An Act To Clarify the Laws Governing Financial Relationships between Entities within the Three-tier System for Distribution of Alcohol
Maine Legislature, Session 129, LD 2088
Committee: Veterans and Legal Affairs
Amends: 28-A MRSA §707, 28-A MRSA §1355-A, 28-A MRSA §1363

Legislative Document
No. 2088
S.P. 737
In Senate, January 28, 2020
An Act To Clarify the Laws Governing Financial Relationships 
between Entities within the Three-tier System for Distribution of 
Alcohol
Reported by Senator LUCHINI of Hancock for the Joint Standing Committee on Veterans 
and Legal Affairs pursuant to Resolve 2019, chapter 15, section 3.
Reference to the Committee on Veterans and Legal Affairs suggested and ordered printed 
pursuant to Joint Rule 218.
DAREK M. GRANT
Secretary of the Senate
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  28-A MRSA §707, sub-§1, as amended by PL 1997, c. 373, §68, is 
further amended to read:
1.  Licensee not indebted.  Except as provided by section 1363 in subsection 7, the 
bureau may not issue any license to or renew the license of a person who is indebted in 
any manner, directly or indirectly: 
A.  To any other person for liquor;
B.  To the State for any tax, other than property tax, assessed and considered final 
under Title 36 that the State Tax Assessor certifies, in accordance with Title 36, 
section 172, as remaining unpaid in an amount exceeding $1,000 for a period greater 
than 60 days after the applicant or licensee has received notice of the finality of that 
tax; or
C.  For any contributions assessed and considered final under Title 26, section 1225, 
when the Director of Unemployment Compensation certifies that the amount remains 
unpaid for a period greater than 60 days, after the applicant or licensee has received 
notice of the finality of that tax.
Sec. 2.  28-A MRSA §707, sub-§3, as amended by PL 2011, c. 629, §9, is 
repealed.
Sec. 3.  28-A MRSA §707, sub-§3-A is enacted to read:
3-A.  Retailer; prohibited financial interests.  Except as authorized in sections 
707-A and 1355-A, a retailer may not have any financial interest, direct or indirect, in 
any:
A.  Licensed Maine manufacturer, out-of-state manufacturer of spirits whose 
products are listed by the commission for sale in the State or out-of-state 
manufacturer of malt liquor or wine who has been issued a certificate of approval; or
B.  Wholesale licensee, out-of-state spirits wholesaler or out-of-state wholesaler of 
malt liquor or wine who has been issued a certificate of approval.
Sec. 4.  28-A MRSA §707, sub-§4, as amended by PL 2011, c. 629, §10, is 
repealed.
Sec. 5.  28-A MRSA §707, sub-§4-A is enacted to read:
4-A.  Manufacturer; prohibited financial interests.  Except as authorized in 
subsection 7 and sections 707-A and 1355-A, a licensed Maine manufacturer, out-of-state 
manufacturer of spirits whose products are listed by the commission for sale in the State 
or out-of-state manufacturer of malt liquor or wine who has been issued a certificate of 
approval may not have any financial interest, direct or indirect, in any:
A.  Wholesale licensee, out-of-state spirits wholesaler or out-of-state wholesaler of 
malt liquor or wine who has been issued a certificate of approval; or
B.  Retailer.
Sec. 6.  28-A MRSA §707, sub-§5, as repealed and replaced by PL 1987, c. 342, 
§42, is repealed.
Sec. 7.  28-A MRSA §707, sub-§5-A is enacted to read:
5-A.  Wholesaler; prohibited financial interests.  Except as authorized in 
subsection 7, the following financial interests are prohibited.
A.  A wholesale licensee, out-of-state spirits wholesaler or out-of-state wholesaler of 
malt liquor or wine who has been issued a certificate of approval may not have any 
financial interest, direct or indirect, in any:
(1)  Licensed Maine manufacturer, out-of-state manufacturer of spirits whose 
products are listed by the commission for sale in the State or out-of-state 
manufacturer of malt liquor or wine who has been issued a certificate of 
approval; or
(2)  Retailer.
B.  An out-of-state wholesaler of malt liquor or wine who has been issued a 
certificate of approval may not have any financial interest, direct or indirect, in any 
wholesale licensee.  A wholesale licensee may not have any financial interest, direct 
or indirect, in any out-of-state wholesaler of malt liquor or wine.
Sec. 8.  28-A MRSA §707, sub-§6, as enacted by PL 1987, c. 342, §43, is 
amended to read:
6.  Minor investment Directors, officers, members and securities.  Minor The 
financial interests prohibited in subsections 3-A, 4-A and 5-A include, but are not limited 
to, circumstances in which an officer, director, member or holder of the securities of a 
business entity is also a director, officer, member or holder of the securities of another 
business entity, except that a minor investment in less than 1% of the securities of a 
corporation engaged in liquor business not amounting to more than 1% shall not be held 
to be an interest forbidden entity does not constitute a financial interest prohibited by this 
subsection subsections 3-A, 4-A and 5-A.
Sec. 9.  28-A MRSA §707, sub-§7, as enacted by PL 1987, c. 342, §43, is 
amended to read:
7.  Application Exceptions.  This section does not prohibit a wholesale licensee from 
receiving normal credits for the purchase of malt liquor or wine from the manufacturer 
located within or without the State.:
A.  A manufacturer or out-of-state wholesaler from extending the usual and 
customary credit to a wholesale licensee for the purchase of malt liquor or wine; or
B.  A manufacturer or out-of-state wholesaler from furnishing materials and 
equipment for the use of a wholesale licensee or the wholesale licensee's employees, 
including:
(1)  Painting the wholesale licensee's vehicles;
(2)  Supplying legal advertising signs used by the wholesale licensee in the 
course of the wholesale licensee's business; and
(3)  Supplying uniforms for the employees of the wholesale licensee.
Sec. 10.  28-A MRSA §707, sub-§8 is enacted to read:
8.  Definitions.  For purposes of this section, the following terms have the following 
meanings.
A.  "Business entity" means a partnership, corporation, firm, association or other 
legal entity.
B.  "Out-of-state spirits wholesaler" means a person located outside the State who 
engages in the purchase of spirits in sealed bottles, containers or original packages, as 
prepared for the market by the manufacturer at the place of manufacture for resale to 
the bureau and not to retail licensees.
Sec. 11.  28-A MRSA §1355-A, sub-§2-B, ¶B, as enacted by PL 2017, c. 341, 
§1, is amended to read:
B.  The licensee is in violation of section 707, subsection 2, 3 3-A or  4  4-A, if the 
violation existed in the same manner at the time the license was initially issued or at 
the time the license was renewed.
Sec. 12.  28-A MRSA §1363, as amended by PL 1997, c. 373, §118, is repealed.
SUMMARY
This bill is reported out by the Joint Standing Committee on Veterans and Legal 
Affairs pursuant to Resolve 2019, chapter 15.  The committee has not taken a position on 
the substance of the bill and by reporting this bill out the committee is not suggesting and 
does not intend to suggest that it agrees or disagrees with any aspect of this bill.  The 
committee is reporting the bill out for the sole purpose of obtaining a printed bill that can 
be referred to the committee for a public hearing and subsequent committee action in the 
normal course.  The committee is taking this action to ensure clarity and transparency in 
the legislative review of the proposal.
This bill consolidates in one section the separate laws prohibiting financial 
relationships between entities within the 3-tier system of alcohol distribution in Maine.  
The bill clarifies that, with only a few minor exceptions, an entity in the manufacturer 
tier, wholesaler tier or retailer tier may not have a financial interest, direct or indirect, in 
an entity in a different tier of the 3-tier system.  Unlike current law, the bill clarifies that 
these so-called 3-tier prohibitions apply to entities that sell spirits.  The bill also preserves 
the prohibition in current law against an in-state wholesaler of malt liquor and wine, 
referred to in current law as a wholesale licensee, having any financial interest, direct or 
indirect, in an out-of-state wholesaler of malt liquor or wine whose products are imported 
into the State.