KY ABC WORKSHOP Licensing and Regulation Discussion in anticipation of City of Danville Local option Election March 2, 2010

The Alcoholic Beverage Control Board Members: Tony Dehner, Chairman Danny Reed, Distilled Spirits Administrator Stephanie Stumbo, Malt Beverage Administrator

The Duties of the ABC Board The Board administers statutes relating to alcohol sales and regulates traffic in alcoholic beverages. Distilled spirits unit administers laws relating to traffic in distilled spirits and wine. Malt beverage unit administers laws relating to traffic in malt beverages.

Functions of the ABC Board Promulgate regulations relative to licensing, supervision and control of use, manufacture, sale, transportation, storage, advertising, and trafficking of alcoholic beverages. Limit the number of license to be issued. Hold hearings due to infractions of alcohol laws and regulations. Conduct hearings and appeals and render final orders, levee fines and disciplinary actions.

Functions of Board, cont. Destroy evidence after all hearings are conducted. Suspend, revoke, or cancel any ABC license. Prohibit issuance of a license for a premise in violation of Kentucky Statute. Suspend a license for any cause for which the board is authorized.

City ABC Administrators Cities of 1 st, 2 nd, 3 rd, and 4 th class cities in which alcoholic beverages are permitted shall have city ABC administrators.

City ABC Administrators in 2 nd, 3 rd, and 4 th Class Cities Appointed by City Manager if there is one. If not, the appointment shall be made by the Mayor. Administrator has: –Full police powers of peace officers –May inspect any premise where alcohol beverages are manufactured, sold, stored, trafficked in without obtaining a search warrant.

Election Questions Ballot Question The ballot question is set by KRS (2). It will read “Are you in favor of the sale of alcoholic beverages in Danville?” continue continue

Election Questions, cont. The ballot question is not perceived to be misleading because it is different from the question the voters were asked to decide in the City’s KRS (6) election which was “Are you in favor of the sale of alcoholic beverages by the drink in Danville at restaurants and dinning facilities with a seating capacity of at least one hundred (100) persons and which derive at least seventy percent (70%) of their gross receipts from the sale of food.” The current question permits the voters to allow all permissible/legal sales of alcoholic beverages without other qualification. continue continue

Election Questions, cont. For the same reason, we would not interpret a failure of the measure to cause Danville to revert to totally dry. The voters answered a different question in the KRS (6) election and they are not now being asked to repeal that vote. continue

Election Questions, cont. Effective Date. KRS provides that the results of the election become effective 60 days after the election is certified. If the measure passes, Danville will be wet.

How Many Licenses and What Types of Licenses A yes vote on the referendum would permit the issuance of retail liquor drink licenses and retail liquor packages licenses in the City of Danville.

Licenses Subject to Quota KRS (2) permits the ABC Board to limit ABC licenses. By regulation, 804 KAR 9:010, Liquor Drink (LD) and Liquor Package (LP) licenses are limited by quota based on population ratios. LD licenses are issued on a ratio of 1/2500 and LP licenses are 1/2300.

Licenses Subject to Quota, cont. City of Danville population is approximately 15,000. Subject to the discretion of the Distilled Spirits Administrator, Danville would receive 6 LD and 6 LP licenses. There is NO QUOTA for retail malt beverage (beer) licenses, restaurant drink or temporary licenses.

License Types and Uses Retail Liquor Drink (LD) Retail Liquor Package (LP) Retail Malt Beverage (BEER) Restaurant Wine Restaurant Drink Temporary

License Types and Uses, cont. Retail Liquor Drink (LD) licenses found in KRS permit the sale of all distilled spirits and wine by the drink for consumption on the premises. These licenses may be for a bar where no food/limited food is sold, or in a restaurant without regard to food sales or available seating. A retail beer license may be held in combination with this license.

License Types and Uses, cont. Retail Liquor Package (LP) licenses found in KRS permit the establishment of package liquor stores. These licenses permit the package sale of: Distilled Spirits Wine continue

License Type and Uses, cont. These licenses would also permit consumption of beer by the drink on the premises. Liquor or wine could not be consumed on the premises, unless the store also held an LD license. continue

License Types and Uses, cont. KRS (5) provides that LP licenses may not be issued to grocery or convenience stores. However, the grocery or convenience store owner may qualify for an LP license immediately adjacent to his store if the licensed premises has a separate entrance and is not accessible from within the grocery/convenience store. A pharmacy may hold an LP license.

License Types and Uses, cont. Retail Malt Beverage (BEER) licenses found in KRS authorize the sale of beer by the package or by the drink. There is no quota on beer licenses. Beer licenses may be issued to gas stations so long as the station maintains an inventory of $5000 worth of food, groceries and related products.

License Types and Uses, cont. Restaurant Wine licenses are found in KRS It is a wine only license for restaurants with a minimum seating capacity of 50 and requires that the restaurant maintain food sales of 50% of gross annual income. The RW is a quota license to be included in the total number of LD licenses. This license may be held in combination with a beer license. continue continue

License Types and Uses, cont. Restaurant Drink license is similar to Danville’s current Limited Restaurant license. It allows for the sale of liquor and wine by the drink in restaurants with a seating capacity of 100. The license is dissimilar in that it would require only that the restaurant maintain food sales equal to 50%, not 70%, of gross receipts. continue continue

License Type and Uses, cont. This license is not subject to the quota limitation. This license may be held in combination with a beer license.

License Types and Uses, cont. Temporary licenses are permitted for beer and also wine and spirits under KRS and KRS These licenses are available for temporary events such as fairs, festivals or carnivals. The licenses are of short endurance (not more than 30 days) and require defined premises for consumption. Temporary licenses would only be available for events held within the city limits.

General Licensing Issues Who may hold a license? KRS addresses licensing qualifications to include: qualified persons (a citizen, over 21 years, no conflicting criminal background), corporate and limited liability entities and non-profit entities may hold a license.

Who may not receive a license? What are causes for refusal? KRS –License shall be refused: If applicant does not comply fully with all ABC Statutes and regulations of board; If applicant or premises does not comply with all regulations of city or county administrator; If applicant has done any act for which a revocation of license would be authorized; or If applicant has made any false material statement on his application. General Licensing Questions, cont.

General Licensing Issues, cont. Issuing Discretion. The ABC administrator will have broad, but not unlimited or arbitrary discretion in the issuance of licenses. She may not, as a matter of policy, prefer local applicants over nonresident applicants. The administrator can restrict the location of a licensed premises so that they are not too close to schools and so that licensed premises do not saturate an area.

General Licensing Issues, cont. KRS A license that might be issued under KRS to may be refused by a state administrator for any reason which administrator deems sufficient. Factors may include: –Public sentiment in the area; –number of licensed outlets in the area; –Potential for future growth –Type of area involved; –Type of transportation available; –Financial potential of the area.

General Licensing Issues, cont. Minors on premises where liquor and wine are sold by the drink is prohibited by KRS This basically prohibits minors from being on the premises of a bar, because there are exceptions to this rule for restaurants, hotels, fairs, schools, private clubs and similar licensed premises.

Is the age requirement for purchasing alcoholic beverages (21) the same for selling and serving alcohol? Is the age requirement for purchasing alcoholic beverages (21) the same for selling and serving alcohol? No – A person must be 20 years old to sell liquor or beer by the drink. --A person must be 18 years old to sell packaged malt beverages and must be directly supervised by a person 20 years of age. --A person must be 21 years old to purchase malt beverages or distilled spirits of any type. General Licensing Issues, cont.

ABC License Application What is the process? What are the local responsibilities? How do the local and state administrators collaborate?

Applicant must publish a notice of intent to apply for license under KRS and Any person, corporation, or partnership applying for a license must advertise by publication his intention to apply for the license. This advertisement must be in the newspaper at least once.

Information required for notice: Name and address of applicant Specific location of the premise and type of license being requested Date the application will be filed Must include the following statement: “Any person association, corporation, or body politic may protest the granting of the license by writing the Department of Alcoholic Beverages, 1003 Twilight Trail, Frankfort, Ky , within 30 days of the date of legal publication.”

Protest Any protest received after the 30 day period has expired and shall not be considered a valid legal protest by the board.

Application Approval Applications for county or city license must first be approved by the county or city administrator before applying for a state license. Local ABC Administrator must sign application before forwarding to the state.

Securing License FAQ How long does it take to secure a state liquor license? A minimum of 30 days due to the protest period (unless the same type license has been issued at the premise within the last year. The State administrators have the discression to issue conditionally before the 30 day period has expired. If the application is correct and complete when received by the state, processing will naturally be faster. The applicant is urged to submit his/her application to the local administrator and state administrators at the same time.

City Regulation KRS places the regulatory authority of the city in the city administrator. The administrator performs many of the same functions as the ABC Board, except that she may not limit the number of quota licenses allotted by regulation to the city. See, Whitehead v. Bravard, 719 S.W.2d 720 (Ky. 1986). continue

City Regulation, cont. The city commission has express authority to: 1. create licenses and charge for them according to KRS ; 1. create licenses and charge for them according to KRS ; 2. modify hours of operation according to KRS (spirits and wine) and KRS (beer), including Sunday sales; and 3. levy a license fee at “a percentage rate reasonably estimated to fully reimburse the cost of additional policing, regulatory and administrative expenses” (credit for original license fee). continue continue

Who regulates and enforces ordinances as far as the hours alcohol can be sold or sales to minors? Who regulates and enforces ordinances as far as the hours alcohol can be sold or sales to minors? Kentucky law provides for alcohol sales between 6 a.m. and 12 midnight, Monday through Saturday; however local city or county ordinance can change the hours of service. KRS – liquor KRS – liquor KRS – beer Sales to minors – State law—KRS Minors shall not possess or purchase liquor nor to misrepresent age. City Regulation, cont.

City Regulations, cont. Though not expressly permitted by statute, many cities require mandatory server training for the employees of all licensed premises.