RELATES TO: KRS 243.027, 243.028, 243.029,
243.030(33),
244.050,
244.440,
244.585
NECESSITY, FUNCTION, AND CONFORMITY: KRS 243.027 requires the
Department of Alcoholic Beverage Control to set forth the requirements and the
form for a direct shipper license application. KRS 243.027(3)(c) requires the
department to establish through regulation what information the department
determines to be necessary to implement and administer the direct shipper
license. KRS 243.027(6)(a) requires the department to reduce unlicensed
deliveries and shipments of alcoholic beverages in the state.
KRS 241.060(1) authorizes the
department to promulgate reasonable administrative regulations governing
procedures relative to application for licenses as well as the supervision and
control of the trafficking of alcoholic beverages. This administrative
regulation establishes requirements for the direct shipper license and the
privileges and responsibilities of a direct shipper license.
Section 1. Qualifications. To qualify for a
direct shipper license, an applicant shall:
(1) Hold a current license, permit, or other
authorization to manufacture alcoholic beverages in the state where it is
located or a current license in this state under
KRS 243.212 or
243.215
to supply alcoholic beverages;
(2)
Hold a current permit or authorization under the Federal Alcohol Administration
Act as follows:
(a) If a manufacturer other
than a brewery, a basic permit to produce or manufacture beverage
alcohol;
(b) If a manufacturer that
is a brewery, a brewer's notice to produce or manufacture malt beverages;
or
(c) If an importer, wholesaler,
or distributor licensed as a supplier under
KRS 243.212 or
243.215,
a basic importer's or wholesaler's permit for the purpose of directly shipping
only those products for which the applicant is designated the primary source of
supply under the applicant's supplier license;
(4) Provide the address and a description of
the premises from which the applicant will ship alcoholic beverages to
consumers, and documentation showing ownership or possession of the premises
under a written agreement;
(5) Pay
the annual license fee established in
KRS 243.030(33);
(6) Disclose all of the applicant's current
alcohol-related licenses, permits, and authorizations granted by this state,
the federal government, and, if applicable, the state in which the applicant
manufactures alcoholic beverages;
(7) Disclose all convictions for violations
of alcoholic beverage laws, or misdemeanors directly or indirectly attributable
to the use of alcoholic beverages or the use or trafficking in controlled
substances, in the last two (2) years in any state, by the applicant or the
applicant's officers, directors, or members or managers as defined in
KRS 275.015;
(8) Disclose all convictions or sentences
served for felonies of any kind by the applicant or the applicant's officers,
directors, or members or managers as defined in
KRS 275.015, in the last five (5)
years;
(9) Complete all
registration requirements with respect to payment of any applicable excise tax,
state or local sales or use tax, local regulatory license fee, or other tax
owed in this state to directly ship alcoholic beverages to consumers in this
state; and
(10) Consent to the
jurisdiction of the Commonwealth of Kentucky for purposes of enforcement of KRS
Chapters 241 to 244.
Section
2. Prohibited Substantial Interests. A direct shipper license
applicant and direct shipper licensee shall comply with
804 KAR 4:015 and for that purpose shall be considered a
manufacturer as defined in
804 KAR 4:015.
Section
3. Licensed Premises.
(1) The
licensed premises described in a direct shipper license application may be
different from the premises where the applicant is licensed, permitted, or
otherwise authorized to manufacture or supply alcoholic beverages.
(2) If the direct shipper licensee uses, or
intends to use, the licensed premises described in the direct shipper license
application for storage of alcoholic beverages incidental to shipment, the
premises shall also comply with the laws of the jurisdiction in which it is
located in order to store the alcoholic beverages to be shipped.
(3) Direct shipper licensees may engage in
transportation of their products as permitted by their license, permit, or
authorization to manufacture or supply alcoholic beverages.
Section 4. Minimum Production. A
manufacturer that is a direct shipper license applicant or a direct shipper
licensee, and who intends to ship wine or distilled spirits, shall meet the
minimum quantities of production set forth in
KRS 243.155(2) and
KRS 243.120(2)(a) as
applicable.
Section 5. Brand
Registration. In accordance with
804 KAR 4:410, a direct shipper licensee shall register with
the department all brands the licensee intends to ship to consumers in this
state.
Section 6. Independent
Contractors. A direct shipper licensee shall not contract with an independent
contractor or agent who has, or would have, a substantial interest prohibited
under
804 KAR 4:015 if the independent contractor or agent is
treated as a manufacturer as defined in
804 KAR 4:015.
Section
7. Records. A direct shipper licensee shall comply with the record
retention and audit requirements set forth in
804 KAR 4:100, except a licensee shall maintain records for a
minimum of three (3) years. At the request of the department, the licensee
shall make available for inspection all records regarding direct shipment to
Kentucky consumers.
Section 8.
Minimum Price. A direct shipper licensee shall sell alcoholic beverages at a
price no less than the cost of production in accordance with
KRS 244.050.
Section 9. Incorporation by Reference.
(1) "Online Direct Shipper License
Application", December 2020, is incorporated by reference.
(2) This material may be inspected, copied,
or obtained, subject to applicable copyright law, at Department of Alcoholic
Beverage Control, 500 Mero Street, 2 NE 33, Frankfort, Kentucky 40601, Monday
through Friday, 8:00 a.m. to 4:30 p.m.
