2023 Arizona Revised Statutes › Title 4 - Alcoholic Beverages › § 4-203.07 - Off-sale privileges; leases; mixed cocktails; permits; fees

4-203.07.
Off-sale privileges;  leases;  mixed cocktails;  permits;  fees
A. Notwithstanding section 4-203,  subsection E and section 4-210,  subsection A,  paragraph 6,  a bar,  beer and wine bar and liquor store licensee may lease the off-sale privileges associated with the licensee's license,  except the privilege to sell mixed cocktails for off-premises consumption pursuant to section 4-244,  paragraph 32,  subdivision (d),  to a restaurant licensee. The lease shall be for a period of one year and may be renewable for successive terms of one year. The off-sale privileges of a bar,  beer and wine bar or liquor store license that are held in nonuse status may also be leased pursuant to this section.
B. Leases made pursuant to this section are subject to the following conditions:
1. The department shall establish a minimum of four lease windows throughout the calendar year during which a lease may be agreed to between a bar,  beer and wine bar or liquor store licensee and a restaurant licensee for the lease of off-sale privileges.
2. A restaurant licensee may apply to the department for approval of a lease at least thirty days before the end of the lease window. The restaurant licensee shall provide a completed lease agreement signed by both the lessor and lessee. The department may establish and charge an application fee for administrative and enforcement costs associated with this section.
3. On the director approving the lease,  the director shall transfer the lessor's off-sale privileges,  except the privilege to sell mixed cocktails for off-premises consumption pursuant to section 4-244,  paragraph 32,  subdivision (d),  to the restaurant lessee for the term of the lease.
4. 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 shall be one year except for the first year of the lease. During the first year of the lease,  the director may establish 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.
(c) The responsibilities of the lessor and lessee.
(d) The lease may be transferred to another restaurant licensee if the new restaurant licensee purchases the business of the original lessee during the term of the lease.
(e) The privileges conveyed to the lessee during the term of the lease will continue if the bar,  beer and wine bar or liquor store lessor has its license suspended or revoked.
(f) If the bar,  beer and wine bar or liquor store lessor sells its license during the term of the lease,  the purchaser of the bar,  beer and wine bar or liquor store license becomes the new lessor.
(g) This title and rules adopted pursuant to this title apply to both the lessor and lessee.
(h) 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 privilege. The restaurant licensee leasing the off-sale privilege is not responsible for violations committed by the lessor.
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,  beer and wine bar or liquor store lessor may not sell spirituous liquor for off-premises consumption,  except a bar or liquor store licensee may sell 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.
10. A lessor may lease its off-sale privileges only to a restaurant licensee located in the same county.
C. The director shall publish a lease amount for leases made pursuant to this section. The department shall establish a lease amount that fairly recognizes,  and is derived from,  the commercial value of selling spirituous liquor for consumption off the licensed premises. The department may establish separate lease amounts for urban and rural counties and may designate counties in this state for each amount. The lease amount applies unless the lessor and lessee agree to a different lease amount.
D. Beginning January 1,  2026,  the director shall make available for restaurant licensees to purchase from the department permits to sell mixed cocktails pursuant to section 4-244,  paragraph 32,  subdivision (d) equal in number to the number of total bar and liquor store licenses. The director may set the application and annual renewal fee for a mixed cocktail permit to be used for administrative and enforcement costs associated with the permit.