Kentucky Administrative Regulations › Title 804 - PUBLIC PROTECTION CABINET - DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL › Chapter 4 - Licensing › Section 804 KAR 4:280 - Affiliated businesses

Current through Register Vol. 51, No. 1, July 1, 2024
RELATES TO:
				KRS
				244.240,
				244.570
NECESSITY, FUNCTION, AND CONFORMITY:
				KRS
				244.240 prohibits a distiller, rectifier,
				vintner or wholesaler or an employee thereof from being interested "directly or
				indirectly" in any way in any premises where distilled spirits or wine are sold
				at retail or any business devoted wholly or partially to the sale of distilled
				spirits or wine at retail.
				KRS
				244.570 prohibits a brewer or distributor
				"either directly or indirectly" from having an ownership or leasehold interest
				in any property for which a retail license is issued. The trend in the
				alcoholic beverage industry today, as well as in American business generally,
				is toward diversification. It is a common practice for manufacturers,
				wholesalers and distributors, to be owned by holding companies which may also
				own many other businesses unrelated to the manufacture or distribution of
				alcoholic beverages. Because of the rise of this diversification, it has become
				more difficult to determine whether an "indirect" interest in a retail premises
				exists. This administrative regulation will eliminate any confusion relating to
				the application of
				KRS
				244.240 and/or
				KRS
				244.570 to businesses affiliated with
				distillers, rectifiers, wineries, wholesalers, brewers, and
				distributors.
Section 1. For the
			 purpose of this administrative regulation an affiliated business of a
			 distiller, rectifier, winery, wholesaler, brewer, or distributor is a corporate
			 entity owned in whole or in part, directly or indirectly, by a corporation
			 which itself also owns in whole or in part a corporation engaged in the
			 business of distiller, rectifier, winery, wholesaler, brewer, or
			 distributor.
Section 2. For the
			 purposes of
			 KRS
			 244.240 and
			 KRS
			 244.570 the term "indirectly" shall not
			 preclude an affiliated business of a distiller, rectifier, winery, wholesaler,
			 brewer, or distributor from having an ownership or leasehold interest in a
			 property for which a retail alcoholic beverage license is issued, provided all
			 the following conditions are met:
(1) The
			 affiliated business is not a wholly owned subsidiary of a distiller, rectifier,
			 winery, wholesaler, brewer, or distributor.
(2) The affiliated business does not wholly
			 own a business entity engaged in the business of distiller, rectifier, winery,
			 wholesaler, brewer, or distributor.
(3) The affiliated business is not engaged in
			 any manner in the business of distiller, rectifier, winery, wholesaler, brewer,
			 or distributor.
(4) The affiliated
			 business does not itself hold any retail licenses.
(5) The affiliated business and the
			 distiller, rectifier, winery, wholesaler, brewer, or distributor shall have
			 separate management and in no case shall the affiliated business and the
			 distiller, rectifier, winery, wholesaler, brewer, or distributor have more than
			 twenty-five (25) percent of their officers or directors in common.