2019 -- S 0517

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LC001745

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

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A N   A C T

RELATING TO ALCOHOLIC BEVERAGES -- LENDING OR BORROWING MONEY OR

RECEIPT OF CREDIT BY LICENSEES

     Introduced By: Senator Sandra Cano

     Date Introduced: February 27, 2019

     Referred To: Senate Special Legislation and Veterans Affairs

     It is enacted by the General Assembly as follows:

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

hereby amended by adding thereto the following chapter:

CHAPTER 7.1

LENDING OR BORROWING MONEY OR RECEIPT OF CREDIT BY LICENSEES

     3-7.1-1. Prohibition of lending or borrowing money.

     It shall be unlawful for any licensee under this title to lend or borrow money, directly or

indirectly, to or from any other licensee under this title.

     3-7.1-2. Prohibition of receipt of credit.

     (a) It shall be unlawful for any licensee under this title to receive or extend credit, directly

or indirectly, for alcoholic beverages sold or delivered to any licensee engaged in the sale of

alcoholic beverages except in the usual course of business and for a period of not more than sixty

(60) days.

     (b) The credit period shall be calculated from the date of the delivery of the alcoholic

beverages to the purchaser to the date when the purchaser discharges in full the indebtedness for

which the credit was extended. If any licensee does not discharge in full any such indebtedness

within the sixty (60) day period, the indebtedness shall be overdue and such licensee shall be

delinquent within the meaning of this section.

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

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

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

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

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

indebtedness remaining undischarged.

     (d) Within five (5) days after receipt of such a letter of notice, the department of business

regulation shall post the name and address only of the delinquent licensee on a delinquent list

containing the names and addresses of all delinquent licensees. Such posting shall constitute

notice to all licensees of the delinquency of such licensee.

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

agent only.

     (f) Nothing in this chapter shall require any manufacturer, winegrower or wholesaler to

extend credit to any licensee.

     3-7.1-3. Prohibition of acquisition of business interest in licensee.

     It shall be unlawful for any manufacturer, wholesaler or importer of alcoholic beverages,

or any winegrower not holding a license under § 3-6-1.1, to acquire, retain or own, directly or

indirectly, any interest in the business of any licensee under this title, or for any winegrower

licensed under § 3-6-1.1 to acquire, retain or own, directly or indirectly, any interest in the

business of any other licensee under this title, or for any manufacturer of alcoholic beverages or

any winegrower to acquire, retain or own, directly or indirectly, any interest in the business of

any licensee under this title.

     3-7.1-4. Nonpayment of licensee due to unforeseen circumstances -- Hearing.

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

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

with the department of business regulation requesting that the provisions of § 3-7.1-2 be

suspended as to it for a reasonable period. The department of business regulation shall set down

the application for hearing within twenty-one (21) days and shall notify all licensees engaged in

selling to said applicant of the hearing and give all interested parties the right to be heard.

     (b) Pending such hearing, the department of business regulation may, after an

investigation and determination that the facts as stated by the licensee in its application would

constitute reasonable grounds for relief, order that such licensee shall not be posted as delinquent.

After hearing, if the department of business regulation finds it is in the public interest to do so, it

may suspend the application of § 3-7.1-2 with respect to the applicant for such period as the

director may consider to be reasonable and in the public interest. Such action shall not deprive

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

contingent on such terms and conditions as the department of business regulation shall determine.

     3-7.1-5. Sales to delinquent licensee.

     No licensee under this chapter shall sell or deliver, directly or indirectly, alcoholic

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

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

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

     3-7.1-6. Transfer of license of delinquent licensee.

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

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

the date of license transfer, in the same manner as if no transfer had occurred; provided that, the

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

trustees under a voluntary assignment for the benefit of creditors; and, provided further, that prior

approval of such assignment is obtained from the department of business regulation after notice to

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

     3-7.1-7. Discharge of indebtedness.

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

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

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

addressed to the director of the discharge of the indebtedness. The director shall immediately

strike the name of the delinquent licensee from the list.

     (b) The director shall by regulations prescribe how licensees, other than the two (2)

licensees initially involved in the process pursuant to § 3-7.1-2(c), shall be notified of the filing of

the name of a licensee on the delinquency list and of the removal of the name of a delinquent

from such list. If, after a hearing, the director finds that any licensee has violated this section or

participated in such violation, the department of business regulation shall suspend the license of

the licensee until full discharge of the indebtedness.

     (c) Notwithstanding, and in lieu of any other penalty in any other provision of this title,

any person who violates any provision of this chapter shall be punished by a fine of not more than

five thousand dollars ($5,000).

     3-7.1-8. Applicability.

     The provisions of this chapter shall not apply to credit extended prior to September 1,

2019.

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO ALCOHOLIC BEVERAGES -- LENDING OR BORROWING MONEY OR

RECEIPT OF CREDIT BY LICENSEES

***

     This act would prohibit the lending or borrowing of money or receipt of credit by

delinquent licensees among manufacturers, wholesalers and retailers of alcoholic beverages as

regulated by the department of business regulation (DBR).

     This act would take effect upon passage.

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