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  The ILCC Legal Division

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TPP-39:
Multi-tier licensing arrangements

Non-resident dealer and Distributor

The Commission has received applications requesting the issuance to one legal entity both an Illinois Distributor and Non-resident dealer license.

It is the position of the Legal Division of the Commission that such licenses cannot be issued to the same applicant for the following reasons:

  1. The Liquor Control Act defines a Non-resident dealer as follows (5/1-3.29. Non-resident dealer): "Non-resident dealer" means any person, firm, partnership, corporation or other legal business entity who or which exports into this State, from any point outside of this State, any alcoholic liquors for sale to Illinois licensed foreign importers or importing distributors. Such license shall be restricted to the actual man­ufacturer of such alcoholic liquors or the primary United States importer of such alcoholic liquors, if manufactured outside of the United States, or the duly registered agent of such manufacturer or importer. Registration of such agent with the State Commission, in such manner and form as it may prescribe, shall be a prerequisite to the issuance of such license to an agent. Any licensed Illinois manufacturer of Class 1, Class 2, or Class 3 may obtain a Non-Resident Dealer's License at no fee. A manufacturer whose production of alcoholic liquor is less than 500,000 gallons per year may obtain a Non-Resident Dealer's License for an annual fee of $75. (emphasis supplied)

    5/5-1. Licenses issued by Illinois Liquor Control Commission
  2. Licenses issued by the Illinois Liquor Control Commission shall be of the following classes: (m) A non-;resident dealer's license shall permit such licensee to ship into and warehouse alcoholic liquor into this State from any point outside of this State, and to sell such alcoholic liquor to Illinois licensed foreign importers and importing distributors and to no one else in this State; provided that said non-resident dealer shall register with the Illinois Liquor Control Commission each and every brand of alcoholic liquor which it proposes to sell to Illinois licensees during the license period; and further provided that it shall comply with all of the provisions of Section 6-9 hereof with respect to registration of such Illinois licensees as may be granted the right to sell such brands at wholesale.

  3. The Liquor Control Act (5/1-3.15. Distributor) defines a distributor as follows: "Distributor" means any person, other than a manufacturer or non-resident dealer licensed under this Act, who is engaged in this State in purchasing, storing, possessing or warehousing any alcoholic liquors for resale or reselling at wholesale, whether within or without this State. (emphasis supplied)

    5/5-1. Licenses issued by Illinois Liquor Control Commission
  4. Licenses issued by the Illinois Liquor Control Commission shall be of the following classes: (b) A distributor's license shall allow the wholesale purchase and storage of alcoholic liquors and sale of alcoholic liquors to licensees in this State and to persons without the State, as may be permitted by law.

  5. The above sections of the Liquor Control Act specifically exclude both manufacturers and non-resident dealers licensed under the Act from the class of proper applicants for a distributors license.

  6. Further, a second ground for the denial of such licenses to a single legal entity is found in Sec. 6-4 of the Liquor Control Act which provides in relevant part:

    5/6-4. Retail sales by Distillers, Manufacturers, Subsidiaries or Affiliates Prohibited Transactions and Interests Exemptions

    1. No person licensed by any licensing authority as a distiller, or a wine manufacturer, or any subsidiary or affiliate thereof, or any officer, associate, member, partner, representative, employee, agent or shareholder owning more than 5% of the outstanding shares of such person shall be issued an importing distributor's or distributor's license, nor shall any person licensed by any licensing authority as an importing distributor, distributor or retailer, or any subsidiary or affiliate thereof, or any officer or associate, member, partner, representative, employee, agent or shareholder owning more than 5% of the outstanding shares of such person be issued a distiller's license or a wine manufacturer's license; and no person or persons licensed as a distiller by any licensing authority shall have any interest, directly or indirectly, with such distributor or importing distributor. However, an importing distributor or distributor, which on January 1, 1985, is owned by a brewer, or any subsidiary or affiliate thereof or any officer, associate, member, partner, representative, employee, agent or shareholder owning more than 5% of the outstanding shares of the importing distributor or distributor referred to in this paragraph, may own or acquire an ownership interest of more than 5% of the outstanding shares of a wine manufacturer and be issued a wine manufacturer's license by any licensing authority.
    2. The foregoing provisions shall not apply to any person licensed by any licensing authority as a distiller or wine manufacturer, or to any subsidiary or affiliate of any distiller or wine manufacturer who shall have been heretofore licensed by the State Commission as either an importing distributor or distributor during the annual licensing period expiring June 30, 1947, and shall actually have made sales regularly to retailers.
    3. Provided, however, that in such instances where a distributor's or importing distributor's license has been issued to any distiller or wine manufacturer or to any subsidiary or affiliate of any distiller or wine manufacturer who has, during the licensing period ending June 30, 1947, sold or distributed as such licensed distributor or importing distributor alcoholic liquors and wines to retailers, such distiller or wine manufacturer or any subsidiary or affiliate of any distiller or wine man­ufacturer holding such dis­tributor's or importing distributor's license may continue to sell or distribute to retailers such alcoholic liquors and wines which are manufactured, distilled, processed or marketed by distillers and wine manufacturers whose products it sold or distributed to retailers during the whole or any part of its licensing periods; and such additional brands and additional products may be added to the line of such distributor or importing distributor, provided, that such brands and such products were not sold or distributed by any distributor or importing distributor licensed by the State Commission during the licensing period ending June 30, 1947, but can not sell or distribute to retailers any other alcoholic liquors or wines.
    4. It shall be unlawful for any distiller licensed anywhere to have any stock ownership or interest in any distributor's or importing distributor's license wherein any other person has an interest therein who is not a distiller and does not own more than 5% of any stock in any distillery. Nothing herein contained shall apply to such distillers or their subsidiaries or affiliates, who had a distributor's or importing distributor's license during the licensing period ending June 30, 1947, which license was owned in whole by such distiller, or subsidiaries or affiliates of such distiller. (emphasis supplied)
  7. From the foregoing, it appears that there are two options available to such an applicant:
    1. continue to be licensed as a Non-resident dealer and to secure another Illinois distributor, or
    2. relinquish the non-resident dealer license and become licensed as an Illinois distributor. Either of these options assumes that the applicant has the proper permit from the Bureau of Alcohol, Tobacco and Firearms.

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