Section R19-1-320. Practices Permitted by a Producer or Wholesaler

A.      In addition to practices specifically authorized under A.R.S. Title 4 and 27 CFR, Chapter 1, Subchapter A, the practices outlined in subsections (B) through (Q) allow a distiller, vint- ner, brewer, rectifier, blender, or other producer or wholesaler to furnish something of value to a licensed retailer or other specified licensee as long as the producer or wholesaler does not furnish something of value to induce the licensed retailer or other specified licensee to purchase spirituous liquor from the producer or wholesaler to the exclusion, in whole or in part, of another producer or wholesaler. A distiller, vintner, brewer, rectifier, blender, or other producer or wholesaler shall not furnish something of value to a licensed retailer or other specified licensee unless specifically authorized under A.R.S. Title 4, 27 CFR, Chapter 1, Subchapter A, or this Chapter. If there is a conflict between the practices authorized in 27 CFR, Chapter 1, Subsection A and this Chapter, this Chapter gov- erns.

B.       A licensed retailer shall not solicit or knowingly accept from a distiller, vintner, brewer, rectifier, blender, or other producer or wholesaler any activity not outlined in subsections (C) through

(Q) unless the activity is specifically authorized under A.R.S. Title 4 or this Chapter.

C.      Participating in a special event.

1.        A producer or wholesaler may furnish advertising, spon- sorship, services, or other things of value at a special event at which spirituous liquor is sold if:

a.         A special event license is issued for the special event. A producer or wholesaler shall not pay for advertising, sponsorship, services, or other things of value until the wholesaler or producer confirms that a special event application has been submitted for approval under A.R.S. § 4-203.02;

b.        The special event license is issued to a charitable, civic, religious, or fraternal organization;

c.         The special event license is not issued to a political committee or organization;

d.        The producer or wholesaler ensures that nothing of value given to a licensed retailer or employees of a licensed retailer during or after the special event is left on the licensed premises of a licensed retailer except that the wholesaler may leave items of value with the licensed retailer or at the licensed premises if the retailer is an on-sale retailer and leaving the items  of   value  complies  with  the  restrictions  at

A.R.S. § 4-243(D); and

e.         The producer or wholesaler pays financial sponsor- ship, if any, to the organization to which the special event license is issued.

2.        A producer or wholesaler may donate spirituous liquor to a special event licensee identified under subsection (C)(1)(b).

3.        A producer or wholesaler may dispense spirituous liquor donated by the producer or wholesaler at a special event.

4.        A producer or wholesaler may provide a sign to a special event licensee identified under subsection (C)(1)(b). If the producer or wholesaler provides a sign to a special event licensee, the sign is not subject to R19-1-313.

5.        A producer or wholesaler may furnish a vehicle for use by a special event licensee identified under subsection (C)(1)(b). The producer or wholesaler shall ensure the vehicle is used to dispense spirituous liquor only during the days of the special event.

D.      Providing an item of value to a customer of a licensed retailer. A producer or wholesaler or its employee or independent con-

tractor  may   provide  an  item  of  value  to  a  customer  of  a licensed retailer if:

1.        The item is provided directly to the customer of the licensed retailer by the producer or wholesaler or an employee or independent contractor of the producer or wholesaler except that a schedule of sporting events, as defined in subsection (F), may be provided to the cus- tomer through the licensed retailer;

2.        The item provided has a value less than $5 and bears advertising about the producer, wholesaler, or spirituous liquor available from the producer or wholesaler. The producer or wholesaler may provide an unlimited number of items;

3.        The item provided has a value more than $5 and bears advertising about the producer, wholesaler, or spirituous liquor available from the producer or wholesaler. The producer or wholesaler shall ensure that the total value of all items provided does not exceed $100 during any 6:00

a.m. to 2:00 a.m. period per licensed premises; and

4.        The producer or wholesaler ensures that no item of value is provided to the licensed retailer or an employee of the licensed retailer or is left on the licensed premises.

E.       Furnishing advertising. A producer or wholesaler may furnish advertising copy in the form of a digital file or camera- or internet-ready images of nominal value to a licensed retailer.

F.       Sponsoring a sporting event. If the licensed premises of a licensed retailer has a permanent occupancy of more than 1,000 people and is used primarily for live sporting events, a producer or wholesaler may sponsor and provide advertising to the licensed retailer in conjunction with a live sporting event or telecast of a sporting event at the licensed premises. If the producer or wholesaler provides a sign as part of the sponsor- ship of a sporting event, the sign is not subject to the value limitation or information content restrictions in R19-1-313. The producer or wholesaler shall ensure no item of value remains with the licensed retailer or at the licensed premises after the sporting event except that the wholesaler may leave items of value with the licensed retailer or at the licensed premises if the retailer is an on-sale retailer and leaving the items of value complies with the restrictions at A.R.S. § 4- 243(D). For the purpose of this subsection, live sporting event means an athletic competition governed by a set of rules or customs to which pre-sold tickets are made available to the public. For nationally recognized sporting events that are sea- sonal, including but not limited to baseball, football, basket- ball, soccer, and NASCAR, the conclusion of a live sporting event occurs when the season ends rather than after each indi- vidual event of the season. A golf tournament is not a live sporting event unless:

1.        The golf tournament is regulated by a golf association; or

2.        The golf tournament is held for the benefit of an unli- censed organization and the sponsoring producer or wholesaler ensures that:

a.         All sponsorship proceeds are provided to the unli- censed organization, and

b.        Nothing of utilitarian value or other consideration is provided to a licensed retailer.

G.      Sponsoring a concert. If the licensed premises of a licensed retailer has a permanent occupancy of more than 1,000 people and is used primarily as a concert or live sporting event venue, a producer or wholesaler may sponsor and provide advertising to the licensed retailer in conjunction with a concert at the licensed premises. For the purpose of this subsection, “con- cert” is a live event with pre-sold tickets for a musical, vocal, theatrical, or comedic performance at the licensed premises or a live musical, vocal, theatrical, or comedic performance at the

licensed premises that is not open to the public. If the producer or wholesaler provides a sign as part of the sponsorship of a concert, the sign is not subject to the value limitation or infor- mation content restrictions in R19-1-313. The producer or wholesaler shall ensure that no item of value remains with the licensed retailer or at the licensed premises after the conclu- sion of the concert event except that the wholesaler may leave items of value with the licensed retailer or at the licensed premises if the retailer is an on-sale retailer and leaving the items of value complies with the restrictions at A.R.S. § 4- 243(D).

H.      Participating in a tradeshow or convention. A producer or wholesaler may provide for a licensee sampling, advertising, and event sponsorship to a trade association in conjunction with a tradeshow or convention if the trade association con- sists of five or more retail licensees that have no common ownership. If the producer or wholesaler provides a sign as part of the sponsorship of a tradeshow or convention, the sign is not subject to the value limitation or information content restrictions in R19-1-313. The producer or wholesaler shall ensure the sign is physically placed at the location where the tradeshow or convention is held. The producer or wholesaler shall remove the sign within one business day after the conclu- sion of the tradeshow or convention and ensure that no item of value remains with the licensed retailer after the conclusion of the tradeshow or convention event except that the wholesaler may leave items of value with the licensed retailer if the retailer is an on-sale retailer and leaving the items of value complies with the restrictions at A.R.S. § 4-243(D).

I.        Participating in an educational seminar. A producer or whole- saler may participate in an educational seminar for employees of a licensed retailer if:

1.        The educational seminar occurs on the licensed premises of a producer, wholesaler, or retailer;

2.        Content of the educational seminar is substantially related to spirituous liquor available from the producer or whole- saler;

3.        Lodging and transportation expenses incurred by employ- ees of the  licensed  retailer  or the  licensed  retailer  to attend the educational seminar are not paid or reimbursed by the producer or wholesaler. The producer or whole- saler may provide a meal and snacks of nominal value to participants in the education seminar;

4.        The retailer’s expenses associated with organizing, pro- ducing, or hosting the educational seminar are not paid or reimbursed by the producer or wholesaler; and

5.        No item of value remains with the licensed retailer after the conclusion of the educational seminar event except that the wholesaler may leave items of value with the licensed retailer if the retailer is an on-sale retailer and leaving the items of value complies with the restrictions at A.R.S. § 4-243(D).

J.        Furnishing a printed menu. A producer or wholesaler may fur- nish a printed menu for use by a retailer if:

1.        All printed menus furnished to the licensed retailer during a calendar year have a fair market value within the limit prescribed by A.R.S. § 4-243(D),

2.        A similar menu is made available to all retail accounts that use menus,

3.        The menu has no utilitarian value to the licensed retailer except as a menu, and

4.        The menu conspicuously bears the name of spirituous liquor available from the producer or wholesaler or the name of the producer or wholesaler.

K.      Distributing coupons or rebates. A producer or wholesaler may distribute coupons or rebates to consumers by any means

including  providing   the  coupons  or  rebates  to  a  licensed retailer if the coupons or rebates:

1.        Can be used only for an off-sale purchase by the con- sumer from a licensed retailer,

2.        Do not specify a licensed retailer at which the coupons or rebates are required to be used, and

3.        Are available in approximately the same number of quali- fying products the licensed retailer has available for cus- tomers if the coupons or rebates are ultimately redeemed by the licensed retailer.

L.       Providing holiday decorations. A producer or wholesaler may lend decorations commonly associated with a specific holiday to a licensed retailer for use on the licensed premises if the decorations:

1.        Bear advertising about a brand, producer, or wholesaler that is substantial, conspicuous, and permanently inscribed or securely affixed; and

2.        The decorations have no utilitarian value to the licensed retailer other than as decorations for a specific holiday.

M.     Providing a sample to a customer of a licensed retailer. A pro- ducer or wholesaler may provide a sample of spirituous liquor to a customer of a licensed:

1.        On-sale retailer without off-sale privileges if the producer or wholesaler complies with the procedures at A.R.S. § 4- 243(B)(2)(b), which limit sampling to 12 ounces of beer or cooler product, six ounces of wine, or two ounces of distilled spirits per person, per brand to be consumed on the licensed premises;

2.        Off-sale retailer if the producer or wholesaler complies with the procedures at A.R.S. § 4-243(B)(3)(c), which limit sampling to three ounces of beer, one and one-half ounces of wine, or one ounce of distilled spirits per per- son, per day. If the sample provided is for off-sale con- sumption, the producer or wholesaler shall ensure the sample is in an unbroken package; or

3.        On-sale retailer with off-sale privileges if the producer or wholesaler complies with subsection (M)(1) when pro- viding samples under the on-sale portion of the license and subsection (M)(2) when providing samples under the off-sale portion of the license.

N.      Conducting market research. A producer or wholesaler may participate in market research regarding spirituous liquor under the following conditions:

1.        The spirituous liquor is provided to research participants by personal delivery or through a delivery service pro- vider;

2.        The spirituous liquor provided to research participants is obtained from or shipped through a wholesaler;

3.        All research participants are of legal drinking age;

4.        Any employee of the producer or wholesaler and any employee of a marketing research business conducting the market research that handles the spirituous liquor is at least 19 years old; and

5.        The amount of spirituous liquor provided to each research participant does not exceed 72 ounces of beer, cooler product, or wine or 750 milliliters of distilled spirits.

O.      Providing a sample to a licensed retailer. A producer or whole- saler may provide a licensed retailer with a sample of a brand of spirituous liquor that the licensed retailer has not purchased for sale within the last 12 months if the sample does not exceed the following:

1.        Wine. Three liters;

2.        Beer. Three gallons; and

3.        Distilled spirits. Three liters.

P.       Providing a shelf plan or schematic. A producer or wholesaler may provide a recommended shelf plan or schematic for use

Department of Liquor Licenses and Control

by a licensed retailer in displaying spirituous liquor or other product in a point-of-sale area.

Q.      Providing meals, beverages, event tickets, and local ground transportation. Except as provided under subsection (I), a pro- ducer or wholesaler may provide a licensed retailer with meals, beverages, event tickets, and local ground transporta- tion if:

1.        The producer or  wholesaler accompanies  the licensed retailer while meals and beverages are consumed and ground transportation is used; and

2.        The value of the meals, beverages, event tickets, and local ground transportation is deductible as a business entertainment expense under the Internal Revenue Code.

R.      A producer or wholesaler that sells spirituous liquor to another producer or wholesaler is exempt from the credit prohibition in

A.R.S. § 4-242.

S.       Section is authorized by A.R.S. §§ 4-242, 4-243 and 4-244(3).

Historical Note

New Section made by final rulemaking at 20 A.A.R.

1207, effective July 6, 2014 (Supp. 14-2).