LOBBYIST REPORT

The  2025 session of the Arizona Legislature is in full swing. We are  approaching the midway in legislative hearings on various bills. Liquor  is no exception, as there are five distinct bills affecting the liquor  industry, with some in the Arizona House of Representatives and some in  the Arizona State Senate. 

First, the Senate:

SB 1556: Adult Hemp Beverages; Policies; Procedures

This  bill was introduced in the Senate by Senator TJ Shope. It has been  considered and passed by the committee on regulatory affairs, and has  now moved on for consideration by the entire State Senate. The bill has  particular impact on the Arizona liquor industry, including Arizona  retailers. 

Today,  there are few restrictions on the sale of hemp and hemp-derived  products, including beverages. You have probably seen hemp products for  sale, containing some form of THC, in liquor stores and numerous other  settings. SB 1556 would change that, in that going forward all  manufacturing, wholesaling, and retail sales of adult hemp beverages in  Arizona would be required to be licensed by the Arizona DLLC. The  regulation of hemp beverages would follow, nearly identically, the  regulation of spiritus liquors. However, there would be no mandatory  participation by a manufacturer, a wholesaler or a retailer. Arizona  retailers could decide, based on their own profile, whether or not to  sell adult hemp beverages side-by-side with liquor products.

ALBA  early on supported this legislation. ALBA wants Arizona to follow the  lead of other states which created sales and regulatory structure for  low-dose hemp-derived THC beverages. 

These  beverages often contain between five and 10 mg of hemp-derived THC.  This is because the product has similar characteristics to spirituous  beverages, and by all means requires limits on the sale and consumption  of the products as well as the age of customers.

Additionally,  the structure of the DLLC is already fully tested, accepted, and in  place. It seemed like it was a natural to have hemp products  manufactured and sold side-by-side with spiritless liquor products; it  also seems natural to have the supervising agency, the DLLC, also  supervise the manufacturer and sale of adult beverages. 

Although  the sale and regulation of adult hemp beverages would be nearly  identical to the sale and regulation of liquor products, there will be  some differences:

1. The bill places limits on the amount of THC present in adult hemp beverages, to a lower dose
2. The  bill requires independent lab testing of products to ensure safety; the  testing must include the potency and amounts of substances listed as  pesticides, etc. 
3. No product can exceed the maximum amount of total THC aloud by per single serving.
4. A  single serving of an adult beverage must have a volume of at least 200  mL or 6.76 ounces with not more than 10 mg of total THC per container
5. A  multi serve container of adult Hemp beverage must have a volume of at  least 3.75 mL or 12.68 ounces with not more than 30 mg/L or .887 mg/  fluid ounces of the container
6. No person can process, distribute or sell any adult hemp beverage product in powdered form or as a concentrate for mixing.
7. The bill limits serving sizes of adult hemp beverages
8. The bill prohibits the mixing of alcohol and hemp beverages 
9. Mixing of any food or beverage with an adult hemp beverage is prohibited
10. No  producer may use a concentrate containing any derivative of a THC  component that is not a naturally occurring cannabinoid to produce an  adult hemp beverage
11. Each  sealed container of adult hand beverage will be taxed at the rate of  $1.50 per gallon and a proportionate rate if less or greater than a  gallon. 

SB 1467: Liquor; Consumption; Watercraft

This  bill, also introduced by Senator Shope, would make several changes to  boat-centered alcohol licensing. First, the new authority would only  apply to government licenses. Reportedly, the bill is directed at Tempe  town Lake and the City of Tempe.

The  second change is with respect to the hours for the sale and consumption  of spirituous liquor service on boats. Currently, the lawful hours of  sale are between the hours of 9 AM and 5 PM. The bill extends the time  from 9 AM until 11 PM. Third, currently liquor can only be sold in  conjunction with the consumption of food. That restriction is  eliminated, with the ability to sell solely liquor without any service  of food. Finally, the definition of “boat“ is modified to permit larger  boats; the new definition is between capacity of 15 to now 100. 

SB 1467 has passed the Senate Regulatory Affairs Committee and is now ready for consideration by the entire State Senate. 

SB 1424; HB 2741: Liquor Sampling; Reporting; Requirements

House  Bill 2741 and SB 1424 are identical bills, and both have been  introduced at the request of Total Wine. Both bills have cleared their  primary committee, with SB 1424 clearing the Regulatory Affairs  Committee in the State Senate and HB 2741 clearing the Commerce  Committee in the House of Representatives. Both are now ready for full  consideration by the Senate and the House, respectively. 

Both  bills deal with reporting requirements and recordkeeping for sampling  by a beer and wine, store retailer or a liquor store license retailer  that have sampling privileges. Instead of using a singular,  Department-maintained system for maintaining the records and reports  that are required by the statute, both types of licenses now may use any  reasonable means for maintaining the records and reports that are  required. 

The  statute requires both types of licenses to report scheduled samplings  to the DLLC once every two weeks. The bill provides that reporting to  the department by a retailer can be by any reasonable means. 

HB 2905: Craft Producer; Festival; Fair; License

This  bill was introduced at the request of the craft brewer, craft  distillery and farm winery industries. The effect of the bill is to  consolidate the three types of festival license and the three types of  county or state fair license. Now, one basic license authority will  apply to all three types of sampling and sale settings.

ALBA  will continue to monitor all five liquor bills that are proceeding  through the legislature. ALBA‘s ongoing goal is to preserve and protect  the rights of Arizona retail licenses and to continually look for new  retail opportunities for these licensees.

Respectfully,

Don Isaacson
ISAACSON LAW FIRM, P.C.