Section 125.545. Small winery cooperative wholesalers.

 

(1)   Definitions. In this section:

(a) “Member" means a small winery that meets the requirements established under this section for membership in a cooperative wholesaler and that has been qualified and accepted for membership in a cooperative wholesaler.

(b) “Out-of-state winery" means a winery that is located in a state other than this state and that holds a valid direct shipper's permit issued under s. 125.535 .

(c) “Retailer" means any person holding a “Class A", “Class B", or “Class C" license or “Class B" permit issued under s. 125.51 .

(d) “Small winery" means any winery that produces and bottles less than 25,000 gallons of wine in a calendar year.

(e) “Small winery cooperative wholesaler" or “cooperative wholesaler" means an entity established under this section.

(f) “Wisconsin winery" means a winery operating under a permit issued under s. 125.53 .

(2)   Creation and organization.

(a)

1. A cooperative wholesaler may only be created as provided under s. 185.043 (2) and this section. Each cooperative wholesaler operating under authority of this section shall be organized under ch. 185 but shall be subject to the limitations on such cooperatives imposed by this section. Subject to subd. 3. , only small wineries may be members of a cooperative wholesaler. The principal purpose of a cooperative wholesaler shall be to sell and distribute wine manufactured, blended, or mixed, and also bottled, by its members.

2. Notwithstanding s. 185.08 (1) , a cooperative wholesaler shall include in its articles of incorporation under ch. 185 a single location for its agent and principal office, which location shall be in this state.

3. A small winery may become a member of a cooperative wholesaler only if all of the following apply:

a. The small winery holds a direct shipper's permit under s. 125.535 .

b. The small winery is certified by the department under sub. (6) (a) as a small winery.

(b) In addition to the requirements specified in s. 185.31 for the board of directors of a cooperative wholesaler, a director representing a member that is a Wisconsin winery shall be either an owner or an employee of that Wisconsin winery. If any out-of-state winery is a member of the cooperative wholesaler, at least one director shall be either an owner or an employee of an out-of-state winery that is a member of the cooperative wholesaler.

(c) Notwithstanding any provision of ch. 185 , a cooperative wholesaler may not employ any owner or employee of a member. However, an individual that is an owner or an employee of a member may act as a volunteer to assist that cooperative wholesaler in the sale and distribution of wine to retailers and other wholesalers in the manner authorized under this section.

(3)   Authorization and activities.

(a)

1. Within 7 days after filing its articles of incorporation under ch. 185 , a cooperative wholesaler shall apply to the department for a wholesaler's permit under s. 125.54 . The provisions of s. 125.04 (5) (c) and (6) shall apply to a cooperative wholesaler as if the cooperative wholesaler were a corporation or a limited liability company and, for each of these provisions, the department shall determine whether the cooperative wholesaler is most similar to a corporation or a limited liability company in the context of that provision and apply that provision to the cooperative wholesaler accordingly.

2. Notwithstanding s. 125.54 (6) , the department may issue not more than one wholesaler's permit to any cooperative wholesaler. The department may not issue more than a total of 6 wholesalers' permits to cooperative wholesalers in this state. The department may not issue any new wholesaler's permit to a cooperative wholesaler after December 31, 2008, but may renew wholesalers' permits that were initially issued to cooperative wholesalers prior to that date.

3. No cooperative wholesaler may operate in this state without a wholesaler's permit.

(b)

1. Notwithstanding s. 125.54 (1) , and except as provided in subd. 3. , a cooperative wholesaler issued a wholesaler's permit under par. (a) is authorized to sell and distribute only wine. Except as provided in subd. 3. , a cooperative wholesaler may not sell or distribute any alcohol beverages, or any other product, except wine.

2. A cooperative wholesaler shall purchase on consignment wine from its members to be resold to retailers and other wholesalers. Notwithstanding s. 125.69 (5) , a cooperative wholesaler may not purchase wine from any person other than a member. A cooperative wholesaler may not resell or distribute wine unless it has been purchased on consignment from a member. Notwithstanding s. 125.54 (1) , a cooperative wholesaler may not sell or distribute wine except to a retailer or to a wholesaler holding a permit under s. 125.54 .

3. A cooperative wholesaler may purchase ancillary wine industry trade goods such as bottles, corks, and other supplies used by wineries in the bottling and sale of wine if such trade goods do not include any alcohol beverages. Any wine industry trade goods purchased by a cooperative wholesaler under this subdivision may be offered for resale to the cooperative wholesaler's members or to any winery that was formerly a member of the cooperative wholesaler.

4. A cooperative wholesaler shall work with all of its members on evenhanded terms. Any preferential treatment by a cooperative wholesaler for the benefit of a member that is a Wisconsin winery, and any discrimination against a member that is an out-of-state winery, is prohibited.

(c) Neither a cooperative wholesaler nor its members are subject to any restriction on dealings under s. 125.69 (1) between wholesalers and wineries. Except as provided in s. 125.54 (7) (e) and as otherwise provided in this section, all provisions of this chapter and ch. 139 that apply to a wholesaler issued a permit under s. 125.54 also apply to a cooperative wholesaler issued a permit under s. 125.54 .

(4)   Exclusive distribution. A member of a cooperative wholesaler may make its wine available for purchase by a retailer or another wholesaler only through the cooperative wholesaler of which it is a member. A member of a cooperative wholesaler may not sell its wine directly to any other wholesaler or directly to a retailer.

(5)   Biennial reports. With each application for renewal of a wholesaler's permit issued to a cooperative wholesaler, each cooperative wholesaler shall file with the department, in the form and manner prescribed by the department by rule, a biennial report that includes detailed information on its members, board of directors, and sale and distribution activities.

(6)   Department certification and rule making.

(a)

1. The department shall, upon application, certify eligible applicants as small wineries and renew prior certifications of eligible applicants as small wineries.

2. Any winery seeking to become a member of, or to maintain its membership in, a cooperative wholesaler may apply to the department for certification as a small winery. If the winery meets the definition of a small winery under this section, satisfies the requirement under sub. (2) (a) 3. a. , and submits any other information that the department determines is necessary to certify that the winery is operating as a small winery and is eligible for membership in a cooperative wholesaler, the department shall certify the winery as a small winery. This certification shall remain valid for one year.

3. In certifying any winery under subd. 2. , the department shall classify the winery as either a Wisconsin winery or an out-of-state winery.

4. The department shall refuse to certify under this paragraph any winery that cannot demonstrate it holds all necessary permits for its operations or that the department finds is otherwise not in full compliance with the laws of this state.

(b) The department shall promulgate rules to administer and enforce the requirements under this section.

(7)   Penalties.

(a) Any winery that sells or distributes its wine directly to a retailer, rather than through a wholesaler or cooperative wholesaler, is subject to a fine of not more than $10,000 and revocation of all of its permits by the department under s. 125.12 (5) .

(b) Any cooperative wholesaler that provides preferential treatment to a Wisconsin winery or discriminates against an out-of-state winery is subject to a fine of not more than $10,000 and revocation of its wholesaler's permit by the department under s. 125.12 (5) .

2007 a. 85 ; 2011 a. 175 . Cross-reference: See also s. Tax 8.05 , Wis. adm. code.