2023 Arizona Revised Statutes › Title 4 - Alcoholic Beverages › § 4-203.06 - Mixed cocktails; off-sale privileges; leases; fees

4-203.06.
Mixed cocktails;  off-sale privileges;  leases;  fees
(Rpld. 1/1/26)
A. Notwithstanding section 4-203,  subsection E and section 4-210,  subsection A,  paragraph 6,  through December 31,  2025,  bar and liquor store licensees,  through the department,  shall lease to restaurant licensees the privilege of selling mixed cocktails for consumption off the licensed premises in accordance with section 4-244,  paragraph 32,  subdivision (d). The lease shall be for a period of one year and shall be renewable for successive terms of one year. The department shall establish a lease amount that fairly recognizes,  and is derived from,  the commercial value of the privilege to sell mixed cocktails for consumption off the licensed premises.
B. Leases made pursuant to subsection A of this section are subject to the following conditions:
1. A restaurant licensee may apply to the department on a form prescribed and provided by the department for a lease pursuant to this section. The department may establish and charge an application fee for administrative and enforcement costs associated with this section.
2. On the director approving the application of a restaurant licensee,  the director shall randomly select a bar or liquor store license for the lease of the bar or liquor store licensee's mixed cocktail off-sale privileges to the restaurant licensee through the department.
3. The department shall establish a process to facilitate and approve the lease conveyance and to govern the leases,  including the following:
(a) A standard form of lease.
(b) The term of the lease,  which shall be one year except for the first year of the lease. During the first year of the lease,  the director may set a lease term that is less than a year in order to align the lease renewal date with the renewal date of the restaurant license. The lease payment amount for the first year may be prorated.
(c) The amount of the lease established by the director pursuant to subsection A of this section.
(d) The responsibilities of the lessor and lessee.
(e) The lease may be transferred to another restaurant licensee if a new restaurant licensee purchases the business of the original lessee during the term of the lease.
(f) The privileges conveyed to the lessee during the term of the lease will continue if the bar or liquor store lessor has its license suspended or revoked.
(g) If the bar or liquor store lessor sells its license during the term of the lease,  the purchaser of the bar or liquor store license becomes the new lessor.
(h) This title and rules adopted pursuant to this title apply to both the lessor and lessee.
(i) During the term of the lease,  all violations and liability for liquor service under the lease shall be attributed only to the restaurant licensee leasing the mixed cocktail off-sale privilege. The restaurant licensee leasing the off-sale privilege is not responsible for violations committed by the lessor.
4. The director may deny approval of a lease based on the proposed location or history of the proposed lessee.
5. The restaurant licensee shall pay to the department all lease payments in full in advance.
6. The department of liquor licenses and control may adopt a procedure to pay the lease amount to the lessor and may use the department of administration to facilitate the payments.
7. During the term of the lease,  all violations and liability for the liquor service under the lease shall be attributed only to the restaurant licensee leasing the privilege. Pursuant to section 4-210,  the director may immediately suspend a lease for any violation of this title or any rule adopted pursuant to this title by the restaurant licensee. The restaurant licensee leasing the off-sale privilege is not responsible for violations committed by the lessor.
8. During the term of the lease,  a bar or liquor store lessor may continue to sell spirituous liquor as authorized by the bar or liquor store license and mixed cocktails for off-premises consumption pursuant to section 4-244,  paragraph 32,  subdivision (d).
9. The restaurant licensee leasing the off-sale privilege is subject to the limit on off-sale use by the restaurant licensee's total spirituous liquor sales as prescribed in section 4-206.01,  subsection G.
C. If a restaurant licensee does not renew a lease,  the director shall return the bar or liquor store lessor to the random selection process pursuant to subsection B,  paragraph 2 of this section.
D. If a bar or liquor store lessor has its license suspended or revoked,  the director shall transfer the lease to another bar or liquor store licensee at the end of the lease term pursuant to subsection B,  paragraph 2 of this section.