CO Code § 44-3-308 (2021)
2021 Colorado Code|Title 44 - Revenue - Regulation of Activities|Article 3 - Alcohol Beverages|Part 3 - State and Local Licensing|§ 44-3-308. Unlawful Financial Assistance

      It is unlawful for any person licensed pursuant to this article 3 as a manufacturer, limited winery, wholesaler, or importer, or any person, partnership, association, organization, or corporation interested financially in or with any of said licensees, to furnish, supply, or loan, in any manner, directly or indirectly, to any person licensed to sell at retail pursuant to this article 3 or article 4 or 5 of this title 44: (a) (I)It is unlawful for any person licensed pursuant to this article 3 as a manufacturer, limited winery, wholesaler, or importer, or any person, partnership, association, organization, or corporation interested financially in or with any of said licensees, to furnish, supply, or loan, in any manner, directly or indirectly, to any person licensed to sell at retail pursuant to this article 3 or article 4 or 5 of this title 44:   Any financial assistance, including the extension of credit for more than thirty days, as specified in section 44-3-202 (2)(b) or in rules of the state licensing authority; or    Any equipment, fixtures, chattels, or furnishings used in the storing, handling, serving, or dispensing of food or alcohol beverages within the premises or for making any structural alterations or improvements in or on the building in which the premises is located.       This subsection (1) does not:   Apply to signs or displays within the licensed premises; or    Prevent a representative, employee, or agent of a person licensed under this article 3 as a manufacturer, limited winery, wholesaler, or importer from pouring or serving the licensee's alcohol beverage products as part of a tasting being conducted on the licensed premises of a person licensed under this article 3 to sell alcohol beverages at retail for off-premises consumption, and pouring or serving the licensee's alcohol beverages does not constitute labor provided by a person licensed under this article 3 as a manufacturer, limited winery, wholesaler, or importer to a person licensed under this article 3 to sell alcohol beverages at retail.          Notwithstanding the provisions of subsection (1)(a) of this section, any person or party described in subsection (1)(a) of this section may provide financial or in-kind assistance, directly or indirectly, to a nonprofit arts organization that has been issued an arts license pursuant to section 44-3-419 or to a state-supported institution of higher education in Colorado, including local district colleges, area technical colleges, and the Auraria higher education center, or the governing board of a state-supported institution of higher education, or to a nonpublic institution of higher education as defined in section 23-3.7-102 that is operating pursuant to 26 U.S.C. sec. 501 (c)(3) of the federal “Internal Revenue Code of 1986”, as amended, if the institution has been issued a license pursuant to this article 3 or article 4 or 5 of this title 44.       The state licensing authority, by rule, shall require a complete disclosure of all persons having a direct or indirect financial interest, and the extent of such interest, in each hotel and restaurant license and each retail gaming tavern license issued under this article 3. A willful failure to report and disclose the financial interests of all persons having a direct or indirect financial interest in a hotel and restaurant license or in a retail gaming tavern license shall be grounds for suspension or revocation of such license by the state licensing authority. The invalidity of any provision of this subsection (2) concerning interest in more than one hotel and restaurant license or retail gaming tavern license shall invalidate all interests in more than one hotel and restaurant license or retail gaming tavern license, and such invalidity shall make any such interest unlawful financial assistance.        It is unlawful for any person licensed to sell at retail pursuant to this article 3 or article 4 of this title 44 to receive and obtain from the persons or parties described and referred to in subsection (1)(a) of this section, directly or indirectly, any financial assistance or any equipment, fixtures, chattels, or furnishings used in the storing, handling, serving, or dispensing of food or alcohol beverages within the premises or from making any structural alterations or improvements in or on the building on which the premises is located. (a) (I)It is unlawful for any person licensed to sell at retail pursuant to this article 3 or article 4 of this title 44 to receive and obtain from the persons or parties described and referred to in subsection (1)(a) of this section, directly or indirectly, any financial assistance or any equipment, fixtures, chattels, or furnishings used in the storing, handling, serving, or dispensing of food or alcohol beverages within the premises or from making any structural alterations or improvements in or on the building on which the premises is located.    This subsection (3) does not:   Apply to signs or displays within the premises or to advertising materials that are intended primarily to advertise the product of the wholesaler or manufacturer and that have only negligible value in themselves or to the inspection and servicing of malt or vinous liquor-dispensing equipment to the extent necessary for the maintenance of reasonable standards of purity, cleanliness, and health; or    Prevent a representative, employee, or agent of a licensee described and referred to in subsection (1)(a) of this section from pouring or serving the licensee's alcohol beverage products as part of a tasting being conducted on the licensed premises of the person licensed under this article 3 to sell alcohol beverages at retail for off-premises consumption, and pouring or serving the licensee's alcohol beverages does not constitute labor provided by a licensee described in subsection (1)(a) of this section to a person licensed under this article 3 to sell alcohol beverages at retail.          Notwithstanding the provisions of subsection (3)(a) of this section, a nonprofit arts organization that has been issued an arts license pursuant to section 44-3-419 or a state-supported institution of higher education in Colorado, including local district colleges, area technical colleges, and the Auraria higher education center, or the governing board of a state-supported institution of higher education, or a nonpublic institution of higher education as defined in section 23-3.7-102 that is operating pursuant to 26 U.S.C. sec. 501 (c)(3) of the federal “Internal Revenue Code of 1986”, as amended, if the institution has been issued a license pursuant to this article 3 or article 4 or 5 of this title 44, may receive financial or in-kind assistance, directly or indirectly, from the persons or parties described and referred to in subsection (1)(a) of this section.         Except as otherwise authorized, it is unlawful for any person or corporation holding any license pursuant to this article 3 or article 4 of this title 44 or any person who is a stockholder, director, or officer of any corporation holding a license pursuant to this article 3 or article 4 of this title 44 to be a stockholder, director, or officer or to be interested, directly or indirectly, in any person or corporation that lends money to any person or corporation licensed pursuant to this article 3 or article 4 of this title 44, but this subsection (4) does not apply to banks or savings and loan associations supervised and regulated by an agency of the state or federal government, or to FHA-approved mortgagees, or to stockholders, directors, or officers thereof; and it is unlawful for any person or corporation licensed pursuant to this article 3 or article 4 of this title 44, or any stockholder, director, or officer of such corporation, to make any loan or be interested, directly or indirectly, in any loan to any other person licensed pursuant to this article 3 or article 4 of this title 44; except that this subsection (4)(a) does not apply to any financial institution that comes into possession of a licensed premises by virtue of a foreclosure or deed in lieu of foreclosure if the financial institution does not retain such premises for longer than one year or for such time exceeding one year as provided in subsection (4)(b) of this section.    In the case of a financial institution that comes into possession of a licensed premises by virtue of a foreclosure or deed in lieu of foreclosure, the state and the local licensing authority may grant a transfer of ownership for such license for a period of one year and, upon notice and hearing, renewal of such license may be granted. This subsection (4)(b) shall apply in the case of every foreclosure or deed in lieu of foreclosure in which disposition of the license has not otherwise been made by the state or local licensing authority.         It is unlawful for any owner, part owner, shareholder, stockholder, or person interested, directly or indirectly, in any retail business or establishment of a person licensed to sell at retail pursuant to this article 3 or article 4 or 5 of this title 44 to enter into any agreement with any person or party or to receive, possess, or accept any money, fixtures, supplies, or things of value from any person or party, whereby a person licensed to sell at retail pursuant to this article 3 or article 4 or 5 of this title 44 may be influenced or caused, directly or indirectly, to buy, sell, dispense, or handle the product of any manufacturer of alcohol beverages.    This subsection (5) does not:   Apply to displays within the premises; or    Prevent a representative, employee, or agent of a person licensed under this article 3 as a manufacturer, limited winery, wholesaler, or importer from pouring or serving the licensee's alcohol beverage products as part of a tasting being conducted on the licensed premises of a person licensed under this article 3 to sell alcohol beverages at retail for off-premises consumption, and pouring or serving the licensee's alcohol beverages does not constitute labor provided by a person licensed under this article 3 as a manufacturer, limited winery, wholesaler, or importer to a person licensed under this article 3 to sell alcohol beverages at retail.          Any transaction, agreement, or arrangement prohibited by the provisions of this section, if made and entered into by and between the persons and parties described and referred to in this section, is unlawful, illegal, invalid, and void, and any obligation or liability arising out of such transaction, agreement, or arrangement shall be unenforceable in any court of this state by or against any such persons and parties entering into the transaction, agreement, or arrangement.    This section is intended to prohibit and prevent the control of the outlets for the sale of alcohol beverages by any persons or parties other than the persons licensed pursuant to the provisions of this article 3 or article 4 or 5 of this title 44.    It is unlawful for an owner, part owner, shareholder, or person interested directly or indirectly in a brew pub, distillery pub, or vintner's restaurant license to conduct, own in whole or in part, or be directly or indirectly interested in a wholesaler's license issued under this article 3 or article 4 of this title 44.     History. Source: L. 2018: (1)(a), (3)(a), and (5) amended,(SB 18-243), ch. 366, p. 2198, § 6, effective June 4; entire article added with relocations,(HB 18-1025), ch. 152, p. 980, § 2, effective October 1. L. 2019: IP(1)(a)(I), (1)(a)(II)(B), and (5)(b)(II) amended,(SB 19-011), ch. 1, p. 6, § 7, effective January 31.    Editor's note:    This section is similar to former § 12-47-308 as it existed prior to 2018.    Subsections (1)(a), (3)(a), and (5) of this section were numbered as § 12-47-308 (1)(a), (3)(a), and (5), respectively, in SB 18-243. Those provisions were harmonized with and relocated to this section as this section appears in HB 18-1025.     Cross references:   For the legislative declaration in SB 18-243, see section 1 of chapter 366, Session Laws of Colorado 2018.   ANNOTATION   Law reviews. For article, “The Colorado Liquor Code: Distinct and Definite Requirements”, see 17 Colo. Law. 841 (1988).   Annotator's note. The following annotations include cases decided under former provisions similar to this section.   This section interdicts any transaction, agreement, or arrangement prohibited by it and provides that any obligation or liability arising out of any such transaction, agreement, or arrangement shall be unenforceable in any court by or against any such persons and parties entering into such transaction. Fishman v. Davis, 112 F.2d 432 (10th Cir. 1940).   A plain reading of this section demonstrates that the general assembly did not speak to the precise question of below-cost sales of alcohol by manufacturers to retailer, and therefore deference to agency construction is appropriate. Wine & Spirits Wholesalers v. Colo. Dept. of Rev., 919 P.2d 894 (Colo. App. 1996).   A person who held a retail liquor license could not acquire an interest in the business of a bankrupt wholesaler, and a transaction whereby he attempts to acquire such an interest is void under this section and any claim or obligation arising therefrom is unenforceable, because he could not advance money to the bankrupt for an interest in its business and obtain a claim which was enforceable in the bankruptcy court against the estate. Fishman v. Davis, 112 F.2d 432 (10th Cir. 1940).   Finding of lack of any indirect interest in another retail liquor store is supported by competent evidence on the record and is not arbitrary nor capricious. The evidence does not show that the stock transfer of ownership of another liquor store to the wife of the licensee was a sham transaction nor that the licensee retained control of or any interest in another liquor store. Brass Monkey v. Louisville City Council, 870 P.2d 636 (Colo. App. 1994).   Liquor wholesaler's extension of credit to retailer unaccompanied with control or attempt to control is not unlawful under the Colorado liquor law. Majestic Marketing Co. v. Anderson Enters. of Colo., Inc. 32 Colo. App. 369, 511 P.2d 943 (1973).   Where decedent, part owner of one bar, advanced money for the construction and equipment of another bar, plaintiff claiming by and through decedent as his heir and as executrix of decedent's estate was barred from recovering moneys advanced by decedent for construction of the other bar. Frederics v. Wilson, 31 Colo. App. 117, 500 P.2d 384 (1972).   When asserting rights of decedent, a claimant is subject to the limitations appurtenant to any claim decedent might have had, thus, the working of this section itself, and clear public policy, would bar recovery. Frederics v. Wilson, 31 Colo. App. 117, 500 P.2d 384 (1972).   Giving of a chattel mortgage was in violation of this section. Fishman v. Davis, 112 F.2d 432 (10th Cir. 1940).   Installment sale by wholesaler not prohibited. Absent proof of control or attempt to control a retail licensee by a wholesale licensee, an installment sale or lease of equipment by a wholesaler to a retailer is not prohibited by this section. Nobel, Inc. v. Colo. Dept. of Rev., 652 P.2d 1084 (Colo. App. 1982).   Installment sale by wholesaler does not constitute unlawful financial assistance. The leasing of equipment and the sale of equipment on credit by a wholesale liquor licensee to a retail liquor licensee, absent control or attempt to control the retail licensee, does not constitute unlawful financial assistance. Nobel, Inc. v. Colo. Dept. of Rev., 652 P.2d 1084 (Colo. App. 1982).   Applied in Law Offices of Bernard D. Morley, P.C. v. MacFarlane, 647 P.2d 1215 (Colo. 1982); People v. Luciano, 662 P.2d 480 (Colo. 1983).