”, class “D” , or class “F” liquor control licensees.
  • Class "E" sales to Consumers - Under 123.46A Delivery of alcoholic beverages by retailers
    • The requirements and restrictions make it clear that delivery under this section applies to “a person and shall be for personal use and not for resale.”

If the legislature intended to allow delivery for these types of sales, they would have provided language in the code.

PDF format: Questions regarding delivery of 5 cases of beer to bars and restaurants.

Iowa Brewpubs: off-premises retail sales at your manufacturing location

Therefore, effective September 2, 2022, Iowa brewpubs are allowed to sell the beer they manufacture and package in original, unopened containers at their brewpub location for off-premises consumption without that beer going through a beer wholesaler. Previously, beer a brewpub manufactured and packaged in original, unopened containers and sold for off -premises consumption at the brewpub had to be sold to a beer wholesaler and purchased back by the brewpub. Now, brewpubs may sell ALL of their beer manufactured at that brewpub location directly to the customer.

Important notes:

  • A brewpub is now responsible for payment of beer barrel tax through the ABD eLAPS licensing system on all of their beer that is sold for on- and off-premises consumption at the brewpub location. For barrel tax questions, please reference https://abd.iowa.gov/licensing/elaps, Tax Reporting, or contact our Native Manufacturing Unit at ccrabtree@iowaabd.com or warrick@iowaabd.com.
  • A brewpub shall not transfer beer from one manufacturing location to another manufacturing location without that beer going through a beer wholesaler.
  • A brewpub shall not transfer beer from their manufacturing location to a 5 or 14 day license issued to the brewpub without that beer going through a beer wholesaler.
  • All other beer sold for on- or off-premises consumption at the brewpub location must be purchased from a beer wholesaler or a native brewery that is self-distributing.

PDF format: Iowa Brewpubs: off-premises retail sales at your manufacturing location

Iowa Native Distilleries - Removal of 100,000 Proof Gallon Limit

Effective September 2, 2022, the 100,000 proof gallon manufacturing limit on Iowa Native Distilleries has been removed. All Iowa Native Distilleries may apply for a class "C" retail alcohol license at the site of native distillery manufacturing.

Important notes:

  • A native distillery may be granted not more than 2 class "C" retail alcohol licenses at the site(s) of native distillery manufacturing.
  • A native distillery may not apply for a class "C" license that is not at the site of native distillery manufacturing. (Example: at a 5 day event in the town square)
  • All alcoholic liquor sold and served by the class "C" license at the site of native distillery manufacturing must be purchased from a class "E" license holder. (This includes your own native distilled spirits.)
  • The nine liters per person per day bottle sales must be sold under the native distillery (ND) license at the native distillery. (These are your bottles that you are electronically transferring through ABD and are likely selling at your gift shop with a separate cash register.)
  • The class "C" license may sell all types of alcoholic liquor by the bottle, but those bottles must be purchased through a class "E". (Do not electronically transfer your bottles through ABD and sell them out of the class "C" license.)

If you have questions, please contact our Native Manufacturing Unit at ccrabtree@iowaabd.com or warrick@iowaabd.com.

PDF format: Iowa Native Distilleries - Removal of 100,000 Proof Gallon Limit