2023 Arizona Revised Statutes › Title 4 - Alcoholic Beverages › § 4-205.10 - Craft distiller license; issuance; regulatory provisions; fee

4-205.10.
Craft distiller license;  issuance;  regulatory provisions;  fee
A. The director may issue a craft distiller license to any person that meets the requirements of subsection C of this section. Each location that engages in producing and bottling these products must obtain a separate craft distiller license. The licensee may not transfer the craft distiller license from person to person or from location to location and may not also hold a producer's license. The licensee and all commonly controlled craft distiller licensees may not manufacture or produce more than twenty thousand gallons of distilled spirits in a calendar year. For the purposes of this section,  annual gallonage shall be the total proof gallons of finished distilled product available for wholesale or retail sale as defined by 26 United States Code section 5002 and rules adopted pursuant to this section or its successor.
B. Persons holding a craft distiller license shall report annually at the end of each calendar year,  at the time and in the manner as the director prescribes,  the amount of distilled spirits that is produced or manufactured by that licensee during the calendar year. In addition to any other provision of this title,  if the total amount of distilled spirits that is produced or manufactured during the year exceeds the amount that is permitted annually by the license,  the licensee shall apply for and,  on qualification,  receive a producer's license only on the surrender of the craft distiller license and shall have no continuing rights as a craft distiller licensee under this section.
C. A person may be licensed as a craft distiller to sell distilled spirits that are produced or manufactured by the person if in a calendar year the person produces or manufactures not more than twenty thousand gallons of distilled spirits and may make sales and deliveries of distilled spirits only as specified in this section and subject to the following criteria:
1. A licensed craft distiller may make sales and deliveries of distilled spirits to wholesalers that are licensed to sell distilled spirits under this title.
2. A licensed craft distiller may serve distilled spirits that are produced or manufactured on the premises for the purpose of consumption on the premises and may charge for samples on the premises of the craft distiller.
3. A licensed craft distiller may sell distilled spirits that are produced or manufactured on the premises in the original container for consumption off the premises to a consumer who is physically present on the premises.
4. The licensed craft distiller may hold one license prescribed in section 4-209,  subsection B,  paragraph 6 or 12 on or adjacent to the licensed craft distiller premises. The licensed craft distiller shall purchase all other spirituous liquor for sale at the on-sale retail premises from wholesalers that are licensed in this state,  except that a licensed craft distiller may:
(a) Purchase distilled spirits from other craft distillers that are licensed in this state. Sales of craft distillery products not produced or manufactured by the craft distiller shall be limited to no more than twenty percent of the total sales by volume.
(b) Make deliveries of the distilled spirits that the craft distiller manufactures or produces to any commonly controlled retail licensed premises or to the craft distiller's remote tasting rooms and that are authorized pursuant to this paragraph.
5. A licensed craft distiller that produces not more than three thousand five hundred sixty-six gallons of distilled spirits in a calendar year may make sales and deliveries of distilled spirits that the licensed craft distiller produces to on-sale and off-sale retailers.
6. Notwithstanding section 4-244,  paragraphs 3 and 7,  an on-sale or off-sale retailer may purchase and accept delivery of distilled spirits from a licensed craft distiller pursuant to paragraph 5 of this subsection.
7. A licensed craft distiller may make sales and deliveries of distilled spirits that the licensed craft distiller manufactures or produces to consumers off of the licensed premises if the sale or delivery is ordered by telephone,  mail,  fax,  catalogue,  the internet or by other means if all of the following conditions exist:
(a) The purchaser of the distilled spirits provided the licensed craft distiller with verification of the purchaser's legal age to purchase alcohol and a copy of same is maintained in the records of the craft distiller.
(b) The shipping container in which the distilled spirits are shipped is marked to require the signature on delivery of an adult who is of legal age to purchase alcohol and delivery confirmation.
(c) The distilled spirits are for personal use only and not for resale.
(d) The distilled spirits are shipped to a residential or business address other than a premises licensed pursuant to this title.
(e) The purchaser could have carried the distilled spirits lawfully into or within this state.
(f) A person who is at least twenty-one years of age makes the delivery.
(g) The craft distiller collects payment for the price of the spirituous liquor no later than at the time of delivery.
D. On application by a craft distiller licensee,  the director may authorize a craft distiller licensee to operate two other remote tasting and retail premises if:
1. The distilled spirits sold at the premises are limited to distilled spirits produced or manufactured by the licensed craft distillery and distilled spirits produced or manufactured by another licensed craft distillery. The craft distillery may sell to a consumer physically present on the premises distilled spirits produced by the craft distillery or by other licensed craft distilleries in the original container for consumption on or off the premises. The sales of the distilled spirits produced or manufactured by other craft distilleries shall not exceed twenty percent of the craft distillery's total sales by volume.
2. The craft distiller licensee:
(a) Remains responsible for the premises.
(b) Obtains approval for the premises from the local governing body before submitting an application to the department. A copy of an order from the local governing body recommending approval of the premises must be filed with the department as part of the application.
(c) Does not sublease the premises.
(d) Has an agent who is a natural person who meets the qualifications of licensure in this state.
(e) Meets the qualifications for a license pursuant to section 4-203,  subsection A.
(f) For a tasting room with a shared patio,  meets the requirements prescribed in section 4-205.12.
E. A craft distiller licensee may hold a farm winery license issued pursuant to section 4-205.04. The craft distiller licensee and farm winery licensee are subject to all other requirements of this section and section 4-205.04. The craft distiller may provide sampling and retail sales of distilled spirits pursuant to subsection C,  paragraphs 2 and 3 of this section on the same premises as the wine sampling and retail sales.
F. The craft distiller is liable for any violation that is committed in connection with any sale or delivery of the distilled spirits. The rules adopted by the director pursuant to section 4-203,  subsection J apply to the delivery of distilled spirits under subsection C of this section. An act or omission of any person who makes a sale or delivery of distilled spirits for a licensee under subsection C of this section is deemed to be an act or omission of the licensee for the purposes of section 4-210,  subsection A,  paragraph 9.
G. A craft distiller that sells or delivers distilled spirits pursuant to this section shall:
1. Pay to the department of revenue all luxury taxes that are imposed pursuant to title 42,  chapter 3 and all transaction privilege or use taxes that are imposed pursuant to title 42,  chapter 5.
2. File all returns or reports that are required by law.
H. A delivery of distilled spirits by a craft distiller to a purchaser in this state is a transaction deemed to have occurred in this state.
I. The production and storage space of the craft distiller are excluded from the public area of the licensed craft distiller premises. Pursuant to section 4-118,  the director,  the director's agents or any peace officer may inspect spaces excluded by this subsection. For the purposes of this subsection:
1. " Production and storage space"  means a bonded area,  tax-paid storage area and area that provides no services to the public.
2. " Public area"  means a place within a licensed and bonded craft distiller that is accessible to the public and in which the craft distiller sells and samples tax-paid product and authorizes the presence of members of the public.
J. The director may adopt rules in order to administer this section.
K. The director may charge a fee adopted pursuant to section 4-209 for the issuance of a license pursuant to this section.
L. The director may issue a craft distiller license to be located on the same parcel of land as a farm winery licensed pursuant to section 4-205.04.