47 Pa. Stat. § 4-431

Current through Pa Acts 2024-53, 2024-56 through 2024-111

Section 4-431 - Malt and brewed beverages manufacturers', distributors' and importing distributors' licenses

(a) The board shall issue to any person a resident of this Commonwealth of good repute who applies therefor, and pays the license fee hereinafter prescribed, a manufacturer's license to produce and manufacture malt or brewed beverages, and to transport, sell and deliver malt or brewed beverages from the place of manufacture only in original containers, in quantities of not less than a case or original containers containing one hundred twenty-eight ounces or more which may be sold separately anywhere within the Commonwealth. The application for such license shall be in such form and contain such information as the board shall require. All such licenses shall be granted for a license period to be determined by the board. Every manufacturer shall keep at his or its principal place of business, within the Commonwealth daily permanent records which shall show, (1) the quantities of raw materials received and used in the manufacture of malt or brewed beverages and the quantities of malt or brewed beverages manufactured and stored, (2) the sales of malt or brewed beverages, (3) the quantities of malt or brewed beverages stored for hire or transported for hire by or for the licensee, and (4) the names and addresses of the purchasers or other recipients thereof. Every place licensed as a manufacturer shall be subject to inspection by members of the board or by persons duly authorized and designated by the board, at any and all times of the day or night, as they may deem necessary, for the detection of violations of this act or of the rules and regulations of the board, or for the purpose of ascertaining the correctness of the records required to be kept by licensees. The books and records of such licensees shall at all times be open to inspection by members of the board or by persons duly authorized and designated by the board. Members of the board and its duly authorized agents shall have the right, without hindrance, to enter any place which is subject to inspection hereunder or any place where such records are kept for the purpose of making such inspections and making transcripts thereof. Whenever any checks issued in payment of filing and/or license fees shall be returned to the board as dishonored, the board shall charge a fee of five dollars ($5.00) per hundred dollars or fractional part thereof, plus all protest fees, to the maker of such check submitted to the board. Failure to make full payment or pay the face amount of the check in full and all charges thereon as herein required within ten days after demand has been made by the board upon the maker of the check or upon notification to the board by the Department of Revenue or the Department of Labor and Industry of its objection, the license of such person shall immediately become invalid and shall remain invalid until payment and all charges are received by the board.

(a.1) Any out of State manufacturer whose products are sold and delivered within this Commonwealth shall be authorized: to rent, lease or otherwise acquire space from an importing distributor or bailee for hire authorized by this act at no more than two locations per manufacturer for use of a segregated portion of a warehouse or other storage facility owned or operated by the importing distributor or bailee for hire at which the out of State manufacturer may store, repackage and sell malt or brewed beverages to any importing distributor to whom the out of State manufacturer has granted distribution rights pursuant to subsection (b) or to any purchaser outside this Commonwealth for delivery outside this Commonwealth; or to ship to its storage facility outside this Commonwealth. Such manufacturer may compensate the importing distributor or bailee for hire for any related storage, repackaging or delivery services. The out of State manufacturer must file with the Liquor Control Board the rate of compensation to be paid. A separate written application must be filed to acquire storage licenses, and the board may establish the information that must be provided on the application. The initial filing must be made prior to any payments being made, and any subsequent changes in the rate of compensation must be filed within thirty days of any such change. Nothing in this act authorizing storage facilities for out of State manufacturers is intended to make any change in the manner malt or brewed beverages are distributed through the three-tier system.

(a.2) The board shall issue to a holder of a manufacturer's license no more than two storage licenses per manufacturer to cover storage facilities separate from the location of the manufacturing facility. A manufacturer may use its storage facilities to receive, store, repackage, sell and distribute malt or brewed beverages in the same manner as it can at its place of manufacture or it may rent, lease or otherwise acquire space from an importing distributor or bailee for hire authorized by this act in the same manner as an out of State manufacturer as set forth in subsection (a.1). A separate written application must be filed to acquire storage licenses, and the board is empowered to establish what information must be provided on that application. Nothing in this act authorizing off-site storage facilities for manufacturers is intended to make any change in the manner malt or brewed beverages are distributed through the three-tier system.

(b) The board shall issue to any reputable person who applies therefor, and pays the license fee hereinafter prescribed, a distributor's or importing distributor's license for the place which such person desires to maintain for the sale of malt or brewed beverages, not for consumption on the premises where sold, and in quantities of not less than a case or original containers containing one hundred twenty-eight ounces or more which may be sold separately as prepared for the market by the manufacturer at the place of manufacture. In addition, a distributor license holder may sell malt or brewed beverages in any amount to a person not licensed by the board for off-premises consumption. The sales shall not be required to be in the package configuration designated by the manufacturer and may be sold in refillable growlers. The board shall have the discretion to refuse a license to any person or to any corporation, partnership or association if such person, or any officer or director of such corporation, or any member or partner of such partnership or association shall have been convicted or found guilty of a felony within a period of five years immediately preceding the date of application for the said license: And provided further, That, in the case of any new license or the transfer of any license to a new location, the board may, in its discretion, grant or refuse such new license or transfer if such place proposed to be licensed is within three hundred feet of any church, hospital, charitable institution, school or public playground, or if such new license or transfer is applied for a place which is within two hundred feet of any other premises which is licensed by the board: And provided further, That the board shall refuse any application for a new license or the transfer of any license to a new location if, in the board's opinion, such new license or transfer would be detrimental to the welfare, health, peace and morals of the inhabitants of the neighborhood within a radius of five hundred feet of the place proposed to be licensed. The board may enter into an agreement with the applicant concerning additional restrictions on the license in question. If the board and the applicant enter into such an agreement, such agreement shall be binding on the applicant. Failure by the applicant to adhere to the agreement will be sufficient cause to form the basis for a citation under section 471 and for the nonrenewal of the license under section 470. If the board enters into an agreement with an applicant concerning additional restrictions, those restrictions shall be binding on subsequent holders of the license until the license is transferred to a new location or until the board enters into a subsequent agreement removing those restrictions. If the application in question involves a location previously licensed by the board, then any restrictions imposed by the board on the previous license at that location shall be binding on the applicant unless the board enters into a new agreement rescinding those restrictions. The board shall require notice to be posted on the property or premises upon which the licensee or proposed licensee will engage in sales of malt or brewed beverages. This notice shall be similar to the notice required of hotel, restaurant and club liquor licensees.

Except as hereinafter provided, such license shall authorize the holder thereof to sell or deliver malt or brewed beverages in quantities above specified anywhere within the Commonwealth of Pennsylvania, which, in the case of distributors, have been purchased only from persons licensed under this act as manufacturers or importing distributors, and in the case of importing distributors, have been purchased from manufacturers or persons outside this Commonwealth engaged in the legal sale of malt or brewed beverages or from manufacturers or importing distributors licensed under this article. In the case of an importing distributor, the holder of such a license shall be authorized to store and repackage malt or brewed beverages owned by a manufacturer at a segregated portion of a warehouse or other storage facility authorized by section 441(d) and operated by the importing distributor within its appointed territory and deliver such beverages to another importing distributor who has been granted distribution rights by the manufacturer as provided herein. The importing distributor shall be permitted to receive a fee from the manufacturer for any related storage, repackaging or delivery services. In the case of a bailee for hire hired by a manufacturer, the holder of such a permit shall be authorized: to receive, store and repackage malt or brewed beverages produced by that manufacturer for sale by that manufacturer to importing distributors to whom that manufacturer has given distribution rights pursuant to this subsection or to purchasers outside this Commonwealth for delivery outside this Commonwealth; or to ship to that manufacturer's storage facilities outside this Commonwealth. The bailee for hire shall be permitted to receive a fee from the manufacturer for any related storage, repackaging or delivery services. The bailee for hire shall, as required in Article V of this act, keep complete and accurate records of all transactions, inventory, receipts and shipments and make all records and the licensed areas available for inspection by the board and for the Pennsylvania State Police, Bureau of Liquor Control Enforcement, during normal business hours.

Each out of State manufacturer of malt or brewed beverages whose products are sold and delivered in this Commonwealth shall give distributing rights for such products in designated geographical areas to specific importing distributors, and such importing distributor shall not sell or deliver malt or brewed beverages manufactured by the out of State manufacturer to any person issued a license under the provisions of this act whose licensed premises are not located within the geographical area for which he has been given distributing rights by such manufacturer. In addition, the holder of a distributor license may not sell or deliver malt or brewed beverages to any licensee whose licensed premises is located within the designated geographical area granted to an importing distributor other than the importing distributor that sold the malt or brewed beverages to the distributor. If the licensee purchasing the malt or brewed beverages from the distributor license holder holds multiple licenses or operates at more than one location, then the malt or brewed beverages may not be consumed or sold at licensed premises located within the designated geographical area granted to an importing distributor other than the importing distributor that sold the malt or brewed beverages to the distributor. Should a licensee accept the delivery of malt or brewed beverages or transfer malt or brewed beverages in violation of this section, said licensee shall be subject to a suspension of his license for at least thirty days: Provided, That the importing distributor holding such distributing rights for such product shall not sell or deliver the same to another importing distributor without first having entered into a written agreement with the said secondary importing distributor setting forth the terms and conditions under which such products are to be resold within the territory granted to the primary importing distributor by the manufacturer.

When a Pennsylvania manufacturer of malt or brewed beverages licensed under this article names or constitutes a distributor or importing distributor as the primary or original supplier of his product, he shall also designate the specific geographical area for which the said distributor or importing distributor is given distributing rights, and such distributor or importing distributor shall not sell or deliver the products of such manufacturer to any person issued a license under the provisions of this act whose licensed premises are not located within the geographical area for which distributing rights have been given to the distributor and importing distributor by the said manufacturer. In addition, the holder of a distributor license may not sell or deliver malt or brewed beverages to a licensee whose licensed premises is located within the designated geographical area granted to an importing distributor other than the importing distributor that sold the malt or brewed beverages to the distributor. If the licensee purchasing the malt or brewed beverages from the distributor license holder holds multiple licenses or operates at more than one location, the malt or brewed beverages may not be consumed or sold at licensed premises located within the designated geographical area granted to an importing distributor other than the importing distributor that sold the malt or brewed beverages to the distributor. If a licensee accepts the delivery of malt or brewed beverages or transfers malt or brewed beverages in violation of this section, the licensee shall be subject to suspension of his license for at least thirty days: Provided, That the importing distributor holding such distributing rights for such product shall not sell or deliver the same to another importing distributor without first having entered into a written agreement with the said secondary importing distributor setting forth the terms and conditions under which such products are to be resold within the territory granted to the primary importing distributor by the manufacturer. Nothing herein contained shall be construed to prevent any manufacturer from authorizing the importing distributor holding the distributing rights for a designated geographical area from selling the products of such manufacturer to another importing distributor also holding distributing rights from the same manufacturer for another geographical area, providing such authority be contained in writing and a copy thereof be given to each of the importing distributors so affected.

(b.1)

(1) Any person in this Commonwealth or elsewhere who shall purchase or in any manner whatsoever acquire or otherwise succeed to the business of a manufacturer, assets or rights to import, market, ship into this Commonwealth or distribute a brand of beer, or to use and exploit any trademark incorporated as part of a brand of beer produced by such a manufacturer shall be obligated to all terms of the manufacturer's franchise agreements in effect on the effective date of the purchase, acquisition or succession, or, if earlier, at the time the agreement contemplating the purchase, acquisition or succession is actually made.

(2)"Purchase" or "acquisition," for purposes of this section, includes, but is not limited to, a purchase, acquisition, lease, license or assignment of all or a controlling interest in the capital stock or operating assets, including brand trademarks rights; merger; any corporate reorganization or consolidation; and also, without limitation, any license, cross-license, joint venture or other agreement or arrangement, directly or indirectly, transferring, substituting or materially changing the person or persons authorized by the one owning or controlling a brand or any trademark as part of a brand, to produce, import, ship, market or distribute the brand of beer into or within this Commonwealth.

(3)"Manufacturer," as used in this subsection, shall mean any person, including any agent of such person, who (i) is licensed as a manufacturer of malt or brewed beverages located within the Commonwealth of Pennsylvania, (ii) holds a distributor or importing distributor license, or (iii) manufactures any malt beverage, has title to any malt beverage products or has the contractual right to distribute any malt beverage product, whether licensed in this Commonwealth or not, who enters into an "agreement" with any importing distributor licensed to do business in this Commonwealth.

(c) The aforesaid licenses shall be issued only to reputable individuals, partnerships and associations who are, or whose members are, citizens of the United States and are residents of the Commonwealth of Pennsylvania or to reputable corporations organized or duly registered under the laws of the Commonwealth of Pennsylvania. Such licenses shall be issued to corporations duly organized or registered under the laws of the Commonwealth of Pennsylvania only when it appears that all of the officers and directors of the corporation are citizens of the United States and are residents of the Commonwealth of Pennsylvania, and that at least fifty-one per centum of the capital stock of such corporation is actually owned by individuals who are citizens of the United States and are residents of the Commonwealth of Pennsylvania: Provided, That the provisions of this subsection with respect to residence requirements shall not apply to individuals, partners, officers, directors and owners of capital stock, of corporations licensed or applying for licenses as manufacturers of malt or brewed beverages, nor shall the provisions of this subsection with respect to stockholder requirements apply to corporations licensed or applying for licenses as manufacturers of malt or brewed beverages.

(d)

(1) All distributing rights as hereinabove required shall be in writing, shall be equitable in their provisions and shall be substantially similar as to terms and conditions with all other distributing rights agreements between the manufacturer giving such agreement and its other importing distributors and distributors shall not be modified, cancelled, terminated or rescinded by the manufacturer without good cause, and shall contain a provision in substance or effect as follows: "The manufacturer recognizes that the importing distributor and distributor are free to manage their business in the manner the importing distributor and distributor deem best and that this prerogative vests in the importing distributor and distributor the exclusive right to establish a selling price, to select the brands of malt or brewed beverages they wish to handle and to determine the efforts and resources which the importing distributor and distributor will exert to develop and promote the same of the manufacturer's products handled by the importing distributor and distributor. However, the manufacturer expects that the importing distributor and distributor will price competitively the products handled by them, devote reasonable effort and resources to the sale of such products and maintain a reasonable sales level." "Good cause" shall mean the failure by any party to an agreement, without reasonable excuse or justification, to comply substantially with an essential, reasonable and commercially acceptable requirement imposed by the other party under the terms of an agreement.

(2) After January 1, 1980, no manufacturer shall enter into any agreement with more than one distributor or importing distributor for the purpose of establishing more than one agreement for designated brand or brands of malt or brewed beverages in any one territory. Each franchise territory which is granted by a manufacturer shall be geographically contiguous or in counties which are contiguous with one another. All importing distributors shall maintain sufficient records to evidence compliance of this section. With regard to any territorial distribution authority granted to an importing distributor by a manufacturer of malt or brewed beverages after January 1, 1996, the records shall establish that each and every case of a brand of malt or brewed beverages for which the importing distributor is assigned was sold, resold, stored, delivered or transported by the importing distributor, either from a point or to a point with the assigned geographically contiguous territory or in counties which are contiguous with one another, to any person or persons, whether such person or persons are licensed by this act or not licensed by this act.

(3) Except for discontinuance of a brand or a valid termination for good cause, the purchaser of the assets of the manufacturer as defined in this act shall become obligated to all the territorial and brand designations of the agreement in effect on the date of purchase. Purchase of assets as defined for the purposes of this act shall include, but not be limited to, the sale of stock, sale of assets, merger, lease, transfer or consolidation.

(4) The court of common pleas of the county wherein the licensed premises of the importing distributor or distributor are located is hereby vested with jurisdiction and power to enjoin the modification, rescission, cancellation or termination of a franchise or agreement between a manufacturer and an importing distributor or distributor at the instance of such importing distributor or distributor who is or might be adversely affected by such modification, rescission, cancellation or termination, and in granting an injunction the court shall provide that no manufacturer shall supply the customers or territory of the importing distributor or distributor by servicing the territory or customers through other importing distributors or distributors or any other means while the injunction is in effect: Provided, however, That any injunction issued under this subsection shall require the posting of sufficient bond against damages arising from an injunction improvidently granted and a showing that the danger of irrevocable loss or damage is immediate and that during the pendency of such injunction the importing distributor or distributor shall continue to service the accounts of the manufacturer in good faith.

(5) The provisions of this subsection shall not apply to Pennsylvania manufacturers whose principal place of business is located in Pennsylvania unless they name or constitute a distributor or importing distributor as a primary or original supplier of their products subsequent to the effective date of this act, or unless such Pennsylvania manufacturers have named or constituted a distributor or importing distributor as a primary or original supplier of their products prior to the effective date of this act, and which status is continuing when this act becomes effective.

(e) In addition to the fees under section 614-A of the act of April 9, 1929 (P.L. 177, No. 175), known as "The Administrative Code of 1929," the board shall assess a fee surcharge of ninety-five dollars ($95.00) for a distributor's license and a fee surcharge of four hundred seventy dollars ($470.00) for an importing distributor's license and a fee surcharge of seventy-five dollars ($75.00) for brand registration. Money collected under this subsection shall be placed in a restricted account in The State Stores Fund. The board may use the money in this account to implement section 216. In the event the provisions ofsection 447(a)(2) and/or (c) are held invalid, then this subsection shall be void and shall not apply.

(f)

(1) Any malt or brewed beverage produced outside this Commonwealth that is repackaged by a bailee for hire or importing distributor on behalf of an out of State manufacturer must be returned to the out of State manufacturer and come to rest out of State before it may reenter this Commonwealth. Such repackaged malt or brewed beverages must be distributed through the three-tier system. Any malt or brewed beverage that is repackaged by a bailee for hire or importing distributor on behalf of an in State manufacturer must be returned to the in State manufacturer and come to rest at the in State manufacturer's licensed facility.

(2) For purposes of this section, "repackage" shall mean any change or alteration to the containers or container configuration of a case.

(g)

(1) Any nonalcoholic malt or brewed beverage produced by an out-of-State manufacturer of malt or brewed beverages or a Pennsylvania manufacturer of malt or brewed beverages which has designated an importing distributor pursuant to this section shall be distributed in accordance with the provisions of this section notwithstanding that it is not a malt or brewed beverage as defined in section 102.

(2) For the purposes of this subsection, "nonalcoholic malt or brewed beverage" means any beverage intended to be marketed or sold as nonalcoholic beer having at least a trace amount of alcohol content but which does not contain one-half per centum (0.5%) or more alcohol by volume.

47 P.S. § 4-431

Amended by P.L. TBD 2020 No. 29, § 3, eff. 8/4/2020.

Amended by P.L. TBD 2019 No. 45, § 3, eff. 8/31/2019.

Amended by P.L. TBD 2016 No. 166, § 10, eff. 1/14/2017.

Amended by P.L. TBD 2016 No. 39, § 9, eff. 8/7/2016.

1951, April 12, P.L. 90, art. IV, § 431. Amended 1952, Jan. 14, P.L. (1951) 2089, § 1; 1959, Oct. 23, P.L. 1360, § 1; 1965, Aug. 17, P.L. 346, §§ 1, 2; 1967, Oct. 9, P.L. 395, No. 179, § 1; 1968, Jan. 18, P.L. (1967) 968, No. 432, § 1; 1968, July 20, P.L. 427, No. 199, § 1; 1970, May 5, P.L. 342, No. 110, § 1; 1980 , June 22, P.L. 253, No. 73, § 1, effective in 60 days. Reenacted and amended 1987 , June 29, P.L. 32, No. 14, § 44, effective 7/1/1987. Amended 1994, April 29, P.L. 212, No. 30, § 11, effective in 60 days; 1996, Dec. 20, P.L. 1513, No. 196, § 3, effective in 60 days; 1996, May 31, P.L. 312, No. 49, § 8, imd. effective; 1998, June 18, P.L. 664, No. 86, § 5, effective in 60 days; 1998, Dec. 21, P.L. 1202, No. 155, § 9, imd. effective; 2002, Dec. 9, P.L. 1653, No. 212, § 11, effective in 60 days; 2004, Dec. 8, P.L. 1810, No. 239, § 5.1, effective 2/7/2005; 2011, June 28, P.L. 55, No. 11, § 4, imd. effective.