AN ACT relating to the Department of Alcoholic Beverage Control and declaring an emergency.

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AN ACT relating to the Department of Alcoholic Beverage Control and declaring 1
an emergency. 2
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 3
Section 1. KRS 243.033 is amended to read as follows: 4
(1) A caterer's license may be issued as a supplementary license to a caterer that holds a 5
quota retail package license, a quota retail drink license, an NQ1 license, an NQ2 6
license, or a limited restaurant license. 7
(2) The caterer's license may be issued as a primary license to a caterer in any wet 8
territory or in any moist territory under KRS 242.1244 for the premises that serves 9
as the caterer's commissary and designated banquet hall [. No primary caterer's 10
license shall authorize alcoholic beverage sales at a premises that operates as a 11
restaurant]. The alcoholic beverage stock of the caterer shall be kept under lock and 12
key[ at the licensed premises] during the time that the alcoholic beverages are not 13
being used[ in conjunction with a catered function]. 14
(3) The caterer's license shall authorize the caterer to: 15
(a) Purchase and store alcoholic beverages in the manner prescribed in KRS 16
243.088, 243.250, and 244.260; 17
(b) Transport, sell, serve, and deliver alcoholic beverages by the drink at locations 18
away from the licensed premises or at the caterer's designated banquet hall in 19
conjunction with the catering of food and alcoholic beverages [ for a customer 20
and the customer's guests,] in: 21
1. Cities and counties established as moist territory under KRS 242.1244 if 22
the receipts from the catering of food [ at any catered event] are at least 23
seventy percent (70%) of the gross receipts from the catering of both 24
food and alcoholic beverages; 25
2. Precincts established as moist territory if the receipts from the catering 26
of food[ at any catered event] are at least ten percent (10%) of the gross 27
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receipts from the catering of both food and alcoholic beverages. This 1
subparagraph shall supe rsede any conflicting provisions of KRS 2
Chapters 241 to 244; 3
3. Wet cities and counties in which quota retail drink licenses are not 4
available if the receipts from the catering of food [ at any catered event] 5
are at least fifty percent (50%) of the gross re ceipts from the catering of 6
both food and alcoholic beverages; or 7
4. All other wet territory if the receipts from the catering of food [ at any 8
catered event] are at least thirty -five percent (35%) of the gross receipts 9
from the catering of both food and alcoholic beverages; 10
(c) Receive and fill telephone orders for alcoholic beverages in conjunction with 11
the ordering of food for catering services[a catered event]; and 12
(d) Receive payment for alcoholic beverages served [ at a catered event] on a by-13
the-drink, cash bar, or by -the-event basis. The caterer may bill the customer 14
for by -the-function sales of alcoholic beverages in the usual course of the 15
caterer's business. 16
(4) A caterer licensee shall not cater alcoholic beverages at locations for which retail 17
alcoholic beverage licenses or special temporary licenses have been issued. A 18
caterer licensee may cater a charitable or nonprofit fundraising event for which a 19
special temporary alcoholic beverage auction license has been issued under KRS 20
243.036. 21
(5)[ A caterer licensee shall not cater alcoholic beverages on Sunday except in territory 22
in which the Sunday sale of alcoholic beverages is permitted under the provisions 23
of KRS 244.290 and 244.480. 24
(6)] The location at which alcoholic beverages are sold, served, a nd delivered by a 25
caterer, pursuant to this section, shall not constitute a public place for the purpose of 26
KRS Chapter 222. If the location is a multi -unit structure, only the unit or units at 27
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which the function being catered is held shall be excluded fro m the public place 1
provisions of KRS Chapter 222. 2
(6)[(7)] The caterer licensee shall post a copy of the licensee's caterer's license at the 3
location of the function for which alcoholic beverages are catered. 4
(7)[(8)] All restrictions and prohibitions appl ying to a quota retail drink licensee and 5
an NQ4 retail malt beverage drink licensee not inconsistent with this section shall 6
apply to the caterer licensee. 7
(8)[(9)] The caterer licensee shall maintain records as set forth in KRS 244.150 and in 8
administrative regulations promulgated by the board. 9
(9)[(10)] Notwithstanding subsection (3)(b) of this section, a caterer may serve 10
alcoholic beverages to guests who are twenty -one (21) years of age or older at a 11
private event in dry territory if: 12
(a) The alcoholic beverages were lawfully purchased in a wet or moist territory: 13
1. By an individual; or 14
2. At the caterer's licensed premises in wet or moist territory; and 15
(b) The alcoholic beverages are not sold in dry territory to guests at the private 16
residence or private event regardless of whether the venue is a public place. 17
(10) Notwithstanding any other provision of state law, the department shall not impose 18
or attempt to enforce the following against a caterer: 19
(a) Any minimum number of customers, consumers, or o ther persons required 20
at an event for a caterer to cater that event; and 21
(b) Any limit on the number of events a caterer may cater in any time period. 22
Section 2. KRS 243.090 is amended to read as follows: 23
(1) (a) All lic enses issued by the department, except special event licenses, 24
temporary licenses, or licenses listed in subsection (5) of this section, shall be 25
valid for a period of no more than a year. 26
(b) The board shall promulgate administrative regulations establis hing the year -27
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round system for renewal of licenses. The system shall be designed to 1
distribute the workload as uniformly as possible within the offices of the local 2
administrators and the Department of Alcoholic Beverage Control. 3
(c) For any application fo r a license issued by the department through its 4
authority under this chapter or KRS Chapter 438, the license shall be 5
approved or denied by the department no later than forty-five (45) days after 6
the department's receipt of the application. 7
(2) (a) Except for licenses listed in paragraph (b) of this subsection, all licenses 8
issued after January 1, 2017, by a local administrator shall be valid for a 9
period of no more than a year and shall be renewable upon the date 10
established by the department for th e expiration of state licenses issued for 11
premises located in that county or city. During the first year following July 12
15, 2016, if the new date for renewal for the licensee does not occur on the 13
date established by the department for the expiration of th e licensee's state 14
license, the local administrator shall either: 15
1. Prorate the cost of the renewed license by proportionally reducing the 16
cost of the renewed license if the new date for the renewal occurs prior 17
to the expiration of a previous license; or 18
2. Provide a prorated provisional local license to cover any period of time 19
between the expiration of the previous license and the new date for 20
renewal if the new date for renewal occurs after the expiration of the 21
licensee's previous license. 22
(b) Paragraph (a) of this subsection shall not apply to licenses issued by a 23
consolidated local government, special event licenses, temporary licenses, or 24
licenses listed in subsection (5) of this section. 25
(3) When any person applies for a new license authorized unde r KRS Chapters 241 to 26
244, the person shall be charged, if the license is issued, the full fee for the 27
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respective license if six (6) months or more remain before the license is due to be 1
renewed and one -half (1/2) the fee if less than six (6) months remain before the 2
license is due to be renewed. No abatement of license fees shall be permitted to any 3
person who held a license of the same kind for the same premises in the preceding 4
license period and who was actually doing business under the license during the last 5
month of the preceding license period. 6
(4) The renewal by the department of any license shall not be construed to waive or 7
condone any violation that occurred prior to the renewal and shall not prevent 8
subsequent proceedings against the licensee. 9
(5) All alcoholic beverage producers, wholesalers, or distributors may obtain or renew 10
their licenses for either a one (1) year term or a two (2) year term. 11
(6) The department may deny license renewal if the licensee is a delinquent taxpayer as 12
defined in KRS 131.1815. 13
Section 3. KRS 438.3061 is amended to read as follows: 14
(1) On or after February 1, 2027, a person, firm, or corporation shall not operate as a 15
retailer selling alternative nicotine products, tobacco products , or authorized 16
nicotine vapor products in or on any premises in the Commonwealth without first 17
obtaining a tobacco, nicotine, or vapor product license issued by the department. 18
(2) Any person who, by himself or herself or through another, directly or indi rectly, 19
violates subsection (1) of this section shall be subject to the penalties in KRS 20
243.990(2). 21
Section 4. KRS 438.3063 is amended to read as follows: 22
(1) On or after February 1, 2027, each application for a tobacco, nicotine, or vapor 23
product license shall be made in a form prescribed by the department, accompanied 24
with a nonrefundable application fee of fifty dollars ($50) and any supporting 25
documentation required by the department. T he application fee shall be applied to 26
the licensing fee if the license is issued. If no license is issued, the application fee 27
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shall be retained by the department. 1
(2) A tobacco, nicotine, or vapor product license shall: 2
(a) Be renewed annually; 3
(b) Remain in full force and effect for one (1) year from the date of issuance 4
unless it is surrendered by the licensee, suspended, or revoked; and 5
(c) Be posted in a conspicuous place in the premises of the business where 6
alternative nicotine products, tobacco pro ducts, or authorized nicotine vapor 7
products are sold. 8
(3) A retailer with a license issued by the department and operating under KRS Chapter 9
243 may initiate the application process to obtain a tobacco, nicotine, or vapor 10
product license on the date of its next renewal. 11
(4) (a) The fee for a tobacco, nicotine, or vapor product license shall be five hundred 12
dollars ($500) per year for each licensed premises and the fee shall be made 13
payable to the State Treasury. 14
(b) All of the fees paid into the State Trea sury for state licenses shall be credited 15
to a revolving trust and agency account as provided in KRS 438.337 for the 16
department. 17
(5) The tobacco, nicotine, or vapor product license shall not be transferred from one (1) 18
person to another or from one (1) premises to another premises. 19
(6) A new tobacco, nicotine, or vapor product license shall be required when a retailer 20
has a change in ownership. 21
Section 5. KRS 438.3065 is amended to read as follows: 22
(1) On or after Februar y 1, 2027, a transitional license may be issued by the 23
commissioner during the time a transfer of an ongoing business is being processed 24
under the following conditions: 25
(a) The purchaser shall file an application for a permanent license pursuant to 26
KRS 438.3063 with the department; 27
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(b) 1. The purchaser shall, before applying for a license, advertise by 1
publication its intention to apply for a license in a newspaper, online, or 2
in print, in the county or city in which the retail establishment is located. 3
2. The department shall prescribe the form and content of the 4
advertisement by promulgati on of administrative regulations in 5
accordance with KRS Chapter 13A. 6
3. The advertisement shall contain the following statement: "Any person 7
may protest the approval of the license by writing the Department of 8
Alcoholic Beverage Control within thirty (30) days of the date of legal 9
publication." 10
4. Any protest received after the thirty (30) day period shall be considered 11
expired and shall not be considered a valid legal protest by the 12
department; and 13
(c) The purchaser shall pay all application and licensing fees for the permanent 14
license established under KRS 438.3063. 15
(2) If the requirements in subsection (1) of this section are met, the commissioner may 16
issue a transitional license with a term of up to sixty (60) days, plus one (1) thirty 17
(30) day renewal l icense, to the purchaser for a nonrefundable processing fee of 18
sixty dollars ($60). All transitional licenses immediately expire upon the issuance to 19
the purchaser of one (1) or more permanent licenses. 20
(3) Upon completion of the sale of the business, the purchaser shall not operate the 21
business on the previous retailer's license. 22
(4) The transitional license shall not be transferable or used for an application to move 23
a business from one (1) location to another location. 24
(5) The transitional license shall entitle the holder to the same privileges and 25
restrictions of the permanent license or licenses for which the holder applied under 26
subsection (1)(a) of this section. 27
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Section 6. KRS 438.3067 is amended to read as follows: 1
(1) On or after February 1, 2027, the commissioner shall approve or deny every 2
application for a tobacco, nicotine, or vapor product license. 3
(2) If the application is denied, the: 4
(a) License shall not be issued; 5
(b) Applicant shall be notified of the co mmissioner's denial, which shall include 6
the reason for the denial; and 7
(c) Applicant may, within thirty (30) days, appeal the denial and request an 8
administrative hearing on the matter in accordance with KRS Chapter 13B. 9
(3) (a) If the commissioner revoke s a license pursuant to KRS 438.3069, the 10
commissioner shall: 11
1. Notify the applicant within ten (10) days of the decision to revoke the 12
license; and 13
2. Upon the request of a denied licensee, commence a hearing on the 14
license revocation in accordance with KRS Chapter 13B. 15
(b) Revocation of a license subject to KRS 438.305 to 438.350 for any reason 16
shall result in the inability of a retailer to reapply for a license for two (2) 17
years. 18
(c) 1. A final order of the commissioner shall be appealable to the Frankl in 19
Circuit Court. 20
2. The licensee may, within thirty (30) days, appeal the final order and 21
request an administrative hearing on the matter in accordance with KRS 22
Chapter 13B. 23
Section 7. KRS 438.3069 is amended to read as follows: 24
On or after February 1, 2027, a license may be revoked or suspended by the 25
commissioner for a violation of: 26
(1) Any of the provisions of KRS 438.305 to 438.350; 27
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(2) Any administrative regulation of the department relating to the regulation of the 1
manufacture, sale, and transportation of alternative nicotine products, tobacco 2
products, or vapor products; 3
(3) Any administrative regulation of the Department of Revenue relating to the taxation 4
of alternative nicotine products, tobacco products, or vapor products; 5
(4) Any Act of Congress or any rule or regulation of any federal board, agency, or 6
commission; 7
(5) Any of the laws, regulations, or ordinances referred to in this section when an 8
agent, servant, or employee of the licensee committed the violation, irrespective of 9
whether the licensee knew of or permitted the violation or whether the violation 10
was committed in disobedience of the licensee's instructions; 11
(6) Any cau se which the department in the exercise of its sound discretion deems 12
sufficient; or 13
(7) Any of the reasons for which the commissioner would have been required to deny a 14
license if existing material facts had been known. 15
Section 8. KRS 438.310 is amended to read as follows: 16
(1) A[No] person shall not sell or cause to be sold any tobacco product or alternative 17
nicotine product at retail to any person under the age of twenty -one (21), or solicit 18
any person under the age of twenty-one (21) to purchase any tobacco product or 19
alternative nicotine product at retail. 20
(2) Any person who sells tobacco products or alternative nicotine products at retail 21
shall cause to be posted in a conspicuous place in his or her establishment a no tice 22
stating that it is illegal to sell tobacco products, alternative nicotine products, or 23
vapor products to persons under age twenty-one (21). 24
(3) Any person selling tobacco products, alternative nicotine products, or vapor 25
products shall require proof o f age from a prospective buyer or recipient if the 26
person has reason to believe that the prospective buyer or recipient is under the age 27
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of twenty-one (21). 1
(4) A person who violates subsection (1) or (2) of this section shall be subject to a: 2
(a) One hundred dollar ($100) fine to the retail sales clerk for a first citation and a 3
notice to the owner of a retail establishment which details the violation; 4
(b) One hundred dollar ($100) fine to the retail sales clerk and an additional five 5
hundred dollar ($500) fine to the owner of a retail establishment for a second 6
citation; 7
(c) One hundred dollar ($100) fine to the retail sales clerk and an additional one 8
thousand dollar ($1,000) fine to the owner of a retail establishment for a third 9
citation; and 10
(d) On or after February 1, 2027, revocation of the tobacco, nicotine, or vapor 11
product license upon a fourth citation. Revocation for any fourth and 12
subsequent citation within a two (2) year period shall result in the inability to 13
reapply for a license for two (2) years. 14
(5) Each citation shall be specific to the premises of the retail establishment where the 15
violation occurred. 16
(6) The fine shall be imposed and collected by the department using a civil 17
enforcement procedure. 18
(7) A retailer shall be prohibited from renewing its license until all fines incurred under 19
KRS 438.305 to 438.350 are paid. 20
Section 9. KRS 438.312 is amended to read as follows: 21
(1) A retailer shall not sell, give away, or distribute an authorized nicotine va por 22
product or tobacco product to any person under twenty -one (21) years of age. A 23
retailer who sells a tobacco product to a person under twenty -one (21) years of age 24
shall be subject to the penalties listed in KRS 438.310(4). 25
(2) (a) A retailer shall have an affirmative defense to a violation of subsection (1) of 26
this section if the sale was induced by the use of false, fraudulent, or altered 27
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identification papers or other documents. 1
(b) Evidence to support an affirmative defense under this subsection may be 2
introduced either in mitigation of the violation or as a defense to the violation 3
itself. 4
(3) Any retailer that violates subsection (1) of this section regarding authorized nicotine 5
vapor products shall be subject to a: 6
(a) One hundred dollar ($100) fine to the retail sales clerk for a first citation and a 7
notice to the owner of a retail establishment which details the violation; 8
(b) One hundred dollar ($100) fine to the retail sales clerk and an additional five 9
hundred dollar ($500) fine to the owner of a retail establishment for a second 10
citation; 11
(c) One hundred dollar ($100) fine to the retail sales clerk and an additional one 12
thousand dollar ($1,000) fine to the owner of a retail establishment for a third 13
citation; and 14
(d) On or after February 1, 2027, revocation of the tobacco, nicotine, or vapor 15
product license upon a fourth citation. Revocation for any fourth and 16
subsequent citation within a two (2) year period shall result in the inability to 17
reapply for a license for two (2) years. 18
(4) Each citation shall be specific to the premises of the retail establishment where the 19
violation occurred. 20
(5) Any retailer with unpaid fines under this section that are more than sixty (60) days 21
overdue shall lose the ability to lawfully sell vapor products until the fines are paid. 22
Section 10. KRS 438.316 is amended to read as follows: 23
(1) A retailer of nicotine vapor products shall only sell authorized nicotine vapor 24
products. 25
(2) Any retailer that violates this section shall be subject to a: 26
(a) Five hundred dollar ($500) fine to the owner of a retail establishment for a 27
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first citation issued for a violation of this section; 1
(b) One thousand dollar ($1,000) fine to the owner of a retail establishment fo r a 2
second or subsequent citation issued for a violation of this section; and 3
(c) On or after February 1, 2027, revocation of the tobacco, nicotine, or vapor 4
product license upon a fourth citation, which shall result in the inability to 5
reapply for a tobacco, nicotine, or vapor product license for two (2) years. 6
(3) Each citation shall be specific to the premises of the retail establishment where the 7
violation occurred. 8
(4) Any retailer with unpaid fines under this section that are more than sixty (60) days 9
overdue shall lose the ability to lawfully sell vapor products until the fines are paid. 10
(5) A retailer shall have an affirmative defense to a violation of selling an unauthorized 11
vapor product if the retailer can establish: 12
(a) Proof of an official mater ial change in the status of a vapor product under 13
review by the FDA within forty -five (45) days of the issuance of the citation; 14
or 15
(b) Proof received under KRS 438.308(1)(b) that the product is an authorized 16
nicotine vapor product. 17
Section 11. KRS 438.337 is amended to read as follows: 18
(1) The department shall carry out the enforcement provisions of KRS 438.305 to 19
438.350. 20
(2) (a) 1. The department shall be entitled to the revenue produced by one -21
twentieth of one cent ($0.0005) of the three -cent ($0.03) per pack 22
revenue collected by the Finance and Administration Cabinet from the 23
state excise tax on the sale of cigarettes as imposed by KRS 138.140. 24
2. One hundred percent (100%) of the license and application fees imposed 25
by KRS 438.3063 unless the license is denied shall be deposited in a 26
trust and agency account created in the State Treasury. If no license is 27
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issued, the application fe e shall be retained by the department in 1
accordance with KRS 438.3063. 2
(b) One hundred percent (100%) of the fines collected under KRS 438.305 to 3
438.350 shall be retained by the department. 4
(c) The department shall keep fifty percent (50%) of any fines co llected under 5
KRS 438.305 to 438.350 to offset the costs of enforcement. The remaining 6
fifty percent (50%) of funds shall go to a youth program administered by the 7
Department for Public Health directed at targeting and educating youth on the 8
dangers of tob acco products, alternative nicotine products, and vapor 9
products. 10
(3) The department shall be responsible for maintaining statistics for compilation of 11
required reports to be submitted to the United States Department of Health and 12
Human Services. 13
(4) The department shall devise a plan and timeframe for enforcement to determine by 14
random inspection if the percentage of retailers, wholesalers, or distributors making 15
illegal sales to persons under the age of twenty -one (21) does or does not exceed 16
federal guidelines preventing tobacco sales to persons under the age of twenty -one 17
(21). 18
(5) (a) The department shall investigate the information provided in each application 19
for a tobacco, nicotine, or vapor product license. 20
(b) Notwithstanding KRS 438.330 and 438.33 1, if the tobacco, nicotine, or vapor 21
product license is approved, random inspections or compliance checks of the 22
licensee shall be conducted not less than once annually during normal 23
business hours or as deemed appropriate by the commissioner. 24
(6) On or after February 1, 2027, the department shall, on the first day of each month, 25
create, update, and publish on its website a list of retail establishments that possess 26
a tobacco, nicotine, or vapor product license. 27
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Section 12. The amendments to KRS 438.3061, 438.3063, 438.3065, 438.3067, 1
438.3069, 438.310, 438.312, 438.316, and 438.337 contained in Sections 3 to 11 of this 2
Act shall be retroactive to January 1, 2026. 3
Section 13. Whereas the proper regulation and licensing of alcoholic beverages 4
and tobacco, nicotine, and vapor products are crucial for public safety and protection, an 5
emergency is declared to exist, and this Act takes effect upon its passage and approval by 6
the Governor or upon its otherwise becoming a law. 7