Original Notice.

     Preproposal statement of inquiry was filed as WSR 08-15-072.

     Title of Rule and Other Identifying Information: New section WAC 314-24-161 Additional locations for retail sales only and amending WAC 314-24-220 Licensing and operation of bonded wine warehouses.

     Hearing Location(s): Liquor Control Board, Board Room, 3000 Pacific Avenue S.E., Olympia, WA, on December 3, 2008, at 10:00 a.m.

     Date of Intended Adoption: December 17, 2008.

     Submit Written Comments to: Karen McCall, P.O. Box 43080, Olympia, WA 98504-3080, e-mail rules@liq.wa.gov, fax (360) 704-4921, by December 10, 2008.

     Assistance for Persons with Disabilities: Contact Karen McCall by December 10, 2008, (360) 664-1631.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The purpose of this rule making is to implement legislation that passed in the 2008 legislative session (SSB 6770) to RCW 66.24.185 which allow bonded wine warehouses to provide fulfillment service to wineries, and RCW 66.24.170 to change current rules or adopt new rules to clarify and provide further guidance to licensees who want to participate in the new activities allowed for wineries.

     Reasons Supporting Proposal: The rules are amended to reflect the statute changes during the legislative sessions.

     Statutory Authority for Adoption: RCW 66.08.030, 66.24.185, 66.24.170.

     Statute Being Implemented: RCW 66.24.185, 66.24.170.

     Rule is not necessitated by federal law, federal or state court decision.

     Name of Proponent: Washington state liquor control board, governmental.

     Name of Agency Personnel Responsible for Drafting: Karen Rogers, 3000 Pacific Avenue S.E., Olympia, WA, (360) 664-1622; Implementation: Alan Rathbun, 3000 Pacific Avenue S.E., Olympia, WA, (360) 664-1615; and Enforcement: Pat Parmer, 3000 Pacific Avenue S.E., Olympia, WA, (360) 664-1726.

     No small business economic impact statement has been prepared under chapter 19.85 RCW. This proposal imposes only minor impact on businesses in the industry.

     A cost-benefit analysis is not required under RCW 34.05.328.

October 15, 2008

Lorraine Lee

Chairman

OTS-1948.2

NEW SECTION
WAC 314-24-161   Domestic winery -- Additional locations for retail sales only.   A licensee holding a domestic winery license under RCW 66.24.170 may apply for two additional location licenses.

     (1) Wine-related retail activities allowed at an additional location include:

     (a) Serving of samples provided with or without charge to customers (must be wine of the winery's own production). Samples are subject to taxes under WAC 314-19-015 (4)(b);

     (b) Selling wine of the winery's own production for either on-premises or off-premises consumption; and

     (c) Renting space for public and private events, such as catered events (subject to all of the provisions of this section, to Title 66 RCW covering the "tied house" restrictions, and to RCW 66.24.320 and 66.24.420).

     (2) A licensee may request approval for an outside designated area. For the purpose of this section, an "outside designated area" means a specific area located on an outside track of land that is set aside for alcohol consumption.

     (a) An outside designated area must have prior written approval from the board's licensing division.

     (b) The outside designated area shall be marked as such, and shall be enclosed in accordance with WAC 314-02-130(1).

     (c) The outside designated area shall be on the licensed premises.

     (3) Anyone involved in the selling or serving of wine, including the pouring of samples, at an additional location for on-premises consumption must obtain a Class 12 or Class 13 alcohol server permit.

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     (2) The bonded wine warehouse shall be physically separated from any other use in such manner as prescribed by the board, and as a condition of license approval, the applicant must furnish the board appropriate documentation indicating the location of the bonded wine warehouse is properly zoned for the intended use. ((Wine not under federal excise tax bond shall be identified as federally tax-paid and physically separated on the premises to the extent required under the license holder's federal basic permit.))

     (3) A bonded wine warehouse may provide storage for a domestic winery, for another bonded wine warehouse, and for a certificate of approval holder. The ((wine may or may not be under federal bond, and the)) Washington wine tax provided in RCW 66.24.210 shall not be due until the wine is removed from bond and shipped to a licensed Washington wine distributor or, pursuant to RCW 66.12.020, to the liquor control board who will be responsible to pay the tax based on their purchases.

     (4) Every bonded wine warehouse licensee shall have on file and available for inspection records of all wine transactions, including receipts and shipments of wine and the total inventory on hand at the bonded warehouse.

     (5) Removals of wine from a bonded wine warehouse may be made only for shipment (a) to a licensed independent Washington wine distributor; (b) to another licensed bonded wine warehouse; (c) to the liquor control board; (d) out of state; (e) for return to the producing winery; ((or)) (f) to a producing domestic winery licensee; or (g) directly to a consumer. For purposes of this section, "producing domestic winery licensee" means the licensed Washington winery that produced the wine and its licensed agents. For purposes of this section, a "licensed agent" shall be an accredited representative, licensed pursuant to chapter 314-44 WAC, of only one producing domestic winery at the time of removal by such agent. A producing domestic winery licensee may take possession of wine from a bonded wine warehouse, after accepting an order therefor, and deliver the wine to a purchasing retail or special occasion licensee only by transporting the wine directly from the bonded wine warehouse to the licensed premises of the purchasing retail or special occasion licensee; provided, however, that in no event may a producing domestic winery licensee remove, in the aggregate, during any one calendar year, more than two thousand cases of wine for delivery directly to retail and special occasion licensees. Producing domestic winery licensees shall maintain records of removals and deliveries of wine from bonded wine warehouses and shall file with the liquor control board annually reports of the quantity of wine removed and delivered directly to retail and special occasion licensees. Invoicing shall be by the titleholder. The titleholder shall report shipments to, and returns from the bonded wine warehouse and sales to Washington wine distributors, and/or the liquor control board on the twentieth day of the month following the month of shipment and/or sale on forms furnished by, or acceptable to, the board.

     (6) At no time shall title to wine stored at the bonded wine warehouse pass to the operator of the bonded wine warehouse.

     (7) "Storage and handling of bottled wine ((only))" as used in RCW 66.24.185(1) shall mean the storage and handling of wine packaged for sale at retail (i.e., other than in bulk form).

     (8) ((As a condition precedent to license issuance, a bonded wine warehouse licensee shall guarantee payment to the state of any and all taxes under RCW 66.24.210 in the event the winery or other entity storing wine in the bonded wine warehouse fails to immediately pay such tax when due. Such guarantee shall be in the form of the bond referred to in subsection (9) of this section.

     (9) As required by RCW 66.24.185(5) every holder of a bonded wine warehouse license must, at all times when said license is in force, have in effect and on file with the board a bond executed by a surety authorized to do business in the state of Washington, in a form approved by the board and in the amount of five thousand dollars.)) Any winery contracting with a bonded wine warehouse for direct shipments to consumers must accept and process the orders and payments from the winery premises. This includes, but is not limited to, in-person, mail, telephone, and internet orders and payments.

     (9) A bonded wine warehouse may not accept orders and payments from consumers for direct shipments.

[Statutory Authority: RCW 66.08.030, 2004 c 160. 04-24-097, § 314-24-220, filed 12/1/04, effective 1/1/05. Statutory Authority: RCW 66.08.030, 15.88.030, 19.126.020, 66.04.010, 66.08.180, 66.16.100, 66.20.010, 66.20.300, 66.20.310, 66.24.150, 66.24.170, 66.24.185, 66.24.200, 66.24.206, 66.24.210, 66.24.230, 66.24.240, 66.24.244, 66.24.250, 66.24.375, 66.24.380, 66.24.395, 66.24.400, 66.24.420, 66.24.425, 66.24.440, 66.24.450, 66.24.455, 66.24.495, 66.24.540, 66.28.010, 66.28.040, 66.28.050, 66.28.170, 66.28.180, 66.28.190, 66.28.200, 66.28.310, 66.44.190, 66.44.310, 66.98.060 and 82.08.150. 98-18-097, § 314-24-220, filed 9/2/98, effective 10/3/98. Statutory Authority: RCW 66.08.030 and 66.24.185. 96-11-076, § 314-24-220, filed 5/13/96, effective 6/13/96; 85-24-042 (Order 170, Resolution No. 179), § 314-24-220, filed 11/27/85. Statutory Authority: RCW 66.24.185, 66.08.030 and 66.98.070. 85-10-029 (Order 158, Resolution No. 167), § 314-24-220, filed 4/24/85.]

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