AN ACT relating to regulated substances and declaring an emergency.

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AN ACT relating to regulated substances and declaring an emergency. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
SECTION 1. A NEW SECTION OF KRS CHAPTER 138 IS CREATED TO 3
READ AS FOLLOWS: 4
(1) As used in this section: 5
(a) "Alcoholic beverage" has the same meaning as in Section 6 of this Act; 6
(b) "Alcoholic beverage retailer" or "retailer" me ans a person who sells any 7
alcoholic beverage to a consumer in Kentucky for any purpose, including: 8
1. At a Kentucky retail location; 9
2. At premises as defined in Section 6 of this Act in Kentucky; 10
3. To a consumer at a Kentucky address by a direct shipper; 11
4. By any other direct-to-consumer seller; or 12
5. To a consumer through any other approved location or method 13
authorized by law; 14
(c) "Cannabis-infused beverage" has the same meaning as in Section 6 of this 15
Act; 16
(d) "Direct shipper" means a direct shipper licensed under KRS 243.027; 17
(e) "Gross receipts": 18
1. Means the total amount or consideration, including cash, credit, 19
property, and servi ces, for which alcoholic beverages or cannabis -20
infused beverages are sold, valued in money, whether received in 21
money or otherwise, without any deduction for any of the following: 22
a. The alcoholic beverage retailer's cost of the alcoholic beverages 23
or cannabis-infused beverages; 24
b. Charges by the retailer for any services necessary to complete the 25
sale; and 26
c. Delivery charges by the retailer for the preparation and delivery 27
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to a location designated by the purchaser, including 1
transportation, shipping, post age, handling, crating, and 2
packing; and 3
2. Does not include: 4
a. Discounts, including cash, term, or coupons that are not 5
reimbursed by a third party and that are allowed by an alcoholic 6
beverage retailer and taken by a purchaser on a sale; 7
b. Interest, fi nancing, and carrying charges from credit extended 8
on the sale of alcoholic beverages or cannabis -infused 9
beverages, if the amount is separately stated on the invoice, bill 10
of sale, or similar document given to the purchaser; 11
c. Any state retail regulatory license fees or taxes legally imposed 12
directly on the purchaser that are separately stated on the 13
invoice, bill of sale, or similar document given to the purchaser, 14
including sales tax imposed by KRS 139.200; 15
d. Local alcohol regulatory license fees autho rized in Section 13 of 16
this Act that are separately stated on the invoice, bill of sale, or 17
similar document given to the purchaser; or 18
e. Sales made by a direct shipper to a consumer located outside of 19
Kentucky; 20
(f) "Person" means an individual, partnersh ip, joint venture, committee, 21
association, corporation, governmental unit, nonprofit organization, or any 22
other organization or group of persons; 23
(g) "State retail regulatory license fee" includes interest accrued at the rate 24
provided by KRS 131.183, all a pplicable penalties imposed pursuant to this 25
chapter, and all applicable penalties and fees imposed pursuant to KRS 26
131.180, 131.410 to 131.445, and 131.990; and 27
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(h) "Third party" means a person other than the purchaser. 1
(2) On or after July 1, 2027, a sta te retail regulatory license fee is imposed on all 2
alcoholic beverage retailers at the rate of four percent (4%) of the gross receipts 3
derived from the sale of alcoholic beverages or cannabis -infused beverages to 4
consumers in this state. 5
(3) The state retail regulatory license fee shall be: 6
(a) Administered by the department; and 7
(b) Transferred to the general fund. 8
(4) The state retail regulatory license fee: 9
(a) May be added to the selling price charged by the alcoholic beverage retailer 10
on the alcoholic beverages or cannabis -infused beverages, when stated 11
separately; and 12
(b) Shall be paid by the alcoholic beverage retailer as prescribed in 13
administrative regulati ons promulgated by the department in accordance 14
with KRS Chapter 13A. 15
(5) The alcoholic beverage retailer is liable for the state retail regulatory license fee. 16
(6) (a) Every alcoholic beverage retailer shall, by the twentieth day of each month, 17
transmit t o the department reports, on the forms the department may 18
prescribe, on the total retail sales for the month and state retail regulatory 19
license fees due. 20
(b) For purposes of facilitating the administration, payment, or collection of the 21
state retail regul atory license fees levied by this chapter, the department 22
may, within its discretion, permit or require returns or fee payments for 23
periods other than those prescribed in paragraph (a) of this subsection. 24
(7) Payment of the state retail regulatory license fee shall be due with the report. 25
(8) (a) For reimbursement of the cost of collecting and remitting the fee, the 26
alcoholic beverage retailer shall deduct on each return one -quarter of one 27
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percent (0.25%) of the fee due, provided the amount due is not delin quent at 1
the time of payment. 2
(b) The total reimbursement allowed for each alcohol beverage retailer shall 3
not exceed fifty dollars ($50) per return. 4
(c) For purposes of this subsection only, "alcoholic beverage retailer" shall not 5
include a distiller. 6
(9) The alcoholic beverage retailer shall keep and preserve an accurate record of all 7
receipts of alcoholic beverages and cannabis -infused beverages sold, and state 8
retail regulatory license fees due, together with invoices or other pertinent records 9
and papers required by the department for four (4) years. 10
(10) An alcoholic beverage retailer or other person shall not: 11
(a) Fail or refuse to make the returns and pay the state retail regulatory license 12
fee prescribed by this section; 13
(b) Refuse to permit the dep artment or any representative appointed by the 14
commissioner in writing to examine his or her records, papers, files, and 15
equipment pertaining to the taxable business; 16
(c) Make an incomplete, false, or fraudulent return, or attempt to do anything 17
to avoid: 18
1. A full disclosure of the amount of business done; or 19
2. The payment of the whole or any part of the state retail regulatory 20
license fee or penalties due; or 21
(d) Fail to keep and preserve records of the alcoholic beverages or cannabis -22
infused beverages sold by the alcoholic beverage retailer to substantiate the 23
reports required by this section. 24
(11) Any person who violates any provision of this section shall be subject to the 25
uniform civil penalties imposed pursuant to KRS 131.180 and interest at the tax 26
interest rate as defined in KRS 131.183. 27
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(12) The department may prescribe forms and promulgate administrative regulations 1
in accordance with KRS Chapter 13A to execute and administer this section. The 2
state retail regulatory license fee may be paid via el ectronic funds transfer. The 3
alcoholic beverage retailer shall provide the department with all protocol 4
documentation and electronic funds transfer data necessary to facilitate the 5
timely transfer of funds. 6
SECTION 2. A NEW SECTION OF KRS CHAPTER 138 IS CREATED TO 7
READ AS FOLLOWS: 8
(1) On and after July 1, 2027, a state wholesale regulatory license fee is imposed at a 9
rate of four-tenths of a cent ($0.004) for each milliliter of alcohol contained in an 10
alcoholic beverage f or human consumption sold, used, or distributed by sale or 11
gift in the Commonwealth of Kentucky on every: 12
(a) Wholesaler; 13
(b) Distributor; 14
(c) Distiller that directly transfers products to its retail premises; 15
(d) Small farm winery that directly transfers products to its retail premises; 16
(e) Manufacturer permitted to self-distribute to retailers; and 17
(f) Direct shipper. 18
(2) On and after July 1, 2027, a state wholesale regulatory license fee is imposed at a 19
rate of one and six -tenths of a cent ($0.016) for each milliliter or milligram of 20
tetrahydrocannabinol contained in a cannabis -infused beverage for human 21
consumption sold, used, or distributed by sale or gift in the Commonwealth of 22
Kentucky on every: 23
(a) Wholesaler; 24
(b) Distributor; 25
(c) Manufacturer permitted by the Department for Public Health; and 26
(d) Direct shipper. 27
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(3) (a) On and after July 1, 2027, a state wholesale reg ulatory license fee is 1
imposed on a microbrewery for its barrels directly transferred to a retailer 2
or consumer independent of a distributor at the following rates for each 3
milliliter of alcohol contained in an alcoholic beverage for human 4
consumption sold, used, or distributed by sale or gift in the Commonwealth 5
of Kentucky: 6
1. For the first fifteen thousand (15,000) taxable, directly transferred 7
barrels in a calendar year, at a rate of fourteen one -hundredths of a 8
cent ($0.0014) for each milliliter of alc ohol contained in an alcoholic 9
beverage sold; and 10
2. For any directly transferred barrels exceeding the first fifteen 11
thousand (15,000) taxable, directly transferred barrels in a calendar 12
year, at a rate of four -tenths of a cent ($0.004) for each millilite r of 13
alcohol contained in an alcoholic beverage sold for human 14
consumption in the Commonwealth of Kentucky. 15
(b) A microbrewery that directly transfers products to a retailer or consumer 16
independent of a distributor prior to July 1, 2027, and: 17
1. Directly transfers more than one thousand (1,000) barrels in calendar 18
year 2026 is subject to the state wholesale regulatory license fee in 19
paragraph (a) of this subsection; or 20
2. a. Directly transfers less than one thousand (1,000) barrels in 21
calendar year 2026 is exempt from the state wholesale regulatory 22
license fee in paragraph (a) of this subsection, subject to 23
subdivision b. of this subparagraph. 24
b. If the microbrewery directly transfers more than one thousand 25
(1,000) barrels in a calendar year after 2026, the state wholesale 26
regulatory license fee imposed by paragraph (a) of this 27
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subsection shall apply to: 1
i. All directly transferred gallons exceeding the first one 2
thousand (1,000) barrels in that calendar year; and 3
ii. All directly transferred gallons in sub sequent calendar 4
years. 5
(c) 1. A microbrewery that begins directly transferring products to a retailer 6
or consumer independent of a distributor on and after July 1, 2027, is 7
exempt from the state wholesale regulatory license fee levied in 8
paragraph (a) of this subsection on the first one thousand (1,000) 9
barrels sold in a calendar year, subject to subparagraph 2. of this 10
paragraph. 11
2. If the microbrewery directly transfers more than one thousand (1,000) 12
barrels in a calendar year, the state wholesale regula tory license fee 13
imposed by paragraph (a) of this subsection shall apply to: 14
a. All directly transferred barrels exceeding the first one thousand 15
(1,000) barrels in that calendar year; and 16
b. All directly transferred barrels in subsequent calendar years. 17
(4) For timely filing and payment, the wholesaler, distributor, distiller, small farm 18
winery, manufacturer, direct shipper, or microbrewery shall deduct, for each 19
milliliter transferred or sold, seven-thousandths of a cent ($0.00007) per milliliter 20
of alcohol contained in an alcoholic beverage sold for human consumption in the 21
Commonwealth of Kentucky, provided the amount due is not delinquent at the 22
time of payment. 23
(5) (a) A wholesaler, distributor, distiller, small farm winery, manufacturer, direct 24
shipper, and microbrewery shall pay and report the state wholesale 25
regulatory license fee levied in subsections (1), (2), and (3) of this section to 26
the Department of Revenue on or before the twentieth day of the calendar 27
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month next succeeding the month in which possession or title of the 1
alcoholic beverages or cannabis -infused beverages is transferred from the 2
wholesaler, distributor, distiller, small farm winery, manufacturer, direct 3
shipper, or microbrewery to manufacturers, retailers, or consumers in this 4
state, in accordance with administrative regulations promulgated pursuant 5
to KRS Chapter 13A designed reasonably to protect the revenues of the 6
Commonwealth. 7
(b) The report of the state wholesale regulatory license fees shall be on the 8
forms the Department of Revenue prescribes and shall include: 9
1. Total milliliters of alcohol transferred or sold, with a listing 10
containing the container size of each type of produc t transferred or 11
sold, the milliliters per container, and how many products were sold; 12
2. Total milliliters or milligrams of tetrahydrocannabinol transferred or 13
sold, with a listing container size of each type of product transferred or 14
sold, the milliliter or milligrams per container, and how many 15
products were sold; and 16
3. The amount of state wholesale regulatory license fees due. 17
SECTION 3. A NEW SECTION OF KRS CHAPTER 138 IS CREATED TO 18
READ AS FOLLOWS: 19
(1) As used in this section: 20
(a) "Food" has the same meaning as in KRS 217.2201; 21
(b) "Hemp" means the plant species Cannabis sativa L. and any part of that 22
plant, including the seeds thereof and all derivatives, extracts, 23
cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or 24
not, with a total delta -9 tetrahydrocannabinol concentration of not more 25
than three-tenths of one percent (0.3%) on a dry weight basis; 26
(c) "Hemp-derived cannabinoid product": 27
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1. Means any intermediate or final product derived from hemp that: 1
a. Contains cannabinoids in any form; and 2
b. Is intended for human or animal use through any means of 3
application or administration, such as inhalation, ingestion, or 4
topical application; and 5
2. Includes but is not limited to cannabis -infused beverages as defined in 6
Section 6 of this Act, and any other edible or consumable product 7
containing tetrahydrocannabinol, regardless of the extraction method 8
used to obtain the tetrahydrocannabinol; 9
(d) "Kratom" has the same meaning as in KRS 217.2201; 10
(e) "Kratom extract" has the same meaning as in KRS 217.2201; 11
(f) "Kratom product" has the same meaning as in KRS 217.2201; 12
(g) "Person" has the same meaning as in Section 31 of this Act; 13
(h) "Retailer" means any person that sells or ships hemp -derived cannabinoid 14
products, kratom extracts, or kratom products for any purpose other than 15
resale: 16
1. At a Kentucky retail location; or 17
2. To a Kentucky address; and 18
(i) "State retail regulatory license fee" includes interest accrued at the rate 19
provided by KRS 131 .183, all applicable penalties imposed pursuant to this 20
chapter, and all applicable penalties and fees imposed pursuant to KRS 21
131.180, 131.410 to 131.445, and 131.990. 22
(2) On and after July 1, 2027, a state retail regulatory license fee is levied on retailers 23
for the privilege of selling kratom extracts or kratom products in this state at the 24
rate of: 25
(a) Four cents ($0.04) per milligram of mitragynine in kratom product sold if 26
the concentration of kratom is two percent (2%) or less per serving; 27
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(b) Four dollars ($4) per milligram of mitragynine in kratom product sold if the 1
concentration of kratom is more than two percent (2%) per serving; 2
(c) Forty cents ($0.40) per milligram of mitragynine in kratom extract sold if 3
the concentration of kratom is two percent (2%) or less; and 4
(d) Eight dollars ($8) per milligram of mitragynine in kratom extract sold if the 5
concentration of kratom is more than two percent (2%) per serving. 6
(3) On and after July 1, 2027, a state retail regulatory license fee is levied on retailers 7
for the privilege of selling hemp-derived cannabinoid products in this state at the 8
rate of one and six -tenths of a cent ($0.016) per milligram, as labeled on the 9
product, of delta -9 tetrahydrocannabinol or delta -8 tetrahydrocannabinol or any 10
other form of tetrahydrocannabinol sold. 11
(4) The state retail regulatory license fees shall be: 12
(a) Administered by the Department of Revenue; 13
(b) Transferred to the general fund; and 14
(c) Paid by the retailer as prescribed in administrative regulations promulgated 15
by the Department of Revenue in accordance with KRS Chapter 13A. 16
(5) The retailer is liable for the state retail regulatory license fee. 17
(6) Every retailer shall, by the twentieth day of each month, transmit reports to the 18
Department of Revenue, on the forms the Department of Re venue may prescribe, 19
on the: 20
(a) Total kratom products sold, with a listing containing the description of each 21
type of product sold, which contains the milligrams of mitragynine per 22
serving and how many servings are in each product; 23
(b) Total mitragynine milligrams contained in the kratom products sold; 24
(c) Total hemp-derived cannabinoid products sold, with a listing containing the 25
description of each type of product sold which contains the milligrams of 26
delta-9 tetrahydrocannabinol or delta -8 tetrahydrocannabinol or any other 27
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form of tetrahydrocannabinol per serving and how many servings are in 1
each product; 2
(d) Total delta-9 tetrahydrocannabinol or delta -8 tetrahydrocannabinol or any 3
other form of tetrahydrocannabinol milligrams contained in the products 4
sold; and 5
(e) Amount of state retail regulatory license fees due. 6
(7) Payment of the state retail regulatory license fee shall be due with the report. 7
(8) The retailer shall keep and preserve an accurate record of all receipts of its hemp-8
derived cannabinoi d products, kratom extracts, and kratom products sold, and 9
state retail regulatory license fees due, together with invoices or other pertinent 10
records and papers required by the Department of Revenue for four (4) years. 11
(9) A retailer or other person shall not: 12
(a) Fail or refuse to make the returns and pay the state retail regulatory license 13
fee prescribed by this section; 14
(b) Refuse to permit the Department of Revenue or any representative 15
appointed by the commissioner of the Department of Revenue in writ ing to 16
examine his or her records, papers, files, and equipment pertaining to the 17
taxable business; 18
(c) Make an incomplete, false, or fraudulent return, or attempt to do anything 19
to avoid: 20
1. A full disclosure of the amount of business done; or 21
2. The paym ent of the whole or any part of the state retail regulatory 22
license fee or penalties due; or 23
(d) Fail to keep and preserve records of the hemp -derived cannabinoid 24
products, kratom extracts, or kratom products sold by the retailer to 25
substantiate the reports required by this section. 26
(10) Any person who violates any provision of this section shall be subject to the 27
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uniform civil penalties imposed pursuant to KRS 131.180 and interest at the tax 1
interest rate as defined in KRS 131.183. 2
(11) The Department of R evenue may prescribe forms and promulgate administrative 3
regulations in accordance with KRS Chapter 13A to execute and administer this 4
section. The state retail regulatory license fee may be paid via electronic funds 5
transfer. The retailer shall provide th e department with all protocol 6
documentation and electronic funds transfer data necessary to facilitate the 7
timely transfer of funds. 8
(12) It is the purpose and intent of the General Assembly to impose regulatory license 9
fees on retailers of substances tha t may have an intoxicating effect on users. It is 10
not the intent of the General Assembly to legalize such activities if not otherwise 11
legal. 12
Section 4. KRS 211.285 is amended to read as follows: 13
(1) There is hereby created the alcohol wellness and responsibility education fund, 14
which shall provide moneys on a matching basis for educational information and 15
materials that deter or eliminate underage drinking. The fund shall consist of 16
moneys generated from: 17
(a) One percent (1%) of the excise tax collected from the sale and distribution of 18
malt beverages under KRS 243.720 before July 1, 2027;[,] 19
(b) One percent (1%) of the wholesale tax collected from distributors of malt 20
beverages and microbreweries und er KRS 243.884 before July 1, 2027; [, 21
and] 22
(c) One-half of one percent (0.5%) of the state retail regulatory license fee 23
collected from the sale of alcoholic beverages pursuant to Section 1 of this 24
Act on and after July 1, 2027; and 25
(d) All proceeds from public auctions conducted by the Alcoholic Beverage 26
Control Board under KRS 241.060 and 243.540. 27
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(2) The alcohol wellness and responsibility education fund shall be established in the 1
State Treasury as a trust and agency account under KRS 45.253. Moneys in the 2
account shall be distributed by the State Treasurer to the Alcohol Wellness and 3
Responsibility Education Corporation, a nonprofit organization that is organized 4
under the laws of this state, upon the authorization of the secretary of the Public 5
Protection Cabinet. The moneys shall be awarded to the corporation solely to fund 6
educational programs to deter or eliminate underage drinking and promote alcohol 7
responsibility measures. 8
(3) The secretary of the Public Protection Cabinet shall authorize that mo neys from the 9
fund be disbursed to the corporation upon the secretary's receipt of a certification 10
from the corporation showing the moneys the corporation has received from malt 11
beverage distributors, microbreweries, auctions, and other private sources sin ce the 12
last certification. The moneys disbursed from the fund shall be equal to the 13
contributions that the corporation has received from its members and other private 14
sources during that period. The moneys in the fund shall be disbursed in accordance 15
with a schedule established by the secretary, and shall be disbursed until the 16
moneys in the fund are exhausted or until the moneys in the fund lapse in 17
accordance with subsection (4) of this section, whichever comes first. 18
(4) Moneys that are credited to the f und and not issued to the corporation shall lapse at 19
the end of the fiscal year and shall be returned to the general fund. 20
(5) As a condition of receiving the governmental funds, the corporation's board of 21
directors shall include the following among its directors: 22
(a) All duly elected statewide constitutional officers or designees; 23
(b) The President of the Senate or designee, who shall serve as a nonvoting 24
member; 25
(c) The Speaker of the House or designee, who shall serve as a nonvoting 26
member; 27
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(d) The secretary of the Public Protection Cabinet or designee; 1
(e) The commissioner of the Department of Alcoholic Beverage Control or 2
designee; 3
(f) A representative of the malt beverage industry submitted by the Kentucky 4
Beer Wholesalers' Association; 5
(g) A represent ative of the malt beverage industry submitted by the Kentucky 6
Malt Beverage Council; 7
(h) A representative of the Kentucky Guild of Brewers submitted by the 8
Kentucky Guild of Brewers; and 9
(i)[(h)] A representative of the distilled spirits industry submitted by the 10
Kentucky Distillers' Association. 11
(6) All expenditures of moneys from the fund shall be approved by a majority of those 12
persons set out in subsection (5)(a) and (d) to (h) of this section. If the moneys from 13
the fund are not expended in their entir ety, any moneys that remain unused by the 14
corporation at the end of the fiscal year shall be returned to the general fund. 15
(7) Any moneys from the fund that are not expended shall be returned to the general 16
fund upon the dissolution of the corporation. 17
(8) The Alcohol Wellness and Responsibility Education Corporation may accept 18
applications for grants by Kentucky high schools, colleges and universities, and 19
other entities that promote alcohol responsibility, and the board of directors shall 20
develop criteria for the awarding of any funds by application. 21
(9) Any high school in the Commonwealth of Kentucky that was registered with the 22
Department of Education as of July 1, 2024, may make an application to the 23
Alcohol Wellness and Responsibility Education Corpora tion by February 28 of 24
each year and shall be granted a minimum of one thousand dollars ($1,000) 25
annually from the funds contributed by the alcohol wellness and responsibility 26
education fund for the single purpose of supporting "Project Graduation" events. 27
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SECTION 5. A NEW SECTION OF KRS CHAPTER 217 IS CREATED TO 1
READ AS FOLLOWS: 2
(1) As used in this section: 3
(a) "Certified reference materials" means highly accurate, stable, and 4
homogenous substances with documented tracea bility to SI units, used to 5
evaluate methods and to ensure measurement quality; 6
(b) "Department" means the Department for Public Health; 7
(c) "Fit-for-purpose" means a validated test procedure that is suitable, 8
functional, and effective for its intended use and meets required standards; 9
(d) Hemp-derived cannabinoid product" has the same meaning as in Section 3 10
of this Act; 11
(e) "Proficiency test" means a test established to evaluate the ability of a 12
laboratory to perform test procedures required under this section by 13
comparing each laboratory’s results against a set of standards; 14
(f) "Proficiency test sample" means an unknown sub stance sent by an 15
approved, external provider to a laboratory for analysis to evaluate 16
accuracy, precision, and performance. Proficiency test samples are 17
submitted blindly for testing using the same methods as are used for 18
regular, routine samples to asses s the ability of the laboratory to produce 19
valid results; 20
(g) "SI units": 21
1. Means the International System of Units (SI) that uses the seven (7) 22
base units of meter, kilogram, second, ampere, kelvin, mole, and 23
candela to provide a consistent, precise, rep roducible, and 24
unambiguous foundation for all physical measurements; and 25
2. Can be used to report or specify a concentration; 26
(h) "Third-party laboratory" means an independent, impartial testing entity not 27
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affiliated with a manufacturer, wholesaler, retail er, or any other seller or 1
buyer of a hemp-derived cannabinoid product; and 2
(i) "Z-score" means a standardized measurement that indicates how many 3
standard deviations a specific data point or test result is above or below the 4
mean of the measurements. 5
(2) The department shall work to improve testing procedures, proficiency testing, and 6
approvals of third -party laboratories who seek to test registered hemp -derived 7
cannabinoid products for sale in Kentucky. 8
(3) Third-party laboratories certified to test regis tered hemp -derived cannabinoid 9
products shall meet the following requirements: 10
(a) Accreditation under ISO/IEC 17025:2017 standard by a recognized 11
accreditation body, including accreditation for each method used for testing 12
hemp-derived cannabinoid products; 13
(b) Comprehensive quality systems and validated methods for testing hemp -14
derived cannabinoids using both Gas Chromatography -Mass Spectrometry 15
(GC-MS/ or GC -MS/MS) and High -Performance Liquid Chromatography 16
(HPLC-PDA or LC-MS/MS) systems; 17
(c) Establishing standard operating procedures and methodologies for testing 18
products containing hemp-derived cannabinoids that are fit-for-purpose; 19
(d) Utilizing fit -for-purpose testing for plant material, oils, edibles, beverages, 20
and vaporizable products; 21
(e) Participating in an accredited proficiency testing program under ISO/IEC 22
17043; and 23
(f) Meeting other standards necessary to fulfill the requirements of this section. 24
(4) (a) The department shall establish a proficiency test for demonstrating 25
proficiency in testin g hemp -derived cannabinoids for the purpose of 26
evaluating and approving third -party laboratories that seek to conduct 27
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compliance testing of hemp -derived cannabinoid products registered in the 1
Commonwealth. 2
(b) The department shall establish the proficiency test. The department shall 3
utilize certified reference materials to create a reference product for 4
compliance testing. The reference product shall include the following 5
cannabinoids: 6
1. Cannabidiol (CBD) (CAS # 13956-29-1); 7
2. Cannabinol (CBN) (CAS # 521-35-7); 8
3. Delta-9-tetrahydrocannabinolic acid (THCA) (CAS # 23978-85-0); 9
4. Delta-9-tetrahydrocannabinol (delta-9-THC) (CAS # 1972-08-3); 10
5. Delta-8-tetrahydrocannabinol (delta-8-THC) (CAS # 5757-75-5); 11
6. Hexahydrocannabinol (HHC) (CAS # 36403 -90-4 for 9( R)-HHC and 12
36403-91-5 for 9(S)-HHC); 13
7. Delta-8-iso-tetrahydrocannabinol (delta-8-iso-THC) (CAS # 23050-47-14
7); 15
8. Delta-4,8-iso-tetrahydrocannabinol (delta 4(8) -iso-THC) (CAS # 16
23050-59-1); 17
9. 9(R) Hexahydrocannabinol (9(R)-HHC) (CAS # 23050-47-7); and 18
10. 9(S) Hexahydrocannabinol (9(S)-HHC) (CAS # 36403-91-5). 19
(c) The proficiency test samples shall be of known concentration, preparation 20
documented, and maintained by the department for purposes of proficiency 21
testing and periodic validation. 22
(5) Upon establishing the proficiency test, the department shall establish an approval 23
process for third -party laboratories seeking to conduct testing of hemp -derived 24
cannabinoid products intended for registration in the Commonwealth in 25
accordance with the following: 26
(a) The department shall provide proficiency test materials to any third -party 27
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laboratory that seeks approval to conduct cannabinoid testing for hemp -1
derived cannabinoid products intended for registration in Kentucky; 2
(b) Participating third -party laborato ries shall test each proficiency sample 3
using the validated methods and analytical procedures that are within their 4
scope of accreditation as specified on their accreditation certificate and 5
submit their results to the department within a timeframe establi shed by the 6
department; 7
(c) The department shall compare the proficiency test results submitted by 8
third-party laboratories to target values and to the results derived from the 9
same reference materials by other certified laboratories. The results from 10
each applicant laboratory for each analyte shall be assigned a z-score; 11
(d) 1. A third -party laboratory shall be approved for inclusion on the 12
Commonwealth’s list of approved laboratories if its results fall within 13
an acceptable range established by the depart ment through the 14
promulgation of administrative regulations. 15
2. To be eligible for approval under this section, a third -party laboratory 16
shall maintain accreditation under ISO/IEC 17025:2017 or its 17
successor standard and shall provide proof of such accreditation to the 18
department. 19
3. The department may establish additional requirements for third -party 20
laboratories seeking approval within the Commonwealth through an 21
administrative regulation promulgated in accordance with KRS 22
Chapter 13A; and 23
(e) The departm ent shall create and maintain a publicly available list of 24
approved laboratories that meet requirements established under this section. 25
(6) Upon establishment of the approved laboratory list: 26
(a) Any person or entity registering hemp -derived cannabinoid -containing 27
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products in Kentucky shall utilize a laboratory included on the department's 1
approved laboratory list; and 2
(b) All previously registered products containing cannabinoids shall be re -3
registered with the department to continue selling in the Commonw ealth. 4
Any registration fees associated with this re -registration requirement shall 5
be waived. 6
(7) The department shall promulgate administrative regulations in accordance with 7
KRS Chapter 13A to implement and enforce this section, including but not 8
limited to: 9
(a) Defining acceptable variance ranges for proficiency testing; 10
(b) Establishing timelines for laboratory participation and review; 11
(c) Establishing procedures for adding or removing laboratories from the 12
approved list; 13
(d) Specifying recordkeeping and reporting requirements; and 14
(e) Determining a timeframe for allowing registered businesses to re -register 15
products using the approved laboratories for retesting certified products to 16
ensure conformance to hemp-derived cannabinoid standards. 17
Section 6. KRS 241.010 is amended to read as follows: 18
As used in KRS Chapters 241 to 244, unless the context requires otherwise: 19
(1) "Alcohol" means ethyl alcohol, hydrated oxide of ethyl or spirit of wine, from 20
whatever source or by whatever process it is produced; 21
(2) "Alcoholic beverage" means every liquid, solid, powder, or crystal, whether 22
patented or not, containing alcohol in an amount in excess of more than one percent 23
(1%) of alcohol by volume, which is fit for beverage pur poses. It includes distilled 24
spirits, wine, malt beverages, and every spurious or imitation liquor sold as, or 25
under any name commonly used for, alcoholic beverages containing alcohol in an 26
amount in excess of more than one percent (1%) of alcohol by volume [, whether 27
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containing any alcohol or not]. It does not include the following products: 1
(a) Medicinal preparations manufactured in accordance with formulas prescribed 2
by the United States Pharmacopoeia, National Formulary, or the American 3
Institute of Homeopathy; 4
(b) Patented, patent, and proprietary medicines; 5
(c) Toilet, medicinal, and antiseptic preparations and solutions; 6
(d) Flavoring extracts and syrups; 7
(e) Denatured alcohol or denatured rum; 8
(f) Vinegar and preserved sweet cider; 9
(g) Wine for sacramental purposes;[ and] 10
(h) Alcohol unfit for beverage purposes that is to be sold for legitimate external 11
use; and 12
(i) Products intended for human consumption containing cannabinoids that 13
have intoxicating properties that change the function of the nervous system 14
and result in alterations of perception, cognition, or behavior; 15
(3) (a) "Alcohol vaporizing device" or "AWOL device" means any device, machine, 16
or process that mixes liquor, spirits, or any other alcohol product with pure 17
oxygen or by any other means produces a vaporized alcoholic product used 18
for human consumption; 19
(b) "Alcohol vaporizing device" or "AWOL device" does not include an inhaler, 20
nebulizer, atomizer, or other device that is designed and intended by the 21
manufacturer to dispense a prescribed or over -the-counter medication or a 22
device installed and used by a licensee under this chapter to demonstrate the 23
aroma of an alcoholic beverage; 24
(4) "Automobile race track" means a facility primarily used for vehicle racing that has a 25
seating capacity of at least thirty thousand (30,000) people; 26
(5) "Barrel-aged and batched cocktail" means an alcoholic beverage that is: 27
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(a) Composed of: 1
1. Distilled spirits that have been dispensed from their original sealed 2
container; and 3
2. Other ingredients or alcoholic beverages; 4
(b) Placed into a barrel or container on the premises of a retail licensee; and 5
(c) Dispensed from the barrel or container as a retail sale by the drink; 6
(6) "Bed and breakfast" means a one (1) family dwelling unit that: 7
(a) Has guest rooms or suites used, rented, or hired out for occupancy or that a re 8
occupied for sleeping purposes by persons not members of the single -family 9
unit; 10
(b) Holds a permit under KRS Chapter 219; and 11
(c) Has an innkeeper who resides on the premises or property adjacent to the 12
premises during periods of occupancy; 13
(7) "Board" means the State Alcoholic Beverage Control Board created by KRS 14
241.030; 15
(8) "Bottle" means any container which is used for holding alcoholic beverages for the 16
use and sale of alcoholic beverages at retail; 17
(9) "Brewer" means any person who manufactures m alt beverages or owns, occupies, 18
carries on, works, or conducts any brewery, either alone or through an agent; 19
(10) "Brewery" means any place or premises where malt beverages are manufactured for 20
sale, and includes all offices, granaries, mash rooms, cooli ng rooms, vaults, yards, 21
and storerooms connected with the premises; or where any part of the process of the 22
manufacture of malt beverages is carried on; or where any apparatus connected with 23
manufacture is kept or used; or where any of the products of bre wing or 24
fermentation are stored or kept; 25
(11) "Building containing licensed premises" means the licensed premises themselves 26
and includes the land, tract of land, or parking lot in which the premises are 27
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contained, and any part of any building connected by direct access or by an 1
entrance which is under the ownership or control of the licensee by lease holdings 2
or ownership; 3
(12) "Cannabinoid" means a compound found in the hemp plant Cannabis sativa L. from 4
a United States Department of Agriculture -sanctioned domestic hemp production 5
program and does not include cannabinoids derived from any other substance; 6
(13) "Cannabis-infused beverage": 7
(a) Means a properly permitted adult -use cannabinoid liquid product intended for 8
human consumption that has intoxicating properties that change the function 9
of the nervous system and results in alterations of perception, cognition, or 10
behavior and shall not co ntain more than five (5) milligrams of intoxicating 11
adult-use cannabinoids per twelve (12) ounce serving; and 12
(b) Shall not include: 13
1. Medicinal cannabis regulated under KRS Chapter 218B; 14
2. Any type of hemp tincture; and 15
3. Any product containing solely nonintoxicating cannabinoids; 16
(14) "Caterer" means a person operating a food service business that prepares food in a 17
licensed and inspected commissary, transports the food and alcoholic beverages to 18
the caterer's designated and inspected banquet hall or t o an agreed location, and 19
serves the food and alcoholic beverages pursuant to an agreement with another 20
person; 21
(15) "Charitable organization" means a nonprofit entity recognized as exempt from 22
federal taxation under Section 501(c) of the Internal Revenue Code, 26 U.S.C. sec. 23
501(c), or any organization having been established and continuously operating 24
within the Commonwealth of Kentucky for charitable purposes for three (3) years 25
and which expends at least sixty percent (60%) of its gross revenue exclusiv ely for 26
religious, educational, literary, civic, fraternal, or patriotic purposes; 27
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(16) "Cider" means any fermented fruit -based beverage containing seven percent (7%) 1
or more alcohol by volume and includes hard cider and perry cider; 2
(17) "City administrator" means city alcoholic beverage control administrator; 3
(18) "Commercial airport" means an airport through which more than five hundred 4
thousand (500,000) passengers arrive or depart annually; 5
(19) (a) "Commercial quadricycle" means a vehicle equipped wit h a minimum of ten 6
(10) pairs of fully operative pedals for propulsion by means of human 7
muscular power and which: 8
1. Has four (4) wheels; 9
2. Is operated in a manner similar to that of a bicycle; 10
3. Is equipped with a minimum of thirteen (13) seats for passengers; 11
4. Has a unibody design; 12
5. Is equipped with a minimum of four (4) hydraulically operated brakes; 13
6. Is used for commercial tour purposes; 14
7. Is operated by the vehicle owner or an employee of the owner; and 15
8. Has an electrical assist system that shall only be used when traveling to 16
or from its storage location while not carrying passengers. 17
(b) A "commercial quadricycle" is not a motor vehicle as defined in KRS 186.010 18
or 189.010; 19
(20) "Commissioner" means the commissioner of the Department of Alcoholic Beverage 20
Control; 21
(21) "Consumer" means a person, persons, or business organization who purchases 22
alcoholic beverages and who: 23
(a) Does not hold a license or permit issued by the department; 24
(b) Purchases the alcoholic beverages for personal consum ption only and not for 25
resale; 26
(c) Is of lawful drinking age; and 27
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(d) Receives the alcoholic beverages in territory where the alcoholic beverages 1
may be lawfully sold or received; 2
(22) "Convention center" means any facility which, in its usual and customary business, 3
provides seating for a minimum of one thousand (1,000) peo ple and offers 4
convention facilities and related services for seminars, training and educational 5
purposes, trade association meetings, conventions, or civic and community events 6
or for plays, theatrical productions, or cultural exhibitions; 7
(23) "Convicted" and "conviction" means a finding of guilt resulting from a plea of 8
guilty, the decision of a court, or the finding of a jury, irrespective of a 9
pronouncement of judgment or the suspension of the judgment; 10
(24) "County administrator" means county alcoholic beverage control administrator; 11
(25) "Department" means the Department of Alcoholic Beverage Control; 12
(26) "Dining car" means a railroad passenger car that serves meals to consumers on any 13
railroad or Pullman car company; 14
(27) "Discount in the usual course of business" means price reductions, rebates, refunds, 15
and discounts given by wholesalers to distilled spirits and wine retailers pursuant to 16
an agreement made at the time of the sale of the merchandise involved and are 17
considered a part of the sales tr ansaction, constituting reductions in price pursuant 18
to the terms of the sale, irrespective of whether the quantity discount was: 19
(a) Prorated and allowed on each delivery; 20
(b) Given in a lump sum after the entire quantity of merchandise purchased had 21
been delivered; or 22
(c) Based on dollar volume or on the quantity of merchandise purchased; 23
(28) "Distilled spirits" or "spirits" means any product capable of being consumed by a 24
human being which contains alcohol obtained by distilling, mixed with water or 25
other substances in solution, except wine, hard cider, and malt beverages; 26
(29) "Distiller" means any person who is engaged in the business of manufacturing 27
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distilled spirits at any distillery in the state and is registered in the Office of the 1
Collector of Internal Revenue for the United States at Louisville, Kentucky; 2
(30) "Distillery" means any place or premises where distilled spirits are manufactured 3
for sale, and which are registered in the office of any collector of internal revenue 4
for the United States. It includes any United States government bonded warehouse; 5
(31) "Distributor" means any person who distributes malt beverages for the purpose of 6
being sold at retail; 7
(32) "Dry" means a territory in which a majority of the electorate voted to prohibit a ll 8
forms of retail alcoholic beverage sales through a local option election held under 9
KRS Chapter 242; 10
(33) "Election" means: 11
(a) An election held for the purpose of taking the sense of the people as to the 12
application or discontinuance of alcoholic bever age sales under KRS Chapter 13
242; or 14
(b) Any other election not pertaining to alcoholic beverages; 15
(34) "Horse racetrack" means a facility licensed to conduct a horse race meeting under 16
KRS Chapter 230; 17
(35) "Hotel" means a hotel, motel, or inn for accommod ation of the traveling public, 18
designed primarily to serve transient patrons; 19
(36) "Investigator" means any employee or agent of the department who is regularly 20
employed and whose primary function is to travel from place to place for the 21
purpose of visitin g licensees, and any employee or agent of the department who is 22
assigned, temporarily or permanently, by the commissioner to duty outside the main 23
office of the department at Frankfort, in connection with the administration of 24
alcoholic beverage statutes; 25
(37) "License" means any license issued pursuant to KRS Chapters 241 to 244; 26
(38) "Licensee" means any person to whom a license has been issued, pursuant to KRS 27
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Chapters 241 to 244; 1
(39) "Limited restaurant" means: 2
(a) A facility where the usual and custom ary business is the preparation and 3
serving of meals to consumers, which has a bona fide kitchen facility, which 4
receives at least seventy percent (70%) of its food and alcoholic beverage 5
receipts from the sale of food, which maintains a minimum seating capacity of 6
fifty (50) persons for dining, which has no open bar, which requires that 7
alcoholic beverages be sold in conjunction with the sale of a meal, and which 8
is located in a wet or moist territory under KRS 242.1244; or 9
(b) A facility where the usual a nd customary business is the preparation and 10
serving of meals to consumers, which has a bona fide kitchen facility, which 11
receives at least seventy percent (70%) of its food and alcoholic beverage 12
receipts from the sale of food, which maintains a minimum seating capacity of 13
one hundred (100) persons of dining, and which is located in a wet or moist 14
territory under KRS 242.1244; 15
(40) "Local administrator" means a city alcoholic beverage control administrator, county 16
alcoholic beverage control administrator, or urban -county alcoholic beverage 17
control administrator; 18
(41) "Malt beverage" means any fermented undistilled alcoholic beverage of any name 19
or description, manufactured from malt wholly or in part, or from any substitute for 20
malt, and includes weak cider; 21
(42) "Manufacture" means distill, rectify, brew, bottle, and operate a winery; 22
(43) "Manufacturer" means a winery, distiller, rectifier, or brewer, and any other person 23
engaged in the production or bottling of alcoholic beverages; 24
(44) "Marina" means a dock or basin providing moorings for boats and offering supply, 25
repair, or other services for remuneration; 26
(45) "Minor" means any person who is not twenty-one (21) years of age or older; 27
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(46) "Moist" means a territory in which a majority of the electorate voted to permit 1
limited alcoholic beverage sales by any one (1) or a combination of sp ecial limited 2
local option elections authorized by KRS Chapter 242; 3
(47) "Population" means the population figures established by the federal decennial 4
census for a census year or the current yearly population estimates prepared by the 5
Kentucky State Data Center, Urban Studies Center of the University of Louisville, 6
Louisville, Kentucky, for all other years; 7
(48) "Premises" means the land and building in and upon which any business regulated 8
by alcoholic beverage statutes is operated or carried on. "Premise s" shall not 9
include as a single unit two (2) or more separate businesses of one (1) owner on the 10
same lot or tract of land, in the same or in different buildings if physical and 11
permanent separation of the premises is maintained, excluding employee access by 12
keyed entry and emergency exits equipped with crash bars, and each has a separate 13
public entrance accessible directly from the sidewalk or parking lot. Any licensee 14
holding an alcoholic beverage license on July 15, 1998, shall not, by reason of this 15
subsection, be ineligible to continue to hold his or her license or obtain a renewal, 16
of the license; 17
(49) "Primary source of supply" or "supplier" means the distiller, winery, brewer, 18
producer, owner of the commodity at the time it becomes a marketable prod uct, 19
bottler, or authorized agent of the brand owner. In the case of imported products, 20
the primary source of supply means either the foreign producer, owner, bottler, or 21
agent of the prime importer from, or the exclusive agent in, the United States of the 22
foreign distiller, producer, bottler, or owner; 23
(50) "Private club" means a nonprofit social, fraternal, military, or political organization, 24
club, or nonprofit or for -profit entity maintaining or operating a club room, club 25
rooms, or premises from which the general public is excluded; 26
(51) "Private selection event" means a private event with a licensed distiller during 27
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which participating consumers, retail licensees, wholesalers, distributors, or a 1
distillery's own representatives select a single barrel o r a blend of barrels of the 2
distiller's products to be specially packaged for the participants; 3
(52) "Private selection package" means a bottle of distilled spirits sourced from the 4
barrel or barrels selected by participating consumers, retail licensees, w holesalers, 5
distributors, microbreweries that hold a quota retail drink or quota retail package 6
license, or a distillery's own representatives during a private selection event; 7
(53) "Public nuisance" means a condition that endangers safety or health, is of fensive to 8
the senses, or obstructs the free use of property so as to interfere with the 9
comfortable enjoyment of life or property by a community or neighborhood or by 10
any considerable number of persons; 11
(54) "Qualified historic site" means: 12
(a) A contributing property with dining facilities for at least fifty (50) persons at 13
tables, booths, or bars where food may be served within a commercial district 14
listed in the National Register of Historic Places; 15
(b) A site that is listed as a National Historic Landm ark or in the National 16
Register of Historic Places with dining facilities for at least fifty (50) persons 17
at tables, booths, or bars where food may be served; 18
(c) A distillery which is listed as a National Historic Landmark and which 19
conducts souvenir retail package sales under KRS 243.0305; or 20
(d) A not-for-profit or nonprofit facility listed on the National Register of Historic 21
Places; 22
(55) "Rectifier" means any person who rectifies, purifies, or refines distilled spirits, 23
malt, or wine by any process oth er than as provided for on distillery premises, and 24
every person who, without rectifying, purifying, or refining distilled spirits by 25
mixing alcoholic beverages with any materials, manufactures any imitations of or 26
compounds liquors for sale under the name of whiskey, brandy, gin, rum, wine, 27
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spirits, cordials, bitters, or any other name; 1
(56) "Repackaging" means the placing of alcoholic beverages in any retail container 2
irrespective of the material from which the container is made; 3
(57) "Restaurant" means a facility where the usual and customary business is the 4
preparation and serving of meals to consumers, that has a bona fide kitchen facility, 5
and that receives at least fifty percent (50%) of its food and alcoholic beverage 6
receipts from the sale of food at the premises; 7
(58) "Retail container" means any bottle, can, barrel, or other container which, without a 8
separable intermediate container, holds alcoholic beverages and is suitable and 9
destined for sale to a retail outlet, whether it is suitable for deli very or shipment to 10
the consumer or not; 11
(59) "Retail sale" means any sale of alcoholic beverages to a consumer, including those 12
transactions taking place in person, electronically, online, by mail, or by telephone; 13
(60) "Retailer" means any licensee who s ells and delivers any alcoholic beverage to 14
consumers, except for manufacturers with limited retail sale privileges and direct 15
shipper licensees; 16
(61) "Riverboat" means any boat or vessel with a regular place of mooring in this state 17
that is licensed by th e United States Coast Guard to carry forty (40) or more 18
passengers for hire on navigable waters in or adjacent to this state; 19
(62) "Sale" means any transfer, exchange, or barter for consideration, and includes all 20
sales made by any person, whether principa l, proprietor, agent, servant, or 21
employee, of any alcoholic beverage; 22
(63) "Service bar" means a bar, counter, shelving, or similar structure used for storing or 23
stocking supplies of alcoholic beverages that is a workstation where employees 24
prepare alcoho lic beverage drinks to be delivered to customers away from the 25
service bar; 26
(64) "Sell" includes solicit or receive an order for, keep or expose for sale, keep with 27
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intent to sell, and the delivery of any alcoholic beverage; 1
(65) "Small farm winery" means a winery whose wine production is not less than two 2
hundred fifty (250) gallons and not greater than five hundred thousand (500,000) 3
gallons in a calendar year; 4
(66) "Souvenir package" means a special package of distilled spirits available from a 5
licensed retailer that is: 6
(a) Available for retail sale at a licensed Kentucky distillery where the distilled 7
spirits were produced or bottled; or 8
(b) Available for retail sa le at a licensed Kentucky distillery but produced or 9
bottled at another of that distiller's licensed distilleries in Kentucky; 10
(67) "State administrator" or "administrator" means the distilled spirits administrator or 11
the malt beverages administrator, or both, as the context requires; 12
(68) "State or national conference": 13
(a) Means a formal gathering for people from across the country or across 14
Kentucky intended for consultation, deliberation, discussion, or interchange 15
of opinions focusing on issues relevan t to the economy, culture, 16
professional fields, or governance, which takes place in the Commonwealth 17
of Kentucky and is attended by no less than three hundred (300) attendees; 18
and 19
(b) Does not include a political campaign fundraiser; 20
(69)[(68)] "State park" means a state park that has a: 21
(a) Nine (9) or eighteen (18) hole golf course; or 22
(b) Full-service lodge and dining room; 23
(70)[(69)] "Supplemental bar" means a bar, counter, shelving, or similar structure used 24
for serving and selling distilled spirits or wine by the drink for consumption on the 25
licensed premises to guests and patrons from additional locations other than the 26
main bar; 27
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(71)[(70)] "Territory" means a county, city, district, or precinct; 1
(72)[(71)] "Urban-county administrator" means an urban -county alcoholic beverage 2
control administrator; 3
(73)[(72)] "Valid identification document" means an unexpired, government-issued form 4
of identification that contains the photograph and date of birth of the individual to 5
whom it is issued; 6
(74)[(73)] "Vehicle" means any device or animal used to carry, convey, transport, or 7
otherwise move alcoholic beverages or any products, equipment, or appurtenances 8
used to manufacture, bottle, or sell these beverages; 9
(75)[(74)] "Vintage distilled spirit" means: 10
(a) A private selection package; or 11
(b) A package or packages of distilled spirits that: 12
1. Are in their original manufacturer's unopened container; 13
2. Are not owned by a distillery; and 14
3. Are not otherwise available for purchase from a licensed wholesaler 15
within the Commonwealth; 16
(76)[(75)] (a) "Vintage distilled spirits seller" means a nonlicensed person at least 17
twenty-one (21) years of age who is: 18
1. An administrator, executor, receiver, or other fiduciary who receives and 19
sells vintage distilled spirits in ex ecution of the person's fiduciary 20
capacity; 21
2. A creditor who receives or takes possession of vintage distilled spirits as 22
security for, or in payment of, debt, in whole or in part; 23
3. A public officer or court official who levies on vintage distilled spir its 24
under order or process of any court or magistrate to sell the vintage 25
distilled spirits in satisfaction of the order or process; or 26
4. Any other person not engaged in the business of selling alcoholic 27
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beverages. 1
(b) "Vintage distilled spirits seller" does not mean: 2
1. A person selling alcoholic beverages as part of an approved KRS 3
243.630 transfer; or 4
2. A person selling alcoholic beverages as authorized by KRS 243.540; 5
(77)[(76)] "Warehouse" means any place in which alcoholic beverages are housed or 6
stored; 7
(78)[(77)] "Weak cider" means any fermented fruit-based beverage containing more than 8
one percent (1%) but less than seven percent (7%) alcohol by volume; 9
(79)[(78)] "Wet" means a territory in which a majority of t he electorate voted to permit 10
all forms of retail alcoholic beverage sales by a local option election under KRS 11
242.050 or 242.125 on the following question: "Are you in favor of the sale of 12
alcoholic beverages in (name of territory)?"; 13
(80)[(79)] "Wholesale sale" means a sale to any person for the purpose of resale; 14
(81)[(80)] "Wholesaler" means any person who distributes alcoholic beverages for the 15
purpose of being sold at retail, but it shall not include a subsidiary of a 16
manufacturer or cooperative of a retail outlet; 17
(82)[(81)] "Wine": 18
(a) Means the product of the normal alcoholic fermentation of the juices of fruits, 19
with the usual processes of manufacture and normal additions, and includes 20
champagne and sparkling and fortified wine of an alcoholic con tent not to 21
exceed twenty-four percent (24%) by volume;[.] 22
(b) [It ]Includes: 23
1. Sake, cider, hard cider, and perry cider; and[ also includes] 24
2. Preparations or mixtures vended in retail containers if these preparations 25
or mixtures contain not more tha n fifteen percent (15%) of alcohol by 26
volume;[. It] 27
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(c) Does not include weak cider; and 1
(83)[(82)] "Winery" means any place or premises in which wine is manufactured from 2
any fruit, or brandies are distilled as a by -product of wine or other fruit, or cord ials 3
are compounded, except a place or premises that manufactures wine for sacramental 4
purposes exclusively. 5
Section 7. KRS 243.020 is amended to read as follows: 6
(1) A person shall not do any act authorized by any kind of license with respect to the 7
manufacture, storage, sale, purchase, transporting, or other traffic in alcoholic 8
beverages or the distribution, retail sale, or transportation of cannabis -infused 9
beverages unless the person holds or is an independent contractor, agent, servant, or 10
employee of a person who holds the kind of license that authorizes the act, or is a 11
third party utilized by a direct shipper licensee as set forth in KRS 243.027. 12
(2) The holding of any permit from the United States government to traffic in alcoholic 13
beverages without the corresponding requisite state and local licenses shall in all 14
cases raise a rebuttable presumption that the holder of the United States permit is 15
unlawfully trafficking in alcoholic beverages. 16
(3) Except as permitted by KRS 243.033, 243.036, 243.155, 243.157, and 243.260, a 17
person, conducting a place of business patronized by the public, who is not a 18
licensee authorized to sell alcoholic beverages, shall not permi t any person to sell, 19
barter, loan, give away, or drink alcoholic beverages on the premises of the place of 20
business. 21
(4) A licensee shall not permit any consumer to possess, give away, or drink alcoholic 22
beverages or cannabis -infused beverages on the lice nsed premises that are not 23
purchased from the licensee. 24
(5) In a moist territory, the only types of licenses that may be issued are those that 25
directly correspond with the types of sales approved by the voters through moist 26
elections within the territory, unless otherwise specifically authorized by statute. 27
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(6) If a licensee holds two (2) or more licenses, only the specific license for which the 1
licensee has violated the terms shall be subject to suspension or revocation. 2
(7) Notwithstanding subsections (3) and (4) of this section, with the written permission 3
of a licensed entertainment destination center: 4
(a) A retail drink licensee located wholly within a licensed entertainment 5
destination center or that has a storefront sharing a physical boundary with 6
that licensed entertainment destination center may allow persons on the 7
licensee's premises to possess and drink alcoholic beverages that were 8
purchased from another retail drink licensee located wholly within, or that has 9
a storefront sharing a physical bou ndary with, the licensed entertainment 10
destination center; and 11
(b) A nonlicensed place of business that is located wholly within a licensed 12
entertainment destination center or that has a storefront sharing a physical 13
boundary with that licensed entertainme nt destination center may allow 14
persons on its property to possess and drink alcoholic beverages that were 15
purchased from a retail drink licensee located wholly within, or that has a 16
storefront sharing a physical boundary with, the licensed entertainment 17
destination center. 18
Section 8. KRS 243.030 is amended to read as follows: 19
The following licenses that authorize traffic in distilled spirits and wine and in cannabis -20
infused beverages may be issued by the distilled spirits administrator. Licenses that 21
authorize traffic in all alcoholic beverages may be issued by both the distill ed spirits 22
administrator and malt beverages administrator. The licenses and their accompanying 23
fees are as follows: 24
(1) Distiller's license: 25
(a) Class A, per annum .......................................................... $2,980.00[$3,090.00] 26
(b) Class B (craft distillery), per annum .................................... $890.00[$1,000.00] 27
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(c) Off-premises retail sales outlet, per annum ............................................$300.00 1
(2) Rectifier's license: 2
(a) Class A, per annum .............................................................................$2,580.00 3
(b) Class B (craft rectifier), per annum ........................................................$825.00 4
(3) Winery license, per annum ..........................................................................$1,030.00 5
(4) Small farm winery license, per annum ...........................................................$110.00 6
(a) Small farm winery off-premises retail license, per annum ......................$30.00 7
(5) Wholesaler's license, per annum ..................................................................$2,060.00 8
(6) Quota retail package license, per annum .........................................................$570.00 9
(7) Quota retail drink license, per annum ..............................................................$620.00 10
(8) Transporter's license, per annum ....................................................................$210.00 11
(9) Special nonbeverage alcohol license, per annum .............................................$60.00 12
(10) Special agent's or solicitor's license, per annum ...............................................$30.00 13
(11) Bottling house or bottling house storage license, per annum ......... .............$1,030.00 14
(12) Special temporary license, per event ..............................................................$100.00 15
(13) Special Sunday retail drink license, per annum ...............................................$520.00 16
(14) Caterer's license, per annum ...........................................................................$830.00 17
(15) Special temporary alcoholic beverage auction license, per event ...................$100.00 18
(16) Extended hours supplemental license, per annum .......................................$2,060.00 19
(17) Hotel in-room license, per annum ...................................................................$210.00 20
(18) Air transporter license, per annum ..................................................................$520.00 21
(19) Sampling license, per annum ...........................................................................$110.00 22
(20) Replacement or duplicate license ......................................................................$25.00 23
(21) Entertainment destination center license: 24
(a) When the licensee is a city, county, urban-county government, 25
consolidated local government, charter county government, or 26
unified local government, per annum .................................................$2,577.00 27
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(b) All other licensees, per annum ............................................................$7,730.00 1
(22) Limited restaurant license, per annum .............................................................$780.00 2
(23) Limited golf course license, per annum ...........................................................$720.00 3
(24) Small farm winery wholesaler's license, per annum .......................................$110.00 4
(25) Qualified historic site license, per annum ....................................................$1,030.00 5
(26) Nonquota type 1 license, per annum ........................ ...................................$4,120.00 6
(27) Nonquota type 2 license, per annum ................................................................$830.00 7
(28) Nonquota type 3 license, per annum ................................................................$310.00 8
(29) Distilled spirits and wine storage license, per annum ..................................$620.00 9
(30) Out-of-state distilled spirits and wine supplier's license, per annum ...........$1,550.00 10
(31) Limited out-of-state distilled spirits and wine supplier's 11
license, per annum ..........................................................................................$260.00 12
(32) Authorized public consumption license, per annum ........................................$250.00 13
(33) Direct shipper Type A license, per annum.......................................................$100.00 14
(34) Limited nonquota package license, per annum ................................................$300.00 15
(35) Vintage distilled spirits license, per annum .....................................................$300.00 16
(36) Cannabis-infused beverage retail package license, per annum .....................$2,000.00 17
(37) Cannabis-infused beverage distributor's license, per annum ........................$1,000.00 18
(38) Cannabis-infused beverage distributor's license, 19
supplemental, per annum ..............................................................................$1,000.00 20
(39) Direct shipper Type B license, per annum ....................................................$1,000.00 21
(40) Souvenir package sales license, per annum ...................................................$110.00 22
(41) A nonrefundable fee of sixty dollars ($60) shall be charged to process each new 23
transitional license pursuant to KRS 243.045. 24
(42)[(41)] Other special licenses the board finds necessary for the proper regulation and 25
control of the traffic in distilled spirits and wine and provides for by administrative 26
regulation. In establishing the amount of license taxes that are required to be fixed 27
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by the board, it shall have regard for the value of the privilege granted. 1
(43)[(42)] The fee for each of the first five (5) supplemental bar licenses shall be the 2
same as the fee for the primary retail drink license. There shall be no charge for 3
each supplemental license issued in excess of five (5) to the same licensee at the 4
same premises. 5
A nonrefundable application fee of fifty dollars ($50) shall be charged to process each 6
new application under this section, except for subsections (4), (8), (9), (10), (12), (15), 7
(19), and (20) of this section. The application fee shall be applied to t he licensing fee if 8
the license is issued; otherwise it shall be retained by the department. 9
Section 9. KRS 243.0305 is amended to read as follows: 10
(1) Any licensed Kentucky distiller that is located in wet territory or in any precinct 11
that has authorized the limited sale of alcoholic beverages at distilleries under KRS 12
242.1243 and that has a gift shop or other retail outlet on its premises may conduct 13
the activities permitted under this section as a part of its distiller's license. 14
(2) (a) For purposes of all retail drink and package sales that occur pursuant to 15
subsection (3), (4), (7), (9), (10), (12), or (13) of this section, the distillery 16
shall: 17
1. Be permitted to transfer its products from the distillery proper to the 18
location where those retail sales occur without having to transfer 19
physical possession of those distilled spirits to a licensed wholesaler; 20
and 21
2. Without otherwise reporting those distilled spirits to a licensed 22
wholesaler, report those retail sales a nd pay all taxes required to the 23
Department of Revenue at the time and in the manner required by the 24
Department of Revenue in accordance with its powers under KRS 25
131.130(3). 26
(b)[ 1.] A distiller selling distilled spirits in accordance with this 27
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subsection shall pay all state regulatory license fees [wholesale sales 1
taxes] due under Sections 1 and 2 of this Act [KRS 243.884] . For the 2
purposes of this subsection, "selling"["wholesale sales"] means a sale 3
of distilled spirits made by a distiller under subsectio n (3)(b), (4), (7), 4
(9), (10), (12), and (13) of this section, if required by Section 1 or 2 of 5
this Act [KRS 243.884] , excluding sales made by a distiller under 6
subsection (4)(a)3. and (b) of this section that utilize a licensed 7
wholesaler[. 8
2. A distiller shall pay the excise tax on distilled spirits in accordance with 9
KRS 243.720 and 243.730]. 10
(c) All other distilled spirits that are produced by the distillery shall be sold and 11
physically transferred in compliance with all other relevant provisions of KRS 12
Chapters 241 to 244. 13
(3) If a distiller holds a souvenir package sales license, it may sell its own private 14
selection packages and souvenir packages at retail: 15
(a) To consumers in accordance with KRS 243.027 to 243.029 if it holds a direct 16
shipper license; and 17
(b) To distillery visitors of legal drinking age, in quantities not to exceed an 18
aggregate of nine (9) liters per purchaser per day. 19
(4) If a distiller holds a souvenir package sales license, it may conduct private 20
selection events and sell private selection packages at retail, as follows: 21
(a) Distillers may sell private selection packages to consumers who participated 22
in a private selection event only by: 23
1. Shipping the private selection packages in accordance with KRS 24
243.027 to 243.029 if the dist iller holds a direct shipper license, but 25
these sales and shipments shall be exempt from the quantity limitations 26
established in KRS 243.028(1); 27
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2. Selling the private selection packages to the participating consumers 1
directly from the distillery premises, but these sales shall be exempt 2
from the quantity limitations established in subsection (3)(b) of this 3
section; or 4
3. Selling the private selection packages through a wholesaler and to a 5
licensed retailer of the consumer's choice. The distillery and 6
wholesaler's cooperation in facilitating the sale of the private selection 7
packages to the retailer of the consumer's choice shall not be deemed a 8
violation of KRS 244.240. 9
(b) Except as provided in KRS 243.036, distillers may sell private selection 10
packages to retail licensees that participated in a private selection event only 11
through a licensed wholesaler. 12
(c) A distillery shall make available for purchase not less than seventy percent 13
(70%) of its annual private selection packages to licensed wholesalers and 14
shall maintain records of such transactions in accordance with KRS 244.150. 15
(d) Distillers may sell private selection packages to wine and distilled spirits 16
wholesalers, malt beverage distributors, and microbreweries that hold a quota 17
retail drink or quot a retail package license that participated in a private 18
selection event if the private selection packages resulting from the event are 19
sold only through a licensed retailer. 20
(5) Hours of sale for souvenir packages sold at retail and private selection packa ges 21
sold at retail shall be in conformity with KRS 244.290(3). 22
(6) Except as provided in this section, souvenir package and private selection package 23
sales to distillery visitors shall be governed by all the statutes and administrative 24
regulations governing the retail sale of distilled spirits by the package. 25
(7) Souvenir packages sold to distillery visitors under subsection (3)(b) of this section, 26
which are not made available to wholesalers licensed in Kentucky or elsewhere, 27
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shall be registered by the lice nsed distiller with the department and shall be sold 1
exclusively to in-person distillery visitors in quantities not to exceed three (3) liters 2
per person per day. 3
(8) Notwithstanding any provision of KRS 244.050 to the contrary, a distillery holding 4
a sampling license may allow visitors to sample distilled spirits under the following 5
conditions: 6
(a) Sampling shall be permitted only on the licensed premises during regular 7
business hours; 8
(b) A distillery shall not charge for the samples; and 9
(c) A distillery shall not provide more than one and three -fourths (1-3/4) ounces 10
of samples per visitor per day, except in connection with a private selection 11
event. 12
(9) Notwithstanding the provisions of KRS 243.110, in accordance with this section, a 13
distillery located in wet territory or in any territory that has authorized the limited 14
sale of alcoholic beverages under an election held pursuant to KRS 242.1243 may: 15
(a) Hold an NQ2 retail drink license fo r the sale of alcoholic beverages on the 16
distillery premises; and 17
(b) Employ persons to engage in the sale or service of alcohol under an NQ2 18
license, if each employee completes the department's Server Training in 19
Alcohol Regulations program within thirty (30) days of beginning 20
employment. 21
(10) A distiller may sell to consumers at fairs, festivals, and other similar types of events 22
located in wet territory. A distiller may: 23
(a) Sell alcoholic beverages by the drink, containing spirits distilled or bottled o n 24
the premises of the distillery; 25
(b) Sell by the package in quantities not to exceed nine (9) liters per person, per 26
day; and 27
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(c) Serve complimentary samples not to exceed one and three -fourths (1 -3/4) 1
ounces per person, per day. 2
(11) A distiller may offe r for sale in its gift shop products that were produced in 3
collaboration with a brewer or microbrewer, except that: 4
(a) These packages shall not be exclusive to the distiller's gift shop; and 5
(b) The distiller shall purchase the jointly branded souvenir pa ckage only from a 6
licensed malt beverage distributor or a microbrewery pursuant to KRS 7
243.157(1)(f). A microbrewery selling and delivering the jointly branded 8
souvenir package directly to a distiller under this subsection shall provide 9
notice to the distributor of any self-distribution delivery by electronic or other 10
means. 11
(12) (a) A distiller that holds a Class B distiller's license but does not hold a Class A 12
distiller's license under KRS 243.030 may sell and deliver to any licensed 13
retailer up to five thousand (5,000) gallons of distilled spirits annually, sold 14
under a brand name owned or exclusively licensed to the distillery, provided 15
the distilled spirits were: 16
1. Produced by the distillery; 17
2. Produced for the distillery under a written contract with another licensed 18
manufacturer; or 19
3. Bottled for or by the distillery. 20
(b) Any products sold and delivered under this subsection that are not otherwise 21
registered by a licensed wholesaler shall be registered by the distillery with 22
the department. 23
(c) Any products sold and delivered under this subsection shall be delivered by 24
the distillery in vehicles owned and operated by the distillery, displaying the 25
distillery's name and license number. 26
(d) The distillery is responsible for payment of all applicable t axes and reporting 27
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of self-distributed distilled spirits. 1
(e) The distillery may extend credit on distilled spirits sold to retail licensees for a 2
period not to exceed thirty (30) days from the date of invoice, with the date of 3
invoice included in the total number of days. 4
(f) A distillery shall report self-distribution sales under this subsection as follows: 5
1. For a sale of in excess of nine (9) liters to any given retailer on any 6
given day, the distillery shall provide at least twenty -four (24) hours 7
advance written or electronic notice to wholesalers that have an existing 8
business relationship with the distillery and that distribute the products 9
the distillery is self-distributing. If advance notice is not practicable, the 10
distillery shall notify the who lesaler within one (1) business day of 11
delivery; 12
2. A distillery shall submit a quarterly report of its self -distribution sales 13
under this subsection to wholesalers that have an existing business 14
relationship with the distillery and that distribute the pro ducts the 15
distillery is self-distributing. The quarterly report shall describe the type, 16
quantity, and price of the product that was self -distributed, the retail 17
delivery location, and the date of delivery of the self-distribution sales in 18
the most recently completed quarter preceding the due date of the report; 19
and 20
3. Each distillery engaging in self -distribution sales under this subsection 21
shall report to the department the total number of gallons self-distributed 22
annually at the time of the renewal of its Class B distiller's license. 23
(13) A distiller that sells souvenir packages and serves complimentary samples in 24
accordance with this section at any of its licensed premises may, for each such 25
premises, maintain one (1) separately licensed off -premises retail sales outlet and 26
engage in the activities and hold the licenses authorized in subsections (3), (4), (8), 27
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(9), (11), and (12) of this section if the off -premises retail sales outlet premises are 1
located in wet territory or in a precinct that has authori zed alcoholic beverage sales 2
by the distillery under KRS 242.1243. The distiller shall pay the fee required under 3
KRS 243.030 for each off-premises retail sales outlet it maintains. 4
(14) Except as expressly stated in this section, this section does not exempt the holder of 5
a distiller's license from: 6
(a) The provisions of KRS Chapters 241 to 244; 7
(b) The administrative regulations of the board;[ and] 8
(c) Regulation by the board at all the distiller's licensed premises; and 9
(d) The state regulatory license fees imposed by Sections 1 and 2 of this Act. 10
(15) A distiller shall only sell souvenir packages pursuant to this section if it also 11
holds a souvenir package sales license. 12
(16) Nothing in this section shall be construed to vitiate the policy of this 13
Commonwealth supporting an orderly three (3) tier system for the production and 14
sale of alcoholic beverages. 15
(17) A distiller may permit leashed dogs on its premises, consistent with any applicable 16
health or safety codes. 17
Section 10. KRS 243.033 is amended to read as follows: 18
(1) A caterer's license may be issued as a supplementary license to a caterer that holds a 19
quota retail package license, a quota retail drink license, an NQ1 license, an NQ2 20
license, or a limited restaurant license. 21
(2) The caterer's license may be issued as a primary license to a caterer in any wet 22
territory or in any moist territory under KRS 242.1244 for the premises that serves 23
as the caterer's commissary and designated banquet hall. A[No] primary caterer's 24
license shall not authorize alcoholic beverage sales at a premises that operates as a 25
restaurant. The alcoholic beverage stock of the caterer shall be kept under lock and 26
key at the licensed premises during the time that the alcoholic beverages are not 27
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being used in conjunction with a catered function. 1
(3) The caterer's license shall authorize the caterer to: 2
(a) Purchase and store alcoholic beverages in the manner prescribed in KRS 3
243.088, 243.250, and 244.260; 4
(b) Transport, sell, serve, and deliver alcoholic beverages by the drink at locations 5
away from the licensed premises or at the caterer's designate d banquet hall in 6
conjunction with the catering of food and alcoholic beverages for a customer 7
and the customer's guests, in: 8
1. Cities and counties established as moist territory under KRS 242.1244 if 9
the receipts from the catering of food at any catered event are at least 10
seventy percent (70%) of the gross receipts from the catering of both 11
food and alcoholic beverages; 12
2. Precincts established as moist territory if the receipts from the catering 13
of food at any catered event are at least ten percent (10%) of the gross 14
receipts from the catering of both food and alcoholic beverages. This 15
subparagraph shall supersede any conflicting provisions of KRS 16
Chapters 241 to 244; 17
3. Wet cities and counties in which quota retail drink licenses are not 18
available if the receipts from the catering of food at any catered event 19
are at least fifty percent (50%) of the gross receipts from the catering of 20
both food and alcoholic beverages; or 21
4. All other wet territory if the receipts from the catering of food at any 22
catered event are at least thirty -five percent (35%) of the gross receipts 23
from the catering of both food and alcoholic beverages; 24
(c) Receive and fill telephone orders for alcoholic beverages in conjunction with 25
the ordering of food for a catered event; and 26
(d) Receive payment for alcoholic beverages served at a catered event on a by -27
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the-drink, cash bar, or by -the-event basis. The caterer may bill the customer 1
for by -the-function sales of alcoholic beverages in the usual course of the 2
caterer's business. 3
(4) A caterer licensee shall not cater alcoholic beverages at locations for which retail 4
alcoholic beverage licenses or special temporary licenses have been issued. A 5
caterer licensee may cater a charitable or nonprofit fundraising event or a state or 6
national confe rence for which a special temporary alcoholic beverage auction 7
license has been issued under KRS 243.036. 8
(5) A caterer licensee shall not cater alcoholic beverages on Sunday except in territory 9
in which the Sunday sale of alcoholic beverages is permitted under the provisions 10
of KRS 244.290 and 244.480. 11
(6) The location at which alcoholic beverages are sold, served, and delivered by a 12
caterer, pursuant to this section, shall not constitute a public place for the purpose of 13
KRS Chapter 222. If the location i s a multi -unit structure, only the unit or units at 14
which the function being catered is held shall be excluded from the public place 15
provisions of KRS Chapter 222. 16
(7) The caterer licensee shall post a copy of the licensee's caterer's license at the 17
location of the function for which alcoholic beverages are catered. 18
(8) All restrictions and prohibitions applying to a quota retail drink licensee and an 19
NQ4 retail malt beverage drink licensee not inconsistent with this section shall 20
apply to the caterer licensee. 21
(9) The caterer licensee shall maintain records as set forth in KRS 244.150 and in 22
administrative regulations promulgated by the board. 23
(10) Notwithstanding subsection (3)(b) of this section, a caterer may serve alcoholic 24
beverages to guests who are twenty-one (21) years of age or older at a private event 25
in dry territory if: 26
(a) The alcoholic beverages were lawfully purchased in a wet or moist territory: 27
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1. By an individual; or 1
2. At the caterer's licensed premises in wet or moist territory; and 2
(b) The alcoholic beverages are not sold in dry territory to guests at the private 3
residence or private event regardless of whether the venue is a public place. 4
Section 11. KRS 243.036 is amended to read as follows: 5
(1) A special temporary alcoholic beverage auction license may be issued to: 6
(a) An auctioneer licensed under KRS Chapter 330;[ or to ] 7
(b) A charitable organization;[ or ] 8
(c) A nonprofit organization; or 9
(d) The organizer or sponsor of a state or national conference. 10
(2) A special temporary alcoholic beverage auction license issued to a charitable or 11
nonprofit organization or to the organizer or sponsor o f a state or national 12
conference shall authorize the holder to: 13
(a) Purchase, transport, receive, possess, store, sell, and deliver alcoholic 14
beverages by the package or by the drink to be sold by auction or raffle or 15
given away or served or consumed at charity or nonprofit events or at state or 16
national conferences; 17
(b) Purchase, transport, receive, possess, store, sell, and deliver limited specially 18
labeled bottles of alcoholic beverages to be sold or given away at charity or 19
nonprofit events or state or national conferences; 20
(c) Obtain alcoholic beverages from distillers, rectifiers, wineries, small farm 21
wineries, brewers, microbreweries, wholesalers, distributors, retailers, or any 22
other person, by gift or donation, for the purpose of charity or nonprofi t 23
events or state or national conferences; and 24
(d) Receive payment for alcoholic beverages sold at events. 25
(3) For a charitable or nonprofit organization or a state or national conference -26
sponsored auction: 27
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(a) Each alcoholic beverage auction or raffle [ co nducted by a charitable 1
organization] shall be subject to all restrictions and limitations contained in 2
KRS Chapters 241 to 244 and the administrative regulations issued under 3
those chapters and shall be authorized only on the days and only during the 4
hours that the sale of alcoholic beverages is otherwise authorized in the 5
county or municipality; and 6
(b) The location at which the alcoholic beverages are auctioned, raffled, or 7
consumed under this section shall not constitute a public place for the purpose 8
of KRS Chapter 222. Charitable ,[ or] nonprofit, or state or national 9
conference-sponsored events may be conducted on licensed or unlicensed 10
premises. The [ charitable] organization possessing a special temporary 11
alcoholic beverage auction license shall post a copy of the license at the 12
location of the event. 13
(4) An auctioneer holding a special temporary alcoholic beverage auction license may: 14
(a) Transport, receive, possess, store, advertise, auction, sell, deliver, and ship 15
alcoholic beverages either sold or intended for sale at auction by the licensee; 16
(b) Sell only alcoholic beverages at auction that: 17
1. Were previously lawfully sold at retail; and 18
2. Are in their original manufacturer's unopened container; 19
(c) Deliver and ship any alcoholic beverages sold at an auction directly to the 20
consumer who purchased the alcoholic beverages. Any shipment to a 21
consumer outside of this state is subject to all applicable laws of the 22
jurisdiction in which that consumer is located. When shipping alcoholic 23
beverages direct ly to a consumer in this state, the auctioneer holder of the 24
license shall: 25
1. Ensure that the shipping label on each container containing the alcoholic 26
beverages conspicuously states the following: "CONTAINS 27
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ALCOHOL: SIGNATURE OF PERSON AGE 21 OR OLDER 1
REQUIRED FOR DELIVERY"; 2
2. Obtain the signature of a person who is at least twenty -one (21) years of 3
age at the delivery address prior to delivery, after requiring that person 4
to demonstrate that he or she is at least twenty -one (21) years of age by 5
providing a valid identification document; and 6
3. Not ship the alcoholic beverages to any address in this state located in 7
dry territory; and 8
(d) Conduct the auction on premises licensed by the department, unlicensed 9
premises, or online. 10
(5) A special temporary alcoholic beverage auction conducted by an auctioneer shall 11
be: 12
(a) Subject to all restrictions and limitations contained in KRS Chapters 241 to 13
244 and the administrative regulations issued under those chapters; 14
(b) Separate from any other type of alcoholic beverage auction authori zed under 15
KRS Chapters 241 to 244, but may be combined with other types of auctions 16
authorized under KRS Chapter 330; 17
(c) Authorized for in-person live auctions and online auction closings only on the 18
days and only during the hours that the sale of alcohol ic beverages is 19
otherwise authorized in the county or municipality where the live auction is 20
held or, for an online auction, the physical location of the alcoholic beverages 21
being sold; and 22
(d) Subject to the auction and auctioneer requirements of KRS Chapter 330. 23
(6) An auctioneer conducting a special temporary alcoholic beverage auction shall: 24
(a) Post a copy of its special temporary alcoholic beverage auction license and 25
auctioneer license at the location of the event for in -person auctions and on 26
the auction website for online auctions; and 27
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(b) Not hold any other type of alcoholic beverage license. 1
(7) Alcoholic beverages shall only be sold by an auctioneer under a special temporary 2
alcoholic beverage auction license if the alcoholic beverages were not purchased or 3
attained for the purpose of resale at auction and in the following circumstances: 4
(a) As an "Estate Auction," or included in such auction where the alcoholic 5
beverages being offered at auction are the property belonging to the estate of 6
one (1) or more deceased persons and are being offered by: 7
1. The direction and authority of the authorized executor or administrator; 8
2. Court order; or 9
3. The direction or on behalf of a surviving spouse or direct heirs; 10
(b) As a "Living Estate Auction" or "Do wnsizing Auction" or included in such 11
auction where the alcoholic beverages being offered at auction are the 12
property belonging to a person or persons of a household that is in transition 13
due to one (1) of the following life-changing situations: 14
1. One (1) or more members of the household moving into a retirement 15
home, nursing home, assisted living home, or a smaller residence; or 16
2. Combining one (1) household with another; or 17
(c) As a partial or complete disbursement of an alcoholic beverage collection 18
consisting of more than one (1) package that has been collected by the same 19
individual or household. An individual or household shall not sell collections 20
at auction more than once every three (3) years. 21
(8) (a) A person shall not purchase alcoholic beverage s from an auctioneer at a 22
special temporary alcoholic beverage auction unless that person may lawfully 23
receive or possess the alcoholic beverages. 24
(b) Nothing in this section shall prevent a vintage distilled spirits licensee from 25
purchasing alcoholic beverages at auction if the alcoholic beverages qualify as 26
vintage distilled spirits. 27
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(9) All advertising for an auctioneer special temporary alcoholic beverage auction 1
shall: 2
(a) Show the name and license number for the special temporary alcoholic 3
beverage auction license and the auctioneer license; and 4
(b) Conform to all advertising requirements and restrictions for auctions 5
contained in KRS Chapter 330 and any administrative regulations 6
promulgated under that chapter. 7
(10) If a person ceases to be licensed a s an auctioneer under KRS Chapter 330, the 8
person's special temporary alcoholic beverage auction license shall be automatically 9
suspended until the person reestablishes licensure as an auctioneer. 10
(11) An auctioneer holding a special temporary alcoholic beverage auction license shall 11
file a quarterly report with the department, which shall be established and 12
maintained by the department, utilizing a form prescribed by the department that 13
includes the following information: 14
(a) The number of alcoholic beverage packages auctioned in the preceding three 15
(3) months in total, with each purchase matched to the individuals who both 16
sold and purchased the alcoholic beverages; 17
(b) The date of each purchase; 18
(c) The name, address, and phone number of each individual who sold and 19
purchased the alcoholic beverages; 20
(d) A detailed description of the alcoholic beverages purchased, including the 21
brand name, number of packages, and the size of the packages; and 22
(e) Whether each alcoholic beverage package was purchased in -person, delivered 23
in-person, or shipped. 24
(12) A special temporary alcoholic beverage auction license shall not be issued for any 25
period longer than thirty (30) days. 26
(13) Notwithstanding any other provisio n of KRS Chapters 241 to 244, a distiller, 27
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rectifier, winery, small farm winery, brewer, microbrewery, wholesaler, distributor, 1
or retailer may donate, give away, or deliver any of its products to a charitable or 2
nonprofit organization or the organizer or sponsor of a state or national 3
conference possessing a special temporary alcoholic beverage auction license under 4
this section. 5
(14) All restrictions and prohibitions applying to an alcoholic beverage retail package 6
and alcoholic beverage by the drink lice nse, not inconsistent with this section, shall 7
apply to a special temporary alcoholic beverage auction license. 8
Section 12. KRS 243.040 is amended to read as follows: 9
The following kinds of malt beverage licenses may be issued by the malt beverages 10
administrator, the fees for which shall be: 11
(1) Brewer's license, per annum ........................................................................$2,580.00 12
(2) Microbrewery license, per annum ...................................................................$520.00 13
(3) Distributor's license, per annum ......................................................................$520.00 14
(4) Nonquota retail malt beverage package license, per annum ............ $570.00[$210.00] 15
(5) Out-of-state malt beverage supplier's license, 16
per annum ....................................................................................................$1,550.00 17
(6) Malt beverage storage license, per annum ......................................................$260.00 18
(7) Replacement or duplicate license, per annum ...................................................$25.00 19
(8) Limited out-of-state malt beverage supplier's license, 20
per annum .......................................................................................................$260.00 21
(9) Nonquota type 4 malt beverage drink license, 22
per annum .......................................................................................................$210.00 23
(10) Direct shipper Type A license, per annum.......................................................$100.00 24
(11) The holder of a nonquota retail malt beverage package license may obtain a 25
Nonquota type 4 malt beverage drink license for a fee of fifty dollars ($50). The 26
holder of a Nonquota type 4 malt beverage drink license may obtain a nonquota 27
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retail malt beverage package license for a fee of fifty dollars ($50). 1
(12) A nonrefundable fee of sixty dollars ($60) shall be charged to process each new 2
transitional license pursuant to KRS 243.045. 3
(13) Other special licenses as the state board finds to be necessary for the administration 4
of KRS Chapters 241 to 244 and for the proper regulation and control of the 5
trafficking in malt beverages, as provided for by administrative regulations 6
promulgated by the state board. 7
A nonrefundable application fee of fifty dollars ($50) shall be charged to process each 8
new application for a license under this section. The application fee shall be applied to 9
the licensing fee if the license is issued, or otherwise the f ee shall be retained by the 10
department. 11
SECTION 13. KRS 243.075 IS REPEALED AND REENACTED TO READ 12
AS FOLLOWS: 13
(1) As used in this section: 14
(a) "City or county" means a: 15
1. City, including a city recognized under KRS 67C.111; 16
2. County; 17
3. Urban-county government; 18
4. Consolidated local government; 19
5. Charter county government; or 20
6. Unified local government; 21
(b) "Gross receipts" has the same meaning as in Section 1 of this Act; and 22
(c) "Regulatory license fee" means a loca l fee imposed by a city or county 23
pursuant to this section. 24
(2) (a) The legislative body of a city or county may by ordinance impose a 25
regulatory license fee upon the gross receipts of the sale of alcoholic 26
beverages and cannabis -infused beverages of each establishment where 27
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alcoholic beverage sales or cannabis-infused beverage sales are lawful. 1
(b) The regulatory license fee may be levied at the beginning of each budget 2
period and expended in accordance with subsection (7) of this section. 3
(c) The regulato ry license fee shall be in addition to any other taxes, fees, or 4
licenses permitted by law, except: 5
1. A credit against a regulatory license fee shall be allowed in an amount 6
equal to any licenses or fees imposed by the city or county pursuant to 7
KRS 243.060 or 243.070; 8
2. In a county in which the city and county both levy a regulatory license 9
fee, the county license fee shall only be applicable outside the 10
jurisdictional boundaries of those cities which levy a license fee; and 11
3. In any consolidated local government in which the local regulatory 12
license fee is levied on and after July 1, 2026, and in which there are 13
cities recognized under KRS 67C.111 within the jurisdictional 14
boundaries of the consolidated local government which assess a local 15
regulatory l icense fee as of January 1, 2026, the consolidated local 16
government fee shall only be applicable outside the boundaries of 17
those cities recognized under KRS 67C.111 that levy a fee. 18
(3) (a) For any election held after one (1) year prior to July 1, 2027, an y new fee 19
authorized by subsection (2) of this section shall be enacted by the city or 20
county no later than one (1) year from the date of the local option election 21
held pursuant to KRS Chapter 242. 22
(b) For any election held one (1) year or more prior to Ju ly 1, 2027, the city or 23
county may enact a regulatory license fee based on that election no later 24
than one (1) year after July 1, 2027. 25
(4) Subject to the restrictions in subsection (7) of this section, the Department of 26
Revenue shall promulgate administra tive regulations in accordance with KRS 27
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Chapter 13A that set forth the process by which a city or county, in the first year 1
following the discontinuance of prohibition, may estimate any additional 2
emergency services funding within its jurisdiction and poli cing, regulation, and 3
administrative expenses by a city or county directly and solely related to the 4
discontinuance of prohibition. This subsection shall apply to any discontinuance 5
of prohibition occurring after the promulgation of administrative regulati ons 6
required by this subsection. 7
(5) The revenue received from the imposition of the regulatory license fee authorized 8
by subsection (2) of this section shall be: 9
(a) Deposited into a segregated fund of the city or county; 10
(b) Spent only in accordance with the requirements of subsection (7) of this 11
section; and 12
(c) Audited in accordance with subsection (6) of this section. 13
(6) (a) By January 1, 2028, the Auditor of Public Accounts shall conduct audits of 14
each local government imposing the regulatory license fee authorized by 15
subsection (2) of this section for a full audit of the segregated fund 16
established in subsection (5) of this section for the most recently completed 17
one (1) fiscal year prior to July 1, 2026, and every three (3) years thereafter. 18
The local government shall retain all documentation relating to the 19
segregated fund for the audited years and reimburse the Auditor of the 20
Public Accounts for the costs associated with any audit from the segregated 21
fund established in subsection (5) of this section. 22
(b) If the local government fails to substantially comply with the requirements 23
of this section, the local government shall: 24
1. For the first offense, if currently assessing a fee higher than one 25
percent (1%), reduce the regulatory license fee to one percent (1%); 26
2. For the first offense, if currently assessing a fee lower than one 27
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percent (1%), reimburse the segregated fund established in subsection 1
(5) as determined noncompliant by the audit; and 2
3. For the second offense, be prohibited from imposing the regulatory 3
license fee. 4
(c) Any protest or appeal by a local government related to the findings of an 5
audit completed purs uant to paragraph (a) of this subsection shall be 6
conducted within the administrative procedures of the Auditor of Public 7
Accounts. 8
(d) The cost of all audits conducted pursuant to this subsection shall be paid 9
from the segregated fund established in subsection (5) of this section. 10
(e) The Auditor of Public Accounts may contract with other auditing entities to 11
assist in the completion of audits required by this subsection. 12
(7) (a) Any city or county that was authorized to impose the regulatory license fee 13
by this section prior to July 1, 2027, shall: 14
1. Not impose the regulatory license fee at a rate greater than the rate it 15
imposed on January 1, 2026; and 16
2. a. Impose the fee at a rate of no more than five percent (5%) by 17
July 1, 2027, but shall only use th e segregated funds to 18
reimburse the local government for the estimated costs of any 19
additional policing, regulatory, or administrative expenses 20
related to the sale of alcoholic beverages or cannabis -infused 21
beverages in the city or county; or 22
b. Impose the fee at a rate of no more than three percent (3%) by 23
July 1, 2027, but shall only use the segregated funds to support 24
local emergency services within the city's or county's jurisdiction 25
and to reimburse the local government for the estimated costs of 26
any a dditional policing, regulatory, or administrative expenses 27
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related to the sale of alcoholic beverages or cannabis -infused 1
beverages in the city or county. 2
(b) Any city or county that initially begins to impose the regulatory license fee 3
on or after July 1, 2027, shall impose the fee at a rate of no more than one 4
percent (1%) and shall only use the segregated funds to support local 5
emergency services within the city's or county's jurisdiction and to 6
reimburse the local government for the estimated costs of a ny additional 7
policing, regulatory, or administrative expenses related to the sale of 8
alcoholic beverages or cannabis-infused beverages in the city or county. 9
(8) A direct shipper licensee shall be subject to and remit the regulatory license fee 10
imposed by this section as though it were an establishment located in a city or 11
county licensed to sell alcoholic beverages or cannabis -infused beverages. Any 12
regulatory license fee imposed pursuant to this section shall be considered a tax 13
as defined in KRS 243.029. 14
(9) Any city or county imposing a regulatory license fee pursuant to this section shall 15
file with the: 16
(a) Department a report showing the applicable fee amount and remittance 17
address for each affected license type in its jurisdiction. Any adoption of this 18
fee or modification of the applicable fee amount or remittance address for 19
each affected licensee shall be reported to the department within thirty (30) 20
days of adoption by the city or county imposing the fee. Within twenty (20) 21
days after receipt of th e information, the department shall compile and 22
publish the information so that it is readily available to the public; and 23
(b) Department for Local Government an annual report on or before 24
September 30 of each year that shows the actual expenses incurred and paid 25
and the receipts taken in relating to the regulatory license fee. If the city or 26
county fails to file this report within fifteen (15) days after its due date, the 27
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city's or county's funds for the previous year taken in through the 1
regulatory license fee shall be forfeited to the Auditor of Public Accounts. 2
Section 14. KRS 243.120 is amended to read as follows: 3
(1) A distiller's, rectifier's, or winery license shall authorize the licensee to engage in 4
the business of distiller, rectifier, or winery at the premises specifically designated 5
in the license, to maintain aging warehouses, to bottle products manufactured for 6
itself, and to transport for itself[himself or herself] only any alcoholic beverage 7
which the licensee[he or she] is authorized under the license to manufacture or sell. 8
The licensee shall transport alcoholic beverages only by a vehicle operated by 9
itself[himself or herself] , which has affixed to its sides at all times a sign of form 10
and size prescribed by the state board, containing among other things the name and 11
license number of the licensee. 12
(2) (a) 1. A licensee holding a distiller's license, Class A license, or Class B 13
license shall distill no less than six hundred (600) gallons in one (1) year 14
at the distillery's licensed premises. Documentation of production shall 15
be: 16
a. Provided by each licensee to the department upon the renewal of 17
its distiller's license; and 18
b. Considered confidential tax information pursuant to KRS 19
131.190 and excepted from public inspection pursuant to KRS 20
61.878(1)(l), except as authorized by court order. 21
2. A licensee that engages in the distilling process for the exclusive 22
purpose of providi ng training and education, conducting research, or 23
teaching about the distilling process, aging, or bottling of distilled spirits 24
shall be exempt from subparagraph 1. of this paragraph, so long as the 25
licensee does not produce spirits for sale to the general public. 26
(b) Distillers that produce more than fifty thousand (50,000) gallons of distilled 27
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spirits per calendar year at the premises shall obtain a distiller's license, Class 1
A. 2
(c) Distillers that produce fifty thousand (50,000) gallons or less of dist illed 3
spirits per calendar year at the premises shall obtain a distiller's license, Class 4
B (craft distillery). 5
(3) (a) Rectifiers that rectify more than fifty thousand (50,000) gallons of distilled 6
spirits per calendar year at the premises shall obtain a rectifier's license, Class 7
A. 8
(b) Rectifiers that rectify fifty thousand (50,000) gallons or less of distilled spirits 9
per calendar year at the premises shall obtain a rectifier's license, Class B 10
(craft rectifier). 11
(4) (a) A distiller that is located in wet territory, or in any precinct that has authorized 12
the limited sale of alcoholic beverages at distilleries under KRS 242.1243, 13
may sell distilled spirits by the drink or by the package at retail to consumers 14
in accordance with KRS 243.0305. 15
(b) Any distilled spirits sold under this subsection shall be taxed and distributed 16
in the same manner as sales under KRS 243.0305(2). 17
(c) Except as provided in this subsection, sales under this subsection shall be 18
governed by all of the statutes and administrative reg ulations governing the 19
retail sale of distilled spirits by the drink. 20
(5) Nothing in this section shall be construed to: 21
(a) Vitiate the policy of this Commonwealth supporting an orderly three (3) tier 22
system for the production and sale of alcoholic beverages; or 23
(b) Allow delivery or shipment of alcohol into dry or moist territory. 24
Section 15. KRS 243.155 is amended to read as follows: 25
(1) A small farm winery may apply for a small farm winery license. In addition to all 26
other licensing requirements, an applicant for a small farm winery license shall 27
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submit with its application a copy of the small farm winery's federal basic permit 1
and proof documenting its annual wine production. The board shall promulgate 2
administrative regulations establishing the form the documentation of proof of 3
production shall take. 4
(2) A small farm winery license shall authorize the licensee to perform the following 5
functions without having to obtain separate licenses, except that each small farm 6
winery off-premises retail site shall be separately licensed and the state regulatory 7
license fees imposed by Sections 1 and 2 of this Act shall be paid by the licensee: 8
(a) Engage in the business of a winery under the terms and conditions of KRS 9
243.120 an d 243.130, except that a small farm winery may sell and deliver 10
wine produced by it to a retailer as authorized by this section. The 11
manufacture of wine at the small farm winery shall not be less than two 12
hundred fifty (250) gallons, and shall not exceed f ive hundred thousand 13
(500,000) gallons, in one (1) year; 14
(b) Bottle wines produced by that small farm winery and other licensed small 15
farm wineries; 16
(c) Enter into an agreement with another licensed small farm winery under which 17
it crushes, processes, ferm ents, bottles, or any combination of these services, 18
the grapes, fruits, or other agricultural products of the other small farm winery 19
for a production year. The resulting wine shall be considered the product of 20
the small farm winery that provides the frui t. The small farm winery 21
providing the custom crushing services may exclude the wine produced under 22
this paragraph from its annual production gallonage; 23
(d) If the licensed small farm winery or off-premises retail site premises is located 24
in wet territory or in a precinct that has authorized alcoholic beverage sales by 25
the small farm winery under KRS 242.124: 26
1. Serve complimentary samples of wine produced by it in amounts not to 27
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exceed six (6) ounces per patron per day; and 1
2. Sell by the drink for on -premises consumption or off -premises 2
consumption pursuant to KRS 243.081, or by the package wine 3
produced by it or by another licensed small farm winery, at retail to 4
consumers; 5
(e) Sell by the drink or by the package, at fairs, festivals, and other similar ty pes 6
of events, wine produced by it or by another licensed small farm winery, at 7
retail to consumers if all sales occur in a wet territory; 8
(f) Sell and transport wine produced by it to consumers, licensed small farm 9
winery off -premises retail sites, wholes ale license holders, and small farm 10
winery license holders, except that wine purchased between small farm 11
wineries shall not exceed five hundred (500) gallons per year per small farm 12
winery; 13
(g) Consume on the premises wine produced by the small farm winer y or a 14
licensed small farm winery and purchased by the drink or by the package at 15
the licensed premises, if the small farm winery is located in wet territory; 16
(h) Sell wine at retail to consumers in accordance with KRS 243.027 to 243.029 17
if it holds a direct shipper license; and 18
(i) Sell and deliver, in accordance with KRS 243.120(1), up to twelve thousand 19
(12,000) gallons of wine produced by it annually to any retail license holder 20
as long as: 21
1. Any products sold and delivered under this paragraph that are not 22
otherwise registered by a licensed wholesaler shall be registered with the 23
department by the small farm winery; 24
2. The small farm winery is responsible for payment of wine state 25
wholesale regulatory license fees [wholesale sales taxes] and reporting 26
of self-distributed wines in accordance with Section 2 of this Act [KRS 27
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243.884]; and 1
3. The small farm winery may extend credit on wine sold to retail licensees 2
for a period not to exceed thirty (30) days from the date of invoice, with 3
the date of invoice included in the total number of days. 4
This paragraph shall not apply to small farm winery wholesalers licensed 5
under KRS 243.154. 6
(3) If the requirements of KRS 242.1241 or 244.290(5) relating to Sunday sales on the 7
licensed premises of a small farm winery are met, a small farm winer y within that 8
territory may sell alcoholic beverages on Sunday only in accordance with this 9
section during the hours and times as permitted in the local ordinance for that 10
locality. 11
(4) A small farm winery license holder may also hold an NQ2 retail drink l icense or an 12
NQ4 retail malt beverage drink license if: 13
(a) The small farm winery is located in wet territory or in a precinct that has 14
authorized alcoholic beverage sales by the small farm winery under KRS 15
242.124; and 16
(b) The issuance of these licenses i s in connection with the establishment and 17
operation of a restaurant, hotel, inn, bed and breakfast, conference center, or 18
any similar business enterprise designed to promote viticulture, enology, and 19
tourism. 20
(5) This section shall not exempt the holder o f a small farm winery license from the 21
provisions of KRS Chapters 241 to 244, nor from the administrative regulations of 22
the board, nor from regulation by the board at all premises licensed by the small 23
farm winery, except as expressly stated in this section. 24
(6) Nothing contained in this section shall exempt a licensed out -of-state winery from 25
obeying the laws of its resident state. 26
(7) Upon the approval of the department, a small farm winery license may be renewed 27
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after the licensee submits to the departm ent the winery's federal basic permit and 1
proof of its annual wine production. Documentation of production shall be: 2
(a) Provided by each licensee to the department upon the renewal of its small 3
farm winery license; and 4
(b) Considered confidential tax info rmation pursuant to KRS 131.190 and 5
excepted from public inspection pursuant to KRS 61.878(1)(l), except as 6
authorized by court order. 7
(8) An employee of a small farm winery may sample the products produced by that 8
small farm winery for purposes of educati on, quality control, and product 9
development. 10
(9) A small farm winery may permit leashed dogs on its premises, consistent with any 11
applicable health or safety codes. 12
Section 16. KRS 243.157 is amended to read as follows: 13
(1) A microbrewery license shall authorize the licensee to perform the following 14
functions: 15
(a) Engage in the business of a brewer under the terms and conditions of KRS 16
243.150, provided that production of malt beverages at the microbrewery shall 17
not exceed fifty thousand (50,000) barrels in one (1) year; 18
(b) Serve[ on the premises] complimentary samples of malt beverages produced 19
by the microbrewery in amounts not to exceed sixteen (16) ounces per patron, 20
provided the microbrewery is located in wet territ ory or a precinct that has 21
authorized the sale of alcoholic beverages at microbreweries under KRS 22
242.1239; 23
(c) Sell malt beverages produced on the premises of the microbrewery to licensed 24
distributors; 25
(d) Sell malt beverages produced on the premises of the microbrewery for on- and 26
off-premises purposes in accordance with subsection (3)(b) and (c) of this 27
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section, pursuant to the following: 1
1. Without restriction on the amount of malt beverages sold by the drink 2
for on -premises consumption provided the mic robrewery is located in 3
wet territory or a precinct that has authorized the sale of alcoholic 4
beverages at microbreweries under KRS 242.1239; and 5
2. With a restriction on the amount of malt beverages sold for off -premises 6
consumption, in an aggregate amoun t not to exceed thirty -one (31) 7
gallons per person per day that shall not include more than three (3) 8
cases in case format; 9
(e) Sell: 10
1. Unlimited amounts of malt beverages by the drink; and 11
2. Not more than one (1) case of packaged malt beverages; 12
produced on the premises of the microbrewery to consumers at fairs, festivals, 13
and other similar types of events located in wet territory, in accordance with 14
subsection (3)(b)2. and (c)2. of this section; and 15
(f) Sell and deliver up to two thousand five hundred (2,500) barrels of malt 16
beverages annually to any retail license holder, provided that [: 17
1. ]any products sold and delivered under this paragraph that are not 18
otherwise registered by a licensed distributor shall be registered with the 19
department by the microbrewery[; and 20
2. The microbrewer notifies the distributor of any self -distribution delivery 21
by electronic or other means]. 22
(2) A microbrewery license shall not be deemed to be incompatible with any other 23
license except for a distributor's license under the provisions of KRS 243.180. 24
(3) In accordance with the provisions of this section, a microb rewery license holder 25
may: 26
(a) Hold retail drink and package licenses both on and off the premises of the 27
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microbrewery. The holder of a microbrewery license is exempt from the 1
provisions of KRS 244.570 and 244.590 as applied to any retail licenses held 2
by the microbrewery license holder, and from any other sections which would 3
restrict the co -ownership of the microbrewery license and any retail licenses 4
described in this section; 5
(b) Sell malt beverages produced on the premises of the microbrewery for on -6
premises purposes without having to transfer physical possession of those 7
malt beverages to a licensed distributor provided: 8
1. The microbrewery possesses a retail drink license for those premises; 9
and 10
2. The microbrewery reports and pays all taxes and state regulatory 11
license fees required by Sections 1 and 2 of this Act [subsection (5)(a) 12
and (b) of this section] to the Department of Revenue at the time and in 13
the manner required by the Department of Revenue in accordance with 14
its powers under KRS 131.130(3); and 15
(c) Sell malt beverages produced on the premises of the microbrewery for off -16
premises purposes without having to transfer physical possession of those 17
malt beverages to a licensed distributor provided that: 18
1. The microbrewery possesses a retail pack age license for those premises; 19
and 20
2. The microbrewery reports and pays all taxes and state regulatory 21
license fees required by Sections 1 and 2 of this Act [subsection (5)(a) 22
and (b) of this section] to the Department of Revenue at the time and in 23
the manner required by the Department of Revenue in accordance with 24
its powers under KRS 131.130(3). 25
(4) The provisions of subsection (3)(b) and (c) of this section shall apply only to malt 26
beverages that are produced by the microbrewery at its licensed premises and: 27
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(a) Offered for sale by the microbrewery at that same premises under the 1
microbrewery's retail drink or package license; or 2
(b) Offered for sale by the microbrewery at a fair, festival, or other similar type of 3
event as authorized under subsection (1)(e) of this section. 4
All other malt beverages produced by the microbrewery which are offered for retail 5
sale shall be sold and physically transferred to a licensed distributor in compliance 6
with all other relevant provisions of KRS Chapters 241 to 244, an d a licensed 7
microbrewery shall not otherwise affect sales of malt beverages directly to retail 8
customers except as provided in subsection (3)(b) and (c) of this section under KRS 9
243.027 to 243.029 if the microbrewery holds a direct shipper license. 10
(5) (a) A microbrewery selling malt beverages in accordance with subsection (1) (d), 11
(e), or (f)[ or (3)(b) and (c)] of this section shall pay all [ wholesale sales] 12
taxes and state regulatory license fees due under Sections 1 and 2 of this 13
Act[KRS 243.884]. For the purposes of this subsection, "selling"["wholesale 14
sales"] means a sale of malt beverages made by a microbrewery under 15
subsection (1)(d), (e), or (f)[ or (3)(b) and (c)] of this section, as applicable. 16
(b) A microbrewery [ shall pay the excise tax on mal t beverages in accordance 17
with KRS 243.720(3) and 243.730 and] shall be entitled to the credit set forth 18
in Section 2 of this Act[KRS 243.720(3)(b)]. 19
(6) A microbrewery shall not be located in dry territory. 20
(7) An employee of a microbrewery may sample the products produced by that 21
microbrewery for purposes of education, quality control, and product development. 22
(8) This section does not exempt the holder of a microbrewery license from the 23
provisions of KRS Chapters 241 to 244, nor from any rules of the boa rd as 24
established by administrative regulations, nor from regulation by the board, except 25
as expressly stated in this section. The provisions of this section shall not be 26
deemed inconsistent with the provisions of KRS 244.602. 27
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(9) Nothing in this section s hall be construed to vitiate the policy of this 1
Commonwealth, as set forth in KRS 244.167 and 244.602, supporting an orderly 2
three (3) tier system for the production and sale of malt beverages. 3
(10) Documentation of production shall be: 4
(a) Provided by eac h licensee to the department upon the renewal of its 5
microbrewery license; and 6
(b) Considered confidential tax information pursuant to KRS 131.190 and 7
excepted from public inspection pursuant to KRS 61.878(1)(l), except as 8
authorized by court order. 9
(11) A microbrewery may permit leashed dogs on its premises, consistent with any 10
applicable health or safety codes. 11
Section 17. KRS 243.160 is amended to read as follows: 12
(1) A licensed wholesaler may purchase, receive, store, or possess distilled spirits and 13
wine to sell at wholesale, from the licensed prem ises only, and to transport to and 14
from the licensed premises only alcoholic beverages that the wholesaler's license 15
authorizes the licensee to sell. The wholesaler may transport: 16
(a) Beverages in the manner provided for manufacturers in KRS 243.120; and 17
(b) Distilled spirits and wine from a manufacturer's warehouse or from another 18
licensed wholesaler's premises to the licensed wholesaler premises. 19
(2) The holder of a wholesaler's license may sell and transport its products to the holder 20
of a special nonbeverage alcohol license. 21
(3) The holder of a wholesaler's license shall: 22
(a) Have exclusive control over the licensed premises and its contents; and 23
(b) Ensure distilled spirits, wine, and business records stored on the premises 24
are adequately secured. 25
Section 18. KRS 243.340 is amended to read as follows: 26
(1) A special agent's or solicitor's license may be issued to a duly authorized 27
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representative, employee, or agent of, or solicitor for a distiller, rectifier, winery, or 1
wholesaler licensed in Kentucky or by the state of his or her residence and by the 2
United States if a resident therein. The license shall authorize the licensee to offer 3
for sale and to solicit orders for the sale of any alcoholic beverage sold by a 4
distiller, rectifier, winery, or wholesaler who is licensed in Kentucky or who is a 5
nonresident. The licensee shall only offer for sale or solicit orders from those 6
wholesale or retail licensees legally authorized to buy and receive the alcoholic 7
beverages of t he distiller, rectifier, winery, or wholesaler licensed in Kentucky. 8
The license shall set forth the name, address, and, unless the vendor is a 9
nonresident, the license numbers of the vendors the agent or solicitor represents, as 10
well as the name, address, and license number of the agent or solicitor. An agent or 11
solicitor shall not represent any vendor or licensee whose name does not appear 12
upon the license or the application for the license. 13
(2) A special agent's or solicitor's license may be issued to a nonresident of this state. 14
The license shall authorize the nonresident to represent a manufacturer, winery, or 15
wholesaler who is licensed by another state and by the federal government, if the 16
nonresident has been issued a license by another state conferri ng privileges similar 17
to a special agent's or solicitor's license authorized by subsection (1) of this section. 18
If the state of residence of the applicant does not issue a similar license, the 19
application filed with the department shall not be accepted wit hout the approval of 20
the alcoholic beverage control agency of the state of the applicant's residence. 21
Section 19. KRS 243.360 is amended to read as follows: 22
(1) (a) For each application for any new or transitional licens e issued by the 23
department, the department shall provide public notice by listing the 24
application on a dedicated public website space controlled by the department 25
for fourteen (14) days, beginning on the day the application is submitted[All 26
persons shall, before applying for a license, advertise by publication their 27
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intention to apply for a license in the newspaper for legal notices for the 1
county or city whose local administrator has jurisdiction over the proposed 2
premises]. 3
(b) For each application for any new or transitional license that also requires a 4
license issued by a local administrator, the local administrator may publish 5
a public notice by listing the application in the same manner that public 6
meeting notices are publish ed on a dedicated public website space 7
controlled by the local administrator or the legislative body of the affiliated 8
city or county for fourteen (14) days, beginning on the day the application is 9
submitted to the department [An advertisement under this su bsection may be 10
made online or in print]. 11
(c) The department shall[may] prescribe the form and content of the public 12
website space described in paragraph (a) of this subsection [advertisement] 13
by an administrative regulation[ that is] promulgated in accordance with KRS 14
Chapter 13A. 15
(2) The public notice and website requirements of subsection (1) of this section shall 16
not apply to an applicant for the same license for the same premises, or an applicant 17
for any of the following licenses: 18
(a) Out-of-state malt beverage supplier's license; 19
(b) Limited out-of-state malt beverage supplier's license; 20
(c) Out-of-state distilled spirits and wine supplier's license; 21
(d) Limited out-of-state distilled spirits and wine supplier's license; 22
(e) Supplemental bar license; 23
(f) Extended hours supplemental license; 24
(g) Special agent or solicitor's license; 25
(h) Special nonbeverage alcohol license; 26
(i) Transporter's license; 27
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(j) Special Sunday drink license; 1
(k) Hotel in-room license; 2
(l) Sampling license; 3
(m) Direct shipper license; 4
(n) Special temporary drink license; or 5
(o) Vintage distilled spirits license. 6
(3) The department's or local administrator's application listing under subsection (1) 7
of this section[notice] shall state[contain] the following[ information]: 8
(a) The[ notice shall state: the] name and address of the applicant and the name [ 9
and address] of each principal owner, partner, member, officer, and director if 10
the applicant is a partnership, limited partnership, limited liability company, 11
corporation, governmental agency, or other business entity recognized by law; 12
(b) The[ notice shall specifically state the] location of the premises for which the 13
license is sought, the type of business, and the type of license being requested; 14
and 15
(c) The[ noti ce shall state the] date the application was[will be] filed and shall 16
contain the following statement: 17
1. For a listing published by the department: "Any person may protest the 18
approval of the license by writing the Department of Alcoholic 19
Beverage Control within fourteen (14)[thirty (30)] days of the date the 20
application was submitted to the department[of legal publication]."; or 21
2. For a listing published by a local administrator: "Any person may 22
protest the approval of the license by writing to the loca l administrator 23
within fourteen (14) days of the date the application was submitted to 24
the department." 25
(4) Any protest received after the fourteen (14) [thirty (30)] day period has expired 26
shall not be considered a valid legal protest by the local administrator or the board. 27
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(5) Substantial compliance with the information listed in subsection (3) of this section 1
shall be sufficient to comply with this section. 2
Section 20. KRS 243.630 is amended to read as follows: 3
(1) For purpose of this section, "transfer" means: 4
(a) The transfer to a new person or entity of ten percent (10%) or more ownership 5
interest in any licensed business or license; 6
(b) The transfer in bulk, and not in the ordinary course of business, of a major 7
part of the fixtures, materials, supplies, merchandise, or other inventory of a 8
licensee's business; or 9
(c) The transfer of a business or license to a different premises. 10
(2) Any license issued to any person for any licensed premises shall not be transferable 11
or assignable to any other person or to any other premises or to any other part of the 12
building containing the licensed premises, unless a transfer or assignment is 13
authorized by the state administrator in the exercise of sound discretion. 14
(3) A licensee shall not acquire or otherwise dispose of any interest in a licensed 15
premises or any license issued by the department, by sale of assets, stock, 16
inventory, control or right of control, or activities on the licensed premises without 17
prior approval of the st ate administrator. The state administrator shall treat a 18
transfer applicant as a new applicant for qualification and discretion purposes. 19
(4) Any acquisition of interest in a license without prior authorization shall be void. 20
(5) All applications for appro val of a transfer shall be made in writing to the state 21
administrator having jurisdiction over the license. 22
(6) Applications for approval of a transfer shall be made under oath or affirmation, 23
shall be signed by both the transferor and the transferee, and shall contain any other 24
information prescribed by the department. 25
(7) The appropriate state administrator shall deny or approve the application when, in 26
the sound discretion of the administrator, all of the necessary information has been 27
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obtained or the ap plicant has refused to provide requested information, but it shall 1
not be acted upon before the end of the public protest period outlined in KRS 2
243.360. 3
(8) A[No] licensee or other person seeking to acquire an interest in an existing license 4
shall not transfer control or assume control of any licensed premises by agreement 5
or otherwise without the written consent of the state administrator of malt beverages 6
or the state administrator of distilled spirits or both. 7
(9) A licensee shall not transfer its license or any interest in the license while any 8
proceedings against the license or the licensee for a violation of any statute or 9
administrative regulation which may r esult in the suspension or revocation of the 10
license are pending. 11
(10) (a) A licensee shall not transfer its license or any interest it has in the license if 12
the licensee owes a debt on the inventory to a wholesaler responsible for the 13
collection and payme nt of the state wholesale regulatory license fee [tax] 14
imposed under Section 2 of this Act. 15
(b) A transfer shall not take place until the department is notified that the 16
licensee's indebtedness has been paid or resolved to all wholesalers. 17
(c) If a licensee owes debt on the inventory to a wholesaler and the licensee 18
surrenders its license, or its lic ense otherwise becomes inactive, a new 19
license shall not be issued on the same premises unless the new license 20
applicant signs an affidavit swearing that a transfer is not taking place[KRS 21
243.884]. 22
(11) A licensee shall not transfer its license or any int erest in the license if the licensee 23
owes the Commonwealth of Kentucky for taxes as defined in KRS 243.500(4). A 24
transfer shall not take place until the department is notified by the Kentucky 25
Department of Revenue that the licensee's indebtedness has been paid or resolved to 26
the satisfaction of the Department of Revenue. This section shall not prohibit a 27
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transfer of a license or an interest in a license by a trustee in bankruptcy if all other 1
requirements of this section are met. 2
Section 21. KRS 243.710 is amended to read as follows: 3
(1) Each wholesaler or self -distributing distiller shall pay to the Department of 4
Revenue five cents ($0.05) per case on each case of distilled spirits sold by the 5
wholesaler or self-distributing distiller in the state. This tax shall be computed each 6
month according to the report required to be filed by KRS 243.850 and shall be paid 7
on or before the date in each succeeding month when reports are required to be 8
filed. 9
(2) This section shall expire on July 1, 2027. 10
Section 22. KRS 243.720 is amended to read as follows: 11
(1) (a) There is levied upon the use, sale, or distribution by sale or gift of distilled 12
spirits a tax of one dollar and ninety -two cents ($1.92) on each wine gallon of 13
distilled spirits, and a proportional rate per gallon on all distilled spirits used, 14
sold, or distributed in any container of more or less than one (1) gallon, but 15
the rate of the excise tax on spirits in retail containers of one -half (1/2) pint 16
shall be twelve cents ($0.12); and 17
(b) Notwithstanding the provisions of paragraph (a) of this subsection, distilled 18
spirits placed in containers for sale at retail, where the distilled spirits 19
represent six percent (6%) or less of the total volume of the contents of the 20
containers, shall be taxed at the rate of twenty-five cents ($0.25) per gallon. 21
(2) There is levied upon the use, sale, or distribution by sale or gift of wine, a tax of 22
fifty cents ($0.50) on each gallon of wine, and a propo rtional rate per gallon on the 23
wine used, sold, or distributed in any container of more or less than one (1) gallon, 24
but the tax shall not be less than four cents ($0.04) on the sale or distribution of any 25
retail container of wine. 26
(3) (a) There is levied upon the sale or distribution by sale or gift of malt beverages 27
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an excise tax of two dollars and fifty cents ($2.50) on each barrel of thirty -one 1
(31) gallons and a proportional rate per gallon on malt beverages sold or 2
distributed in any container of more or less than thirty-one (31) gallons; 3
(b) Each brewer producing malt beverages in this state shall be entitled to a credit 4
of fifty percent (50%) of the tax levied on each barrel of malt beverages sold 5
in this state, up to three hundred thousand (300,000) barrels per annum. 6
(4) There is levied upon the use, sale, or distribution by sale or gift of cannabis -infused 7
beverages a tax of one dollar and ninety -two cents ($1.92) on each gallon of a 8
cannabis-infused beverage, and a proportional rate per gallon on all cannabis -9
infused beverages used, sold, or distributed in any container of more or less than 10
one (1) gallon. 11
(5) This section shall not apply to: 12
(a) Wine manufactured, sold, given away, or distributed and used solely for 13
sacramental purposes; or 14
(b) Distilled spirits and wine purchased by holders of special licenses provided 15
for in KRS 243.320 and purchased and used in the manner authorized by 16
those licenses. 17
(6) This section shall expire on July 1, 2027. 18
Section 23. KRS 243.730 is amended to read as follows: 19
(1) (a) Wholesalers of distilled spirits and wine shall pay and report the tax and fees 20
levied by Sections 1 and 2 of this Act [KRS 243.720(1) and (2)] on or before 21
the twentieth day of the calendar month next succ eeding the month in which 22
possession or title of the distilled spirits and wine is transferred from the 23
wholesaler to retailers or consumers in this state, in accordance with 24
administrative regulations promulgated under KRS Chapter 13A designed 25
reasonably to protect the revenues of the Commonwealth. 26
(b) 1. Distributors or retailers of malt beverages, who purchase malt beverages 27
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directly from a brewer, shall pay and report the tax and fees levied by 1
Sections 1 and 2 of this Act[KRS 243.720(3)] on or before the twentieth 2
day of the calendar month next succeeding the month in which the 3
brewer sells, transfers, or passes title of the malt beverage to the 4
distributor or retailer, in accordance with administrative regulations 5
promulgated under KRS Chapter 13A designed reasonably to protect the 6
revenues of the Commonwealth. 7
2.[ The credit allowed brewers in this state, under the provisions of KRS 8
243.720(3)(b), shall flow through to the distributor or retailer who 9
purchases malt beverages directly from the brewer. 10
3.] If a brewer sells, transfers, or passes title to malt beverages to any of its 11
employees for home consumption or to any charitable or fraternal 12
organization pursuant to the provisions of KRS 243.150, the brewer 13
shall be responsible for paying and report ing the tax and fees levied by 14
Sections 1 and 2 of this Act [KRS 243.720(3)] in accordance with the 15
provisions of paragraph (d) of this subsection. 16
(c) Cannabis-infused beverage distributors shall pay and report the tax levied by 17
KRS 243.720(4) on or before the twentieth day of the calendar month next 18
succeeding the month in which possession or title of the cannabis -infused 19
beverages are transferred from the cannabis -infused beverage distributor to 20
retailers or consumers in this state, in accordance with adm inistrative 21
regulations promulgated under KRS Chapter 13A designed reasonably to 22
protect the revenues of the Commonwealth. 23
(d) 1. Every brewer selling, transferring, or passing title to malt beverages to 24
any person in this state other than a distributor or retailer; 25
2. Every manufacturer of cannabis -infused beverages permitted by the 26
Department for Public Health selling, transferring, or passing title to 27
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cannabis-infused beverages to any person in this state other than a 1
distributor or retailer; and 2
3. Every other person selling, transferring, or passing title of distilled 3
spirits, wine, malt beverages, or cannabis -infused beverages to 4
distributors, retailers, cannabis -infused beverage licensees, or 5
consumers; 6
shall report and pay the tax and fees levied by Sections 1 and 2 of this Act 7
and KRS 243.720 on or before the twentieth day of the calendar month next 8
succeeding the month in which possession or title of distilled spirits, wine, 9
malt beverages, or cannabis -infused beverages is transferred to a distribu tor, 10
retailer, cannabis -infused beverage licensee, or consumer in this state, in 11
accordance with administrative regulations promulgated under KRS Chapter 12
13A designed reasonably to protect the revenues of the Commonwealth. 13
(e) Every distributor, retailer, or consumer possessing, using, selling, or 14
distributing distilled spirits, wine, malt beverages, or cannabis -infused 15
beverages in this state upon which the tax and fees levied by Sections 1 and 2 16
of this Act and KRS 243.720[ and 243.884] has not been paid shall be jointly 17
and severally liable for reporting and paying the tax due, in accordance with 18
administrative regulations promulgated under KRS Chapter 13A designed 19
reasonably to protect the revenues of the Commonwealth. The liability shall 20
not be extinguished until the tax has been paid to the Department of Revenue. 21
(f) Notwithstanding the provisions of paragraph (a) of this subsection, every 22
owner of a small farm winery shall pay and report the tax and fees levied by 23
Sections 1 and 2 of this Act[KRS 243.720 (1) and (2)] on a quarterly basis, in 24
accordance with administrative regulations of the Department of Revenue 25
designed reasonably to protect the revenues of the Commonwealth. 26
(2) Every wholesaler of distilled spirits or wine before using, selling, or di stributing by 27
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sale or gift distilled spirits and wine shall register with the Department of Revenue. 1
(3) Every brewer before selling or distributing by sale or gift malt beverages, or before 2
importing malt beverages into the state, shall register with the Department of 3
Revenue in a manner as the Department of Revenue may require. 4
(4) Every manufacturer of cannabis -infused beverages before selling or distributing by 5
sale or gift cannabis -infused beverages, or before importing cannabis -infused 6
beverages into the state, shall: 7
(a) Obtain a permit as a food manufacturer through the Department for Public 8
Health; and 9
(b) Register with the Department of Revenue in a manner as the Department of 10
Revenue may require. 11
Section 24. KRS 243.884 is amended to read as follows: 12
(1) (a) Before July 1, 2027, for the privilege of making "wholesale sales" or "sales at 13
wholesale" of malt beverages, wine, distilled spirits, or cannabis -infused 14
beverages, a tax is hereby imposed upon all wholesalers of wine and distilled 15
spirits, all distributors of malt beverages or cannabis -infused beverages, all 16
direct shipper licensees shipping alcoholic beverages or cannabis -infused 17
beverages to a consumer at a Kentucky address, all distillers making sales 18
pursuant to KRS 243.0305(3), (4)(a)1. and 2. and (c), (7), (9), (10), ( 12), and 19
(13), all microbreweries selling malt beverages under KRS 243.157, all small 20
farm wineries selling wine under KRS 243.155, and all manufacturers of 21
cannabis-infused beverages permitted by the Department for Public Health. 22
(b) Prior to July 1, 2015 , the tax shall be imposed at the rate of eleven percent 23
(11%) of the gross receipts of any wholesaler or distributor derived from 24
"sales at wholesale" or "wholesale sales" made within the Commonwealth, 25
except as provided in subsection (3) of this section. For the purposes of this 26
section, the gross receipts of a microbrewery making "wholesale sales" shall 27
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be calculated by determining the dollar value amount that the microbrewer 1
would have collected had it conveyed to a distributor the same volume sold to 2
a consumer as allowed under KRS 243.157(3)(b) and (c). 3
(c) The following rates shall apply to wholesale sales or sales at wholesale: 4
1. For distilled spirits and cannabis -infused beverages, eleven percent 5
(11%); and 6
2. For wine and malt beverages, ten percent (10%). 7
(d) The following rates shall apply for direct shipper sales: 8
1. For distilled spirits and cannabis -infused beverages shipments, eleven 9
percent (11%) for wholesale sales or sales at wholesale; and 10
2. For wine and malt beverage shipments, ten perc ent (10%) for wholesale 11
sales or sales at wholesale. 12
(e) For direct shipper sales or sales made pursuant to KRS 243.0305, if a 13
wholesale price is not readily available, the direct shipper licensee or distillery 14
shall calculate the wholesale price to be sev enty percent (70%) of the retail 15
price of the alcoholic beverages. 16
(2) Wholesalers of distilled spirits and wine, distributors of malt beverages or cannabis-17
infused beverages, microbreweries, distillers, manufacturers of cannabis -infused 18
beverages permitte d by the Department for Public Health, and direct shipper 19
licensees shall pay and report the tax levied by this section on or before the 20
twentieth day of the calendar month next succeeding the month in which possession 21
or title of the distilled spirits, wi ne, malt beverages, or cannabis -infused beverages 22
is transferred from the wholesaler or distributor to retailers, or by microbreweries, 23
distillers, manufacturers of cannabis -infused beverages permitted by the 24
Department for Public Health, or direct shipper licensees to consumers in this state, 25
in accordance with administrative regulations promulgated under KRS Chapter 13A 26
designed reasonably to protect the revenues of the Commonwealth. 27
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(3) Gross receipts from sales at wholesale or wholesale sales shall not include the 1
following sales: 2
(a) Sales made between wholesalers, between distributors, or between 3
manufacturers of cannabis-infused beverages permitted by the Department for 4
Public Health; 5
(b) Sales from the first fifty thousand (50,000) gallons of wine produced by a 6
small farm winery in a calendar year made by: 7
1. The small farm winery; or 8
2. A wholesaler of that wine produced by the small farm winery; and 9
(c) Sales made between a direct s hipper licensee and a consumer located outside 10
of Kentucky. 11
(4) This section shall expire on July 1, 2027. 12
Section 25. KRS 243.886 is amended to read as follows: 13
(1) To reimburse himself or herself for the cost of collecting and reporting the tax, each 14
person required to pay and report the tax levied by KRS 243.884, other than a 15
microbrewery or a distiller, shall deduct on each report one percent (1%) of the tax 16
due, provided the amount due is not delinquent at the time o f payment. A 17
microbrewery or distiller that reports and pays the wholesale sales tax levied by 18
KRS 243.884, in accordance with KRS 243.0305 or 243.157 as applicable, shall not 19
be entitled to deduct one percent (1%) of the tax due. 20
(2) This section shall expire on July 1, 2027. 21
Section 26. KRS 243.890 is amended to read as follows: 22
Except as provided in KRS 211.285, receipts derived from taxes and fees assessed and 23
collected under the provisions of this chapter and Sections 1, 2, and 3 of this Act shall be 24
appropriated for general fund purposes. 25
Section 27. KRS 244.050 is amended to read as follows: 26
A retail licensee shall not sell, give away, or deliver any alcoholic beverage at retail i n 27
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any quantity for less than paid or current wholesale cost, except upon written request and 1
approval by the administrators, pursuant to a bona fide "close out" sale, or as provided by 2
KRS 243.0305, 243.0307, 243.155, and 243.157 and Section 11 of this Act. 3
Section 28. KRS 244.080 is amended to read as follows: 4
(1) A retail licensee, or the licensee's agent, servant, or employee, shall not sell, give 5
away, or deliver any alcoholic beverages or cannabis -infused beverages, or procure 6
or permit any alcoholic beverages or cannabis -infused beverages to be sold, given 7
away, possessed by, or delivered to: 8
(a)[(1)] A minor, except that in any prosecution for selling alcoholic beverages 9
or cannabis -infused beverages to a minor it s hall be an affirmative defense 10
that the sale was induced by the use of false, fraudulent, or altered 11
identification papers or other documents and that the appearance and character 12
of the purchaser were such that the purchaser's age could not have been 13
ascertained by any other means and that the purchaser's appearance and 14
character indicated strongly that the purchaser was of legal age to purchase 15
alcoholic beverages or cannabis -infused beverages. This evidence may be 16
introduced either in mitigation of the c harge or as a defense to the charge 17
itself; or 18
(b)[(2)] A person who appears to a reasonable person to be actually or 19
apparently under the influence of alcoholic beverages, cannabis -infused 20
beverages, controlled substances, other intoxicating substances, o r any of 21
these substances in combination, to the degree that the person may endanger 22
any person or property, or unreasonably annoy persons in the vicinity. 23
(2) If a retail licensee violates subsection (1)(a) of this section three (3) or more times 24
under the same retail license at the same licensed premises within a twenty -four 25
(24) month period, that retail licensee shall be permanently prohibited from 26
holding that type of retail license issued by the department at that licensed 27
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premises. 1
Section 29. KRS 244.585 is amended to read as follows: 2
(1) It shall be unlawful for any distributor to sell any brand or product name of malt 3
beverage in the Commonwealth of Kentucky, except in the territory described in a 4
written agreement between the supplier or brewer and distributor, authorizing sale 5
by the distributor of that brand and product name within a designated area, and 6
within that designated area the distributor shall not refuse to sell or offer reasonable 7
service to licensed retailers during the normal business hours of the distributor. 8
Where a supplier or brewer sells several brands and named products, the agreement 9
need not apply to all brands and named products sold by the supplier or brewer and 10
may apply to only one (1) b rand and product name. A[No] supplier or brewer shall 11
not provide by the written agreement for the distribution of a brand or named 12
product of malt beverages to more than one (1) distributor for all or any part of the 13
designated territory. Upon request, al l territorial agreements shall be filed with the 14
department. 15
(2) Each distributor shall comply with current, written quality control standards as 16
determined by the owner of the trademark of the brand of malt beverage, provided 17
those controls are: 18
(a) Normal industry practice; 19
(b) Reasonably related to the maintenance of quality control; 20
(c) Consistent with the provisions of this chapter and all administrative 21
regulations promulgated under this chapter; and 22
(d) Communicated to the distributor through written notice of them from the 23
owner. 24
(3) A distributor may sell to only those licensed retailers, religious, charitable, or 25
fraternal organizations located within its designated geographical territory as 26
provided in this section and to the distributor's employees and to other distributors 27
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of the same brand. A[No] brand or product name of malt beverage may not be sold 1
in the Commonwealth of Kentucky without prior written approval of the brewer and 2
supplier filed with the department. 3
(4) A territorial designation in any agreement between a distribut or and brewer or 4
supplier pursuant to this section shall be modified only in accordance with all the 5
rights and duties of the distributor and brewer or supplier contained in any written 6
agreement between them or by any other action of the brewer, supplier, or 7
distributor that is consistent with the terms of their agreement, and this modification 8
shall be filed pursuant to the provisions of this section. The board shall require each 9
party to verify that the level of service within the designated territory wi ll not be 10
adversely affected by the modification. When a distributor is prevented from selling 11
or servicing retailers within its territory due to natural disasters, labor disputes, or 12
other causes beyond the distributor's control, the distributor may allow another 13
distributor of the same brand or named product of malt beverages to sell and service 14
that brand within its territory upon approval of the brewer or supplier. 15
(5) The[No] provisions of any agreement shall not expressly or impliedly establish or 16
maintain the resale price of any brand or product name of malt beverage by the 17
distributor, and a brewer or microbrewery shall not: 18
(a) Adjust the price at which the brewer or microbrewery sells malt beverages to 19
a distributor based on the price at which a distributor resells malt beverages 20
to a retailer; or 21
(b) Seek to recover any percentage of the distributor's increase in price to a 22
retailer that may exceed the brewer's or microbrewery's recommended price 23
to that retailer. 24
(6) It shall be unlawful for any brewer or microbrewery to require any distributor to 25
accept delivery of any malt beverages or any other item or commodity that was 26
not ordered by the distributor or included in sales projections to the brewer or 27
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microbrewery that were agreed upon by the distributor. 1
(7) Each brewer or microbrewery contracting with a distributor shall submit an 2
affidavit to the distributor verifying that it will not, by any means, induce a 3
distributor to, or cause a distributor to, waiv e or forego any rights granted or 4
protected by this chapter with respect to the distributor's franchise. 5
(8) This section shall not be construed as encouraging or authorizing any unlawful 6
activity, including but not limited to violations of federal antitrust laws. 7
Section 30. KRS 131.250 is amended to read as follows: 8
(1) For the purpose of facilitating the administration of the taxes it administers, the 9
department may require any tax return, report, or statement to be el ectronically 10
filed. 11
(2) (a) A person required to electronically file a return, report, or statement may 12
apply for a waiver from the requirement by submitting the request on a form 13
prescribed by the department. 14
(b) The request shall indicate the lack of one (1) or more of the following: 15
1. Compatible computer hardware; 16
2. Internet access; or 17
3. Other technological capabilities determined relevant by the department. 18
(3) Beginning July 1, 2026, a licensee: 19
(a) Holding a microbrewery license and authorized to s ell malt beverages under 20
KRS 243.157; and 21
(b) Required to pay the state regulatory license fees due pursuant to Sections 1 22
and 2 of this Act[: 23
1. Wholesale sales tax under KRS 243.884; and 24
2. Excise tax on malt beverages under KRS 243.720(3)]; 25
shall electronically submit any payment and tax return, report, or statement to the 26
department. 27
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Section 31. KRS 139.010 is amended to read as follows: 1
As used in this chapter, unless the context otherwise provides: 2
(1) (a) "Admissions" means the fees paid for: 3
1. The right of entrance to a display, program, sporting event, music 4
concert, performance, play, show, movie, exhibit, fair, or other 5
entertainment or amusement event or venue; and 6
2. The privilege of using facilities or participating in an event or activity, 7
including but not limited to: 8
a. Bowling centers; 9
b. Skating rinks; 10
c. Health spas; 11
d. Swimming pools; 12
e. Tennis courts; 13
f. Weight training facilities; 14
g. Fitness and recreational sports centers; and 15
h. Golf courses, both public and private; 16
regardless of whether the fee paid is per use or in any other form, 17
including but not limited to an initiation fee, monthly fee, membership 18
fee, or combination thereof. 19
(b) "Admissions" does not include: 20
1. Any fee paid to enter or participate in a fishing tournament; or 21
2. Any fee paid for the use of a boat ramp for the purpose of allowing 22
boats to be launched into or hauled out from the water; 23
(2) "Advertising and promotional direct mail" means direct mail the primary purpose of 24
which is to attract public attention to a product, person, business, or organization, or 25
to attempt to sell, popularize, or secure financial support for a product, person, 26
business, or organization. As used in this defi nition, "product" means tangible 27
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personal property, an item transferred electronically, or a service; 1
(3) "Business" includes any activity engaged in by any person or caused to be engaged 2
in by that person with the object of gain, benefit, or advantage, ei ther direct or 3
indirect; 4
(4) "Commonwealth" means the Commonwealth of Kentucky; 5
(5) (a) "Cosmetic surgery services" means modifications to all areas of the head, 6
neck, and body to enhance appearance through surgical and medical 7
techniques. 8
(b) "Cosmetic su rgery services" does not include surgery services that are 9
medically necessary to reconstruct or correct dysfunctional areas of the face 10
and body due to birth disorders, trauma, burns, or disease; 11
(6) "Department" means the Department of Revenue; 12
(7) (a) "Digital audio -visual works" means a series of related images which, when 13
shown in succession, impart an impression of motion, with accompanying 14
sounds, if any. 15
(b) "Digital audio -visual works" includes movies, motion pictures, musical 16
videos, news and entertainment programs, and live events. 17
(c) "Digital audio -visual works" shall not include video greeting cards, video 18
games, and electronic games; 19
(8) (a) "Digital audio works" means works that result from the fixation of a series of 20
musical, spoken, or other sounds. 21
(b) "Digital audio works" includes ringtones, recorded or live songs, music, 22
readings of books or other written materials, speeches, or other sound 23
recordings. 24
(c) "Digital audio works" shall not include audio greeting cards sent by electronic 25
mail; 26
(9) (a) "Digital books" means works that are generally recognized in the ordinary and 27
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usual sense as books, including any literary work expressed in words, 1
numbers, or other verbal or numerical symbols or indicia if the literary work 2
is generally recognized in the ordinary or usual sense as a book. 3
(b) "Digital books" shall not include digital audio -visual works, digital audio 4
works, periodicals, magazines, newspapers, or other news or information 5
products, chat rooms, or weblogs; 6
(10) (a) "Digital code" means a code which provides a purchaser with a right to obtain 7
one (1) or more types of digital property. A "digital code" may be obtained by 8
any means, including electronic mail messaging or by tangible means, 9
regardless of the code's designation as a song code, video code, or book code. 10
(b) "Digital code" shall not include a code that represents: 11
1. A stored monetary value that is deducted from a total as it is used by the 12
purchaser; or 13
2. A redeemable card, gift card, or gift certificate that entitles the holder t o 14
select specific types of digital property; 15
(11) (a) "Digital property" means any of the following which is transferred 16
electronically: 17
1. Digital audio works; 18
2. Digital books; 19
3. Finished artwork; 20
4. Digital photographs; 21
5. Periodicals; 22
6. Newspapers; 23
7. Magazines; 24
8. Video greeting cards; 25
9. Audio greeting cards; 26
10. Video games; 27
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11. Electronic games; or 1
12. Any digital code related to this property. 2
(b) "Digital property" shall not include digital audio -visual works or satellite 3
radio programming; 4
(12) (a) "Direct mail" means printed material delivered or distributed by United States 5
mail or other delivery service to a mass audience or to addressees on a mailing 6
list provided by the purchaser or at the direction of the purchaser when the 7
cost of the items are not billed directly to the recipient. 8
(b) "Direct mail" includes tangible personal property supplied directly or 9
indirectly by the purchaser to the direct mail retailer for inclusion in the 10
package containing the printed material. 11
(c) "Direct mail" does not include multiple items of printed material delivered to 12
a single address; 13
(13) "Directly used in the manufacturing or industrial processing process" means the 14
process that commences with the movement of raw materials from storage into a 15
continuous, unbroken, integrated process and ends when the finished product is 16
packaged and ready for sale; 17
(14) (a) "Executive employee recruitment services" means services provided by a 18
person to locate potential candidates to fill open senior -level management 19
positions. 20
(b) "Executive employee recruitment services" includes but is not limited to 21
making a detailed list of client requirements, researching and identifying 22
potential candidates, performing prescreening interviews, and providing 23
contract and salary negotiations; 24
(15) (a) "Extended warranty services" means services provided through a service 25
contract agreement between the contract provider and the purchaser where the 26
purchaser agrees to pay compensation for the contract and the provider agrees 27
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to repair, replace, sup port, or maintain tangible personal property, digital 1
property, real property, or prewritten computer software access services 2
according to the terms of the contract. 3
(b) "Extended warranty services" does not include the sale of a service contract 4
agreement for tangible personal property to be used by a small telephone 5
utility as defined in KRS 278.516 or a Tier III CMRS provider as defined in 6
KRS 65.7621 to deliver communications services as defined in KRS 136.602 7
or broadband; 8
(16) (a) "Finished artwork" means final art that is used for actual reproduction by 9
photomechanical or other processes or for display purposes. 10
(b) "Finished artwork" includes: 11
1. Assemblies; 12
2. Charts; 13
3. Designs; 14
4. Drawings; 15
5. Graphs; 16
6. Illustrative materials; 17
7. Lettering; 18
8. Mechanicals; 19
9. Paintings; and 20
10. Paste-ups; 21
(17) (a) "Gross receipts" and "sales price" mean the total amount or consideration, 22
including cash, credit, property, and services, for which tangible personal 23
property, digital property, or services are sold, l eased, or rented, valued in 24
money, whether received in money or otherwise, without any deduction for 25
any of the following: 26
1. The retailer's cost of the tangible personal property, digital property, or 27
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services sold; 1
2. The cost of the materials used, labo r or service cost, interest, losses, all 2
costs of transportation to the retailer, all taxes imposed on the retailer, or 3
any other expense of the retailer; 4
3. Charges by the retailer for any services necessary to complete the sale; 5
4. Delivery charges, whic h are defined as charges by the retailer for the 6
preparation and delivery to a location designated by the purchaser 7
including transportation, shipping, postage, handling, crating, and 8
packing; 9
5. Any amount for which credit is given to the purchaser by the retailer, 10
other than credit for tangible personal property or digital property traded 11
when the tangible personal property or digital property traded is of like 12
kind and character to the property purchased and the property traded is 13
held by the retailer for resale; and 14
6. The amount charged for labor or services rendered in installing or 15
applying the tangible personal property, digital property, or service sold. 16
(b) "Gross receipts" and "sales price" shall include consideration received by the 17
retailer from a third party if: 18
1. The retailer actually receives consideration from a third party and the 19
consideration is directly related to a price reduction or discount on the 20
sale to the purchaser; 21
2. The retailer has an obligation to pass the price reduction or discount 22
through to the purchaser; 23
3. The amount of consideration attributable to the sale is fixed and 24
determinable by the retailer at the time of the sale of the item to the 25
purchaser; and 26
4. One (1) of the following criteria is met: 27
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a. The purchaser presents a coupon, certificate, or other 1
documentation to the retailer to claim a price reduction or discount 2
where the coupon, certificate, or documentation is authorized, 3
distributed, or granted by a third party with the understanding that 4
the third party will reimburse any seller to whom the coupon, 5
certificate, or documentation is presented; 6
b. The price reduction or discount is identified as a third -party price 7
reduction or discount on the invo ice received by the purchaser or 8
on a coupon, certificate, or other documentation presented by the 9
purchaser; or 10
c. The purchaser identifies himself or herself to the retailer as a 11
member of a group or organization entitled to a price reduction or 12
discount. A "preferred customer" card that is available to any 13
patron does not constitute membership in such a group. 14
(c) "Gross receipts" and "sales price" shall not include: 15
1. Discounts, including cash, term, or coupons that are not reimbursed by a 16
third party and that are allowed by a retailer and taken by a purchaser on 17
a sale; 18
2. Interest, financing, and carrying charges from credit extended on the 19
sale of tangible personal property, digital property, or services, if the 20
amount is separately stated on the inv oice, bill of sale, or similar 21
document given to the purchaser; 22
3. Any taxes legally imposed directly on the purchaser that are separately 23
stated on the invoice, bill of sale, or similar document given to the 24
purchaser;[ or] 25
4. Local alcohol regulatory license fees authorized under KRS 243.075 that 26
are separately stated on the invoice, bill of sale, or similar document 27
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given to the purchaser; or 1
5. State retail regulatory license fees imposed by Section 1 of this Act 2
that are stated separately on the invoic e, bill of sale, or similar 3
document given to the purchaser. 4
(d) As used in this subsection, "third party" means a person other than the 5
purchaser; 6
(18) "In this state" or "in the state" means within the exterior limits of the 7
Commonwealth and includes all territory within these limits owned by or ceded to 8
the United States of America; 9
(19) "Industrial processing" includes: 10
(a) Refining; 11
(b) Extraction of minerals, ores, coal, clay, stone, petroleum, or natural gas; 12
(c) Mining, quarrying, fabricating, and industrial assembling; 13
(d) The processing and packaging of raw materials, in -process materials, and 14
finished products; and 15
(e) The processing and packaging of farm and dairy products for sale; 16
(20) (a) "Lease or rental" means any transfer of possession or c ontrol of tangible 17
personal property for a fixed or indeterminate term for consideration. A lease 18
or rental shall include future options to: 19
1. Purchase the property; or 20
2. Extend the terms of the agreement and agreements covering trailers 21
where the amount of consideration may be increased or decreased by 22
reference to the amount realized upon sale or disposition of the property 23
as defined in 26 U.S.C. sec. 7701(h)(1). 24
(b) "Lease or rental" shall not include: 25
1. A transfer of possession or control of propert y under a security 26
agreement or deferred payment plan that requires the transfer of title 27
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upon completion of the required payments; 1
2. A transfer of possession or control of property under an agreement that 2
requires the transfer of title upon completion of the required payments 3
and payment of an option price that does not exceed the greater of one 4
hundred dollars ($100) or one percent (1%) of the total required 5
payments; or 6
3. Providing tangible personal property and an operator for the tangible 7
personal property for a fixed or indeterminate period of time. To qualify 8
for this exclusion, the operator must be necessary for the equipment to 9
perform as designed, and the operator must do more than maintain, 10
inspect, or setup the tangible personal property. 11
(c) This definition shall apply regardless of the classification of a transaction 12
under generally accepted accounting principles, the Internal Revenue Code, or 13
other provisions of federal, state, or local law; 14
(21) (a) "Lobbying services" means the act of promoting or securing passage of 15
legislation or an attempt to influence or sway a public official or other public 16
servant toward a desired action, including but not limited to the support of or 17
opposition to a project or the passage, amendment, defeat, approval, or veto of 18
any legislation, regulation, rule, or ordinance.[;] 19
(b) "Lobbying services" includes but is not limited to the performance of 20
activities described as executive agency lobbying activities as defined in KRS 21
11A.201, activities described under the definition of lobby in KRS 6.611, and 22
any similar activities performed at the local, state, or federal levels; 23
(22) (a) "Machinery for new and expanded industry" means machinery: 24
1. Directly used in the manufacturing or industrial processing process of: 25
a. Tangible personal property at a plant facility; 26
b. Distilled spirits or wine at a plant facility or on the premises of a 27
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distiller, rectifier, winery, or small farm winery licensed under 1
KRS 243.030 that includes a retail establishment on the premi ses; 2
or 3
c. Malt beverages at a plant facility or on the premises of a brewer or 4
microbrewery licensed under KRS 243.040 that includes a retail 5
establishment; 6
2. Which is incorporated for the first time into: 7
a. A plant facility established in this state; or 8
b. Licensed premises located in this state; and 9
3. Which does not replace machinery in the plant facility or licensed 10
premises unless that machinery purchased to replace existing machinery: 11
a. Increases the consumption of recycled materials at the plant 12
facility by not less than ten percent (10%); 13
b. Performs different functions; 14
c. Is used to manufacture a different product; or 15
d. Has a greater productive capacity, as measured in units of 16
production, than the machinery being replaced. 17
(b) "Machinery for new and expanded industry" does not include repair, 18
replacement, or spare parts of any kind, regardless of whether the purchase of 19
repair, replacement, or spare parts is required by the manufacturer or seller as 20
a condition of sale or as a condition of warranty; 21
(23) "Manufacturing" means any process through which material having little or no 22
commercial value for its intended use before processing has appreciable 23
commercial value for its intended use after processing by the machinery; 24
(24) "Marketplace" mea ns any physical or electronic means through which one (1) or 25
more retailers may advertise and sell tangible personal property, digital property, or 26
services, or lease tangible personal property or digital property, such as a catalog, 27
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Internet website, or television or radio broadcast, regardless of whether the tangible 1
personal property, digital property, or retailer is physically present in this state; 2
(25) (a) "Marketplace provider" means a person, including any affiliate of the person, 3
that facilitates a retail sale by satisfying subparagraphs 1. and 2. of this 4
paragraph as follows: 5
1. The person directly or indirectly: 6
a. Lists, makes available, or advertises tangible personal property, 7
digital property, or services for sale by a marketplace retailer in a 8
marketplace owned, operated, or controlled by the person; 9
b. Facilitates the sale of a marketplace retailer's product through a 10
marketplace by transmitting or otherwise communicating an offer 11
or acceptance of a retail sale of tangible personal property, digital 12
property, or services between a marketplace retailer and a 13
purchaser in a forum including a shop, store, booth, catalog, 14
Internet site, or similar forum; 15
c. Owns, rents, licenses, makes available, or operates any electronic 16
or physical infrastructu re or any property, process, method, 17
copyright, trademark, or patent that connects marketplace retailers 18
to purchasers for the purpose of making retail sales of tangible 19
personal property, digital property, or services; 20
d. Provides a marketplace for making retail sales of tangible personal 21
property, digital property, or services, or otherwise facilitates retail 22
sales of tangible personal property, digital property, or services, 23
regardless of ownership or control of the tangible personal 24
property, digital pr operty, or services, that are the subject of the 25
retail sale; 26
e. Provides software development or research and development 27
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activities related to any activity described in this subparagraph, if 1
the software development or research and development activities 2
are directly related to the physical or electronic marketplace 3
provided by a marketplace provider; 4
f. Provides or offers fulfillment or storage services for a marketplace 5
retailer; 6
g. Sets prices for a marketplace retailer's sale of tangible personal 7
property, digital property, or services; 8
h. Provides or offers custom er service to a marketplace retailer or a 9
marketplace retailer's customers, or accepts or assists with taking 10
orders, returns, or exchanges of tangible personal property, digital 11
property, or services sold by a marketplace retailer; or 12
i. Brands or otherwi se identifies sales as those of the marketplace 13
provider; and 14
2. The person directly or indirectly: 15
a. Collects the sales price or purchase price of a retail sale of tangible 16
personal property, digital property, or services; 17
b. Provides payment processing services for a retail sale of tangible 18
personal property, digital property, or services; 19
c. Through terms and conditions, agreements, or arrangements with a 20
third party, collects payment in connection with a retail sale of 21
tangible personal property, digit al property, or services from a 22
purchaser and transmits that payment to the marketplace retailer, 23
regardless of whether the person collecting and transmitting the 24
payment receives compensation or other consideration in exchange 25
for the service; or 26
d. Provides a virtual currency that purchasers are allowed or required 27
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to use to purchase tangible personal property, digital property, or 1
services. 2
(b) "Marketplace provider" includes but is not limited to a person that satisfies the 3
requirements of this subsecti on through the ownership, operation, or control 4
of a digital distribution service, digital distribution platform, online portal, or 5
application store; 6
(26) "Marketplace retailer" means a seller that makes retail sales through any 7
marketplace owned, operated, or controlled by a marketplace provider; 8
(27) (a) "Occasional sale" includes: 9
1. A sale of tangible personal property or digital property not held or used 10
by a seller in the course of an activity for which he or she is required to 11
hold a seller's permit , provided such sale is not one (1) of a series of 12
sales sufficient in number, scope, and character to constitute an activity 13
requiring the holding of a seller's permit. In the case of the sale of the 14
entire, or a substantial portion of the nonretail asset s of the seller, the 15
number of previous sales of similar assets shall be disregarded in 16
determining whether or not the current sale or sales shall qualify as an 17
occasional sale; or 18
2. Any transfer of all or substantially all the tangible personal property or 19
digital property held or used by a person in the course of such an activity 20
when after such transfer the real or ultimate ownership of such property 21
is substantially similar to that which existed before such transfer. 22
(b) For the purposes of this subsec tion, stockholders, bondholders, partners, or 23
other persons holding an interest in a corporation or other entity are regarded 24
as having the "real or ultimate ownership" of the tangible personal property or 25
digital property of such corporation or other entity; 26
(28) (a) "Other direct mail" means any direct mail that is not advertising and 27
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promotional direct mail, regardless of whether advertising and promotional 1
direct mail is included in the same mailing. 2
(b) "Other direct mail" includes but is not limited to: 3
1. Transactional direct mail that contains personal information specific to 4
the addressee, including but not limited to invoices, bills, statements of 5
account, and payroll advices; 6
2. Any legally required mailings, including but not limited to privacy 7
notices, tax reports, and stockholder reports; and 8
3. Other nonpromotional direct mail delivered to existing or former 9
shareholders, customers, employees, or agents, including but not limited 10
to newsletters and informational pieces. 11
(c) "Other direct mail" does not include the development of billing information or 12
the provision of any data processing service that is more than incidental to the 13
production of printed material; 14
(29) "Person" includes any individual, firm, copartnership, joint venture, associati on, 15
social club, fraternal organization, corporation, estate, trust, business trust, receiver, 16
trustee, syndicate, cooperative, assignee, governmental unit or agency, or any other 17
group or combination acting as a unit; 18
(30) "Permanent," as the term applies to digital property, means perpetual or for an 19
indefinite or unspecified length of time; 20
(31) (a) "Photography and photofinishing services" means: 21
1. The taking, developing, or printing of an original photograph; or 22
2. Image editing, including shadow removal, tone adjustments, vertical and 23
horizontal alignment and cropping, composite image creation, 24
formatting, watermarking printing, and delivery of an original 25
photograph in the form of tangible personal property, digital property, or 26
other media. 27
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(b) "Photography and photofinishing services" does not include photography 1
services necessary for medical or dental health; 2
(32) "Plant facility" means a singl e location that is exclusively dedicated to 3
manufacturing or industrial processing activities. A location shall be deemed to be 4
exclusively dedicated to manufacturing or industrial processing activities even if 5
retail sales are made there, provided that th e retail sales are incidental to the 6
manufacturing or industrial processing activities occurring at the location. The term 7
"plant facility" shall not include any restaurant, grocery store, shopping center, or 8
other retail establishment; 9
(33) (a) "Prewritten computer software" means: 10
1. Computer software, including prewritten upgrades, that are not designed 11
and developed by the author or other creator to the specifications of a 12
specific purchaser; 13
2. Software designed and developed by the author or other cre ator to the 14
specifications of a specific purchaser when it is sold to a person other 15
than the original purchaser; or 16
3. Any portion of prewritten computer software that is modified or 17
enhanced in any manner, where the modification or enhancement is 18
designed and developed to the specifications of a specific purchaser, 19
unless there is a reasonable, separately stated charge on an invoice or 20
other statement of the price to the purchaser for the modification or 21
enhancement. 22
(b) When a person modifies or enhances computer software of which the person 23
is not the author or creator, the person shall be deemed to be the author or 24
creator only of the modifications or enhancements the person actually made. 25
(c) The combining of two (2) or more prewritten computer softwar e programs or 26
portions thereof does not cause the combination to be other than prewritten 27
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computer software; 1
(34) "Prewritten computer software access services" means the right of access to 2
prewritten computer software where the object of the transaction i s to use the 3
prewritten computer software while possession of the prewritten computer software 4
is maintained by the seller or a third party, wherever located, regardless of whether 5
the charge for the access or use is on a per use, per user, per license, subscription, or 6
some other basis; 7
(35) (a) "Purchase" means any transfer of title or possession, exchange, barter, lease, 8
or rental, conditional or otherwise, in any manner or by any means 9
whatsoever, of: 10
1. Tangible personal property; 11
2. An extended warranty service; 12
3. Digital property transferred electronically; or 13
4. Services included in KRS 139.200; 14
for a consideration. 15
(b) "Purchase" includes: 16
1. When performed outside this state or when the customer gives a resale 17
certificate, the producing, fabricating, processing, printing, or imprinting 18
of tangible personal property for a consideration for consumers who 19
furnish either directly or indirectly the materials used in the producing, 20
fabricating, processing, printing, or imprinting; 21
2. A transaction where by the possession of tangible personal property or 22
digital property is transferred but the seller retains the title as security 23
for the payment of the price; and 24
3. A transfer for a consideration of the title or possession of tangible 25
personal property or digital property which has been produced, 26
fabricated, or printed to the special order of the customer, or of any 27
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publication; 1
(36) "Recycled materials" means materials which have been recovered or diverted from 2
the solid waste stream and reused or returned to use in the form of raw materials or 3
products; 4
(37) "Recycling purposes" means those activities undertaken in which materials that 5
would otherwise become solid waste are collected, separated, or processed in order 6
to be reused or returned to use in the form of raw materials or products; 7
(38) "Remote retailer" means a retailer with no physical presence in this state; 8
(39) (a) "Repair, replacement, or spare parts" means any tangible personal property 9
used to maintain, restore, mend, or repair machinery or equipment. 10
(b) "Repair, replacement, or spare parts" does not include machine oils, grease, or 11
industrial tools; 12
(40) (a) "Retailer" means: 13
1. Every person engaged in the business of making retail sales of tangible 14
personal property, digital property, or furnishing any services in a retail 15
sale included in KRS 139.200; 16
2. Every person engaged in the business of making sales at auction of 17
tangible personal property or digital property owned by the person or 18
others for storage, use or other consumption, except as provided in 19
paragraph (c) of this subsection; 20
3. Every person making more than two (2) retail sales of tangible personal 21
property, digital property, or services included in KRS 139.200 during 22
any twelve (12) month period, including sales made in the capacity of 23
assignee for the benefit of creditors, or receiver or trustee in bankruptcy; 24
4. Any person conducting a race meeting under the provi sion of KRS 25
Chapter 230, with respect to horses which are claimed during the 26
meeting. 27
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(b) When the department determines that it is necessary for the efficient 1
administration of this chapter to regard any salesmen, representatives, 2
peddlers, or canvassers as the agents of the dealers, distributors, supervisors or 3
employers under whom they operate or from whom they obtain the tangible 4
personal property, digital property, or services sold by them, irrespective of 5
whether they are making sales on their own beh alf or on behalf of the dealers, 6
distributors, supervisors or employers, the department may so regard them and 7
may regard the dealers, distributors, supervisors or employers as retailers for 8
purposes of this chapter. 9
(c) 1. Any person making sales at a cha ritable auction for a qualifying entity 10
shall not be a retailer for purposes of the sales made at the charitable 11
auction if: 12
a. The qualifying entity, not the person making sales at the auction, is 13
sponsoring the auction; 14
b. The purchaser of tangible perso nal property at the auction directly 15
pays the qualifying entity sponsoring the auction for the property 16
and not the person making the sales at the auction; and 17
c. The qualifying entity, not the person making sales at the auction, is 18
responsible for the col lection, control, and disbursement of the 19
auction proceeds. 20
2. If the conditions set forth in subparagraph 1. of this paragraph are met, 21
the qualifying entity sponsoring the auction shall be the retailer for 22
purposes of the sales made at the charitable auction. 23
3. For purposes of this paragraph, "qualifying entity" means a resident: 24
a. Church; 25
b. School; 26
c. Civic club; or 27
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d. Any other nonprofit charitable, religious, or educational 1
organization; 2
(41) "Retail sale" means any sale, lease, or rental for any pu rpose other than resale, 3
sublease, or subrent; 4
(42) (a) "Ringtones" means digitized sound files that are downloaded onto a device 5
and that may be used to alert the customer with respect to a communication. 6
(b) "Ringtones" shall not include ringback tones o r other digital files that are not 7
stored on the purchaser's communications device; 8
(43) (a) "Sale" means: 9
1. The furnishing of any services included in KRS 139.200; or 10
2. Any transfer of title or possession, exchange, barter, lease, or rental, 11
conditional or otherwise, in any manner or by any means whatsoever, 12
of: 13
a. Tangible personal property; or 14
b. Digital property transferred electronically; 15
for a consideration. 16
(b) "Sale" includes but is not limited to: 17
1. The producing, fabricating, processing, printing, or imprinting of 18
tangible personal property or digital property for a consideration for 19
purchasers who furnish, either directly or indirectly, the materials used 20
in the producing, fabricating, processing, printing, or imprinting; 21
2. A transaction whereby the possession of tangible personal property or 22
digital property is transferred, but the seller retains the title as security 23
for the payment of the price; and 24
3. A transfer for a consideration of the title or possession of tangible 25
personal property or digital property which has been produced, 26
fabricated, or printed to the special order of the purchaser. 27
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(c) This definition shall apply regardless of the classification of a transaction 1
under generally accepted accounting principles, the Internal Revenue Code, or 2
other provisions of federal, state, or local law; 3
(44) "Seller" includes every person engaged in the business of selling tangible personal 4
property, digital property, or services of a kind, the gross r eceipts from the retail 5
sale of which are required to be included in the measure of the sales tax, and every 6
person engaged in making sales for resale; 7
(45) (a) "Storage" includes any keeping or retention in this state for any purpose 8
except sale in the re gular course of business or subsequent use solely outside 9
this state of tangible personal property, digital property, or prewritten 10
computer software access services purchased from a retailer. 11
(b) "Storage" does not include the keeping, retaining, or exerc ising any right or 12
power over tangible personal property for the purpose of subsequently 13
transporting it outside the state for use thereafter solely outside the state, or 14
for the purpose of being processed, fabricated, or manufactured into, attached 15
to, or incorporated into, other tangible personal property to be transported 16
outside the state and thereafter used solely outside the state; 17
(46) "Tangible personal property" means personal property which may be seen, 18
weighed, measured, felt, or touched, or whic h is in any other manner perceptible to 19
the senses and includes natural, artificial, and mixed gas, electricity, water, steam, 20
and prewritten computer software; 21
(47) "Taxpayer" means any person liable for tax under this chapter; 22
(48) "Telemarketing service s" means services provided via telephone, facsimile, 23
electronic mail, text messages, or other modes of communications to another 24
person, which are unsolicited by that person, for the purposes of: 25
(a) 1. Promoting products or services; 26
2. Taking orders; or 27
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3. Providing information or assistance regarding the products or services; 1
or 2
(b) Soliciting contributions; 3
(49) "Transferred electronically" means accessed or obtained by the purchaser by means 4
other than tangible storage media; and 5
(50) (a) "Use" includes the exercise of: 6
1. Any right or power over tangible personal property or digital property 7
incident to the ownership of that property, or by any transaction in 8
which possession is given, or by any transaction involving digital 9
property or tangible person al property where the right of access is 10
granted; or 11
2. Any right or power to benefit from any services subject to tax under 12
KRS 139.200(2)(p) to (ax). 13
(b) "Use" does not include the keeping, retaining, or exercising any right or 14
power over: 15
1. Tangible personal property or digital property for the purpose of: 16
a. Selling tangible personal property or digital property in the regular 17
course of business; or 18
b. Subsequently transporting tangible personal property outside the 19
state for use thereafter solely outs ide the state, or for the purpose 20
of being processed, fabricated, or manufactured into, attached to, 21
or incorporated into, other tangible personal property to be 22
transported outside the state and thereafter used solely outside the 23
state; or 24
2. Prewritten computer software access services purchased for use outside 25
the state and transferred electronically outside the state for use thereafter 26
solely outside the state. 27
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Section 32. KRS 243.045 is amended to read as follows: 1
(1) A transitional license may be issued by the state administrator or administrators 2
during the time a transfer of an ongoing business is being processed under the 3
following conditions: 4
(a) The purchaser shal l file an application for a permanent license with the 5
appropriate local alcoholic beverage authority and with the department; 6
(b) The purchaser shall submit its license application to the department for 7
placement on the department's online listing [advertise its intention to apply 8
for a license] pursuant to KRS 243.360; and 9
(c) The purchaser shall pay all application fees for the permanent license. 10
(2) If the above requirements are met, the state administrator or administrators, as 11
appropriate, may issue a transitional license with a term of up to sixty (60) days, 12
plus one (1) thirty (30) day renewal license, to the purchaser for a processing fee set 13
forth in KRS 243.030 to 243.040. All transitional licenses immediately expire upon 14
the issuance to the purchaser of one (1) or more permanent licenses. 15
(3) Upon completion of the sale of the business, the purchaser shall not operate the 16
business on the seller's license. 17
(4) The transitional license shall not be transferable or used for an application to move 18
a business from one (1) location to another location. 19
(5) The transitional license shall entitle the holder to the same privileges and 20
restrictions of the permanent license or licenses for which the holder applied under 21
subsection (1)(a) of this section. 22
Section 33. KRS 243.430 is amended to read as follows: 23
(1) The state administrator may deny any application for a license if the application is 24
incomplete or the correct fee has not been remitted with the application. 25
(2) A l icense shall not be approved or issued until the fourteen (14)[thirty (30)] day 26
period in which a protest is permissible has expired. Any license for which 27
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department listing[public notice] under KRS 243.360 is required may conditionally 1
be issued in less than fourteen (14)[thirty (30)] days from the date the application is 2
received if the premises has previously operated under the same type of license 3
within the last twelve (12) months. 4
(3) The state administrator shall deny, approve, or issue licenses whe n, in the sound 5
discretion of the administrator, all of the information necessary has been obtained 6
or the applicant has refused to provide requested information. 7
Section 34. KRS 243.790 is amended to read as follows: 8
The sale or distribution of alcoholic beverages or cannabis -infused beverages 9
manufactured in or imported into this state for shipment permanently out of the state to 10
be sold without the state and consumed without the state shall not be subject to the state 11
regulatory license fees imposed by Sections 1, 2, and 3 of this Act or the tax imposed by 12
KRS 243.720. Provided, however, the Department of Revenue may, when necessary for 13
the purpose of control enforcement or protection of revenue, prescribe the condition s 14
under which containers of the alcoholic beverages or cannabis -infused beverages for 15
shipment permanently out of the state to be sold without the state and consumed without 16
the state may be kept and trafficked in without payment of the tax. 17
Section 35. KRS 243.850 is amended to read as follows: 18
(1) For the purpose of assisting in the enforcement of Sections 1, 2, and 3 of this Act 19
and KRS 243.720, 243.730, 243.790, and 243.884, every licensee [, except 20
retailers], whether subject to the payment of state regulatory license fees imposed 21
by Sections 1, 2, and 3 of this Act or the taxes imposed by KRS 243.720, 243.730, 22
243.790, and 243.884, shall, on or before the twentieth day of each month, render to 23
the Department of Revenue a statement, in writing, of all trafficking in alcoholic 24
beverages or cannabis-infused beverages during the preceding month. 25
(2) The statement shall: 26
(a) Be taken directly from the records of the reporting licensee or manufacturer of 27
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cannabis-infused beverages permitted by the Department for Public Health, 1
and shall set forth on forms furnished by the Department of Revenue the 2
required information; and 3
(b) Include alcoholic beverages or cannabis -infused beverages destined for sale 4
outside the state, as well as alcoholic beverages or cannabis-infused beverages 5
subject to the state regulatory license fees imposed by Sections 1, 2, and 3 of 6
this Act or the tax imposed by KRS 243.720, 243.730, 243.790, and 243.884. 7
(3) The Department of Revenue sh all have authority to require from retail licensees, 8
other licensees, and manufacturers of cannabis -infused beverages other reports and 9
statements at the necessary times for the enforcement of Sections 1, 2, and 3 of this 10
Act and KRS 243.720, 243.730, 243.790, and 243.884. 11
Section 36. KRS 243.990 is amended to read as follows: 12
(1) Any person who, by himself or herself or acting through another, directly or 13
indirectly, violates any of the provisions of KRS 243.020 to 243.6 70, for which no 14
other penalty is provided, shall, for the first offense, be guilty of a Class B 15
misdemeanor; and for the second and each subsequent violation, he or she shall be 16
guilty of a Class A misdemeanor. The penalties provided for in this subsectio n shall 17
be in addition to the revocation of the offender's license. 18
(2) Any person who, by himself or herself or through another, directly or indirectly, 19
violates subsection (1) of KRS 243.020 shall, for the first offense, be guilty of a 20
Class B misdemeanor; for the second offense, he or she shall be guilty of a Class A 21
misdemeanor; and for the third and each subsequent offense, he or she shall be 22
guilty of a Class D felony. 23
(3) Any person who violates subsection (3) of KRS 243.020 shall be guilty of a 24
violation. 25
(4) Any person who violates KRS 243.620 with respect to a license issued under KRS 26
243.050 or 243.082 shall be guilty of a violation. 27
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(5) Any person who violates any of the provisions of Section 2 of this Act [KRS 1
243.720 or 243.730] or any administrative regulation issued thereunder shall be 2
guilty of a Class A misdemeanor. 3
(6) Any person who violates any provision of Section 2 of this Act [KRS 243.710 to 4
243.850] shall be subject to the uniform civil penalties imposed pursuant to KRS 5
131.180. 6
(7) In every case, any state wholesale regulatory license fee[tax] imposed by Section 2 7
of this Act [KRS 243.710 to 243.720] which is not paid on or before the due date 8
shall bear interest at the tax interest rate as define d in KRS 131.010(6) from the due 9
date until the date of payment. 10
(8) Any person who, by himself or herself or acting through another, directly or 11
indirectly, violates KRS 243.502(1) shall, for the first offense, be guilty of a Class 12
B misdemeanor, and for the second and each subsequent violation, he or she shall 13
be guilty of a Class A misdemeanor. The penalties provided for in this subsection 14
shall be in addition to the suspension or revocation of the offender's license. 15
(9) Any person who violates the prov isions of KRS 243.897 shall be subject to a fine 16
not to exceed one thousand dollars ($1,000). 17
(10) Any vintage distilled spirits seller who, by himself or herself or acting through 18
another, directly or indirectly, violates any of the provisions of KRS 243. 232(6) 19
shall: 20
(a) For the first offense, pay a five hundred dollar ($500) fine; 21
(b) For the second offense, pay a two thousand five hundred dollar ($2,500) fine; 22
and 23
(c) For the third and each subsequent offense, pay a five thousand dollar ($5,000) 24
fine. 25
Section 37. KRS 243.100 is amended to read as follows: 26
(1) An individual shall not become a licensee if the individual: 27
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[(1) ](a) Has been convicted of any felony until five (5) years have passed from the 1
date of convicti on, release from custody or incarceration, parole, or 2
termination of probation, whichever is later; 3
(b) Has been convicted of any misdemeanor involving a controlled substance that 4
is described in or classified pursuant to KRS Chapter 218A in the two (2) 5
years immediately preceding the application; 6
(c) Has been convicted of any misdemeanor directly or indirectly attributable to 7
the use of alcoholic beverages or cannabis -infused beverages in the two (2) 8
years immediately preceding the application; 9
(d) Is under the age of twenty-one (21) years; or 10
(e) Has had any license relating to the regulation of the manufacture, sale, and 11
transportation of alcoholic beverages or the regulation of the sale, distribution, 12
or transportation of cannabis-infused beverages revoked for cause or has been 13
convicted of a violation of any statute within KRS Chapters 241 to 244, until 14
the expiration of two (2) years from the date of the revocation or conviction. 15
(2) A partnership, limited partnership, limited liability company, corpora tion, 16
governmental agency, or other business entity recognized by law shall not be 17
licensed if: 18
(a) Each principal owner, partner, member, officer, and director does not qualify 19
under subsection (1)(a), (b), (c), (d), and (e) of this section; 20
(b) It has ha d any license relating to the regulation of the manufacture, sale, and 21
transportation of alcoholic beverages or the regulation of the sale, distribution, 22
or transportation of cannabis-infused beverages revoked for cause or has been 23
convicted of a violation of any statute within KRS Chapters 241 to 244, until 24
the expiration of two (2) years from the date of the revocation or conviction; 25
or 26
(c) Any principal owner, partner, member, officer, or director, or any business 27
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entity in which they were directly or in directly interested, has had any license 1
revoked for cause or has been convicted of a violation of any statute within 2
KRS Chapters 241 to 244, until the expiration of the later of two (2) years 3
from the date of the revocation or two (2) years from the date of conviction. 4
(3) The provisions of subsection (1)(a) and (b) shall apply to anyone applying for a new 5
license under this chapter after July 15, 1998, but shall not apply to those who 6
renew a license that was originally issued prior to July 15, 1998, or an application 7
for a supplemental license where the original license was issued prior to July 15, 8
1998. 9
(4) A person shall not evade license disqualification by applying for a license through 10
or under the name of a different person. The state administrator s shall examine the 11
ownership, membership, and management of all license applicants, and shall deny 12
the application if a disqualified person has a direct or indirect interest in the 13
applicant's business. The department may issue administrative subpoenas an d 14
summonses to determine ownership of an applicant or to investigate alleged 15
violations by a licensee. 16
(5) A direct shipper license applicant shall be exempt from the requirements of this 17
section, and shall instead follow the requirements set forth in KRS 243.027. 18
Section 38. Sections 1 to 4, 9, 13, 15, 16, 20 to 26, 30, 31, and 34 to 36 of this 19
Act take effect July 1, 2027. 20
Section 39. Whereas alcoholic beverages require prompt regulat ion and 21
enforcement, an emergency is declared to exist, and Sections 6, 10, 11, 19, 27, 32, and 33 22
of this Act take effect upon its passage and approval by the Governor or upon its 23
otherwise becoming a law. 24