GEORGIA’S ALCOHOLIC BEVERAGE LAWS AND REGULATIONS – SPRING 2016 Georgia Association of Business Tax Officials

DAVID DYAL SENIOR REGULATORY ADVISOR, SARD & LEFF, LLC FORMER CHIEF OF OPERATIONS & CHIEF OF ENFORCEMENT, GEORGIA DEPARTMENT OF REVENUE ALCOHOL & TOBACCO DIVISION

W. WRIGHT BANKS, JR. Deputy Attorney General, Commercial Transactions and Litigation Division

MICHAEL SARD, SARD & LEFF, LLC Founding Members of the Alliance of Alcohol License Attorneys and Consultants

Overview General Overview of Alcoholic Beverage Regulatory Scheme The Three Tier System New state legislation including local government reporting alcohol citations to DOR How does DOR measure distances? BYOB Q & A

Twenty-First Amendment “Section 1. The eighteenth article of amendment to the Constitution of the United States is hereby repealed. Section 2. The transportation or importation into any State, Territory, or possession of the United States for delivery or use there in of intoxicating liquors, in violation of the laws thereof, is hereby prohibited. Section 3. This article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by conventions in the several States, as provided in the Constitution, within seven years from the date of the submission hereof to the States by the Congress.” www.wikipedia.org

Official Code of Georgia Annotated Section 3-3-2 The manufacturing, distributing, and selling by wholesale or retail of alcoholic beverages shall not be conducted in any county or incorporated municipality of this state without a permit or license from the governing authority of the county or municipality. Each local governing authority is given discretionary powers within the guidelines of due process to grant or refuse, suspend or revoke alcohol licenses. The following due process guidelines must be provided: a) The governing authority must set forth ascertainable standards in the local licensing ordinance upon which all decisions pertaining to alcohol are based; b) All decisions approving, denying, suspending, or revoking alcohol licenses shall be in writing, with the reasons stated, and shall be mailed or delivered to the applicant; and c) Upon timely application, any applicant aggrieved by the decision of the governing authority shall be afforded a hearing with an opportunity to present evidence and cross-examine opposing witnesses.

There are more than 665 separate licensing jurisdictions in Georgia

The Three Tier System for Alcohol Distribution

REGULATE 1. to control or direct by a rule, principle, method, etc. 2. to adjust to some standard or requirement, as amount, degree, etc. 3. to adjust so as to ensure accuracy of operation. 4. to put in good order.

THREE WAYS THAT GOVERNMENT COLLECTS MONEY FROM ALCOHOLIC BEVERAGES REVENUE COLLECTION THREE WAYS THAT GOVERNMENT COLLECTS MONEY FROM ALCOHOLIC BEVERAGES Regulatory Fees Taxation Enforcement

REGULATORY FEES Charged by government to regulate a certain activity. Are NOT collected to raise revenue. Must approximate the cost to government of regulating the specified activity.

TAXATION Right for local government to tax is granted by the General Assembly and voters. Policy issues Purpose of tax? Will the tax achieve the goal of its purpose?

GENERAL TAXING SCHEME IN GEORGIA Wholesalers collect mandatory excise taxes from retailers and pay to the state If the local government has approved excise taxes, Wholesalers collect additional malt beverage and wine excise taxes from retailers and which are paid to the local government Liquor (Distilled Spirits) stores pay tax to local governments based upon sales volume If the local government has approved, consumption on the premises licensees collect from consumers and pay to local governments a 3% distilled spirits by the drink tax Above taxes are in addition to state sales tax and local option sales taxes (8% in City of Atlanta)

GEORGIA DOR TAX COLLECTION Violation of state regulations for alcohol business to have any outstanding tax liabilities to the state As many of you know, DOR performs an exhaustive tax background investigation of principals and officers: NO CLEARANCE – NO LICENSE! DOR has foregone performing annual tax investigations with state renewal applications. Most businesses are now required by regulation to report and remit sales and withholding taxes online. As a result, businesses and regulators have easy access to know whether businesses are current with DOR tax payments. DOR now performs ongoing tax investigations during the year. This alleviates year end stress on DOR and alcohol licensees to obtain clearance and licenses issued by December 31 It also results in DOR collecting license fees and then subjecting violators to citations, civil penalties and for repeat offenders, suspension during the course of the year

Law Enforcement Check local charters and state law for maximum fines and civil penalties

LOCAL GOVERNMENT REPORTING VIOLATIONS TO DOR H.B. 152 Becomes effective July 1, 2016 Expands reporting requirements from underage sales only to all alcohol violations Limits types of licensees for whom reporting is required from all licensees to bars only 'Bar' means any premises at which a retailer licensed pursuant to this title to sell alcoholic beverages derives 75 percent or more total annual gross revenue from the sale of alcoholic beverages for consumption on the premises.

DISTANCES State Laws Local Laws May Be More Restrictive Must Comply With State Law Governing Distilled Spirits by the Package Sales Must Comply With State Law Governing Malt Beverage & Wine Package Sales Local Law Preempts On Premises Consumption Sales If Local Government Has Acted

Rule 560-2-2-.12. Measurement of Distances (1) Unless otherwise provided by law, all measurements to determine distances required by the Act, for the issuance of an initial state Alcoholic Beverages license, shall be measured by the most direct route of travel on the ground and shall be measured in the following manner: (a) Prior to April 1, 2007: 1. From the front door of the structure which Alcoholic Beverages are sold or offered for sale. 2. In a straight line to the nearest public sidewalk, walkway, street, road or highway. 3. Along such public sidewalk, walkway, street, road or highway by the nearest route. 4. To the front door of the building, or to the nearest portion of the grounds, whichever is applicable under the appropriate statute.

Rule 560-2-2-.12. Measurement of Distances (1) Unless otherwise provided by law, all measurements to determine distances required by the Act, for the issuance of an initial state Alcoholic Beverages license, shall be measured by the most direct route of travel on the ground and shall be measured in the following manner: (b) After March 31, 2007: 1. In a straight line from the front door of the structure from which Alcoholic Beverages are sold or offered for sale. 2. To the front door of the building of a church, government-owned treatment center or a retail package store. Or 3. To the nearest property line of the real property being used for school or educational purposes. (2) All renewal applications shall use the measurements required in the initial application and license.

GUEST BYOB ISSUES

CITY OF ATLANTA A licensee for the sale of alcoholic beverages by the drink or for the consumption of alcoholic beverages on the licensee's premises shall have the ability to allow patrons or members to bring in and consume alcoholic beverages on the premises in the manner authorized by this section. City of Atlanta Code of Ordinances Section 10-59 (a)

Sandy Springs City of Sandy Springs Code of Ordinances Section 6-8

City of Hiram Sec. 6-8. - Brown-bagging, BYOB prohibited. It is prohibited for any person to bring in his own alcoholic beverage in any retail establishment without regard to whether such establishment is licensed. For purposes of this section, the term "retail establishment" does not include a private hotel room or other similar guestroom or a private club.

Georgia Department of Revenue Direction Licensee and employees must not handle the beverage alcohol Guest must remove all beverage alcohol when guest leaves Licensee remains liable to the Georgia Department of Revenue for compliance with state alcohol laws and regulations Licensee may provide mixers, glasses & bar tools  

WINE TO GO A/K/A “MERLOT TO GO” 3-6-4. Removal of partially consumed bottle of wine from premises 1) Notwithstanding any other contrary provision of law 2) Any restaurant which is licensed to sell alcoholic beverages for consumption on the premises 3) May permit a patron to remove one unsealed bottle of wine per patron for consumption off premises, if: a) the patron has purchased a meal; and b) consumed a portion of the bottle of wine i) which has been purchased on the premises; ii) with such meal on the restaurant's premises.

WINE TO GO A/K/A “MERLOT TO GO” 4) A partially consumed bottle of wine that is to be removed from the premises: a) must be securely resealed by the licensee or its employees before removal from the premises; b) The partially consumed bottle of wine shall be placed: i) in a bag or other container; ii) that is secured in such a manner that it is visibly apparent if the container has been subsequently opened or tampered with; iii) and a dated receipt for the bottle of wine and meal shall be provided by the licensee and attached to the container. 5) If transported in a motor vehicle, the container with the resealed bottle of wine shall be placed in a locked glove compartment, a locked trunk, or the area behind the last upright seat of a motor vehicle that is not equipped with a trunk.