liquor licenses; issuance; prohibition

HB4090 - 572R - I Ver

REFERENCE TITLE:
liquor licenses; issuance; prohibition

State of Arizona

House of Representatives

Fifty-seventh Legislature

Second Regular Session

2026

HB 4090

Introduced by

Representatives
Peshlakai: Cavero, Contreras L, Villegas

AN
ACT

amending section 4-203, arizona
revised statutes; relating to liquor licenses.

(TEXT OF BILL BEGINS ON NEXT PAGE)

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 4-203, Arizona Revised
Statutes, is amended to read:

START_STATUTE
4-203.

Licenses; issuance; transfer; reversion to state; tastings;
rules; off-sale privileges; order requirements

A. A spirituous liquor license shall be issued only
after satisfactory showing of the capability, qualifications and reliability of
the applicant and, with the exception of wholesaler, producer, government or
club licenses, that the public convenience requires and that the best interest
of the community will be substantially served by the issuance.� If an
application is filed for the issuance of a transferable or nontransferable
license, other than for a craft distiller license, a microbrewery license or a
farm winery license, for a location that on the date the application is filed
has a valid license of the same series, or in the case of a restaurant license
application filed for a location with a valid hotel-motel license, issued
at that location, there shall be a rebuttable presumption that the public
convenience and best interest of the community at that location was established
at the time the location was previously licensed.� The presumption may be rebutted
by competent contrary evidence. The presumption shall not apply once
the licensed location has not been in use for more than one hundred eighty days
and the presumption shall not extend to the personal qualifications of the
applicant.

B. The license shall be to manufacture, sell or deal
in spirituous liquors only at the place and in the manner provided in the
license. A separate license shall be issued for each specific
business, and each shall specify:

1. The particular spirituous liquors that the
licensee is authorized to manufacture, sell or deal in.

2. The place of business for which issued.

3. The purpose for which the liquors may be
manufactured or sold.

C. A spirituous liquor license issued to a bar, a
liquor store or a beer and wine bar shall be transferable as to any permitted
location within the same county, if the transfer meets the requirements of an
original application.� A spirituous liquor license may be transferred to a
person qualified to be a licensee, if the transfer is pursuant to either
judicial decree, nonjudicial foreclosure of a legal or equitable lien,
including security interests held by financial institutions pursuant to section
4-205.05, a sale of the license, a bona fide sale of the entire business
and stock in trade, or other bona fide transactions that are provided for by
rule.� Any change in ownership of the business of a licensee, directly or
indirectly, as defined by rule is deemed a transfer, except that there is no
transfer if a new artificial person is added to the ownership of a licensee's
business but the controlling persons remain identical to the controlling
persons that have been previously disclosed to the director as part of the
licensee's existing ownership.

D. All applications for a new license pursuant to
section 4-201 or for a transfer to a new location pursuant to subsection
C of this section shall be filed with and determined by the director, except
when the governing body of the city or town or the board of supervisors
receiving an application pursuant to section 4-201 orders disapproval of
the application or when the director, the state liquor board or any aggrieved
party requests a hearing. The application shall then be presented to
the state liquor board, and the new license or transfer shall not become
effective unless approved by the state liquor board.

E. A person who assigns, surrenders, transfers or
sells control of a liquor license or business that has a spirituous liquor
license shall notify the director within thirty business days after the
assignment, surrender, transfer or sale. A spirituous liquor license
shall not be leased or subleased. A concession agreement entered
into under section 4-205.03 is not considered a lease or sublease in
violation of this section.

F. If a person other than those persons originally
licensed acquires control over a license or licensee, the person shall file
notice of the acquisition with the director within thirty business days after
the acquisition of control and a list of officers, directors or other
controlling persons on a form prescribed by the director. There is
no acquisition of control if a new person is added to the ownership of a
licensee's business but the controlling persons remain identical to the
controlling persons that have been previously disclosed to the director as part
of the licensee's existing ownership. All officers, directors or
other controlling persons shall meet the qualifications for licensure as
prescribed by this title. On request, the director shall conduct a
preinvestigation before the assignment, sale or transfer of control of a
license or licensee, the reasonable costs of which, not more than $1,000, shall
be borne by the applicant. The preinvestigation shall determine
whether the qualifications for licensure as prescribed by this title are met.�
On receipt of notice of an acquisition of control or request of a
preinvestigation, the director, within fifteen days after receipt, shall
forward the notice of the acquisition of control to the local governing body of
the city or town, if the licensed premises is in an incorporated area, or the
county, if the licensed premises is in an unincorporated area.� The director
shall include in the notice to the local governing body written instructions on
how the local governing body may examine, free of charge, the results of the
department's investigation regarding the capabilities, qualifications and
reliability of all officers, directors or other controlling persons listed in
the application for acquisition of control. The local governing
body, or the governing body's designee, may provide the director with a
recommendation, either in favor of or against the acquisition of control,
within sixty days after the director mails the notice, but section 4-201
does not apply to the acquisition of control provided for in this section.� A
local governing body may charge not more than one fee, regardless of the number
of licenses held by the applicant, for review of one or more applications for
acquisition of control submitted to the department at the same time and for the
same entity.� Within one hundred five days after filing the notice of the
acquisition of control, the director shall determine whether the applicant is
qualified, capable and reliable for licensure. A recommendation by
the local governing body, or the governing body's designee, against the
acquisition of control or denial by the director shall be set for a hearing
before the board. The person who has acquired control of a license
or licensee has the burden of an original application at the hearing, and the
board shall make its determination pursuant to section 4-202 and this
section with respect to capability, reliability and qualification.

G. A licensee who holds a license in nonuse status
for more than five months shall be required to pay a $100 surcharge for each
month thereafter. The surcharge shall be paid at the time the
license is returned to active status.� A license automatically reverts to the
state after being held in continuous nonuse for more than thirty-six
months.� The director may waive the surcharge and may extend the time period
provided in this subsection for good cause if the licensee files a written
request for an extension of time to place the license in active status before
the date of the automatic reversion. Unless the reverted license of
the licensee has been subsequently reissued, the director shall relieve a
licensee or its legal representative from a prior license reversion under this
section if the request for such relief is filed in writing not later than two
years after the date of reversion.� A license shall not be deemed to have gone
into active status if the license is transferred to a location that at the time
of or immediately before the transfer had an active license of the same type,
unless the licenses are under common ownership or control.

H. A restructuring of a licensee's business is not
an acquisition of control, a transfer of a spirituous liquor license or the
issuance of a new spirituous liquor license if both of the following apply:

1. All of the controlling persons of the licensee
and the new business entity are identical.

2. There is no change in control or beneficial
ownership.

I. If subsection H of this section applies, the
licensee's history of violations of this title is the history of the new
business entity.� The director may prescribe a form and shall require the
applicant to provide the necessary information to ensure compliance with this
subsection and subsections F and G of this section.

J. Notwithstanding subsection B of this section, the
holder of a retail license in this state having off-sale privileges,
except a bar, beer and wine bar or restaurant licensee, may take orders by
telephone, mail, fax or catalog, through the internet or by other means for the
sale and delivery of spirituous liquor off of the licensed premises to a person
in this state in connection with the sale of spirituous liquor.�
Notwithstanding the definition of "sell" prescribed in section 4-101,
the placement of an order and payment pursuant to this section is not a sale
until delivery has been made.� At the time that the order is placed, the
licensee shall inform the purchaser that state law requires a purchaser of
spirituous liquor to be at least twenty-one years of age and that the
person accepting delivery of the spirituous liquor is required to comply with
this state's age identification requirements as prescribed in section 4-241,
subsections A and K. The licensee may maintain a delivery service
and may contract with one or more independent contractors, that may also
contract with one or more independent contractors, or may contract with a
common carrier for delivery of spirituous liquor if the spirituous liquor is
loaded for delivery at the premises of the retail licensee in this state and
delivered in this state.� Except if the person delivering the order has
personally retrieved and bagged or otherwise packaged the container of
spirituous liquor for delivery and the licensee records, or requires to be recorded
electronically, the identification information for each delivery, all
containers of spirituous liquor delivered pursuant to this subsection shall be
conspicuously labeled with the words "contains alcohol, signature of
person who is twenty-one years of age or older is required for
delivery". The licensee is responsible for any violation of
this title or any rule adopted pursuant to this title that is committed in
connection with any sale or delivery of spirituous liquor. Delivery
must be made by an employee of the licensee or other authorized person as
provided by this section who is at least twenty-one years of age to a
customer who is at least twenty-one years of age and who displays an
identification at the time of delivery that complies with section 4-241,
subsection K. The retail licensee shall collect payment for the full
price of the spirituous liquor from the purchaser before the product leaves the
licensed premises. The director shall adopt rules that set
operational limits for the delivery of spirituous liquors by the holder of a
retail license having off-sale privileges. With respect to the
delivery of spirituous liquor, for any violation of this title or any rule
adopted pursuant to this title that is based on the act or omission of a
licensee's employee or other authorized person, the mitigation provision of
section 4-210, subsection G applies, with the exception of the training
requirement. For the purposes of this subsection and notwithstanding
the definition of "sell" prescribed in section 4-101, section 4-241,
subsections A and K apply only at the time of delivery. For the
purposes of compliance with this subsection, an independent contractor, a
subcontractor of an independent contractor, the employee of an independent
contractor or the employee of a subcontractor is deemed to be acting on behalf
of the licensee when making a delivery of spirituous liquor for the licensee.

K. Except as provided in subsection J of this
section, Arizona licensees may transport spirituous liquors for themselves in
vehicles owned, leased or rented by the licensee.

L. Notwithstanding subsection B of this section, an
off-sale retail licensee may provide consumer tasting of wines off of the
licensed premises subject to all applicable provisions of section 4-206.01.

M. The director may adopt reasonable rules to
protect the public interest and prevent abuse by licensees of the activities
permitted such licensees by subsections J and L of this section.

N. Failure to pay any surcharge prescribed by
subsection G of this section or failure to report the period of nonuse of a
license shall be grounds for revocation of the license or grounds for any other
sanction provided by this title. The director may consider
extenuating circumstances if control of the license is acquired by another
party in determining whether or not to impose any sanctions under this
subsection.

O. If a licensed location has not been in use for
three years, the location must requalify for a license pursuant to subsection A
of this section and shall meet the same qualifications required for issuance of
a new license except when the director deems that the nonuse of the location
was due to circumstances beyond the licensee's control and an extension of time
has been granted pursuant to subsection G of this section.

P. If the licensee's interest is forfeited pursuant
to section 4-210, subsection L, the location shall requalify for a
license pursuant to subsection A of this section and shall meet the same
qualifications required for issuance of a new license except when a bona fide
lienholder demonstrates mitigation pursuant to section 4-210, subsection
K.

Q. The director may implement a procedure for the
issuance of a license with a licensing period of two years.

R. For any sale of a farm winery or craft distiller
or change in ownership of a farm winery or craft distiller directly or
indirectly, the business, stock-in-trade and spirituous liquor may be
transferred with the ownership, in compliance with the applicable requirements
of this title.

S. Notwithstanding subsection B of this section,
bar, beer and wine bar, liquor store, beer and wine store or restaurant
licensees in this state may take orders by telephone, mail, fax or catalog,
through the internet or by other means for the sale and delivery of spirituous
liquor off the licensed premises as follows:

1. Bar licensees for beer, wine, distilled spirits
and mixed cocktails.

2. Beer and wine bar licensees for beer and wine.

3. Liquor store licensees for beer, wine, distilled
spirits and mixed cocktails.

4. Beer and wine store licensees for beer and wine.

5. Restaurant licensees for any of the following:

(a) Mixed cocktails, with the sale of menu food
items for consumption on or off the licensed premises, if the restaurant holds
a permit issued pursuant to section 4-203.07 and section 4-205.02,
subsection K or a lease pursuant to section 4-203.06.

(b) Beer if the restaurant holds a permit issued
pursuant to section 4-205.02, subsection H.

(c) Beer, wine and distilled spirits if the
restaurant holds an off-sale privileges lease with a bar or liquor store
pursuant to section 4-203.07.

(d) Beer and wine if the restaurant holds an
off-sale privileges lease with a beer and wine bar pursuant to section 4-203.07.

T. Notwithstanding the definition of
"sell" prescribed in section 4-101, placing an order and paying
for that order pursuant to subsection S of this section is not a sale until
delivery has been made.� At the time that the order is placed, the licensee
shall inform the purchaser that state law requires a purchaser of spirituous
liquor to be at least twenty-one years of age and that the person
accepting delivery of the spirituous liquor is required to comply with this
state's age identification requirements as prescribed in section 4-241,
subsections A and K.� The licensee may maintain a delivery service and may
contract with one or more alcohol delivery contractors registered pursuant to
section 4-205.13 for delivery of spirituous liquor if the spirituous
liquor is packaged and tamperproof sealed by the bar, beer and wine bar, liquor
store, beer and wine store or restaurant licensee or the licensee's employee
and is loaded for delivery at the premises of the restaurant, beer and wine
bar, liquor store, beer and wine store or bar licensee in this state and
delivered in this state on the same business day. A liquor store or
beer and wine store licensee may contract with one or more independent
contractors as provided in subsection J of this section for delivery of
spirituous liquor if the spirituous liquor is loaded for delivery at the
premises of the liquor store or beer and wine store licensee in this state and
delivered in this state on the same business day.� All containers of spirituous
liquor delivered pursuant to subsection S of this section shall be tamperproof
sealed and conspicuously labeled with the words "contains alcohol,
signature of person who is twenty-one years of age or older is required
for delivery". The licensee is responsible for any violation of
this title or any rule adopted pursuant to this title that is committed in
connection with any sale or delivery of spirituous liquor. Delivery
must be made by an employee of the licensee or an employee or authorized
independent contractor of a registered alcohol delivery contractor as provided
by this section who is at least twenty-one years of age and delivery must be
made to a customer who is at least twenty-one years of age and who displays an
identification at the time of delivery that complies with section 4-241,
subsection K. The restaurant, beer and wine bar, liquor store, beer
and wine store or bar licensee shall collect payment for the full price of the
spirituous liquor from the purchaser before the product leaves the licensed
premises.� The director shall adopt rules that set operational limits for the
delivery of spirituous liquor pursuant to this subsection and subsection S of
this section with respect to the delivery of spirituous liquor.� For any
violation of this title or any rule adopted pursuant to this title that is
based on the act or omission of a licensee's employee or a registered alcohol
delivery contractor, the mitigation provision of section 4-210,
subsection G applies, with the exception of the training
requirement. For the purposes of this subsection and notwithstanding
the definition of "sell" prescribed in section 4-101, section 4-241,
subsections A and K apply only at the time of delivery. An alcohol delivery
contractor, a subcontractor of an alcohol delivery contractor, an employee of
an alcohol delivery contractor or an employee of a subcontractor is deemed to
be acting on behalf of the licensee when making a delivery of spirituous liquor
for the licensee. For the purposes of this subsection,
"business day" means between the hours of 6:00 a.m. of one day
and 2:00 a.m. of the next day.

U. A licensee that has off-sale privileges and
that delivers spirituous liquor as prescribed in this section shall complete a
written record of each delivery at the time of delivery.� The written record
shall include all of the following:

1. The name of the licensee making the delivery.

2. The complete address of the licensee making the
delivery.

3. The licensee's license number.

4. The date and time of the delivery.

5. The address where the delivery was made.

6. The type and brand of all spirituous liquor
delivered.

V. A licensee that has off-sale privileges and
that delivers spirituous liquor as prescribed in this section shall obtain the
following information from the individual who accepts delivery:

1. The individual's name.

2. The individual's date of birth.

3. The individual's signature.� The licensee making
the delivery may use an electronic signature system to comply with the
requirements of this paragraph.

w. Notwithstanding any other law, as
of the effective date of this amendment to this section, the department may not
issue an available license pursuant to section 4-206.01, subsection B or C to a
location that is in an area of land that is surrounded on all sides by an
indian reservation in this state. For the purposes of this
subsection, "surrounded on all sides" means an area of land that is
surrounded on all sides by an indian reservation except for an area of land that
is identified by the state land department as state land ingress and egress
points.
END_STATUTE