SB2130 102ND GENERAL ASSEMBLY

LRB102 10761 RPS 16090 b

102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB2130

Introduced 2/26/2021, by Sen. Rachelle Crowe

SYNOPSIS AS INTRODUCED:

235 ILCS 5/6-5	from Ch. 43, par. 122
235 ILCS 5/6-9.5 new
235 ILCS 5/6-9.10 new
235 ILCS 5/6-9.15 new
235 ILCS 5/6-9.20 new
235 ILCS 5/6-9.25 new

Amends the Liquor Control Act of 1934. Provides that a verified written list of delinquent retail licensees shall be developed, administered, and maintained only by the Illinois Liquor Control Commission. Provides that determinations of delinquency or nondelinquency shall be made only by the State Commission and shall be made only after determining there is not a bona fide dispute between such retail licensee and the manufacturer, importing distributor, or distributor with respect to the amount of the indebtedness existing because of such alleged sale. Adds provisions concerning cooperative purchasing agreements, quantity discount programs, credit or rebate programs, and combination sales offers. Effective immediately.

A BILL FOR

AN ACT concerning liquor.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Liquor Control Act of 1934 is amended by changing Section 6-5 and by adding Sections 6-9.5, 6-9.10, 6-9.15, 6-9.20, and 6-9.25 as follows:

(235 ILCS 5/6-5) (from Ch. 43, par. 122)

Sec. 6-5. Except as otherwise provided in this Section, it is unlawful for any person having a retailer's license or any officer, associate, member, representative or agent of such licensee to accept, receive or borrow money, or anything else of value, or accept or receive credit (other than merchandising credit in the ordinary course of business for a period not to exceed 30 days) directly or indirectly from any manufacturer, importing distributor or distributor of alcoholic liquor, or from any person connected with or in any way representing, or from any member of the family of, such manufacturer, importing distributor, distributor or wholesaler, or from any stockholders in any corporation engaged in manufacturing, distributing or wholesaling of such liquor, or from any officer, manager, agent or representative of said manufacturer. Except as provided below, it is unlawful for any manufacturer or distributor or importing distributor to give or lend money or anything of value, or otherwise loan or extend credit (except such merchandising credit) directly or indirectly to any retail licensee or to the manager, representative, agent, officer or director of such licensee. A manufacturer, distributor or importing distributor may furnish free advertising, posters, signs, brochures, hand-outs, or other promotional devices or materials to any unit of government owning or operating any auditorium, exhibition hall, recreation facility or other similar facility holding a retailer's license, provided that the primary purpose of such promotional devices or materials is to promote public events being held at such facility. A unit of government owning or operating such a facility holding a retailer's license may accept such promotional devices or materials designed primarily to promote public events held at the facility. No retail licensee delinquent beyond the 30 day period specified in this Section shall solicit, accept or receive credit, purchase or acquire alcoholic liquors, directly or indirectly from any other licensee, and no manufacturer, distributor or importing distributor shall knowingly grant or extend credit, sell, furnish or supply alcoholic liquors to any such delinquent retail licensee; provided that the purchase price of all beer sold to a retail licensee shall be paid by the retail licensee in cash on or before delivery of the beer, and unless the purchase price payable by a retail licensee for beer sold to him in returnable bottles shall expressly include a charge for the bottles and cases, the retail licensee shall, on or before delivery of such beer, pay the seller in cash a deposit in an amount not less than the deposit required to be paid by the distributor to the brewer; but where the brewer sells direct to the retailer, the deposit shall be an amount no less than that required by the brewer from his own distributors; and provided further, that in no instance shall this deposit be less than 50 cents for each case of beer in pint or smaller bottles and 60 cents for each case of beer in quart or half-gallon bottles; and provided further, that the purchase price of all beer sold to an importing distributor or distributor shall be paid by such importing distributor or distributor in cash on or before the 15th day (Sundays and holidays excepted) after delivery of such beer to such purchaser; and unless the purchase price payable by such importing distributor or distributor for beer sold in returnable bottles and cases shall expressly include a charge for the bottles and cases, such importing distributor or distributor shall, on or before the 15th day (Sundays and holidays excepted) after delivery of such beer to such purchaser, pay the seller in cash a required amount as a deposit to assure the return of such bottles and cases. Nothing herein contained shall prohibit any licensee from crediting or refunding to a purchaser the actual amount of money paid for bottles, cases, kegs or barrels returned by the purchaser to the seller or paid by the purchaser as a deposit on bottles, cases, kegs or barrels, when such containers or packages are returned to the seller. Nothing herein contained shall prohibit any manufacturer, importing distributor or distributor from extending usual and customary credit for alcoholic liquor sold to customers or purchasers who live in or maintain places of business outside of this State when such alcoholic liquor is actually transported and delivered to such points outside of this State.

A manufacturer, distributor, or importing distributor may furnish free social media advertising to a retail licensee if the social media advertisement does not contain the retail price of any alcoholic liquor and the social media advertisement complies with any applicable rules or regulations issued by the Alcohol and Tobacco Tax and Trade Bureau of the United States Department of the Treasury. A manufacturer, distributor, or importing distributor may list the names of one or more unaffiliated retailers in the advertisement of alcoholic liquor through social media. Nothing in this Section shall prohibit a retailer from communicating with a manufacturer, distributor, or importing distributor on social media or sharing media on the social media of a manufacturer, distributor, or importing distributor. A retailer may request free social media advertising from a manufacturer, distributor, or importing distributor. Nothing in this Section shall prohibit a manufacturer, distributor, or importing distributor from sharing, reposting, or otherwise forwarding a social media post by a retail licensee, so long as the sharing, reposting, or forwarding of the social media post does not contain the retail price of any alcoholic liquor. No manufacturer, distributor, or importing distributor shall pay or reimburse a retailer, directly or indirectly, for any social media advertising services, except as specifically permitted in this Act. No retailer shall accept any payment or reimbursement, directly or indirectly, for any social media advertising services offered by a manufacturer, distributor, or importing distributor, except as specifically permitted in this Act. For the purposes of this Section, "social media" means a service, platform, or site where users communicate with one another and share media, such as pictures, videos, music, and blogs, with other users free of charge.

No right of action shall exist for the collection of any claim based upon credit extended to a distributor, importing distributor or retail licensee contrary to the provisions of this Section.

Every manufacturer, importing distributor and distributor shall submit or cause to be submitted, to the State Commission, in triplicate, not later than Thursday of each calendar week, a verified written list of the names and respective addresses of each retail licensee purchasing spirits or wine from such manufacturer, importing distributor or distributor who, on the first business day of that calendar week, was delinquent beyond the above mentioned permissible merchandising credit period of 30 days; or, if such is the fact, a verified written statement that no retail licensee purchasing spirits or wine was then delinquent beyond such permissible merchandising credit period of 30 days.

Every manufacturer, importing distributor and distributor shall submit or cause to be submitted, to the State Commission, in triplicate, a verified written list of the names and respective addresses of each previously reported delinquent retail licensee who has cured such delinquency by payment, which list shall be submitted not later than the close of the second full business day following the day such delinquency was so cured.

The verified written list of delinquent retail licensees shall be developed, administered, and maintained only by the State Commission. Determinations of delinquency or nondelinquency shall be made only by the State Commission and shall be made only after determining there is not a bona fide dispute between such retail licensee and manufacturer, importing distributor, or distributor with respect to the amount of indebtedness existing because of such alleged sale.

Such written verified reports required to be submitted by this Section shall be posted by the State Commission in each of its offices in places available for public inspection not later than the day following receipt thereof by the State Commission. The reports so posted shall constitute notice to every manufacturer, importing distributor and distributor of the information contained therein. Actual notice to manufacturers, importing distributors and distributors of the information contained in any such posted reports, however received, shall also constitute notice of such information.

The 30 day merchandising credit period allowed by this Section shall commence with the day immediately following the date of invoice and shall include all successive days including Sundays and holidays to and including the 30th successive day.

In addition to other methods allowed by law, payment by check during the period for which merchandising credit may be extended under the provisions of this Section shall be considered payment. All checks received in payment for alcoholic liquor shall be promptly deposited for collection. A post dated check or a check dishonored on presentation for payment shall not be deemed payment.

A retail licensee shall not be deemed to be delinquent in payment for any alleged sale to him of alcoholic liquor when there exists a bona fide dispute between such retailer and a manufacturer, importing distributor or distributor with respect to the amount of indebtedness existing because of such alleged sale. A retail licensee shall not be deemed to be delinquent under this provision and 11 Ill. Adm. Code 100.90 until 30 days after the date on which the region in which the retail licensee is located enters Phase 4 of the Governor's Restore Illinois Plan as issued on May 5, 2020. A retail licensee shall not be deemed to be delinquent in payment for any alleged sale to the retail licensee of alcoholic liquor unless such manufacturer, importing distributor, or distributor has provided notice in writing to the retailer of the amount of indebtedness existing because of such alleged sale not less than 7 days prior to reporting the retailer as delinquent.

A delinquent retail licensee who engages in the retail liquor business at 2 or more locations shall be deemed to be delinquent with respect to each such location.

The license of any person who violates any provision of this Section shall be subject to suspension or revocation in the manner provided by this Act.

If any part or provision of this Article or the application thereof to any person or circumstances shall be adjudged invalid by a court of competent jurisdiction, such judgment shall be confined by its operation to the controversy in which it was mentioned and shall not affect or invalidate the remainder of this Article or the application thereof to any other person or circumstance and to this and the provisions of this Article are declared severable.

(Source: P.A. 101-631, eff. 6-2-20.)

(235 ILCS 5/6-9.5 new)

Sec. 6-9.5. Definitions. In this Section through Section 6-9.25:

"Common ownership" means any ownership interest of more than 5% of the total ownership interests of 2 or more retail licensees.

"Cooperative purchasing agreement" means an agreement entered into between 2 or more individually owned, commonly owned, or not commonly owned retail licensees or other licensees with retail privileges for the purpose of purchasing alcoholic beverages from licensees with distribution privileges.

"Quantity discounting" means a sales program between a licensee with distribution privileges and a retail licensee or retail licensees in which the primary purpose of the program is to increase product sales and merchandising to retail licensees and is not a subterfuge to provide prohibited things of value as inducements to retail licensees. "Quantity discounting" includes circumstances in which a licensee with distribution privileges offers a retail licensee or retail licensees a discount based upon an agreement by which the retail licensee may purchase a predetermined number of products in return for receiving a discount on the goods purchased, which may be applied either as a price reduction at the time of sale or as a rebate or credit following the sale, subject to the conditions found in Section 6-9.15.

(235 ILCS 5/6-9.10 new)

Sec. 6-9.10. Cooperative purchasing agreements.

(a) A cooperative purchasing agreement shall only be valid if the following conditions are met:

(1) the agreement is in writing and signed by all parties to the agreement;

(2) the agreement contains the complete license information for all parties to the agreement, including State and local license numbers and expiration dates;

(3) a retail licensee that is a party to the agreement must not be a party to any other liquor-related cooperative purchasing agreement;

(4) the agreement designates an agent or select group of agents who will place orders on behalf of the participating members of the group;

(5) a copy of the executed agreement, including any amendments, deletions, or additions, is kept on the premises of each party to the agreement for a period of 3 years; and

(6) a copy of the executed agreement, including any amendments, deletions, or additions, is delivered to the relevant licensee with distribution privileges and to the State Commission prior to making any purchases under the agreement; any amendments, deletions, or additions must be submitted to the State Commission within 7 business days after the amendment, deletion, or addition is executed.

(b) A retail licensee may only be a member of one cooperative purchasing agreement group at a time. A retail licensee may make purchases as a party to a cooperative purchasing agreement or independently of any such agreement. Nothing in this or any other Section of this Act shall be construed to prohibit commonly or not commonly owned retail licensees from making purchases separate and apart from any executed cooperative purchasing agreements.

(c) A retail licensee may change to a different cooperative purchasing agreement group no more than twice in a 12-month period. However, if an existing cooperative purchasing agreement group member purchases a retail location from a member of another cooperative purchasing agreement, the new owner of the retail location may move the membership of the retail licensee to a different cooperative purchasing agreement.

(d) When a retail licensee joins an existing cooperative purchasing agreement group, the members of a group must be members for a period of 7 days prior to being able to participate in any quantity discount programs.

(e) Cooperative purchasing agreement group members must be either all on-premises retail licensees or off-premises retail licensees.

(f) Any individual retail licensee that fails to comply with the terms and conditions of this Section may be deemed to be in violation of Section 6-5. Any licensee with distribution privileges that fails to comply with this Section may be deemed to be in violation of Section 6-5.

(235 ILCS 5/6-9.15 new)

Sec. 6-9.15. Quantity discounting terms.

(a) Any and all quantity discount programs shall offer the same quantity price discount to all retail licensees, cooperative purchasing agreement groups, and their agents. Quantity discount programs shall:

(1) be open and available for acceptance for 7 business days;

(2) be designed and implemented to produce product volume growth with retail licensees;

(3) be based on the volume of product purchased; discounts may include price reductions, cash, credits, and rebates; no-charge alcoholic liquor products may be given in lieu of a discount;

(4) be documented on related sales invoices or credit memoranda;

(5) not require a retail licensee to take and dispose of any quota of alcoholic liquors; bona fide quantity discounts shall not be deemed to be quota sales;

(6) not require a retail licensee to purchase one product in order to purchase another; this includes combination sales if one or more products may be purchased only in combination with other products and not individually; and

(7) require a minimum quantity of 250 cases.

(b) A licensee who has distribution privileges and makes quantity discount sales to participating members of a cooperative purchasing agreement group shall issue customary invoices to each participating retail licensee itemizing the alcoholic liquor sold and delivered as part of a quantity discount program to each participating retail licensee.

(c) A licensee who has distribution privileges may require any participating member of a cooperative purchase group to make the following minimum purchases:

(1) 2% of cases of any quantity discount program of 500 or fewer cases.

(2) 1.5% of cases of any quantity discount program of at least 501 and not more than 2,000 cases.

(3) 1% of cases of any quantity discount program of 2,001 or more cases.

(235 ILCS 5/6-9.20 new)

Sec. 6-9.20. Credit or rebate programs.

(a) A licensee with distribution privileges may issue to a retail licensee product credits and rebates as an adjustment on the purchase price based on volume purchasing, such as end of month, end of year, end of period, or other such temporary cumulative discounts, credits, and rebates to a retail licensee. These cumulative discounts are considered to be a form of pricing arrangement or quantity discount program and must be offered to all retail licensees.

(b) A licensee with distribution privileges utilizing credits or rebates shall conform the credit or rebate program to the following conditions:

(1) the credit or rebate program is made pursuant to a written agreement established at or prior to the sale; the licensee and the retail licensee shall maintain a record of the written agreement per recordkeeping requirements;

(2) the agreement is entered into at the time of sale;

(3) the credit or rebate is extended for a specific period of time;

(4) the credit or rebate is calculated based solely upon the purchases made by the retail licensee receiving the cumulative discount; and

(5) the credit or rebate is documented on a related sales invoice or credit memoranda.

(c) If the retail licensee is part of a group of retail licensees with common ownership or a member of a cooperative purchasing agreement in compliance with Section 6-9.10, cumulative discounts, credits, or rebates may be aggregated into a single payment to each participating retail licensee. If an aggregated payment is issued, the cumulative discount, credit, or rebate must be calculated based upon the volume purchases of each individual participating retail licensee and must include supporting documentation that denotes the portion of the discount, credit, or rebate attributable to each individual retail licensee.

(235 ILCS 5/6-9.25 new)

Sec. 6-9.25. Combination sales offers. A licensee with distribution privileges is not prohibited from selling, at a special combination price, 2 or more kinds or brands of products to a retail licensee if the retail licensee has the option of purchasing either product at the usual price and the retail licensee is not required to purchase any product it does not want.

Section 99. Effective date. This Act takes effect upon becoming law.