File No. 35058
This rule was published in the August 1, 2011, issue (Vol. 2011, No. 15) of the Utah State Bulletin.
Alcoholic Beverage Control, Administration
Notice of Proposed Rule
DAR File No.: 35058
Filed: 07/14/2011 10:10:35 AM
Purpose of the rule or reason for the change:
This rule amendment is filed to implement provisions of S.B. 314 passed in the 2011 General Session, to implement several new provisions as a direct result of the recent audit of the Eden package agency by the Office of the Legislative Auditor General; to make nonsubstantive changes that change code references from Title 32A to Title 32B as a result of the Alcoholic Beverage Control Act recodification that became effective on 07/01/2011; and to remove references to the "state stamp" on bottles as state stamps are no longer in use.
Summary of the rule or change:
This rule amendment clarifies the definition of a type 3 as one that is in existence for the main purpose of selling alcohol, and adds to the definition of a type 4 package agency that it may sell in other than a sealed container (by the drink) for room service as allowed by S.B. 314 and may stock mini-bottles as an alternative to service by the drink. As a result of the audit of the Eden package agency by the Office of the Legislative Auditor General, this rule amendment clarifies and updates the commission's evaluation guidelines. This rule clarifies when type 5 package agencies may operate on Sundays and holidays in accordance with the provisions in S.B. 314. This rule amendment clarifies and revises the consignment inventory management procedures as a result of the recent audit of the Eden package agency by the Office of the Legislative Auditor General. This amendment also clarifies the procedure for handling credit cards to require that consignment package agencies mail all receipts to the DABC on a weekly basis for long-term storage. This rule amendment also includes nonsubstantive changes that change code references from Title 32A to Title 32B as a result of the Alcoholic Beverage Control Act recodification that became effective on 07/01/2011, and removes references to the "state stamp" on bottles as state stamps are no longer in use.
State statutory or constitutional authorization for this rule:
- Section 32B-2-202
Anticipated cost or savings to:
the state budget:
There may be some revenues generated into the state's coffers since package agencies buy their liquor from the DABC and additional sales on Sundays and legal holidays by type 5 agencies will result in income for the state. It is not possible at this point to determine what that amount may be. There may be some savings to the state as a result of the tightened consignment inventory procedures. Those savings cannot be estimated at this time.
Added sales days to type 5 package agencies may increase sales, and consequently, increase taxes paid to local governments. It is not possible to know what the tax increases may be.
Some package agencies located in wineries, distilleries, and breweries are small businesses. Their ability to sell on Sundays and legal holidays could potentially increase revenues. What those increases will be cannot be estimated at this time. Most consignment agencies are small businesses. Tightened rules for the control of consignment inventories may result in better inventory management that may save them money. At this time, it is not possible to estimate these savings.
persons other than small businesses, businesses, or local governmental entities:
None--Package agencies are operated by private persons under contracts with the state. This rule amendment will not fiscally affect other persons.
Compliance costs for affected persons:
There should be no additional compliance costs associated with this amendment. These rules clarify operational procedures already required by statute and apply to package agencies that are established and in operation. Nothing more will be required of type 5 agencies to remain open on Sundays and holidays or for consignment agencies to comply with the updated inventory rules. There may be costs involved for type 4 agencies to provide room service by the drink, however room service by the drink is an option for them. Costs will vary by package agency and cannot be estimated at this time.
Comments by the department head on the fiscal impact the rule may have on businesses:
The clarifications and revisions of policy in this rule amendment will benefit the state, local governments, and small businesses due to the tightened control measures and potential increased revenues. There also may be an increase in customer convenience and satisfaction by patrons of the package agencies, both residents and tourists alike.
Dennis Kellen, Director
The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:Alcoholic Beverage Control
1625 S 900 W
SALT LAKE CITY, UT 84104-1630
Direct questions regarding this rule to:
- Neil Cohen at the above address, by phone at 801-977-6800, by FAX at 801-977-6889, or by Internet E-mail at email@example.com
Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:
This rule may become effective on:
Dennis Kellen, Director
R81. Alcoholic Beverage Control, Administration.
R81-3. Package Agencies.
Package agencies are retail liquor outlets operated by private persons under contract with the department for the purpose of selling packaged liquor from facilities other than state liquor stores for off premise consumption. Package agencies are classified into five types:
Type 1 - A package agency under contract with the department which is operated in conjunction with a resort environment (e.g., hotel, ski lodge, summer recreation area).
Type 2 - A package agency under contract with the department which is in conjunction with another business where the primary source of income to the operator is not from the sale of liquor.
Type 3 - A package agency under contract
with the department which is not in conjunction with another
business, but is in existence for the [
sole] purpose of selling liquor.
Type 4 - A package agency under contract with the department which is located within a facility approved by the commission for the purpose of selling and delivering liquor to tenants or occupants of specific rooms which have been leased, rented, or licensed within the same facility. A type 4 package agency shall not be open to the general public.
Type 5 - A package agency under contract with the department which is located within a winery, distillery, or brewery that has been granted a manufacturing license by the commission.
The commission may grant type 4 package agency privileges to a type 1 package agency.
R81-3-2. Change of Location.
Any change of package agency location must be requested in writing and approved in advance by the commission.
No part of any surety bond required in Section [
32A-3-105], may be withdrawn during the time the package
agency contract is in effect. If the package agent fails to
maintain a valid surety bond, the package agency contract shall be
immediately suspended until a valid bond is obtained. Failure to
obtain a bond within 30 days of notification by the department of
the delinquency shall result in an automatic rescission of the
package agency contract.
R81-3-4. Change of Package Agent.
Pursuant to Section [
32A-3-106(17)], any change of the package agent designated in
the department's package agency agreement is a violation of
these rules and shall result in the immediate termination of the
package agency contract.
R81-3-5. Special Orders of Liquor by Public.
(1) Purpose. A special order product is
any product not listed on the [
department=s] product/price list. This rule outlines the
procedures for accepting, processing, ordering and disbursing
(2) Application of Rule.
(a) Only type 2 and 3 package agencies may process special order requests.
(b) Any individual may place a special order at any type 2 or 3 package agency. Special orders may be placed by groups of individuals, organizations, or retail licensees either at a type 2 or 3 package agency or with the purchasing division of the department. A special order shall be processed as follows:
(i) A special order form must be filled out and signed by the customer for each special order product purchased. The package agency shall forward the form to the department's purchasing division.
(ii) Special orders may be ordered only by the case, not by the bottle. There is no handling fee on special orders.
(iii) Customers should be advised to allow at least two months between processing and delivery of a special order.
(iv) Special orders for beer will be subject to availability and according to the distributor's shipping criteria.
(v) If a group, organization, or retail licensee places a special order, they may designate a particular package agency or state store to which they want the special order items to be sent. They shall include the name and telephone number of the individual who will pick up and pay for the special order product at that location.
(vi) A special order must include the product name and distributor or shipper.
(vii) The [
department=s] special order buyer shall obtain a retail
bottle price and call the customer and/or package agent for
clearance to proceed with the order.
(viii) When the special order arrives, the package agency or state store to which the special order has been sent shall immediately notify the customer, and the customer shall pick up the order as soon as possible after notification. The customer shall pay for and pick up the entire special order. The package agency or state store is not allowed to warehouse special ordered products. All merchandise must be cleared from the system before a reorder on that special order item is allowed.
(ix) Special orders may only be placed by customers. Package agencies may not place a special order unrelated to a particular customer as a means to sell unlisted products to the general public.
(x) Special orders of beer, wine or spirits with lower prices than quoted to the department on products handled by or similar to products handled by the department will be allowed only on two conditions:
(A) the department has the opportunity to purchase the same product at the same price; or
(B) the individual, group of individuals, organization, or retail licensee name is part of the design of the front label found on the product.
R81-3-6. Liquor Returns, Refunds and Exchanges.
(1) Purpose. This rule establishes guidelines for accepting liquor returns, refunds and exchanges.
(2) Application of Rule.
(a) Unsaleable Product. Unsaleable product includes product that is spoiled, leaking, contains foreign matter, or is otherwise defective. The department will accept for refund or exchange, liquor merchandise that is unsaleable subject to the following conditions and restrictions:
(i) Returns of unsaleable merchandise are subject to approval by the package agent to verify that the product is indeed defective.
(ii) The product must be returned within a reasonable time of the date of purchase. Discontinued products may not be returned. Vintages of wine that are not currently being retailed by the department may not be returned.
(iii) All returned product must have the state stamp
attached to each bottle. (iv)] No refunds shall be given for wines returned due to
spoilage such as corkiness, oxidation, and secondary fermentation,
or due to the customer's unfamiliarity with the characteristics
of the product. Such wines may only be exchanged for another bottle
of the same product. Wine will not be accepted for refund or
exchange if the return is a result of improper extraction of the
(v) Unsaleable product shall be held at the package agency and accounted for in the same manner as breakage.
(b) Saleable Product. Package agents are authorized to accept saleable returned merchandise from licensees, single event permit holders, convention groups, and individual customers, subject to the following conditions and restrictions:
(i) Returns of saleable merchandise are subject to approval by the package agent. The customer may receive a refund or exchange of product for the return. Large returns will be accepted from licensees, single event permittees, convention groups and other organizations only if prior arrangements have been made with the package agent.
(ii) Returns should be made within a
reasonable amount of time from the date of purchase, and all
returned merchandise must be in good condition[
with a state stamp attached to every bottle].
Returns of $50.00 or more shall not be accepted without a receipt.
Therefore, it is necessary for cashiers to print a receipt for all
purchases of $50.00 or more. Signs should be posted at each cash
register informing customers of this requirement. Merchandise shall
be refunded at the price paid by the customer, or the current
price, whichever is lower.
(iii) Wine and beer, due to their perishable nature and susceptibility to temperature changes, should be accepted back with caution. These products can only be returned if the package agent has personal knowledge of how they have been handled and stored.
(iv) If the total amount of the return is more than $500 the package agent shall fill out a "Returned Merchandise Acknowledgment Receipt" (LQ-45), and submit a copy to the office. A refund check will be processed at the office and mailed to the customer. Customers need to be informed that it generally takes three to six weeks to process payment.
(v) If the total value of the returned merchandise is more than $1,000, a 10% restocking fee shall be charged on the total amount.
(c) Unreturnable Products. The following items may not be returned:
(i) All limited item wines - wines that are available in very limited quantities.
(ii) Any products that have been chilled, over-heated, or label-damaged.
(iii) Outdated (not listed on the department's product/price list) and discontinued products.
(iv) Merchandise purchased by catering services.
(v) Unsaleable product shall be held at the package agency and accounted for in the same manner as breakage.
(d) A cash register return receipt shall be completed for each product return. The following information must be on the receipt: the customer's name, address, telephone number, driver's license number, and signature. The cashier must attach the receipt to the cash register closing report.
R81-3-7. Warning Sign.
All package agencies shall display in a prominent place a "warning sign" as defined in R81-1-2.
R81-3-8. Identification Guidelines to Purchase Liquor.
All package agencies shall accept only four forms of identification to establish proof of age for the purchase of liquor by customers:
(1) A current valid driver's license that includes date of birth and has a picture affixed and is issued in this state under Title 53, Chapter 3, Uniform Driver License Act or in accordance with the laws of another state;
(2) A current valid identification card that includes date of birth and has a picture affixed issued by this state under Title 53, Chapter 3, Part 8, Identification Card Act, or issued by another state that is substantially similar to this state's identification card;
(3) A current valid military identification card that includes date of birth and has a picture affixed; or
(4) A current valid passport.
If a person's age is still in question
after presenting proof of age, the package agency may require the
person to also sign a "statement of age" form as provided
32A-1-303]. The form shall be filed alphabetically by the
close of business day, and shall be maintained on file for a period
of three years.
R81-3-9. Promotion and Listing of Products.
(1) An operator or employee of a Type 1, 2, or 3 package agency, as defined in R81-3-1, may not promote a particular brand or type of liquor product while on duty at the package agency. An operator or employee may inform a customer as to the characteristics of a particular brand or type of liquor, provided the information is linked to a comparison with other brands or types.
(2) A package agency may not advertise alcoholic beverages on billboards except:
(a) a Type 1 package agency, as defined in R81-3-1, may provide informational signs on the premises of the hotel or resort directing persons to the location of the hotel's or resort's Type 1 package agency;
(b) a Type 2 package agency, as defined in R81-3-1, may provide informational signs on the premises of its business directing persons to the location of the Type 2 package agency within the business; and
(c) a Type 5 package agency, as defined in R81-3-1, may advertise the location of the winery, distillery, or brewery and the Type 5 package agency, and may advertise the alcoholic beverage products produced by the winery, distillery, or brewery and sold at the Type 5 package agency under the guidelines of R81-1-17 for advertising alcoholic beverages.
(3) A package agency may not display price lists in windows or showcases visible to passersby except:
(a) a Type 1 package agency, as defined in R81-3-1, may provide a price list in each guest room of the hotel or resort containing the code, number, brand, size and price of each item it carries for sale at the Type 1 package agency;
(b) a Type 4 package agency, as defined in R81-3-1, may provide a price list of the code number, brand, size, and price of each item it carries for sale to the tenants or occupants of the specific leased, rented, or licensed rooms within the facility; and
(c) a Type 5 package agency, as defined in R81-3-1, may provide a price list on the premises of the winery, distillery, or brewery, authorized tasting room, and at the entrance of the Type 5 package agency of the code, number, brand, size, and price of each liquor item it carries for sale at the Type 5 package agency.
R81-3-10. Non-Consignment Inventory.
Type 1, 4 and 5 package agencies shall be on a non-consignment inventory status where the agency owns the inventory.
An application for a package agency shall
be included in the agenda of the monthly commission meeting for
consideration for issuance of a package agency contract when the
requirements of Sections [
32A-3-102, -103, and -105] have been met, a
completed application has been received by the department, and when
the package agency premises have been inspected by the department.
No application fee is required for type 2 and 3 package agency
R81-3-12. Evaluation Guidelines of Package Agencies.
Type 2 and 3 package agencies shall:
(1)] serve a population of at least 6,000 people comprised of
both permanent residents and tourists;
(2)] not be established or maintained within a one mile
radius of another type 2 or 3 package agency unless it can be
clearly demonstrated that it is in the best interest of the state
to establish and maintain the outlet at that location[ ; and (3) maintain a gross profit to the state of $12,000
annually to assure adequate service to the public].
R81-3-13. Operational Restrictions.
(1) Hours of Operation.
(a) Type 1, 2, and 5 package agencies may operate from 10:00 a.m. until 12:00 midnight, Monday through Saturday. However, the actual operating hours may be less in the discretion of the package agent with the approval of the department. Type 2 agencies shall be open for business at least seven hours a day, five days a week, except where closure is otherwise required by law. Type 5 package agencies may, in the discretion of the package agent, be open as early as 8:00 a.m. for sales to licensees with the approval of the department.
(b) Type 3 package agencies may operate from 10:00 a.m. until 10:00 p.m., Monday through Saturday, but may remain closed on Mondays in the discretion of the package agent. However, the actual operating hours may be less in the discretion of the package agent with the approval of the department, provided the agency operates at least seven hours a day.
(c) Type 4 package agencies may operate
from 10:00 a.m. until 1:00 a.m., Monday through Friday, and 10:00
a.m. until 12:00 midnight on Saturday. However, the actual
operating hours may be less in the discretion of the package agent
with the approval of the department. A Type 4 package agency in a
resort that is licensed under [
32A-4a], may operate 24 hours a day, Monday through Sunday to
provide room service to guests of the resort.
(d) Any change in the hours of operation of any package agency requires prior department approval, and shall be submitted in writing by the package agent to the department.
(e)(i) A package agency shall not operate
on a Sunday or legal holiday except to the extent authorized by [
32A-3-106(9)] which allows the following to operate on a
Sunday or legal holiday:
(A) a package agency located in certain licensed wineries ; and
(B) a package agency held by a resort that
is licensed under [
32A-4a] that does not sell liquor in a manner similar to a
state store which is limited to a Type 4 package agency.
(ii) If a legal holiday falls on a Sunday, the following Monday will be observed as the holiday by a Type 2 and 3 package agency.
(2) Size of Outlet. The retail selling space devoted to liquor sales in a type 2 or 3 package agency must be at least one hundred square feet.
(3) Inventory Size. Type 2 and 3 package agencies must maintain at least fifty code numbers of inventory at a retail value of at least five thousand dollars and must maintain a representative inventory by brand, code, and size.
(4) Access to General Public. Type 1, 2, and 3 package agencies must be easily accessible to the general consuming public.
(5) Purchase of Inventory. All new package agencies, at the discretion of the department, will purchase and maintain their inventory of liquor.
R81-3-14. Type 5 Package Agencies.
(1) Purpose. A type 5 package agency is for the limited purpose of allowing a winery, distillery, or brewery to sell at its manufacturing location the packaged liquor product it actually produces to the general public for off-premise consumption. This rule establishes guidelines and procedures for type 5 package agencies.
(2) Application of Rule.
(a) The package agency must be located on the winery, distillery, or brewery premises at a location approved by the commission.
(b) The package agency may only sell products produced at the winery, distillery, or brewery, and may not carry the products of other alcoholic beverage manufacturers.
(c) The product produced by the winery, distillery, or brewery and sold in the type 5 package agency need not be shipped from the winery, distillery, or brewery to the department warehouse and then back to the package agency. The bottles for sale may be moved directly from the manufacturer's storage area to the package agency provided that proper record-keeping is maintained on forms provided by the department. Records required by the department shall be kept current and available to the department for auditing purposes. Records must be maintained for at least three years. The package agency shall submit to the department a completed monthly sales report form which specifies the variety and number of bottles sold from the package agency. This report must be submitted to the department within the first five working days of the month. A club or restaurant purchases form must be filled out for every licensee purchase.
(d) Direct deliveries to licensees are prohibited. Products must be purchased and picked up by the licensees or their designated agents at the Type 5 package agency.
(e) The type 5 package agency shall follow the same laws, rules, policies, and procedures applicable to other package agencies as to the retail price of products.
(f) The days and hours of sale of the type
5 package agency shall be in accordance with [
R81-3-15. Refusal of Service.
An employee of the package agency may refuse to sell liquor to any person whom the employee has reason to believe is purchasing or attempting to purchase liquor in violation of the Utah Alcoholic Beverage Control laws. The employee may also detain the person and hold the person's form of identification in a reasonable manner and for a reasonable length of time for the purpose of informing a peace officer of a suspected violation.
R81-3-16. Minors on Premises.
No person under the age of 21 years may enter a package agency unless accompanied by a parent, legal guardian, or spouse that is 21 years of age or older. Signs notifying the public of this rule shall be posted in a prominent place on the doors or windows of the package agency.
R81-3-17. Consignment Inventory Package Agencies.
(1) Purpose. At the discretion of the
department, liquor may be provided by the department to a Type 2
and Type 3 package agency for sale on consignment pursuant to [
32A-3-106(2)(b)]. This rule provides the procedures for such
(2) Application of the Rule.
(a) Consignment Inventory.
(i) The initial amount of consignment
inventory furnished to the package agency shall be established by
the department's [
assigned to the package agency].
(ii) The consignment inventory amount shall be posted to the department's accounting system as "Consignment Inventory Account."
(iii) The consignment inventory amount shall be stated in the department's contract with the package agency.
(iv) Any adjustment to the consignment
inventory amount shall be done through the use of a transfer, [
authorization], or payment of money. A copy of the transfer,
adjusting [ authorization], or evidence of payment shall be included in the
package agency's file.
(v) The consignment inventory amount may be adjusted from time to time based on the package agency's monthly average sales. Any adjustment shall be made by a properly executed amendment to the department's contract with the package agency.
After receipt of a shipment of merchandise, the package
agent shall submit a check to the department within 30 days of the
The check shall be annotated with the authorization,
transfer and credit memo numbers to which it applies as follows:
Authorization(s) + or - transfers - credit memos = check].
All delivery discrepancies shall be resolved immediately by
contacting the department's warehouse shipping manager. Payment
shall be made on all authorizations/transfers by their due date
whether or not any discrepancies have been resolved].
Any returned checks to the department from a package agent
is grounds to require the package agent to provide a certified
check to pay for future shipments].
If a check for an authorization is not received by the
department within 30 days of its due date, the department may
assess the legal rate of interest on the amount owed, or may
terminate the contract with the package agent and close the package
(i) Transfers (+ or -) shall be adjusted to the package agency's next payment due the department.
(ii) Transfer in will add to the amount owed to the department on the next check due to the department.
(iii) Transfer out will subtract from the amount owed to the department on the next check due to the department.
(i) Any package agency that is on a consignment contract shall keep a daily log of sales.
(ii) The [
regional manager] shall audit the package agency at least [ once every six months].
(iii) The package agency is subject to a department audit at any time.
R81-3-18. Type 4 Package Agency Room Service - Mini-Bottle/187 ml Wine Sales.
(1) Purpose. Pursuant to [
32A-1-116], the department may not purchase or stock
alcoholic beverages in containers smaller than 200 milliliters.
except as otherwise allowed by the commission. The commission
hereby allows the limited use of 50 milliliter
"mini-bottles" of distilled spirits and 187 milliliter
bottles of wine [ for]
room service sales by Type 4 package agencies
located in hotels and resorts. The following conditions are imposed
to ensure that these smaller bottle sales are limited to patrons of
sleeping rooms, and are not offered to the general public.
(2) Application of Rule.
(a) The department will not maintain a regular inventory of distilled spirits and wine in the smaller bottle sizes, but will accept special orders for these products from a Type 4 package agency. Special orders may be placed with the department's purchasing division, any state store, or any Type 2 or 3 package agency.
(b) The Type 4 package agency must order in full case lots, and all sales are final.
(c) If the hotel/resort has a Type 1 package agency with Type 4 privileges, the smaller bottle sized products must be stored in a secure area separate from the Type 1 agency inventory.
(d) Sale and use of alcohol in the smaller bottle sizes is restricted to providing room service to guests in sleeping rooms in the hotel/resort, and may not be used for other purposes, or be sold to the general public.
(e) Failure of the Type 4 package agency to strictly adhere to the provisions of this rule is grounds for the department to terminate its contract with the Type 4 package agency.
R81-3-19. Credit Cards.
(1) Purpose. This rule explains the procedures to be followed by consignment package agents in accepting credit cards for the purchase of alcoholic beverages.
(2) Application of Rule.
(a) Licensee purchases may not be paid by credit card. The department will accept only checks and cash from licensees.
(b) Refunds, or exchanges of products of unequal value, will be handled by crediting the customer's credit card account. The cash register must be balanced by doing a return at the register.
(c) The cashier shall examine the security features of the card such as signatures, account numbers, expiration date, hologram, etc., before accepting any card.
(d) No sale may be made without the credit card. Merely having the credit card number available is not acceptable.
(e) All credit cards must be signed by the card holder.
(f) Customers may not use another person's credit card, including their spouse's card.
(g) Credit card receipts contain
confidential information that needs to be safeguarded. Cashiers
should not throw them in the trash. Consignment package agents and
their employees should consult their [
regional] manager concerning proper storage and disposal of such
(h) If for any reason the credit card
cannot be scanned, the credit card number should be hand keyed into
the credit card machine keyboard. [
An imprinted copy of the credit card must then be made. The
imprinted copy must be signed by the card holder.]
KEY: alcoholic beverages
Date of Enactment or Last Substantive Amendment: [
February 24, ]2011
Notice of Continuation: May 10, 2011
Authorizing, and Implemented or Interpreted Law: [
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For questions regarding the content or application of this rule, please contact Neil Cohen at the above address, by phone at 801-977-6800, by FAX at 801-977-6889, or by Internet E-mail at firstname.lastname@example.org.