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Chapter 314-28 WAC

Last Update: 10/2/19

DISTILLERS

WAC Sections

HTMLPDF314-28-005Definitions.
HTMLPDF314-28-010Records.
HTMLPDF314-28-030What does a distillery license allow?
HTMLPDF314-28-050What does a craft distillery license allow?
HTMLPDF314-28-055What are the requirements for contract production by craft distilleries?
HTMLPDF314-28-060What are the general requirements for a craft distillery license?
HTMLPDF314-28-070Monthly reporting and payment requirements for a distiller and craft distiller.
HTMLPDF314-28-080What if a distillery or craft distillery licensee fails to report or pay, or reports or pays late?
HTMLPDF314-28-090Distilleries or craft distilleries—Selling out-of-state.
HTMLPDF314-28-095Farmer's market spirits sales.
HTMLPDF314-28-100Consumer orders, internet sales, and delivery for distillery and craft distillery licensees.
HTMLPDF314-28-200Adoption of federal laws.
HTMLPDF314-28-210Return of spirits by retailer—Replacement—Conditions.
HTMLPDF314-28-220Bonded and nonbonded spirits warehouse.


PDF314-28-005

Definitions.

The following definition applies to distilleries.
"Craft distillery" means any distillery licensed under RCW 66.24.145 and located in the state of Washington.
"Domestic distillery" means any distillery licensed under RCW 66.24.140 and located in the state of Washington.
[Statutory Authority: RCW 66.24.145, and 66.08.030. WSR 14-20-047, § 314-28-005, filed 9/24/14, effective 10/25/14. Statutory Authority: RCW 66.08.030 and 66.28.320. WSR 10-01-090, § 314-28-005, filed 12/16/09, effective 1/16/10.]



PDF314-28-010

Records.

(1) All distilleries licensed under RCW 66.24.140 and 66.24.145, including craft, fruit, and laboratory distillers must:
(a) Keep records regarding any spirits, whether produced or purchased, for three years after each sale. A distiller is required to report on forms approved by the liquor and cannabis board;
(b) In the case of spirits exported or sold, preserve all bills of lading and other evidence of shipment;
(c) Submit duplicate copies of transcripts, notices, or other data that is required by the federal government to the liquor and cannabis board if requested, within thirty days of the notice of such request. A distiller shall also furnish copies of the bills of lading, covering all shipments of the products of the licensee, to the board within thirty days of notice of such request;
(d) Preserve all sales records to spirits retail licensees, sales to spirits distributors, and exports from the state; and
(e) Submit copies of its monthly records to the liquor and cannabis board upon request.
(2) In addition to the above, a craft distiller must:
(a) Preserve all sales records of retail sales to consumers; and
(b) Submit its monthly records to the liquor and cannabis board upon request.
[Statutory Authority: RCW 66.08.030. WSR 16-01-102, § 314-28-010, filed 12/16/15, effective 1/16/16. Statutory Authority: RCW 66.08.030, 66.24.055, 66.24.160, 66.24.630, and 66.24.640. WSR 12-12-065, § 314-28-010, filed 6/5/12, effective 7/6/12. Statutory Authority: RCW 66.24.145 and 66.08.030. WSR 10-19-066, § 314-28-010, filed 9/15/10, effective 10/16/10; WSR 09-02-011, § 314-28-010, filed 12/29/08, effective 1/29/09. Statutory Authority: RCW 66.08.030. WSR 86-07-022 (Order 172, Resolution No. 181), § 314-28-010, filed 3/13/86; Order 14, § 314-28-010, filed 12/1/70, effective 1/1/71; Rule 84, filed 6/13/63.]



PDF314-28-030

What does a distillery license allow?

(1) A distillery license allows the licensee to:
(a) Sell spirits of their own production directly to a licensed spirits distributor in the state of Washington and to a licensed spirits retailer in the state of Washington;
(b) Sell spirits of its own production for consumption off the premises. A distiller selling spirits under this subsection must comply with the applicable laws and rules relating to retailers;
(c) Provide free or for a charge one-half ounce or less samples of spirits of its own production to persons on the premises of the distillery under the following conditions:
(i) Samples may be altered with nonalcoholic mixers, mixers with alcohol of the distiller's own production, ice, and/or water.
(ii) The maximum amount of alcohol per person per day is two ounces.
(iii) Every person who participates in any manner in the service of samples must obtain a class 12 alcohol server permit.
(d) Contract distilled spirits for, and sell contract distilled spirits to, holders of distillers' or manufacturers' licenses, including licenses issued under RCW 66.24.520, or for export.
(2) Contract production is when one distillery, referred to as the "contractor," produces distilled spirits for and sells contract distilled spirits to holders of a distillery license, or manufacturers' license including licenses issued under RCW 66.24.520, referred to as "contractee," and for export from the state. This distilled spirit is referred to as the "product."
(a) The contractee is the product owner. The contractee may handle the product under its license as the Revised Code of Washington and the Washington Administrative Code allow.
(b) The contractor is required to physically transport all contracted product to the contractee. The contractor is not allowed to distribute or retail the product.
(3) The contractor must submit a copy of the contract to the board prior to production. Any changes in the contract must also be submitted to the board prior to subsequent production. The board may require additional information.
(4) The contractor and contractee are required to obtain any federal approvals.
[Statutory Authority: RCW 66.24.170, 66.24.640, 66.24.695, and 66.08.030. WSR 18-02-006, § 314-28-030, filed 12/20/17, effective 1/20/18. Statutory Authority: RCW 66.08.030, 66.24.145. WSR 15-16-049, § 314-28-030, filed 7/29/15, effective 8/29/15; WSR 14-20-047, § 314-28-030, filed 9/24/14, effective 10/25/14. Statutory Authority: RCW 66.08.030, 66.24.055, 66.24.160, 66.24.630, and 66.24.640. WSR 12-12-065, § 314-28-030, filed 6/5/12, effective 7/6/12.]



PDF314-28-050

What does a craft distillery license allow?

(1) A craft distillery license allows a licensee to:
(a) Produce one hundred fifty thousand proof gallons or less of spirits per calendar year. A "proof gallon" is one liquid gallon of spirits that is fifty percent alcohol at sixty degrees Fahrenheit;
(b) Sell spirits of its own production directly to a customer for off-premises consumption, provided that the sale occurs when the customer is physically present on the licensed premises. A craft distiller may not sell liquor products of someone else's production;
(c) Sell spirits of its own production to a licensed spirits distributor;
(d) Sell spirits of its own production to a licensed spirits retailer in the state of Washington;
(e) Sell to out-of-state entities;
(f) Provide, free or for a charge, samples of spirits of its own production to persons on the distillery premises subject to the following conditions:
(i) The maximum amount of alcohol per person per day is two ounces.
(ii) Samples may be altered with nonalcoholic mixers, mixers with alcohol of the distiller's own production, ice, and/or water.
(iii) Anyone involved in the serving of such samples must have a valid Class 12 alcohol server permit.
(iv) Samples must be in compliance with RCW 66.28.040;
(g) Provide samples of spirits of its own production to retailers. Samples must be unaltered, and in compliance with RCW 66.28.040, 66.24.310 and WAC 314-64-08001. Samples are considered sales and are subject to taxes;
(h) Contract produce spirits for holders of a distiller or manufacturer license.
(2) A craft distillery licensee may add a spirits, beer, and wine restaurant license at the craft distillery premises. The licensee must complete an application and submit the application and applicable fees to the board for processing.
[Statutory Authority: RCW 66.24.170, 66.24.640, 66.24.695, and 66.08.030. WSR 18-02-006, § 314-28-050, filed 12/20/17, effective 1/20/18. Statutory Authority: RCW 66.08.030, 66.24.145. WSR 15-16-049, § 314-28-050, filed 7/29/15, effective 8/29/15; WSR 14-20-047, § 314-28-050, filed 9/24/14, effective 10/25/14. Statutory Authority: RCW 66.08.030, 66.24.055, 66.24.160, 66.24.630, and 66.24.640. WSR 12-12-065, § 314-28-050, filed 6/5/12, effective 7/6/12. Statutory Authority: RCW 66.24.145 and 66.08.030. WSR 10-19-066, § 314-28-050, filed 9/15/10, effective 10/16/10; WSR 09-02-011, § 314-28-050, filed 12/29/08, effective 1/29/09.]



PDF314-28-055

What are the requirements for contract production by craft distilleries?

(1) This section clarifies the language for contract production found in RCW 66.24.145. For the purposes of this section, contract production is when one craft distillery, referred to as the "contractor," produces distilled spirits for and sells contract distilled spirits to holders of distillers' or manufacturers' licenses including licenses issued under RCW 66.24.520, referred to as "contractee," and for export from the state. This distilled spirit is referred to as the "product."
(a) The contractee is the product owner. The contractee may handle the product under its license as RCW and WAC allow.
(b) The contractor is required to physically transport all contracted product to the contractee. The contractor is not allowed to distribute or retail the product.
(2) The contractor must submit a copy of the contract to the board prior to production. Any changes in the contract must also be submitted to the board prior to subsequent production. The board may require additional information.
(3) The contractor and contractee are required to obtain any federal approvals.
(4) Maintaining qualification as a craft distillery. Each craft distillery, whether in the capacity of a contractor or contractee, is allowed to produce one hundred fifty thousand gallons or less of total product per year. Total product, in this instance, includes:
(a) Product owned and produced by the craft distillery;
(b) Product owned and produced by the craft distillery for export from the state;
(c) Product owned by the craft distillery but produced by another craft distillery;
(d) Product produced by the craft distillery on behalf of another craft distillery;
(e) Product produced by the craft distillery under contract for another distillery, manufacturer, or grower.
(5) Reporting and recordkeeping.
(a) The contractor must include all product produced including contract production when it reports its monthly production to the board.
(b) The contractee must include the product contract produced by another craft distillery when the contractee reports its monthly production to the board.
(c) The contractor's and the contractee's recordkeeping documents must include the product information for each contract. The information must show the quantities produced.
[Statutory Authority: RCW 66.24.145, and 66.08.030. WSR 14-20-047, § 314-28-055, filed 9/24/14, effective 10/25/14; WSR 10-19-066, § 314-28-055, filed 9/15/10, effective 10/16/10.]



PDF314-28-060

What are the general requirements for a craft distillery license?

Per RCW 66.24.140 and 66.24.145, a craft distillery licensee is required to:
(1) Submit copies of all permits required by the federal government;
(2) Submit other licensing documents as determined by the board;
(3) Ensure a minimum of fifty percent of all raw materials (including any neutral grain spirits and the raw materials that go into making mash, wort or wash) used in the production of the spirits product are grown in the state of Washington. Water is not considered a raw material grown in the state of Washington.
[Statutory Authority: RCW 66.08.030, 66.24.055, 66.24.160, 66.24.630, and 66.24.640. WSR 12-12-065, § 314-28-060, filed 6/5/12, effective 7/6/12. Statutory Authority: RCW 66.24.145 and 66.08.030. WSR 10-19-066, § 314-28-060, filed 9/15/10, effective 10/16/10; WSR 09-02-011, § 314-28-060, filed 12/29/08, effective 1/29/09.]



PDF314-28-070

Monthly reporting and payment requirements for a distiller and craft distiller.

(1) A distiller or craft distiller must submit monthly production and sales reports and payment to the board.
(2) The required monthly reports must be:
(a) Filed electronically or mailed on a form furnished by the board;
(b) Filed every month, including months with no activity or payment due;
(c) Submitted with any payment due to the board on or before the twentieth day of each month for the previous month (for example, a report listing transactions for the month of January is due by February 20th). When the twentieth day of the month falls on a Saturday, Sunday, or a legal holiday, the report and payment must be submitted electronically or postmarked by the U.S. postal service no later than the next postal business day; and
(d) Filed separately for each liquor license held.
(3) For reporting purposes, production is the distillation of spirits from mash, wort, wash, or any other distilling material. After the production process is complete, a production gauge must be made to establish the quantity and proof of the spirits produced. Designation of the kind of spirits must be made at the time of the production gauge. The distiller must maintain a record of the production gauge. The production process is complete when the product is packaged for distribution. Production quantities are reportable within thirty days of the completion of the production process.
(4) A distiller must pay seventeen percent of their gross spirits revenue to the board on sales to customers for off-premises consumption.
(a) Payments must be submitted with the monthly reports on or before the twentieth day of each month for the previous month (for example, payment for a report listing transactions for the month of January is due by February 20th). When the twentieth day of the month falls on a Saturday, Sunday, or a legal holiday, payment must be made or postmarked by the U.S. postal service no later than the next postal business day.
(b) Electronic payments will be considered received on the date they post in the WSLCB receiving account.
[Statutory Authority: Chapter 66.24 RCW, RCW 66.08.030 and Court of Appeals Decision: Washington Restaurant Association, et al., v. WSLCB, 200 Wn.App. 119, 401 P.3d 428 (2017). WSR 19-21-002, § 314-28-070, filed 10/2/19, effective 1/1/20. Statutory Authority: RCW 66.24.170, 66.24.640, 66.24.695, and 66.08.030. WSR 18-02-006, § 314-28-070, filed 12/20/17, effective 1/20/18. Statutory Authority: RCW 66.08.030, 66.24.055, 66.24.160, 66.24.630, and 66.24.640. WSR 12-12-065, § 314-28-070, filed 6/5/12, effective 7/6/12. Statutory Authority: RCW 66.24.145 and 66.08.030. WSR 10-19-066, § 314-28-070, filed 9/15/10, effective 10/16/10; WSR 09-02-011, § 314-28-070, filed 12/29/08, effective 1/29/09.]



PDF314-28-080

What if a distillery or craft distillery licensee fails to report or pay, or reports or pays late?

Failure of a distillery or craft distiller to submit its monthly reports and payment to the board as required will be sufficient grounds for the board to suspend or revoke the liquor license.
Penalties. A penalty of two percent per month will be assessed on any payments postmarked after the twentieth day of the month following the month of sale. When the twentieth day of the month falls on a Saturday, Sunday, or a legal holiday, the filing must be postmarked by the U.S. Postal Service no later than the next postal business day.
Absent a postmark, the date received at the Washington state liquor control board, or designee, will be used to determine if penalties are to be assessed.
[Statutory Authority: RCW 66.24.170, 66.24.640, 66.24.695, and 66.08.030. WSR 18-02-006, § 314-28-080, filed 12/20/17, effective 1/20/18. Statutory Authority: RCW 66.08.030. WSR 14-12-101, § 314-28-080, filed 6/4/14, effective 7/5/14. Statutory Authority: RCW 66.24.630, 66.24.055, 66.24.145 and 66.08.030. WSR 13-07-085, § 314-28-080, filed 3/20/13, effective 4/20/13. Statutory Authority: RCW 66.08.030, 66.24.055, 66.24.160, 66.24.630, and 66.24.640. WSR 12-12-065, § 314-28-080, filed 6/5/12, effective 7/6/12. Statutory Authority: RCW 66.08.030, 66.24.145. WSR 09-02-011, § 314-28-080, filed 12/29/08, effective 1/29/09.]



PDF314-28-090

Distilleries or craft distilleries—Selling out-of-state.

What are the requirements for a craft distillery licensee to sell its spirits product outside the state of Washington?
(1) A distillery or craft distillery licensee shall include, in its monthly report to the board, information on the product it produces in-state and sells out-of-state. Information includes, but is not limited to, the amount of proof gallons sold, and for a craft distillery, the composition of raw materials used in production of the product.
(2) Product produced in-state and sold out-of-state counts toward a craft distillery licensee's one hundred fifty thousand proof gallons per calendar year production limit.
(3) Product produced in-state and sold out-of-state is subject to the fifty percent Washington grown raw materials requirement for a craft distillery.
(4) A distillery or craft distillery licensee is not subject to Washington state liquor taxes on any product the licensee sells out-of-state.
[Statutory Authority: RCW 66.24.170, 66.24.640, 66.24.695, and 66.08.030. WSR 18-02-006, § 314-28-090, filed 12/20/17, effective 1/20/18. Statutory Authority: RCW 66.08.030, 66.24.055, 66.24.160, 66.24.630, and 66.24.640. WSR 12-12-065, § 314-28-090, filed 6/5/12, effective 7/6/12. Statutory Authority: RCW 66.24.145 and 66.08.030. WSR 10-19-066, § 314-28-090, filed 9/15/10, effective 10/16/10; WSR 09-02-011, § 314-28-090, filed 12/29/08, effective 1/29/09.]



PDF314-28-095

Farmer's market spirits sales.

To conduct bottled spirits sales at a farmer's market, the following criteria must be met:
(1) The farmer's market must be authorized to allow distilleries and craft distilleries to sell bottled spirits at retail.
(2) The farmer's market endorsement does not allow sampling of spirits.
(3) A distillery or craft distillery selling bottled spirits at a farmer's market must have an endorsement from the liquor and cannabis board to sell bottled spirits of its own production at a farmer's market (see RCW 66.24.145).
(4) The distillery or craft distillery is required to send a list of the dates, times, and locations where bottled spirits may be offered for sale to the liquor and cannabis board at the beginning of each month.
(5) The farmer's market is required to provide a sketch to the licensing division of the area where spirits bottle sales will be conducted.
[Statutory Authority: RCW 66.08.030. WSR 16-01-102, § 314-28-095, filed 12/16/15, effective 1/16/16.]



PDF314-28-100

Consumer orders, internet sales, and delivery for distillery and craft distillery licensees.

A distillery or craft distillery licensee may accept orders for spirits from, and deliver spirits to, customers.
(1) Resale. Spirits shall not be for resale.
(2) Stock location. Spirits must come directly from a licensed distillery or craft distillery possession.
(3) How to place an order. Spirits may be ordered in person at a licensed location, by mail, telephone, or internet, or by other similar methods.
(4) Sales and payment.
(a) Only a spirits distillery or craft distillery licensee or a licensee's direct employees may accept and process orders and payments. A contractor may not do so on behalf of a spirits distillery or craft distillery licensee, except for transmittal of payment through a third-party service.
The use of internet or mobile applications for retail customers to purchase alcohol in Washington state are allowed under the following conditions:
(i) The internet sale will be made by the distillery;
(ii) The payment for the sale will be processed by the distillery; and
(iii) The distillery pays the owner of the internet or mobile application a service fee.
(b) All orders and payments shall be fully processed before spirits transfers ownership or, in the case of delivery, leaves a licensed distillery's possession.
(c) All orders and payments shall be fully processed before spirits transfers ownership or, in the case of delivery, leaves a licensed distillery's or craft distillery's possession.
(d) Payment method. Payment methods include, but are not limited to: Cash, credit or debit card, check or money order, electronic funds transfer, or an existing prepaid account. An existing prepaid account may not have a negative balance.
(e) Internet. To sell spirits via the internet, a new spirits distillery or craft distillery license applicant must request internet sales privileges in his or her application. An existing spirits distillery or craft distillery licensee must notify the board prior to beginning internet sales. A corporate entity representing multiple stores may notify the board in a single letter on behalf of affiliated spirits distillery or craft distillery licensees, as long as the liquor license numbers of all licensee locations utilizing internet sales privileges are clearly identified.
(5) Delivery location. Delivery shall be made only to a residence or business that has an address recognized by the United States postal service; however, the board may grant an exception to this rule at its discretion. A residence includes a hotel room, a motel room, or other similar lodging that temporarily serves as a residence.
(6) Hours of delivery. Spirits may be delivered each day of the week between the hours of 6:00 a.m. and 2:00 a.m. Delivery must be fully completed by 2:00 a.m.
(7) Age requirement.
(a) Under chapter 66.44 RCW, any person under twenty-one years of age is prohibited from purchasing, delivering, or accepting delivery of liquor.
(b) A delivery person must verify the age of the person accepting delivery before handing over liquor.
(c) If no person twenty-one years of age or older is present to accept a liquor order at the time of delivery, the liquor shall be returned.
(8) Intoxication. Delivery of liquor is prohibited to any person who shows signs of intoxication.
(9) Containers and packaging.
(a) Individual units of spirits must be factory sealed in bottles. For the purposes of this subsection, "factory sealed" means that a unit is in one hundred percent resalable condition, with all manufacturer's seals intact.
(b) The outermost surface of a liquor package, delivered by a third party, must have language stating that:
(i) The package contains liquor;
(ii) The recipient must be twenty-one years of age or older; and
(iii) Delivery to intoxicated persons is prohibited.
(10) Required information.
(a) Records and files shall be retained at the licensed premises. Each delivery sales record shall include the following:
(i) Name of the purchaser;
(ii) Name of the person who accepts delivery;
(iii) Street addresses of the purchaser and the delivery location; and
(iv) Time and date of purchase and delivery.
(b) A private carrier must obtain the signature of the person who receives liquor upon delivery.
(c) A sales record does not have to include the name of the delivery person, but it is encouraged.
(11) Web site requirements. When selling over the internet, all web site pages associated with the sale of liquor must display the spirits distillery or craft distillery licensee's registered trade name.
(12) Accountability. A spirits distillery or craft distillery licensee shall be accountable for all deliveries of liquor made on its behalf.
(13) Violations. The board may impose administrative enforcement action upon a licensee, or suspend or revoke a licensee's delivery privileges, or any combination thereof, should a licensee violate any condition, requirement, or restriction.
[Statutory Authority: RCW 66.24.170, 66.24.640, 66.24.695, and 66.08.030. WSR 18-02-006, § 314-28-100, filed 12/20/17, effective 1/20/18. Statutory Authority: RCW 66.08.030. WSR 16-01-102, § 314-28-100, filed 12/16/15, effective 1/16/16.]



PDF314-28-200

Adoption of federal laws.

All laws, rules and regulations of the federal government, or any subsequent modification thereof, applicable to the distillation of spirits, wines, cordials, liquors, etc., are by reference hereby adopted and promulgated as the rules and regulations of this board, unless the board implements different procedures by rule or policy.
[Statutory Authority: RCW 66.08.030, 66.24.145. WSR 09-02-011, § 314-28-200, filed 12/29/08, effective 1/29/09.]



PDF314-28-210

Return of spirits by retailerReplacementConditions.

No spirits shall be returned by any retail licensee to any spirits distributor except as herein provided.
(1) Spirits which is not in a salable condition may be returned by a retail licensee to the spirits distributor from whom purchased, provided it is immediately replaced by the spirits distributor with an identical quantity, type and brand of spirits. If the brand of spirits is not presently in the spirits distributor's stock and is not available to the distributor in the immediate future, a cash refund may be made to the retail licensee upon the approval of the board first being obtained.
(a) Every spirits distributor shall maintain on the licensed premises for a period of three years complete records of all refunds and exchanges made under this section including an inventory of unsalable spirits returned to such distributor by any retail licensee.
(b) Such unsalable spirits which requires reconditioning or destruction shall be returned by the spirits distributor to the distillery or craft distillery which manufactured or produced the same, or to the importer who imported such spirits. When spirits which has been returned to a distiller or craft distiller by any person for reconditioning or destruction has been assembled at the distillery or craft distillery, a complete inventory in duplicate of unsalable spirits shall be filed with the board by the distillery or craft distillery with a request that inspection be made of the returned spirits before the reconditioning process or destruction is started. When spirits has been returned by the distributor to the importer who imported such spirits, a complete inventory of said spirits shall be filed in duplicate with enforcement by the importer with a request that inspection be made of the returned spirits before the spirits is destroyed or returned to the out-of-state manufacturer.
(c) Spirits which is not in a salable condition and has been returned to a distillery, craft distillery or importer by a distributor may be replaced by the supplier with an identical quantity, type, and brand of spirits. If the brand of spirits is not presently in the distillery, craft distillery, or importer's stock and is not available to the supplier in the immediate future, a cash refund or credit may be made to the distributor by the supplier. Credit extended for the return of product should be noted on a separate document from the original invoice. Except as provided herein, no other adjustment, by way of a cash refund or otherwise, shall be made by the distillery, craft distillery, or spirits distributor.
(2) Spirits may be returned by a retail licensee or by a governmental agency who has seized the same to the spirits distributor selling such spirits in the event the retailer goes out of the business of selling spirits at retail a cash refund may be made upon return of the spirits, provided that consent of the board is first had and obtained.
(3) Spirits different from that ordered which has been delivered in error to a retail licensee may be returned to a spirits distributor and either replaced with that spirits which was ordered or a cash refund may be made upon the approval of the board first being obtained. The error in delivery shall be discovered and corrected within eight days of the date the delivery was made.
(4) A distributor may return salable spirits to a Washington distillery or craft distillery provided the distillery or craft distillery reimburses the distributor for the cost of the spirits.
[Statutory Authority: RCW 66.24.170, 66.24.640, 66.24.695, and 66.08.030. WSR 18-02-006, § 314-28-210, filed 12/20/17, effective 1/20/18.]



PDF314-28-220

Bonded and nonbonded spirits warehouse.

(1) There shall be a license that allows the storage and handling of bonded bulk spirits and, to the extent allowed under federal law, bottled spirits and the storage of tax-paid spirits not in bond. The licensee is allowed to store spirits of a distillery, craft distillery or manufacturer.
(2) Spirits in bond (bulk) may be removed from a bonded spirits warehouse for the purpose of being:
(a) Exported from the state;
(b) Returned to a distillery or spirits warehouse licensed under this section; or
(c) Transferred to a distillery, spirits warehouse licensed under this section, or a licensed bottling or packaging facility.
(3) Bottled spirits that are being removed from a spirits warehouse licensed under this section tax-paid may be:
(a) Transferred back to the distillery that produced them;
(b) Shipped to a licensed Washington spirits distributor;
(c) Shipped to a licensed Washington spirits retailer;
(d) Exported from the state; or
(e) Removed for direct shipping to a consumer pursuant to RCW 66.20.410.
(4) Handling of bottled spirits that have been removed from bond tax-paid and that reside in the spirits warehouse includes:
(a) Packaging and repackaging services;
(b) Bottle labeling services;
(c) Creating baskets or variety packs that may or may not include nonspirits products; and
(d) Picking, packing, and shipping spirits orders on behalf of a licensed distillery direct to consumers in accordance with RCW 66.20.410.
A distillery contracting with the operator of a spirits warehouse licensed under this section for handling bottled spirits must comply with all applicable state and federal laws and is responsible for financial transactions in direct to consumer shipping activities.
(5) The license applicant must demonstrate:
(a) The right to have warehoused spirits under a valid federal permit held by the distiller, craft distillery, or manufacturer who maintains ownership and title to the spirits while they are in storage;
(b) The location is physically secure;
(c) Zoned for the intended use; and
(d) Physically separated from any other use.
(6) A licensee must be a sole proprietor, a partnership, a limited liability company, a corporation, a port authority, a city, a county, or any other public entity or subdivision of the state that elects to license a bonded spirits warehouse as an agricultural or economic development activity. One or more domestic distilleries or manufacturers may operate as a partnership, corporation, business co-op, cotenant, or agricultural co-op for the purpose of obtaining a bonded and nonbonded spirits warehouse license or storing spirits in the facility under a common management and oversight agreement free of charge or for a fee.
(7) The ownership and operation of a spirits warehouse facility licensed under this section may be by a person or entity other than those described in this section acting in a commercial warehouse management position under contract for such licensed persons or entities on their behalf.
(8) A licensee must designate clearly in its license application to the board the sections of the warehouse that are bonded and nonbonded with a physical separation between such spaces, be physically secure, zoned for the intended use, and physically separated from any other use.
(9) The proprietor of the warehouse must maintain a plan for tracking spirits being stored in the warehouse to ensure compliance with relevant bonding and tax obligations.
[Statutory Authority: RCW 66.24.170, 66.24.640, 66.24.695, and 66.08.030. WSR 18-02-006, § 314-28-220, filed 12/20/17, effective 1/20/18.]