Ariz. Admin. Code § R19-1-802 - Leasing an Off-sale Privilege regarding Mixed Cocktails

A. Applicant responsibilities. To apply under A.R.S. § 4-203.06 to lease the privilege of a bar or liquor store licensee to sell mixed cocktails for consumption off the licensed premises, a restaurant licensee shall submit to the Department:

1. An application form that is available from the Department at its office or on the Department's website;

2. A non-refundable application fee of $200; and

3. A privileges lease form, which is available from the Department at its office or on the Department's website, signed and dated by the restaurant licensee.

B. Director responsibilities. The Director shall:

1. Within 30 days after receiving an application under subsection (A), approve or deny the application based on the location or history of the applicant. If the Director denies the application, the Director shall provide to the restaurant licensee the notice required under R19-1-209(H) ;

2. Randomly select a bar or liquor store licensee to enter a privileges lease agreement with the approved restaurant licensee to lease the bar or liquor store licensee's privilege to sell mixed cocktails for consumption off the licensed premises. A bar or liquor store licensee is not required to opt-in but may opt-out of being selected by the Director. The bar or liquor store licensee selected may be located in the same or a different county from the county of the restaurant licensee;

3. Establish a lease amount to be paid by the restaurant licensee that fairly recognizes and is derived from the commercial value of the privilege being leased; and

4. Act as a third-party facilitator of the funds paid under subsection (C)(1) to ensure the lease payment is made to the bar or liquor store licensee.

C. Restaurant licensee responsibilities. A restaurant licensee whose application is approved under subsection (B)(1) shall:

1. Pay in full to the Department the lease amount established under subsection (B)(3) when the application is approved under subsection (B)(1);

2. Comply with all Department statutes and rules including:

a. A.R.S. § 4-203(S)(5) regarding the sale of menu food items, as defined at A.R.S. § 4-101;

b. A.R.S. § 4-205.02(M) regarding the percentage of gross revenue derived from the sale of food; and

c. A.R.S. § 4-206.01(G) regarding the percentage of spirituous liquor sales derived under the privileges lease agreement; and

3. If desired, apply to the Department for renewal of the privileges lease agreement. To renew the privileges lease agreement, a restaurant licensee shall:

a. Submit to the Department a renewal application form that is available from the Department at its office or on the Department's website;

b. Pay a renewal fee that includes renewal of the restaurant license and is specified on the Department's website; and

c. Pay in full the lease amount established under subsection (B)(3).

D. This Section is authorized by A.R.S. § 4-203.06. Under A.R.S. § 4-203.06(A), this Section is not applicable on and after January 1, 2026.

Notes

Ariz. Admin. Code § R19-1-802

New Section made by final exempt rulemaking at 28 A.A.R. 3436, effective 10/13/2022.