2013 -- S 0324

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LC01064

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO ALCOHOLIC BEVERAGES -- RETAIL, MANUFACTURING AND

WHOLESALE LICENSES

     Introduced By: Senators Felag, Walaska, and Bates

     Date Introduced: February 13, 2013

     Referred To: Senate Special Legislation and Veterans Affairs

It is enacted by the General Assembly as follows:

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     SECTION 1. Title 3 of the General Laws entitled "ALCOHOLIC BEVERAGES" is

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hereby amended by adding thereto the following chapter:

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     CHAPTER 7.1

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LENDING OR BORROWING MONEY OR RECEIPT OF CREDIT BY LICENSEES

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     3-7.1-1. Lending or borrowing by licensees prohibited. -- It shall be unlawful for any

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manufacturer or wholesaler to lend or borrow money, directly or indirectly, to or from any other

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licensee under chapter 3-6 or chapter 3-7.

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     3-7.1-2. Restrictions on the extension or receipt of credit by licensees. -- (a) It shall be

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unlawful for any licensee under chapter 3-6 or chapter 3-7 to receive or extend credit, directly or

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indirectly, for alcoholic beverages sold or delivered to any licensee under chapter 3-6 or chapter

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3-7 engaged in the sale of alcoholic beverages except in the usual course of business and for a

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period of not more than sixty (60) days. Nothing in this subsection shall require any manufacturer

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or wholesaler to extend credit to any licensee. The credit period shall be calculated from the date

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of delivery of the alcoholic beverages to the purchaser to the date when the purchaser discharges

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in full the indebtedness for which the credit was extended.

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     (b) If any licensee does not discharge in full any such indebtedness within such sixty (60)

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day period, the indebtedness shall be overdue and such licensee shall be delinquent within the

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meaning of subsection (a).

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     (c) Within three (3) days after a licensee becomes delinquent, the licensee who extended

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the credit shall mail a letter of notice by certified mail to the director of the department of

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business regulation and a copy thereof to the delinquent licensee. The letter of notice shall be on

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forms provided by the director of the department of business regulation. The notice shall contain

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the name of the delinquent licensee, the date of delivery of the alcoholic beverages and the

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amount of the indebtedness remaining undischarged. Within five (5) days after receipt of such a

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letter of notice, the director of the department of business regulation shall post the name and

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address only of the delinquent licensee in a delinquent list containing the names and addresses of

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all delinquent licensees. Such posting shall constitute notice to all licensees of the delinquency of

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such licensee.

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     (d) If a licensee is seriously damaged in his business by riot, insurrection, civil

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disturbance, fire, explosion or by an act of God, so-called, the licensee may file an application

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with the director of the department of business regulation requesting that the provisions of

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subsections (a) and (b) be suspended as to him/her for a reasonable period. The director of the

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department of business regulation shall set down the application for hearing within twenty-one

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(21) days and shall notify all licensees engaged in selling to said applicant of the hearing and give

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all interested parties the right to be heard. Pending such hearing, the director of the department of

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business regulation may, after an investigation and determination that the facts as stated by the

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licensee in his/her application would constitute reasonable grounds for relief, order that such

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licensee shall not be posted as delinquent. If the director of the department of business regulation

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finds it is in the public interest to do so, the director of business regulation may suspend the

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application of said subsections with respect to the applicant for such period as the director of

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business regulation may consider to be reasonable and in the public interest. Such action shall not

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deprive creditors of all legal rights available to them for the collection of the indebtedness and

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shall be contingent on such terms and conditions as the director of the department of business

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regulation shall determine.

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     (e) No licensee under chapters 3-6 and 3-7 shall sell or deliver, directly or indirectly,

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alcoholic beverages to a licensee whose name is posted on the delinquent list, except for payment

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in cash on or before delivery, and no licensee who is posted on the delinquent list shall purchase

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or accept delivery of any alcoholic beverages except for payment in cash on or before delivery.

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     (f) Whenever the license of any licensee whose name appears on the delinquent list is

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transferred, the name of the transferee shall appear in the place and stead of the transferor, as of

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the date of license transfer, in the same manner as if no transfer had occurred, but the provisions

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of this sentence shall not apply to transfers of licenses by assignees, court-appointed receivers or

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trustees under a voluntary assignment for the benefit of creditors, provided that prior approval of

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such assignment is obtained from the director of the department of business regulation after

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notice to all creditors has been given and reasonable time allowed for objections by such

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creditors.

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     (g) Upon full discharge of the indebtedness for which a licensee was posted, the licensee

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who filed the letter of notice of delinquency shall, within twenty-four (24) hours thereafter, notify

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the director of the department of business regulation, by mailing a letter by certified mail

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addressed to the director of the department of business regulation of the discharge of the

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indebtedness. The director of the department of business regulation shall immediately strike the

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name of the delinquent licensee from the list. The director of the department of business

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regulation shall by regulations prescribe how licensees, other than the two (2) concerned, shall be

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notified of the filing of the name of a licensee on the delinquency list and of the removal of the

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name of a delinquent from such list.

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     (h) If, after a hearing, the director of the department of business regulation finds that any

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licensee has violated these subsections or participated in such violation, the director of the

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department of business regulation shall suspend the license of the licensee until full discharge of

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the indebtedness.

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     (i) Notwithstanding and in lieu of any other penalty in any other provision of these

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subsections, any person who violates any provision of these subsections shall be punished by a

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fine of not more than five thousand ($5,000) dollars.

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     (j) The posting list shall be available for inspection by any licensee or his duly authorized

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agent only.

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     (k) The provisions of these subsections shall not apply to credit extended prior to July 1,

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2013.

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     SECTION 3. This act shall take effect upon passage and apply to credit extended on or

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after July 1, 2013.

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LC01064

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO ALCOHOLIC BEVERAGES -- RETAIL, MANUFACTURING AND

WHOLESALE LICENSES

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     This act would make unlawful for any manufacturer, wholesaler or retailer of alcoholic

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beverages to lend or borrow money, directly or indirectly, to or from one another and place

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restrictions upon the extensions of credit to the usual course of business and for a period of not

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more than sixty (60) days. Violators of these provisions would be subject to regulation by the

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department of business regulation and penalties assessed after hearing of a fine of not more than

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five thousand ($5,000) dollars or suspension of license or both.

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     This act would take effect upon passage and apply to credit extended on or after July 1,

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2013.

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LC01064

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