New Laws Effective July 1

Starting Wednesday, July 1, the commonwealth will enact 19 laws that impact the Virginia Alcoholic Beverage Control Authority (ABC), its licensees and applicants for ABC licenses. The Virginia General Assembly passed the following Virginia ABC-related legislative proposals during the 2020 session, and Governor Ralph Northam signed them into law.

ABC License Reform (HB390, SB389 and SB447) – The combined bill modernizes and reforms Virginia ABC’s licenses by reducing the total number by approximately 50%. It reorganizes the licensing sections found in Title 4.1 of the Alcoholic Beverage Control Act to improve service to licensees by defining licenses as either retail, wholesale or manufacturing. The bill further addresses the changing world of alcoholic beverage service by creating a new “marketplace” license, which provides discretion to ABC in issuing specialized on-premises licenses authorizing a licensee to provide limited volumes of wine and beer to customers free of charge. Modest across-the-board license fee increases will address ABC’s continued growth and enable the authority to build on its commitment to support licensees with regulatory guidance from its Bureau of Law Enforcement.

“After several years of creative thinking within ABC and collaboration with various stakeholders, we’re pleased to now have a licensing solution that will provide long-term benefits for everyone,” said Chief Executive Officer Travis Hill. “Over the next year, licensees will see a gradual transition to the new licensing structure, with all amendments becoming effective no later than July 1, 2021.”

Games of Skill (HB881 and SB971) – Amended by Governor Northam, the bill provides for a one-year phase-out of existing skill games, with skill games prohibited effective July 1, 2021. Each distributor who issues skill games to Virginia ABC licensees or truck stops would pay a monthly tax of $1,200 for each skill game provided for play during the previous month. Tax revenues would be disbursed among four entities with 2% going to the Problem Gambling Treatment and Support Fund, 2% to ABC for administering the bill’s provisions, 12% to localities in which the skill games are located and 84% to the COVID-19 Relief Fund, created by the bill. Distributors are required to report monthly to ABC the number of skill games provided for play. Distributors are prohibited from increasing the number of machines above the number provided for play as of June 30, 2020, and are prohibited from operating new skill games. Distributors are subject to a civil penalty of up to $50,000 for violations of the bill’s provisions. ABC’s Board of Directors adopted final regulations to implement this legislation on June 11, 2020.

The following bill passed during the 2019 session effective July 1, 2020, allows the sale of distilled spirits in all Virginia jurisdictions, moving certain areas from “dry to wet” unless determined otherwise by referenda:

Mixed Beverage Referendum (HB2634 and SB1110) – This law permits Virginia ABC to sell alcoholic beverages and restaurants to sell mixed beverages in all counties, cities, towns and supervisors’ districts, unless 10% of the qualified voters in those jurisdictions petition the circuit court asking that a referendum be held on the question of whether the sale of alcoholic beverages by restaurants licensed by ABC should be prohibited within that jurisdiction. Results of previous referenda taken prior to July 1, 2019, will be effective for five years after the date of the referenda, and previous establishments exempt from local mixed beverage referenda will continue licensure.

Other 2020 session legislation important to Virginia ABC and its stakeholders includes:

Virginia Spirits Board (HB1436 and SB583) – This law establishes the Virginia Spirits Board within the Virginia Department of Agriculture and Consumer Services. The bill provides for a Virginia Spirits Promotion Fund, which includes research services to improve farming practices related to growing ingredients necessary for distillation in Virginia. The board may also enter into contracts with private and public entities to market, advertise and promote the industry, and engage in revenue generating activities. The Virginia Spirits Board includes gubernatorial appointees and ABC’s Chief Executive Officer.

Habitual Drunkard Law Repeal (HB923) – This law repeals the provision allowing a court to enter an order of interdiction prohibiting the sale of alcoholic beverages to any person who has shown to be a habitual drunkard.

ABC Net Payment Program (SB698) – This law requires Virginia ABC to allow licensed distillers to enter the Net Payment Program if they have a distillery store agreement and meet certain requirements for entry into the program. The Net Payment Program would allow these licensed distillers to submit electronic payments to Virginia ABC for applicable taxes and markups.

Additional measures impacting alcohol licenses:

• SB395 – eliminates Virginia’s one-year residency requirement for the issuance of alcoholic beverage licenses to conform to the U.S. Supreme Court’s ruling in Tennessee Wine and Spirits Retailers Association v. Thomas. This ruling held that state residency requirements violated the Commerce Clause.
• SB181 – reduces the acreage necessary for Virginia ABC to issue a Commercial Lifestyle Center license from locations with 25 acres to locations with 10 acres. This allows visitors at a mall or shopping center to buy drinks at a restaurant and leave the restaurant to enjoy it in the center’s common areas.
• SB496 – authorizes culinary lodging resorts to obtain a mixed beverage restaurant license that allows for the sale of alcoholic beverages for on premise consumption on areas approved by Virginia ABC, including any outdoor areas under control of the licensee.
• HB949 and SB689 – increases the number of local special event licenses available each year from 12 to 16 events per year. This combined bill also restricts the duration of any licensed local special event to a maximum of three consecutive days.
• SB833 – increases the number of annual tasting licenses issued to any person from four to 12. The bill does not affect tastings conducted by manufacturers of alcoholic beverages, wholesalers or their representatives. These groups need a tasting permit for their products.
• SB497 – allows mixed beverage-licensed restaurants operated by private, nonprofit or for-profit clubs exclusively for members and their guests to sell and serve mixed beverages for on-premises consumption, and sell spirits that are packaged in original closed containers with a maximum capacity of 2 fluid ounces or 50 milliliters purchased from ABC for on premise consumption.
• SB441 – permits winery licensees to sell at retail the brands of wine that the winery manufactures on the licensed premises described in the winery license for on premise consumption or in closed containers for off-premise consumption.
• SB1029 – permits gourmet shop licensees to allow distilleries to participate in tastings at the gourmet shop.
• SB414 - removes the provision that restricts limited distiller licensees to manufacturing a maximum of 36,000 gallons of spirits per year.
• HB1088 – eliminates the requirement that food cooked or prepared on the premises be served at each retail on premise location selling alcoholic beverages as part of a walking tour permit. Instead, the walking tour will go to retail on premise locations selling alcoholic beverages. The fee charged by the licensee will also include any food offered as part of the tour, but food is not required.
• HB37 – narrows ABC permit requirements to keep, store or possess any still or distilling apparatus to include only instances in which the still or distilling apparatus is licensed for distilling alcohol.
• SB212 and HB598 – provides for a new mixed beverage license for a performing arts facility located in Fairfax County. The new license authorizes the sale of alcoholic beverages for on-premises consumption only on the dates of performances or events in areas approved by ABC. This mixed beverage license would not be subject to the Mixed Beverage Annual Review (MBAR) or food requirements.
• HB731 and SB676 – grants the City of Hampton’s governing authority or its board of zoning appeals the ability to impose conditions upon any special exception or use permit relating to retail alcoholic beverage control licensees.

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The Virginia Alcoholic Beverage Control Authority (ABC) is a major source of revenue for the commonwealth, contributing more than $2.2 billion to the general fund in the last five years. Virginia ABC currently operates 388 state stores, and provides alcohol education and prevention programs for people of all ages. Its Bureau of Law Enforcement oversees more than 18,000 ABC licensed establishments. Now marking its 86th year, ABC remains committed to progress and innovation in carrying out its vision of bringing good spirits and excellent service to Virginia.

Web:  www.abc.virginia.gov    Facebook: @VirginiaABC and @SpiritedVirginia    Instagram: @spiritedvirginia    Twitter: @VirginiaABC