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ARIZONA STATE SENATE
Fifty-Fifth Legislature, Second Regular Session
liquor; licensing; processes; procedures
Purpose
Allows for a regional shopping center, a commercial office and retail center and an on-sale spirituous liquor licensee to apply to the Department of Liquor Licenses and Control (DLLC) for an extension of premises. Outlines a process for a bar or liquor store licensee to decline and surrender a lease of its mixed cocktail privilege.
Background
DLLC, which consists of the State Liquor Board and the Office of the Director of DLLC, regulates the manufacture, distribution and sale of liquor in Arizona through the issuance of a series of licenses. A separate license is required for each specific type of business and is issued only after a satisfactory showing of the capability, qualifications and reliability of the applicant (A.R.S. §§ 4-111 and 4-203). DLLC is also responsible for investigating compliance with liquor statutes in cooperation with law enforcement (A.R.S. § 4-112).
In 2019, the Legislature authorized a pilot program in DLLC for spirituous liquor licensees at regional shopping centers that encompasses at least 400,000 square feet of retail space to apply for an extension of premises. The extension of premises, if issued, allows one on-sale retail licensee to sell spirituous liquor to patrons for consumption throughout a designated pedestrian area of the regional shopping center. DLLC is authorized to prescribe an application process, as well as conditions and limits. The pilot program terminates January 1, 2023 (Laws 2019, Ch. 136).
In 2021, the Legislature authorized the privilege for a bar or liquor store to sell mixed cocktails for off-premises consumption and allowed restaurants to apply for a lease of this privilege from a bar or liquor store (Laws 2021, Ch. 375; A.R.S. § 4-203.06).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
Regional Shopping Center or Commercial Office and Retail Center
Extension of Premises
1. Allows the owner or management of a regional shopping center that encompasses at least 400,000 square feet of a retail space to apply to DLLC for an extension of premises on behalf of retail licensees located at the shopping center.
2. Allows one or more licensees at a commercial office and retail center to apply for an extension of premises if all the following apply:
a) the center is under one management company;
b) the proposed extended premises are at a central location within the commercial office and retail center with limited ingress and egress; and
c) the proposed extended premises are designed in a manner that the management can provide security and oversight of the extended premises.
3. Requires the premises extension, if issued, to allow designated on-sale retail licensees to sell spirituous liquor throughout a designated pedestrian area of the regional shopping center or commercial office and retail center.
4. Requires the regional shopping center or commercial office and retail center, at least 60 days before submitting an application, to submit a copy of the application to the local governing body for review.
5. Stipulates that the local governing body has 60 days after a copy of the application is submitted to review the application and provide advisory recommendations to DLLC.
6. Prohibits DLLC from accepting an application before the local governing body review period has elapsed or the local governing body makes its advisory recommendations, whichever is sooner.
7. Requires the application to be on a form prescribed by DLLC and include:
a) plans or diagrams designating the specific extension of premises requested; and
b) designated times of spirituous liquor service on the extended premises.
8. Requires the plan to delineate the physical arrangement of the extended premises, including showing the locations of ingress to and egress from the extended premises and other features of the extended premises as DLLC may require.
9. Allows the plan, in order to delineate the extended premises and to control spirituous liquor services in the extended premises, to use physical barriers, signage, electronic surveillance, security guards, cordons or a combination of these barriers and strategies.
10. Allows the extended premises authorized by DLLC to include only areas limited to pedestrian traffic.
11. Prohibits the extended premises authorized by DLLC from including or being bisected by a public or private roadway unless the private roadway is blocked to vehicular traffic or is immediately adjacent to a public or private roadway.
12. Allows the regional shopping center or commercial office and retail center to file with DLLC a request to modify the designated times of spirituous liquor services.
13. Allows DLLC, for good cause showing, to modify the designated times of spirituous liquor services.
14. Specifies that retail licensees that are subject to an extension of premises are responsible for compliance with liquor statutes on the extended premises.
15. Subjects an extension of premises to the following:
a) DLLC may set and charge a fee for reviewing and processing an application submitted;
b) DLLC may set day and time limits on using the extended premises and establish security requirements as a condition of approval;
c) the extended premises is prohibited from overlapping the licensed premises of any other licensee that is not subject to the extension of premises;
d) the regional shopping center, the commercial office and retail center and on-sale retail licensees are prohibited from altering the physical arrangement of the extended premises to use additional or different space, locations of ingress or egress or accommodations without first complying with the application process;
e) DLLC may cancel or suspend an on-sale retail licensee's approval to extend its premises for good cause at any time and the regional shopping center or commercial office and retail center may appeal an order to cancel or suspend in accordance with the administrative appeal process; and
f) an extension of premises is not transferable.
16. Defines local governing body.
On-Sale Spirituous Liquor Licensee Extension of Premises
17. Allows an on-sale spirituous liquor licensee to apply to DLLC to extend the licensed premises on an individual day or hour basis or on a regularly recurring basis.
18. Requires the application to be on a form prescribed by DLLC and to include:
a) plans and diagrams that completely disclose and designate the physical arrangement of the proposed extended premises;
b) a schedule showing the date and time periods when the extended premises will be in use; and
c) a security plan.
19. Requires the security plan to:
a) provide for the security of patrons;
b) ensure that an individual who is under the legal drinking age does not purchase, possess or consume spirituous liquor on the extended premises;
c) prevent the unauthorized removal of spirituous liquor from the extended premises; and
d) prevent the unauthorized carrying of spirituous liquor onto the extended premises.
20. Requires the applicant to identify the security measures that will be implemented for the extended premises.
21. Requires the applicant to submit a copy of the application to the local governing body at least 60 days before submitting the application to DLLC.
22. Allows the local governing body to review the application and provide an advisory recommendation to DLLC.
23. Allows the applicant to modify from time to time the schedule showing the date and time periods when the extended premises will be in use.
24. Requires the applicant to provide at least 10 days' written notification of the modification to DLLC.
25. Allows DLLC to limit or revoke the right of a licensee to use an extended premises for a violation of liquor statutes or rules.
26. Allows DLLC to set and charge a fee for the review and processing of applications.
27. Prohibits a licensee with extended premises from allowing an individual who is under the legal drinking age and who is not accompanied by a spouse, parent, grandparent or legal guardian of legal drinking age to remain in an area on the extended premises during hours used for the sale, dispensing or consumption of spirituous liquor.
Mixed Cocktails Off-Premises Lease Privilege
28. Allows a bar or liquor store licensee to decline to lease the licensee's privilege to sell mixed cocktails for consumption off-premises by surrendering the privilege to DLLC.
29. Specifies that declining a lease does not affect the bar or liquor licensee's privilege of selling mixed cocktails for consumption off the licensed premises.
30. Requires DLLC to immediately notify a bar or liquor store that is selected for a lease of its mixed cocktail off-premises privilege.
31. Directs the bar or liquor store licensee to notify DLLC, within 30 days, if the bar or liquor store licensee accepts or declines the lease.
32. Requires the failure of a bar or liquor store licensee to respond to DLLC's notice of its selection to indicate that the bar or liquor store licensee is declining to enter into the lease and is surrendering its privilege.
33. Allows a bar or liquor store licensee to decline a lease by either:
a) notifying DLLC in writing within 30 days after being notified that the bar or liquor store licensee was selected; or
b) failing to respond to the DLLC notice that the bar or liquor store licensee has been selected.
34. Stipulates that a bar or liquor store licensee declining a lease is final and may not be reversed.
35. Requires DLLC to convey the privilege of selling mixed cocktails for off-premises consumption to a restaurant licensee that is approved for the lease, upon a bar or liquor store licensee declining a lease and surrendering its privilege.
36. Requires DLLC to revoke any privilege conveyed to a restaurant licensee, if the restaurant licensee fails to pay prescribed lease or renewal fees.
37. Requires the privilege to sell mixed cocktails off-premises to be immediately granted if a restaurant licensee's application for a lease is approved, whether or not a bar or liquor store licensee has accepted the lease.
38. Requires the lease payment received by DLLC from a restaurant licensee to accumulate during the calendar year with other unclaimed lease payments and be paid during the calendar year on a fractional basis to all bar and liquor store licensees that have leases, if a restaurant licensee's application is approved but the bar or liquor store licensee selected declines the lease.
Miscellaneous
39. Excludes a person with control of more than one microbrewery who holds an on-sale retail license from the prohibition on a microbrewery that is otherwise engaged as a liquor producer holding a retail license remotely from the microbrewery.
40. Removes the restriction on issuing a retailer's license to premises that are located within 300 feet of a church.
41. Specifies that a licensee's duty to protect the safety of a customer does not limit the licensee from using, as necessary, reasonable intervention, restraint or removal of a person from the premises to prevent that person from injuring other persons or damaging or disrupting the premises.
42. Excludes dispensing or tapping machines or equipment from the definition of promotional items which may be provided by a wholesaler to an on-sale retailer.
43. Allows the Governor, in consultation with the Governor's Office of Highway Safety and the public safety community in Arizona, to issue an executive order that extends the sale of spirituous liquor in connection with a professional or collegiate national sporting championship from 2:00 am to 3:00 a.m.
44. Extends spirituous liquor consumption on a retail premise from 2:30 a.m. to 3:30 a.m., if a gubernatorial executive order extends the sale of liquor in connection with a professional or collegiate national sporting championship.
45. Exempts DLLC from rulemaking requirements for one year after the general effective date relating to the sale mixed cocktails for off-premises consumption.
46. Makes technical and conforming changes.
47. Becomes effective on the general effective date.
House Action
COM 2/8/22 DP 8-0-1-1
3rd Read 2/23/22 56-3-1
Prepared by Senate Research
March 7, 2022
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