Senate Bill No. 354

Introduced By waterman, marshall, eck, hibbard, ewer, mesaros, grosfield, tash, halligan, bohlinger, bartlett, sands, swysgood, swanson, barnhart, smith, simpkins, ahner, m. taylor, burnett, wyatt, l. taylor, rose, schmidt, j. johnson, crippen, toews, carey, cobb, rehbein, ream, stovall, jabs, mills, r. johnson, shea, ellingson, foster, beck, depratu, grimes

A Bill for an Act entitled: "An Act establishing a restaurant beer and wine license to allow restaurants to serve beer and wine TO PATRONS WHO PURCHASE FOOD; prohibiting a restaurant beer and wine licensee from holding any other type of beer, wine, or liquor license; exempting BASING THE ISSUANCE OF restaurant beer and wine licenses from ON the quota system; LIMITING THE NUMBER OF LICENSES THAT MAY BE ISSUED TO RESTAURANTS WITH A SEATING CAPACITY OF 101 PERSONS OR MORE; PROVIDING THAT CERTAIN LICENSES BE ISSUED BY LOTTERY; providing that restaurant beer and wine licenses are nontransferable TRANSFERABLE UNDER CERTAIN CONDITIONS; prohibiting gaming and gambling in conjunction with a license, other than an all-beverages license, to sell alcoholic beverages for consumption on premises not originally licensed prior to the effective date OF SECTION 6 of this act; and amending sections 16-4-105, 16-4-111, 23-5-306, 23-5-502, 23-5-603, and 23-5-611, MCA; AND PROVIDING EFFECTIVE DATES."

Be it enacted by the Legislature of the State of Montana:

NEW SECTION. Section 1.  Restaurant beer and wine license. (1) The department shall issue a restaurant beer and wine license TO AN APPLICANT whenever THE DEPARTMENT DETERMINES THAT THE APPLICANT, IN ADDITION TO SATISFYING THE REQUIREMENTS OF THIS SECTION, MEETS THE FOLLOWING QUALIFICATIONS AND CONDITIONS:

(a)  the applicant is otherwise qualified to possess a beer and wine license IN THE CASE OF AN INDIVIDUAL APPLICANT:

(I) THE APPLICANT'S PAST RECORD AND PRESENT STATUS AS A PURVEYOR OF ALCOHOLIC BEVERAGES AND AS A BUSINESS PERSON AND CITIZEN DEMONSTRATE THAT THE APPLICANT IS LIKELY TO OPERATE THE ESTABLISHMENT IN COMPLIANCE WITH ALL APPLICABLE LAWS OF THE STATE AND LOCAL GOVERNMENTS; AND

(II) THE APPLICANT IS NOT UNDER 19 YEARS OF AGE;

(B) IN THE CASE OF A CORPORATE APPLICANT:

(I) IN THE CASE OF A CORPORATION LISTED ON A NATIONAL STOCK EXCHANGE, THE CORPORATE OFFICERS AND THE BOARD OF DIRECTORS MUST MEET THE REQUIREMENTS OF SUBSECTION (1)(A);

(II) IN THE CASE OF A CORPORATION NOT LISTED ON A NATIONAL STOCK EXCHANGE, EACH OWNER OF 10% OR MORE OF THE OUTSTANDING STOCK MUST MEET THE REQUIREMENTS FOR AN INDIVIDUAL LISTED IN SUBSECTION (1)(A); AND

(III) THE CORPORATION IS AUTHORIZED TO DO BUSINESS IN MONTANA;

(C) IN THE CASE OF ANY OTHER BUSINESS ENTITY, INCLUDING BUT NOT LIMITED TO PARTNERSHIPS INCLUDING LIMITED LIABILITY PARTNERSHIPS, LIMITED PARTNERSHIPS, AND LIMITED LIABILITY COMPANIES, BUT NOT INCLUDING ANY FORM OF A TRUST:

(I) IF THE APPLICANT CONSISTS OF MORE THAN ONE INDIVIDUAL, ALL INDIVIDUALS MUST MEET THE REQUIREMENTS OF SUBSECTION (1)(A); AND

(II) IF THE APPLICANT CONSISTS OF MORE THAN ONE CORPORATION, ALL CORPORATIONS LISTED ON A NATIONAL STOCK EXCHANGE MUST MEET THE REQUIREMENTS OF SUBSECTION (1)(B)(I) AND CORPORATIONS NOT LISTED ON A NATIONAL STOCK EXCHANGE MUST MEET THE REQUIREMENTS OF SUBSECTION (1)(B)(II);

(b)(D)  the applicant operates a restaurant at the location where the restaurant beer and wine license will be used or satisfies the department:

(i)  that the applicant intends to open a restaurant that will meet the requirements of subsection (2)(6) and intends to operate the restaurant so that at least 75% of the restaurant's gross income during its first year of operation is expected to be the result of the sale of food; and

(ii) that the restaurant beer and wine license will be used in conjunction with that restaurant, THAT THE RESTAURANT WILL SERVE ONLY BEER AND WINE TO A PATRON WHO ORDERS FOOD, AND THAT BEER AND WINE PURCHASES WILL BE STATED ON THE FOOD BILL; AND

(III) THAT THE RESTAURANT WILL SERVE BEER AND WINE FROM A SERVICE BAR, AS SERVICE BAR IS DEFINED BY THE DEPARTMENT BY RULE;

(c)(E)  the applicant understands AND ACKNOWLEDGES IN WRITING ON THE APPLICATION that this license prohibits the applicant from being licensed to conduct any gaming or gambling activity or operate any gambling machines and that if any gaming or gambling activity or machine exists at the location where the restaurant beer and wine license will be used, the activity must be discontinued or the machines must be removed before the restaurant beer and wine license takes effect; AND

(d)  the owner of an existing all-beverages, beer, wine, or beer and wine license agrees to sell any existing license before the restaurant beer and wine license takes effect; and

(e)(F) the applicant does not hold any other retail license for the sale of beer, wine, or any other alcoholic beverages THE APPLICANT STATES THE PLANNED SEATING CAPACITY OF THE RESTAURANT, IF IT IS TO BE BUILT, OR THE CURRENT SEATING CAPACITY IF THE RESTAURANT IS OPERATING.

(2) A RESTAURANT THAT HAS AN EXISTING RETAIL LICENSE FOR THE SALE OF BEER, WINE, OR ANY OTHER ALCOHOLIC BEVERAGE MAY NOT BE CONSIDERED FOR A RESTAURANT BEER AND WINE LICENSE AT THE SAME LOCATION.

(3) (A) A COMPLETED APPLICATION FOR A LICENSE UNDER THIS SECTION AND THE APPROPRIATE APPLICATION FEE, AS PROVIDED IN SUBSECTION (11), MUST BE SUBMITTED TO THE DEPARTMENT. THE DEPARTMENT SHALL REQUEST THAT THE DEPARTMENT OF JUSTICE MAKE AN INVESTIGATION OF ALL THE ITEMS RELATING TO THE APPLICATION AS DESCRIBED IN SUBSECTIONS (3)(A)(I) THROUGH (3)(A)(IV). BASED ON THE RESULTS OF THE INVESTIGATION OR IN EXERCISING ITS SOUND DISCRETION, THE DEPARTMENT SHALL DETERMINE WHETHER:

(I) THE APPLICANT IS QUALIFIED TO RECEIVE A LICENSE;

(II) THE APPLICANT'S PREMISES ARE SUITABLE FOR THE CARRYING ON OF THE BUSINESS;

(III) THE REQUIREMENTS OF THIS CODE AND THE RULES PROMULGATED BY THE DEPARTMENT ARE MET AND COMPLIED WITH; AND

(IV) THE SEATING CAPACITY AS STATED ON THE APPLICATION IS CORRECT.

(B) THE DEPARTMENT MAY RETAIN 20% OF THE APPLICATION FEE COLLECTED UNDER SUBSECTION (10) TO DEFRAY THE COSTS OF THE DEPARTMENT AND DEPARTMENT OF JUSTICE ASSOCIATED WITH INVESTIGATING AND PROCESSING APPLICATIONS.

(4) AN APPLICATION FOR A BEER AND WINE LICENSE SUBMITTED UNDER THIS SECTION IS SUBJECT TO THE PROVISIONS OF 16-4-203, 16-4-207, AND 16-4-405.

(5) IF A PREMISES PROPOSED FOR LICENSING UNDER THIS SECTION IS A NEW OR REMODELED STRUCTURE, THEN THE DEPARTMENT MAY ISSUE A CONDITIONAL LICENSE PRIOR TO COMPLETION OF THE PREMISES BASED ON REASONABLE EVIDENCE, INCLUDING A STATEMENT FROM THE APPLICANT'S ARCHITECT OR CONTRACTOR CONFIRMING THAT THE SEATING CAPACITY STATED ON THE APPLICATION IS CORRECT, THAT THE PREMISES WILL BE SUITABLE FOR THE CARRYING ON OF BUSINESS AS A BONA FIDE RESTAURANT, AS DEFINED IN SUBSECTION (6).

(2)(6)  For purposes of this section, "restaurant" means a public eating place where individually priced meals are prepared and served for on-premises consumption. At least 75% of the restaurant's annual gross income from the operation must be from the sale of food and not from the sale of alcoholic beverages. EACH YEAR AFTER A LICENSE IS ISSUED, THE APPLICANT SHALL FILE WITH THE DEPARTMENT A STATEMENT, IN A FORM APPROVED BY THE DEPARTMENT, ATTESTING THAT AT LEAST 75% OF THE GROSS INCOME OF THE RESTAURANT DURING THE PRIOR YEAR RESULTED FROM THE SALE OF FOOD. The restaurant must have a dining room, a kitchen, and the number and kinds of employees necessary for the preparation, cooking, and serving of meals in order to satisfy the department that the space is intended for use as a full-service restaurant. A FULL-SERVICE RESTAURANT IS A RESTAURANT THAT PROVIDES AN EVENING DINNER MENU.

(3)(7) (A) (I)  A SUBJECT TO THE CONDITIONS OF SUBSECTION (7)(A)(II), A restaurant beer and wine license is not transferable and may not be sold by a licensee MAY BE TRANSFERRED, UPON APPROVAL BY THE DEPARTMENT, FROM THE ORIGINAL APPLICANT TO A NEW OWNER OF THE RESTAURANT IF THERE IS NO CHANGE OF LOCATION, AND THE ORIGINAL OWNER MAY TRANSFER LOCATION AFTER THE LICENSE IS ISSUED BY THE DEPARTMENT TO A NEW LOCATION, UPON APPROVAL BY THE DEPARTMENT.

(II) A NEW OWNER MAY NOT TRANSFER THE LICENSE TO A NEW LOCATION FOR A PERIOD OF 1 YEAR FOLLOWING THE TRANSFER OF THE LICENSE TO THE NEW OWNER.

(B) A LICENSE ISSUED UNDER THIS SECTION MAY BE JOINTLY OWNED, AND THE LICENSE MAY PASS TO THE SURVIVING JOINT TENANT UPON THE DEATH OF THE OTHER TENANT. HOWEVER, THE LICENSE MAY NOT BE TRANSFERRED TO ANY OTHER PERSON OR ENTITY BY OPERATION OF THE LAWS OF INHERITANCE OR SUCCESSION OR ANY OTHER LAWS ALLOWING THE TRANSFER OF PROPERTY UPON THE DEATH OF THE OWNER IN THIS STATE OR IN ANOTHER STATE.

(C) AN ESTATE MAY, UPON THE SALE OF A RESTAURANT THAT IS PROPERTY OF THE ESTATE AND WITH THE APPROVAL OF THE DEPARTMENT, TRANSFER A RESTAURANT BEER AND WINE LICENSE TO A NEW OWNER.

(4)(8) (A)  The department shall issue a restaurant beer and wine license to a qualified applicant regardless of the number of beer and wine licenses already issued within a beer license quota area in which the restaurant is located:

(I) FOR A RESTAURANT LOCATED IN A QUOTA AREA WITH A POPULATION OF 20,000 PERSONS OR FEWER, AS THE QUOTA AREA POPULATION IS DETERMINED IN 16-4-105, IF THE NUMBER OF RESTAURANT BEER AND WINE LICENSES ISSUED IN THAT QUOTA AREA IS EQUAL TO OR LESS THAN 60% OF THE NUMBER OF BEER LICENSES THAT MAY BE ISSUED IN THAT QUOTA AREA PURSUANT TO 16-4-105;

(II) FOR A RESTAURANT LOCATED IN A QUOTA AREA WITH A POPULATION OF 20,001 TO 60,000 PERSONS, AS THE QUOTA AREA POPULATION IS DETERMINED IN 16-4-105, IF THE NUMBER OF RESTAURANT BEER AND WINE LICENSES ISSUED IN THAT QUOTA AREA IS EQUAL TO OR LESS THAN 50% OF THE NUMBER OF BEER LICENSES THAT MAY BE ISSUED IN THAT QUOTA AREA PURSUANT TO 16-4-105;

(III) FOR A RESTAURANT LOCATED IN A QUOTA AREA WITH A POPULATION OF 60,001 PERSONS OR MORE, AS THE QUOTA AREA POPULATION IS DETERMINED IN 16-4-105, IF THE NUMBER OF RESTAURANT BEER AND WINE LICENSES ISSUED IN THAT QUOTA AREA IS EQUAL TO OR LESS THAN 40% OF THE NUMBER OF BEER LICENSES THAT MAY BE ISSUED IN THAT QUOTA AREA PURSUANT TO 16-4-105; AND

(IV) FOR A RESTAURANT LOCATED IN A QUOTA AREA THAT IS ALSO A RESORT COMMUNITY, AS THE RESORT COMMUNITY IS DESIGNATED BY THE DEPARTMENT OF COMMERCE UNDER 7-6-4461(5), IF THE NUMBER OF RESTAURANT BEER AND WINE LICENSES ISSUED IN THE QUOTA AREA THAT IS ALSO A RESORT COMMUNITY IS EQUAL TO OR LESS THAN 100% OF THE NUMBER OF BEER LICENSES THAT MAY BE ISSUED IN THAT QUOTA AREA PURSUANT TO 16-4-105.

(B) IN DETERMINING THE NUMBER OF RESTAURANT BEER AND WINE LICENSES THAT MAY BE ISSUED UNDER THIS SUBSECTION (8) BASED ON THE PERCENTAGE AMOUNTS DESCRIBED IN SUBSECTIONS (8)(A)(I) THROUGH (8)(A)(III), THE DEPARTMENT SHALL ROUND TO THE NEARER WHOLE NUMBER.

(C) IF THERE ARE MORE APPLICANTS THAN LICENSES AVAILABLE IN A QUOTA AREA, THEN THE LICENSE MUST BE AWARDED BY LOTTERY AS PROVIDED IN SUBSECTION (9).

(9) (A) WHEN A RESTAURANT BEER AND WINE LICENSE BECOMES AVAILABLE BY THE INITIAL ISSUANCE OF LICENSES UNDER THIS SECTION OR AS THE RESULT OF AN INCREASE IN THE POPULATION IN THE QUOTA AREA, THE NONRENEWAL OF RESTAURANT BEER AND WINE LICENSE, OR THE LAPSE OR REVOCATION OF THE LICENSE BY THE DEPARTMENT, THEN THE DEPARTMENT SHALL ADVERTISE THE AVAILABILITY OF THE LICENSE IN THE QUOTA AREA FOR WHICH IT IS AVAILABLE. IF THERE ARE MORE APPLICANTS THAN NUMBER OF LICENSES AVAILABLE, THE LICENSE MUST BE AWARDED TO AN APPLICANT BY A LOTTERY.

(B) ANY APPLICANT WHO OPERATES A RESTAURANT THAT MEETS THE QUALIFICATIONS OF SUBSECTION (6) FOR AT LEAST 12 MONTHS PRIOR TO THE FILING OF AN APPLICATION MUST BE GIVEN A PREFERENCE.

(C) THE DEPARTMENT SHALL NUMERICALLY RANK ALL APPLICANTS IN THE LOTTERY. ONLY THE SUCCESSFUL APPLICANTS WILL BE REQUIRED TO SUBMIT A COMPLETED APPLICATION AND THE REQUIRED FEE. AN APPLICANT'S RANKING MAY NOT BE SOLD OR TRANSFERRED TO ANOTHER PERSON OR ENTITY. THE PREFERENCE AND AN APPLICANT'S RANKING APPLY ONLY TO THE INTENDED LICENSE ADVERTISED BY THE DEPARTMENT OR TO THE NUMBER OF LICENSES DETERMINED UNDER SUBSECTION (8) WHEN THERE ARE MORE APPLICANTS THAN LICENSES AVAILABLE. THE APPLICANT'S QUALIFICATIONS FOR ANY OTHER RESTAURANT BEER AND WINE LICENSE AWARDED BY LOTTERY MUST BE DETERMINED AT THE TIME OF THE LOTTERY.

(5)(10)  Under a restaurant beer and wine license, beer and wine may not be sold for off-premises consumption.

(6)(11) An application for a restaurant beer and wine license must be accompanied by a fee of $1,000 ACCORDING TO THE FOLLOWING SCHEDULE:

(A) $5,000 FOR RESTAURANTS WITH A STATED SEATING CAPACITY OF 60 PERSONS OR LESS;

(B) $10,000 FOR RESTAURANTS WITH A STATED SEATING CAPACITY OF 61 TO 100 PERSONS; OR

(C) $20,000 FOR RESTAURANTS WITH A STATED SEATING CAPACITY OF 101 PERSONS OR MORE.

(12) The annual fee for a restaurant beer and wine license is $300 $400.

(13) IF A RESTAURANT INCREASES THE STATED SEATING CAPACITY OF THE LICENSED RESTAURANT OR IF THE DEPARTMENT DETERMINES THAT AN APPLICANT HAS INCREASED THE STATED SEATING CAPACITY OF THE LICENSED RESTAURANT, THEN THE APPLICANT SHALL PAY TO THE DEPARTMENT THE DIFFERENCE BETWEEN THE APPLICATION FEE PAID AT THE TIME OF FILING THE ORIGINAL APPLICATION AND THE APPLICABLE APPLICATION FEE FOR THE ADDITIONAL SEATING.

(14) THE NUMBER OF BEER AND WINE LICENSES ISSUED TO RESTAURANTS WITH A STATED SEATING CAPACITY OF 101 PERSONS OR MORE MAY NOT EXCEED 25% OF THE TOTAL LICENSES ISSUED.

(7)(15)  Possession of a restaurant beer and wine license is not a qualification for licensure of any gaming or gambling activity. A gaming or gambling activity may not occur on the premises of a restaurant with a restaurant beer and wine license.

NEW SECTION. Section 2.  Appropriate alcoholic beverage license for gaming or gambling. (1) Gaming or gambling may be conducted on premises with retail all-beverages licenses issued under 16-4-201 but may not be conducted on premises that are originally licensed after [the effective date of this act] under any other provision of law to sell alcoholic beverages for consumption on the premises. The transfer or renewal of a license in conformance with the provisions of this title does not constitute the new issuance of a license, and premises operating under a license originally issued prior to [the effective date of this act] may, subject to the provisions of Title 23, chapter 5, have gaming or gambling conducted on the premises.

(2) All licenses to sell alcoholic beverages for consumption on the premises, other than all-beverages licenses issued under 16-4-201, that are issued after [the effective date of this act] must have a conspicuous notice that the license may not be used for premises where gaming or gambling is conducted.

NEW SECTION. SECTION 2. DENIAL OF RESTAURANT BEER AND WINE LICENSE. (1) A RESTAURANT BEER AND WINE LICENSE MAY NOT BE ISSUED BY THE DEPARTMENT FOR A PREMISES SITUATED WITHIN A ZONE OF A CITY, TOWN, OR COUNTY WHERE THE SALE OF ALCOHOLIC BEVERAGES IS PROHIBITED BY ORDINANCE, A CERTIFIED COPY OF WHICH HAS BEEN FILED WITH THE DEPARTMENT.

(2) A RESTAURANT BEER AND WINE LICENSE MAY NOT BE ISSUED OR RENEWED IF THE DEPARTMENT FINDS, SUBJECT TO THE OPPORTUNITY FOR A HEARING PURSUANT TO TITLE 2, CHAPTER 4, PART 6, THAT THE APPLICANT OR THE PREMISES PROPOSED FOR LICENSING FAIL TO MEET THE ELIGIBILITY OR SUITABILITY CRITERIA PROVIDED BY LAW.

NEW SECTION. SECTION 3. SALE OF BEER AND WINE PROHIBITED DURING CERTAIN HOURS. EXCEPT AS PROVIDED IN 16-3-305, RESTAURANTS LICENSED PURSUANT TO [SECTION 1] IN WHICH BEER AND WINE ARE SOLD, OFFERED FOR SALE, OR GIVEN AWAY AT RETAIL MAY NOT SERVE BEER AND WINE BETWEEN THE HOURS OF 11 P.M. AND 11 A.M. HOWEVER, IF AN INCORPORATED CITY OR TOWN HAS BY ORDINANCE FURTHER RESTRICTED THE HOURS OF SALE OF BEER AND WINE, THEN THE SALE OF BEER AND WINE IN RESTAURANTS LICENSED TO SELL BEER AND WINE, PURSUANT TO [SECTION 1], IS PROHIBITED WITHIN THE LIMITS OF THE CITY OR TOWN DURING THE TIME THAT THE SALE IS PROHIBITED BY THIS SECTION AND IN ADDITION TO THE HOURS THAT THE SALE IS PROHIBITED BY ORDINANCE.

NEW SECTION. SECTION 4. RESTAURANT BEER AND WINE LICENSE -- PROHIBITED PRACTICES. A RESTAURANT LICENSED FOR THE SALE OF BEER AND WINE PURSUANT TO [SECTION 1] MAY NOT CONVEY TO ANY PERSON BY ANY MEANS THAT A PERSON MAY EITHER PURCHASE OR CONSUME BEER OR WINE ON THE PREMISES WITHOUT BEING REQUIRED TO PURCHASE FOOD.

NEW SECTION. SECTION 5. APPROPRIATE ALCOHOLIC BEVERAGE LICENSE FOR CERTAIN GAMBLING ACTIVITIES. (1) TO BE ELIGIBLE TO OFFER GAMBLING UNDER TITLE 23, CHAPTER 5, PART 3, 5, OR 6, AN APPLICANT SHALL OWN IN THE APPLICANT'S NAME:

(A) A RETAIL ALL-BEVERAGES LICENSE ISSUED UNDER 16-4-201; OR

(B) A LICENSE ISSUED PRIOR TO [THE EFFECTIVE DATE OF SECTION 6] UNDER 16-4-105, AUTHORIZING THE SALE OF BEER AND WINE FOR CONSUMPTION ON THE LICENSED PREMISES.

(2) FOR PURPOSES OF THIS SECTION, A LICENSE ISSUED UNDER 16-4-105 PRIOR TO [THE EFFECTIVE DATE OF SECTION 6] MAY BE TRANSFERRED TO A NEW OWNER OR TO A NEW LOCATION OR TRANSFERRED TO A NEW OWNER AND LOCATION BY THE DEPARTMENT OF REVENUE PURSUANT TO THE APPLICABLE PROVISIONS OF TITLE 16. THE OWNER OF THE LICENSE THAT HAS BEEN TRANSFERRED MAY OFFER GAMBLING IF THE OWNER AND THE PREMISES QUALIFY UNDER TITLE 23, CHAPTER 5, PART 3, 5, OR 6.

SECTION 6.  SECTION 16-4-105, MCA, IS AMENDED TO READ:

"16-4-105.   Limit on retail beer licenses -- wine license amendments -- off-premises consumption -- limitation on use of license -- exception. (1) Except as otherwise provided by law, a license to sell beer at retail or beer and wine at retail, in accordance with the provisions of this code and the rules of the department, may be issued to any person, firm, or corporation that is approved by the department as a fit and proper person, firm, or corporation to sell beer, except that:

(a)  the number of retail beer licenses that the department may issue for premises situated within incorporated cities and incorporated towns and within a distance of 5 miles from the corporate limits of the cities and towns must be determined on the basis of population prescribed in 16-4-502 as follows:

(i)  in incorporated towns of 500 inhabitants or less and within a distance of 5 miles from the corporate limits of the towns, not more than one retail beer license, which may not be used in conjunction with a retail all-beverages license;

(ii) in incorporated cities or incorporated towns of more than 500 inhabitants and not over 2,000 inhabitants and within a distance of 5 miles from the corporate limits of the cities or towns, one retail beer license for every 500 inhabitants, which may not be used in conjunction with retail all-beverages licenses;

(iii) in incorporated cities of over 2,000 inhabitants and within a distance of 5 miles from the corporate limits of the cities, four retail beer licenses for the first 2,000 inhabitants, two additional retail beer licenses for the next 2,000 inhabitants or major fraction of 2,000 inhabitants, and one additional retail beer license for every additional 2,000 inhabitants, which may not be used in conjunction with retail all-beverages licenses;

(b)  the number of the inhabitants in incorporated cities and incorporated towns, exclusive of the number of inhabitants residing within a distance of 5 miles from the corporate limits of the cities or towns, governs the number of retail beer licenses that may be issued for use within the cities and towns and within a distance of 5 miles from the corporate limits of the cities and towns. If two or more incorporated municipalities are situated within a distance of 5 miles from each other, the total number of retail beer licenses that may be issued for use in both the incorporated municipalities and within a distance of 5 miles from their respective corporate limits must be determined on the basis of the combined populations of both municipalities and may not exceed the limitations in this section. The distance of 5 miles from the corporate limits of any incorporated city or incorporated town must be measured in a straight line from the nearest entrance of the premises proposed for licensing to the nearest corporate boundary of the city or town.

(c)  retail beer licenses of issue on March 7, 1947, and retail beer licenses issued under 16-4-110 that are in excess of the limitations in this section are renewable, but new licenses may not be issued in violation of the limitations;

(d)  the limitations do not prevent the issuance of a nontransferable and nonassignable retail beer license to an enlisted persons', noncommissioned officers', or officers' club located on a state or federal military reservation on May 13, 1985, or to a post of a nationally chartered veterans' organization or a lodge of a recognized national fraternal organization if the veterans' or fraternal organization has been in existence for a period of 5 years or more prior to January 1, 1949;

(e)  the number of retail beer licenses that the department may issue for use at premises situated outside of any incorporated city or incorporated town and outside of the area within a distance of 5 miles from the corporate limits or for use at premises situated within any unincorporated area must be determined by the department in its discretion, except that a retail beer license may not be issued for any premises so situated unless the department determines that the issuance of the license is required by public convenience and necessity.

(2)  A person holding a license to sell beer for consumption on the premises at retail may apply to the department for an amendment to the license permitting the holder to sell wine as well as beer. The division may issue an amendment if it finds, on a satisfactory showing by the applicant, that the sale of wine for consumption on the premises would be supplementary to a restaurant or prepared-food business. A Except for beer and wine licenses issued pursuant to [section 1], a person holding a beer-and-wine license may sell wine for consumption on or off the premises. Nonretention of the beer license, for whatever reason, means automatic loss of the wine amendment license.

(3) (a) Except as provided in subsection (3)(b), a license issued pursuant to this section after [the effective date of this section] must have a conspicuous notice that the license may not be used for premises where gambling is conducted.

(b) Subsection (3)(a) does not apply to licenses issued under this section if the department received the application before [the effective date of this section]. For the purposes of this subsection (3)(b), the application is received by the department before [the effective date of this section] if the application's mail cover is postmarked by the United States postal service before [the effective date of this section] or if the application was consigned to a private courier service for delivery to the department before [the effective date of this section]. An applicant who consigns an application to a private courier shall provide to the department, upon demand, documentary evidence satisfactory to the department that the application was consigned to a private courier before [the effective date of this section]."

SECTION 7.  SECTION 16-4-111, MCA, IS AMENDED TO READ:

"16-4-111.   Catering endorsement for beer and wine licensees. (1) (a) A person who is engaged primarily in the business of providing meals with table service and who is licensed to sell beer at retail or beer and wine at retail for on-premises consumption may, upon the approval of the liquor division, be granted a catering endorsement to the license to allow the catering and sale of beer or beer and wine to persons attending a special event upon premises not otherwise licensed for the sale of beer or beer and wine for on-premises consumption. The beer and or wine must be consumed on the premises where the event is held.

(b) A person who is licensed pursuant to [section 1] to sell beer at retail or beer and wine at retail for on-premises consumption may, upon the approval of the liquor division, be granted a catering endorsement to the license to allow the catering and sale of beer and wine to persons attending a special event upon premises not otherwise licensed for the sale of beer or beer and wine, along with food equal in cost to 75% of the total gross revenue from the catering contract, for on-premises consumption. The beer or wine must be consumed on the premises where the event is held.

(2)  A written application for a catering endorsement and an annual fee of $200 must be submitted to the department for its approval.

(3)  A licensee who holds a catering endorsement may not cater an event in which the licensee is the sponsor. The catered event must be within 100 miles of the licensee's regular place of business.

(4)  The licensee shall notify the local law enforcement agency that has jurisdiction over the premises that the catered event is to be held. A fee of $35 must accompany the notice.

(5)  The sale of beer or beer and wine pursuant to a catering endorsement is subject to the provisions of 16-6-103.

(6)  The sale of beer or beer and wine pursuant to a catering endorsement is subject to the provisions of 16-3-306, unless entities named in 16-3-306 give their written approval for the on-premises sale of beer or beer and wine on premises where the event is to be held.

(7)  A catering endorsement issued for the purpose of selling and serving beer or beer and wine at a special event conducted on the premises of a county fairground or public sports arena authorizes the licensee to sell and serve beer or beer and wine in the grandstand and bleacher area of the premises, as well as from a booth, stand, or other fixed place on the premises."

Section 8.  Section 23-5-306, MCA, is amended to read:

"23-5-306.   Live card game table -- permit -- fees -- disposition of fees. (1) (a) A person who has been granted an operator's license under 23-5-177 and a who holds an appropriate license to sell alcoholic beverages for consumption on the premises as provided in [section 2 5] may be granted an annual permit for the placement of live card game tables.

(b)  The department may issue an annual permit for the placement of live card game tables to a person operating a premises not licensed to sell alcoholic beverages for consumption on the premises if:

(i)  one or more live card game tables were legally operated on the premises on January 15, 1989;

(ii) the premises were licensed on January 15, 1989, to sell food, cigarettes, or any other consumable product;

(iii) the person has been granted an operator's license under 23-5-177; and

(iv) at the time of application for the permit:

(A)  the person has continuously operated a live card game table on the premises since January 15, 1989; and

(B)  the natural person or persons who own the business operated on the premises are the same as on January 15, 1989.

(2)  The annual permit fee in lieu of taxes for each live card game table operated in a licensed operator's premises may not be prorated and must be:

(a)  $250 for the first table; and

(b)  $500 for each additional table.

(3)  The department shall retain for administrative purposes $100 of the fee collected under this part for each live card game table.

(4)  The department shall forward on a quarterly basis the remaining balance of the fee collected under subsection (2) to the treasurer of the county or the clerk, finance officer, or treasurer of the city or town in which the live card game table is located for deposit to the county or municipal treasury. A county is not entitled to proceeds from fees assessed on live card game tables located in incorporated cities and towns within the county. The local government portion of this fee is statutorily appropriated to the department, as provided in 17-7-502, for deposit to the county or municipal treasury."

Section 9.  Section 23-5-502, MCA, is amended to read:

"23-5-502.   Sports pools and sports tab games authorized -- tax. (1) Conducting or participating in sports pools and sports tab games as defined and governed in this part is lawful, except that:

(a)  sports tab games may only be conducted only on premises appropriately licensed to sell alcoholic beverages for consumption on the premises as provided in [section 2 5]; and

(b)  only a licensee of premises that are located in an incorporated city or town with a population of less than 100 or located outside the boundaries of an incorporated city or town and that are appropriately licensed to sell alcoholic beverages for consumption on the premises under [section 2 5] may conduct a race between animals and conduct one or more sports pools on the race. The race may be conducted only if it is between pigs, gerbils, or hamsters and is conducted on the premises but outside of interior areas of the establishment where food and beverages are usually stored, prepared, or served.

(2)  A manufacturer licensed under 23-5-115 who sells sports tabs to a licensed operator for use in a sports tab game shall collect from the operator, at the time of sale, a tax of $1 for each 100 sports tabs sold and, within 15 days after the end of each calendar quarter, submit to the department any forms required by the department and the proceeds of the collected tax. The manufacturer shall keep a record of taxes collected as required by department rule. The records must be made available for inspection by the department upon request of the department. The department shall retain the proceeds of the tax to administer this part."

Section 10.  Section 23-5-603, MCA, is amended to read:

"23-5-603.   Video gambling machines -- possession -- play -- restriction. (1) A licensed operator may make available for public play only the number of approved video gambling machines specifically authorized by this part.

(2)  The video gambling machines specifically authorized by this part are bingo, keno, and draw poker machines. Only the number of approved machines for which permits have been granted under 23-5-612 may be made available for play by the public on the premises of a licensed operator. The department shall adopt rules allowing a video gambling machine that needs repair to be temporarily replaced while it is being repaired with a video gambling machine that is approved under the permit provisions of this part. A fee may not be charged for the replacement machine.

(3)  Machines on premises appropriately licensed to sell alcoholic beverages for on-premises consumption as provided in [section 2 5] must be placed:

(a)  in a room, area, or other part of the premises in which alcoholic beverages are sold or consumed; and

(b)  within control of the operator for the purpose of preventing access to the machines by persons under 18 years of age."

Section 11.  Section 23-5-611, MCA, is amended to read:

"23-5-611.   Machine permit qualifications -- limitations. (1) (a) A person who has been granted an operator's license under 23-5-177 and a who holds an appropriate license to sell alcoholic beverages for consumption on the premises as provided in [section 2 5] may be granted a permit for the placement of video gambling machines in his on the person's premises.

(b)  If video keno or bingo gambling machines were legally operated on a premises on January 15, 1989, and the premises were not on that date licensed to sell alcoholic beverages for consumption on the premises or operated for the principal purpose of gaming and there is an operator's license for the premises under 23-5-177, a permit for the same number of video keno or bingo gambling machines as were operated on the premises on that date may be granted to the person who held the permit for such machines on those premises on that date.

(c)  A person who legally operated an establishment on January 15, 1989, for the principal purpose of gaming and has been granted an operator's license under 23-5-177 may be granted a permit for the placement of bingo and keno machines in his on the person's premises.

(2)  An applicant for a permit shall disclose on the application form to the department any information required by the department consistent with the provisions of 23-5-176.

(3)  A licensee may not have on the premises or make available for play on the premises more than 20 machines of any combination."

NEW SECTION. SECTION 12. SEVERABILITY. IF A PART OF [THIS ACT] IS INVALID, ALL VALID PARTS THAT ARE SEVERABLE FROM THE INVALID PART REMAIN IN EFFECT. IF A PART OF [THIS ACT] IS INVALID IN ONE OR MORE OF ITS APPLICATIONS, THE PART REMAINS IN EFFECT IN ALL VALID APPLICATIONS THAT ARE SEVERABLE FROM THE INVALID APPLICATIONS.

NEW SECTION. Section 13.  Codification instruction. (1) [Sections 1 and 2 THROUGH 4] are intended to be codified as an integral part of Title 16, CHAPTER 4, PART 4, and the provisions of Title 16, CHAPTER 4, PART 4, apply to [sections 1 and 2 THROUGH 4].

(2) [SECTION 5] IS INTENDED TO BE CODIFIED AS AN INTEGRAL PART OF TITLE 23, CHAPTER 5, PART 1, AND THE PROVISIONS OF TITLE 23, CHAPTER 5, PART 1, APPLY TO [SECTION 5].

NEW SECTION. SECTION 14.  EFFECTIVE DATES. (1) EXCEPT AS PROVIDED IN SUBSECTION (2), [THIS ACT] IS EFFECTIVE OCTOBER 1, 1997.

(2) [SECTION 6] AND THIS SECTION ARE EFFECTIVE ON PASSAGE AND APPROVAL.

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