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Concise Explanatory Statement Permanent Rules to Implement 1183

Concise Explanatory Statement Permanent Rules to Implement 1183

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Published by: Matt Driscoll on Jun 22, 2012
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Concise Explanatory Statement 6/5/12Permanent Rules to implement I-1183
Notice of Permanent Rules to Implement I-1183 – Explanatory Statement
This explanatory statement concerns the
Washington State Liquor Control Board’sadoption of rules to implement Initiative 1183.
The Administrative Procedure Act (RCW 34.05.325(6)) requires agencies to complete aconcise explanatory statement before filing adopted rules with the Office of the CodeReviser. This statement must be provided to anyone who gave comment about theproposed rule making.Once persons who gave comment during this rule making have had a chance to receivethis document, the Liquor Control Board will file the amended rules with the Office of the Code Reviser. These rule changes will become effective 31 days after filing(approximately July 6, 2012).The Liquor Control Board appreciates your involvement in this rule making process. If you have any questions, please contact Karen McCall, Rules Coordinator, at (360) 664-1631 or e-mail at rules@liq.wa.gov.   _______________________________ 
What are the agency’s reasons for adopting these rules?
Initiative 1183 was passed by the voters on November 8, 2011. New license typeswere created and additional privileges are allowed for current license types. Rules areneeded to implement and clarify changes made by Initiative 1183.
Summary of all public comments received on this ruleproposal.
The Liquor Control Board received eighteen comments on the proposed permanentrules at the public hearing on May 24, 2012, and received two hundred ninety-fourwritten comments during the comment period that ended May 30, 2012.
 
Concise Explanatory Statement 6/5/12Permanent Rules to implement I-1183
Comments from Public Hearing:WAC 314-02-106 (4): The following people commented on the 17% licenseissuance fee that spirits retail licensees must pay on all spirits sales. Thecommenters stated that former contract liquor stores and successful biddersof former state liquor stores should not be required to pay the 17% licenseissuance fee on retail-to-retail sales. There was also comment that nospirits retailer licensee should pay 17% license issuance fees on retail-to-retail sales.
 
Rob Kauffman – CLS owner and member of the Lincoln County Board of Commissioners.
 
Trent House – Representing former CLS, Clear View Spirits & Wine.
 
Jerry McAlpine – CLS owner.
 
 Anthony Thieland – successful bidder of former state liquor store.
 
Ian Murphy – Small restaurant owner.
 
Katherine Degorty – CLS in Port Hadlock.
 
Julia Clark – Washington Restaurant Association.
 
Natalie Murphy – CLS in Greenacres.
 
Julian Mark – CLS 147, Lake Chelan.
 
Mike Thieland – successful bidder of former state liquor store.
 
Bonnie Ralston – CLS owner
 
Jeannie Weston – CLS 639.
LCB response:
The language in RCW 66.24.630 (4) states, “
Each spirits retaillicensee must pay to the board, for deposit into the liquor revolving fund, a licenseissuance fee equivalent to seventeen percent of all spirits sales revenues under thelicense, exclusive of taxes collected by the licensee and of sales of items on which alicense fee payable under this section has otherwise been incurred. The board mustestablish rules setting forth the timing of such payments and reporting of sales dollarvolume by the licensee, with payments required quarterly in arrears. The first paymentis due October 1, 2012. The language does not include any basis for the board toexempt any retail-to-retail-sales from the 17% license issuance fee required by the law.
WAC 314-02-103 (2) and WAC 314-02-106 (1) (c): The following peoplecommented on the 24 liter limit per sale per on-premises licensee per dayrules for wine and spirits. Numerous written comments were also receivedon this rule.
 
Lynne Omlie – DISCUS. Supported the per day limit.
 
 Andy Thieland – Successful bidder of former state liquor store. Opposes the perday limit.
 
Holly Chisa – NWGA – Opposes the per day limit.
 
Concise Explanatory Statement 6/5/12Permanent Rules to implement I-1183
 
Julia Clark – WRA. Opposes the per day limit.
 
Bruce Beckett – WRA. Opposes the per day limit.
 
John Guadnola – WBWWA – Supports the per day limit.
LCB response:
The emergency rules adopted by the board simply repeated thelanguage of the initiative that included the 24 liter limitation. In response to theemergency rules, the board received comments that suggested the rule should be morespecific, such as limiting the retail-to-retail sales to one every twenty-four hours, orother limitation, such as requiring each sale to be completed and the product removedfrom the store before another transaction could be made.The board set this matter for a work session at the February 22, 2012, board meetingand received numerous comments. Some of the comments asserted that the board hasno authority to impose a limitation and that the “twenty-four liters per sale” language isclear.Testimony at the board work session certainly supports the view that a limitation of some kind was intended, and that the inclusion of a limit on the amount of spirits andwine that may be sold in a retail-to-retail transaction was intended to be a meaningfullimitation. Although I-1183 amends the powers of the Liquor Control Board, the boardclearly has authority to do rulemaking that affects how licensees may sell liquor:
RCW 66.08.030
“The power of the board to make regulations under chapter  34.05   RCW extends to: 
 
(6) Regulating the sale of liquor kept by the holders of licenses which entitle the holder to purchase and keep liquor for sale; 
 
(12) Prescribing the conditions, accommodations, and qualifications requisite for the obtaining of licenses to sell beer, wines, and spirits, and regulating the sale of beer, wines, and spirits thereunder; 
 
Together these sections referenced above clearly show that the board has the authorityto adopt rules governing the sale of liquor by licensees, including a clarification orfurther limitation on sales.
WAC 314-23-030. The following people commented on the restriction thatan authorized representative US spirits COA and an authorizedrepresentative foreign spirits COA are not allowed to sell directly to a spritsretail licensee in Washington State.
 
Lynne Omlie – DISCUS. Opposes the rule that does not allow authorizedrepresentative spirits COAs from selling directly to Washington retailers.
 
C.J.Healy – Spirits Canada. Opposes the rule that does not allow authorizedrepresentative spirits COAs from selling directly to Washington retailers. This

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