Title 2, Subtitle E | Prohibited Conduct and Activities
Title 2, Subtitle E | Prohibited Conduct and Activities; Cancellation, Suspension and Revocation of Permits to Manufacture and Wholesale Controlled Beverages
Section 2.28 Grounds for Cancellation, Suspension or Revocation of Permit.
Any permit issued pursuant to the authority of any alcoholic beverage control law of the State of Arkansas to manufacture or wholesale controlled beverages may be cancelled, revoked or suspended by the Director for any of the following reasons:
(1) Manufacturer or Wholesaler to Have No Interest in Retail Establishment.
That the manufacturer or wholesaler was interested directly or indirectly in any premises where controlled beverages are sold at retail, or in any business devoted wholly or partially to the sale of controlled beverages at retail, or by stock ownership, interlocking directors, mortgage or lien on any personal or real property in any premises where controlled beverages are sold at retail.
The term “interest” as used in ACA § 3-3-212 shall mean such a substantial ownership or financial interest, whether direct or indirect, in the business of any wholesale or retail licensee or in the premises on which said business is conducted as in the judgment of the Alcoholic Beverage Control Division may tend to influence such licensee to purchase beverages from such manufacturer to the exclusion or detriment of alcoholic beverages offered for sale by others. In determining whether an “interest” is prohibited by ACA § 3-3-212, the Division shall consider the following factors:
A. Whether the retail licensee is owned directly by the manufacturer or whether the manufacturer and the retailer are merely under common ownership of the same parent company. In the event a manufacturer and a retail licensee are commonly owned by the same company, the Alcoholic Beverage Control Division shall examine the degree to which the management and control of the manufacturing business and the retail business are separate and independent;
B. Whether there is a bona fide business reason for owning the retail licensee other than solely to promote the sale of alcoholic beverages;
C. Whether a significant portion of the revenues obtained by the manufacturer, or its parent company, as a result of the interest in a retail business, are derived from the sale of alcoholic beverages;
D. Whether the retail licensee purchases alcoholic beverages from an independently owned unrelated wholesaler;
E. Whether more than ten percent (10%) of the total gross annual revenues from the sale of alcoholic beverages by the retail licensee shall be derived from the sale of the alcoholic beverage products of the manufacturer or any entity affiliated with or related to the manufacturer;
F. Any other factor which the Alcoholic Beverage Control Division deems relevant.
Whenever a manufacturer proposes to acquire any interest, to any degree, in a wholesale or retail outlet, such acquisition shall be reviewed by the Agency. Such review shall include whatever documentation the Agency deems necessary to fully define the degree of interest acquired by the manufacturer, in accordance with the above factors.
Upon a finding by the Director that no “prohibited interest”, as defined herein, exists in the proposed purchase, stock transfer, merger, or other means of acquiring an interest in a wholesale or retail licensee by a manufacturer, an order approving such acquisition will be entered; (Amended 12-15-89)
(2) Manufacturer or Wholesaler Not to Make Loan to Retailer.
That the manufacturer or wholesaler made any loan to any person holding a permit to sell controlled beverages at retail;
(3) Exclusive Contracts Prohibited.
That the manufacturer or wholesaler entered into a contract with any person holding a permit to sell controlled beverages at retail whereby such person agreed to confine his sales to the products manufactured by one manufacturer or sold by one wholesaler;
(4) Gifts and Services to Retailers Prohibited.
That the manufacturer or wholesaler gave an article or articles away of any value or use whatsoever, or provided any services for the use or benefit of any person holding a permit to sell controlled beverages at retail. It is specifically provided that the practice of pricing alcoholic beverages for a retail permit holder by a manufacturer or wholesaler is not considered a prohibited service under this Regulation.
In addition, the following practices are not prohibited gifts or services under this Regulation: manufacturers and wholesalers may provide point of sale advertising items and related services to retailers in conformity with current federal regulations as long as the furnished item does not constitute a real or secondary gift to the retailer receiving it; notwithstanding any other Regulation to the contrary, wholesalers may as a permitted service deliver product, provide keg-tapping and cooling equipment, delivery lines, and keg hook-up service to holders of temporary beer permits and temporary restaurant wine permits on any day such permits are in effect; wholesalers may provide keg-tapping and cooling equipment, delivery lines, and keg hook-up service to consumers at the request of and as a permitted service to retail permit holders in any area where the sale of alcoholic beverages is legal. Provided, a wholesaler may not deliver any alcoholic beverages to a consumer, and a wholesaler’s employees may not be involved in any way with the dispensing of alcoholic beverages and serving such beverages to consumers.
Product Display means any alcoholic beverage racks, bins, barrels, casks, shelving or similar items the primary function of which is to hold and display consumer products.
A wholesaler may give or sell a “product display” to a retailer so long as:
(1) the total value of all product displays provided by the wholesaler does not exceed three hundred dollars ($300.00) per brand at any one time in any one retail outlet;
(2) the display bears conspicuous and substantial advertising matter on the product. The name and address of the retailer may appear on the displays;
(3) the giving or selling may be conditioned upon the purchase of the distilled spirits, wine, or malt beverages advertised on those displays in a quantity necessary for the initial completion of such display. No other condition can be imposed by the wholesaler on the retailer in order for the retailer to receive or obtain the product display.
A wholesaler may give or sell the following to a retailer:
Point of Sale Advertising Materials are items designed to be used within a retail establishment to attract consumer attention to the products of the industry member. Such materials include, but are not limited to: posters, placards, designs, inside signs (electrical, mechanical, or otherwise), window decorations, trays, coasters, mats, menu cards, foam scrapers, back bar mats, thermometers, clocks, calendars, and alcoholic beverage lists or menus.
Beer wholesalers may give, loan or sell inside signs (electrical, mechanical, or otherwise). Inside signs for spirits, wines or malt liquors shall not be loaned.
Consumer Advertising Specialties are items designed to be carried away by the consumer, such as trading stamps, non-alcoholic mixers, pouring racks, ash trays, bottle or can openers, cork screws, shopping bags, matches, printed recipes, pamphlets, cards, leaflets, blotters, post cards, and pencils. Umbrellas, caps, shirts, and visors shall be sold, not given, by the wholesalers to the retailer. The minimum value of umbrellas, caps, shirts and visors shall be the price paid by the industry member who first acquired the merchandise.
All point of sale advertising materials and consumer advertising specialties must bear conspicuous and substantial advertising matter about the product or the industry member which is permanently inscribed or securely affixed. The name, logo, address and web site of the retailer may appear on the point of sale advertising material. Any non-promotional item that the business would buy in the normal course of business must be sold, not given, by a wholesaler to a retailer.
A wholesaler may, without violating the provisions of these Regulations, and subject to approval by the Director on such form provided by the Agency, no less than five (5) working days prior to the qualified event, rent for fifty dollars ($50.00) per tap and associated cooling equipment or fair market value, whichever is greater, cooling and keg-tapping equipment, keg hook-up service and delivery lines to a retail permit holder for a special purpose. These provisions shall apply only to events outside of the normal course of the retail permit holder’s ordinary course of business, not to exceed ten (10) days in duration.
It is specifically provided that if a manufacturer or wholesaler provides any of the services for a retailer allowable under this Section, he must provide the same service upon request to any other retailer who purchases the product; (Amended 8-16-11)
(5) Inducements Prohibited.
That the manufacturer or wholesaler gave any inducement for sale to any person holding a permit to sell controlled beverages at retail, including but not limited to secret discounts, rebates, gifts or fictitious sales;
(6) Samples Prohibited.
That the manufacturer or wholesaler gave samples to any person, said samples being either in unbroken packages, partial packages or by the drink, except that a manufacturer or wholesaler may give a sample of distilled spirits, wine, or malt beverages to a retailer who has not previously purchased the brand from that manufacturer or wholesaler. No manufacturer or wholesaler may give to any retail outlet more than three (3) gallons of any brand of malt beverage, 750 ml of any brand of distilled spirits, or three (3) liters of any brand of wine.
Further, a wholesaler may provide retail package store owners or employees with a small sample of any brand of wine or liquor not previously purchased by such retail package store, with such sample not to exceed one (1) ounce per owner or employee. Such samples shall be poured from bottles owned by such wholesaler, brought into the retail package store by such wholesaler or its employees, and removed from the retail package store premises immediately after the conclusion of any such sampling activity. Any sampling conducted by a wholesaler in accordance with this Section shall not violate any other law or regulation prohibiting possession of an open container on the premises of a retail package store or violate any other law or regulation prohibiting an employee of a retail package store from drinking while on duty.
Sampling parties may not be given to retailers, consumers or prospective customers by manufacturers, distillers, importers, producers, distributors, retailers or wholesalers, except as permitted herein. Manufacturers, distillers, importers, producers, distributors, wholesalers and retailers may donate intoxicating liquor to charitable or non-profit organizations for on premises consumption only at non-profit functions where such organization receiving the intoxicating liquor does not hold a permit to dispense intoxicating liquors. The donation of intoxicating liquor by manufacturers, distillers, importers, producers, distributors, retailers or wholesalers may occur on a permitted premises of an on premises permittee of this agency. Manufacturers, wholesalers, distillers, importers, producers, distributors, and retailers may provide keg-tapping equipment and hook-up service to a charitable or non-profit organization at a function; (Amended 8-21-13)
(7) Employment of Unpermitted Sales Agents Prohibited. Repealed 8-21-13
(8) Sale, Taking of Order or Solicitation of Business by Wholesale Liquor Dealers From Private Clubs.
No holder of any wholesale liquor permit shall sell to, take any order or solicit any business, directly or indirectly, from a private club permittee;
(9) Effect of Violation of Regulations or Law.
That the manufacturer or wholesaler violated any of these Regulations or any alcoholic beverage control law of the State or Arkansas;
(10) Wholesalers Furnishing Outside Signs to Retailers Governed by Federal Regulations.
Notwithstanding the provisions of Section 2.28(4) of these Regulations, the Federal Regulations governing the furnishing of outside signs to retailers by wholesalers are hereby adopted by reference and incorporated herein; Further, any outdoor sign provided by an industry member shall only contain information regarding products sold to the retail outlet by the industry member. The retail outlets agree, as consideration for receiving the advertising banner, that said outlets will not customize or otherwise edit, add to or delete from the sign furnished by the industry member. All employees or agents of the industry member providing the signs are prohibited from erecting any temporary signs for the retail outlet.
It shall not be considered a violation for the industry member to provide a sign to a retail outlet containing the name of the outlet and “Grand Opening” so long as it is not displayed at the outlet for more than twenty-one (21) days. (Amended 8-16-11)
(11) Manufacturers Not to Engage in Price Fixing.
No liquor manufacturer or supplier shall take or fail to take any action that would cause any type of fixing of wholesale or retail prices in the state. This shall include engaging in the industry practice known as “reach-back pricing” Suggestion of wholesale or retail prices will not be considered to be a violation of the permit. Further, alcoholic beverage manufacturers or suppliers shall not require, any alcoholic beverage wholesaler to contribute to any local or national advertising, marketing or brand development fund, either directly or indirectly. (Amended 8-19-09)
(12) Wholesalers May Pay for Advertising Devices in Certain Retail Outlets.
Wholesale beer permittees shall be allowed to pay for certain advertising devices used at government owned facilities which are issued a large attendance facility permit as long as the permitted facility is located in a county which has a population of more than one hundred fifty-five thousand (155,000) people according to the 2000 Decennial Census. Such advertising devices shall include items such as inside or outside signs, scoreboards, programs, scorecards, and the like. However, payment for the advertising devices cannot result in the formation or existence of an exclusive buying arrangement between the large attendance facility permittee and the wholesaler who furnishes such advertising items; (Adopted 8-15-07)
(13) Advertising and Promotion Materials; Exception for Racing Facilities.
As an exception to Section 2.28(4) of these Regulations, any manufacturer or wholesaler may pay for the display or other presentation of advertising and promotion materials on or about the premises of the holder of a franchise granted by the Arkansas Racing Commission; (Amended 8-15-01)
(14) Arkansas Licensed Beer Wholesalers to Offer Keg Identification Labels for Sale.
Arkansas licensed beer wholesalers shall maintain and offer for sale to retail dealers any keg identification labels or tags required by Act 2320 of 2005. The identification labels or tags, as described by that Act, shall be sold at a price of the cost of manufacturing and maintaining the keg tags or labels. Any Arkansas native brewery or microbrewery-restaurant that sells kegs for off premises consumption at their location or which engages in sales to retailers for resale shall also be required to furnish said identification labels or tags as required by law; (Adopted 8-17-05)
(15) Professional Sports Teams Allowed Sponsorship.
A large attendance facility permitted establishment owned or operated by an owner of a professional sports team franchised by the National Association of Professional Baseball Leagues within a county that has a population of more than one hundred fifty-five thousand (155,000), according to the 2000 Federal Decennial Census, may accept sponsorship funds, advertising items or promotional items from licensed beer wholesalers. The furnishing of the sponsorship funds, advertising or promotional items may not result in the formation or existence of an exclusive buying arrangement between the large attendance facility permittee and the wholesaler who furnishes the sponsorship funds, advertising items or promotional items.(Adopted 8-15-07)
(16) Unlawful Pricing by Brewers and Manufacturers.
Pursuant to Act 783 of 2009 it is unlawful for a brewer or manufacturer of malt beverage products to engage in unlawful pricing practices as between the manufacturer or brewer and their respective Arkansas wholesalers.
Any violation of these regulations, or any violation of Act 783 of 2009, shall subject the Arkansas Native Brewery permit or non- resident beer seller’s permit issued to such party or their designee (Suppliers) to the full range of penalties as provided by ACA 3-2-212 and may also subject said permits to the imposition of a fine as authorized by ACA 3-4-401, et seq. The following regulations are hereby adopted to supplement Act 783:
(1) A supplier shall offer all Arkansas wholesalers to whom it offers product the same price, allowance, rebate, refund, commission, or discount.
(2) Suppliers shall act in “good faith” as defined in 3-5-1102(a)(4 ) toward wholesalers with regard to all matters including, but not limited to, transport costs, fees, charges, product support, rebates, commissions, refunds, and product availability .
(3) No supplier may take any “retaliatory action” as defined in 3-5-1102(a)(6) against a wholesaler.
(4) If a wholesaler believes a supplier has not acted in good faith or has taken retaliatory action against it, a hearing before the Director may be requested.
(5) Suppliers with wholesalers that have state-wide distribution rights on or after the effective date of this regulation may provide those wholesalers quantity discounts. Any wholesaler that obtains state-wide product distribution rights as of the effective date of this regulation, due to the consolidation of one or more wholesalers or suppliers, shall not be entitled to quantity discounts from the supplier.
(6) A supplier shall post the following information with the Director in its most current form: FOB-Source for all products offered in Arkansas, and all allowances, rebates, refunds, commissions or discounts it offers.
(7) All price information shall be provided by the supplier to the Director via email. It shall be submitted 14 days prior to any increase and 2 days prior to any decrease.
(8) All information provided to the ABC Director by the supplier is proprietary in nature and not subject to freedom of information requests pursuant to the Arkansas Freedom of Information Act.
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