1. (a)

   1. (1) This section is intended to more clearly delineate the structure of the three-tier system of alcohol distribution established by Arkansas Code provisions and to prohibit ownership and employment interests between the three (3) tiers.

   2. (2) Rule in this area is considered necessary and appropriate for the following reasons:

      1. (A) The State of Arkansas has long recognized and adhered to the three-tier system of alcohol distribution as evidenced by state laws establishing the types of permits authorized and the many Alcoholic Beverage Control Division rules currently in effect implementing those laws;
      2. (B) A clear delineation of the three-tier system that is in place will foster the understanding of the system by those people holding alcoholic beverage sales permits and those seeking to obtain permits;
      3. (C) Such rule will give the State of Arkansas greater control of all facets of alcohol distribution and will enhance the state’s ability to more effectively administer those code provisions and rules that are currently in effect;
      4. (D) Such rule will decrease the likelihood of one tier of distribution owning, gaining control over, and/or dictating distribution, brand availability and pricing, or other marketing practices in any other tiers of the system; and
      5. (E) Such rule will enhance and foster free and independent marketing of alcoholic beverages in the state and will help to maintain a wide selection of brands at reasonable prices available to the consuming public.

2. (b)

   1. (1) The three-tier system of alcohol distribution consists of the three (3) broad categories of the marketing chain.
   2. (2) Alcoholic beverage manufacturers, including distilleries, breweries, importers, or rectifiers, whether or not they hold a permit issued by the division, are considered the first tier of the distribution system.
   3. (3) Alcoholic beverage wholesalers, licensed by the State of Arkansas, are considered the second tier of distribution.
   4. (4) Alcoholic beverage retailers and casino licensees licensed by the State of Arkansas are considered the third tier of distribution.

3. (c) The following ownership and employment interest among the three (3) tiers are prohibited:

   1. (1)

      1. (A) No person, firm, or corporation owning any interest in any business involved in the first tier of distribution may own any interest in any business involved in the second or third tiers of distribution, regardless of degree of such interest.
      2. (B) Further, no person, firm, or corporation being employed by or serving as an officer of any business involved in the first tier of distribution shall own any interest in or be employed by any business involved in the second or third tiers of distribution;

   2. (2)

      1. (A) No person, firm, or corporation owning any interest in any business involved in the second tier of distribution may own any interest in any business involved in the first or third tiers of distribution, regardless of degree of such interest.
      2. (B) Further, no person, firm, or corporation being employed by or serving as an officer of any business involved in the second tier of distribution shall own any interest in or be employed by any business involved in the first or third tiers of distribution;

   3. (3)

      1. (A) No person, firm, or corporation owing any interest in any business involved in the third tier of distribution may own any interest in any business involved in the first or second tiers of distribution, regardless of degree of such interest.
      2. (B) Further, no person, firm, or corporation being employed by or serving as an officer of any business involved in the third tier of distribution shall own any interest in or be employed by any business involved in the first or second tier of distribution;
   4. (4) Notwithstanding the prohibitions contained in subdivisions (c)(2) and (3) of this section, permit holders in the second and third tiers of distribution may hold stock in businesses involved in the first tier where that stock is traded on any national stock exchange, not to exceed one percent (1%) of the total outstanding shares of any one (1) company;
   5. (5) Nothing contained herein shall be construed to prohibit any manufacturer licensed pursuant to the provisions of Arkansas Code § 3-5-408 [repealed] from maintaining or hereafter acquiring a wholesale wine permit or retail permit; and
   6. (6) In addition to any other sanctions or penalties which may be imposed by the Director of the Alcoholic Beverage Control Division pursuant to the procedures outlined in Title 3 of the Arkansas Code and Acts 1907, No. 434, as amended, violation of any provision of this section shall also be considered a Class A permit violation, pursuant to the provisions of Acts 1981, No. 790, as codified in Arkansas Code § 3-4-401 et seq.

Codification Notes: Arkansas Code § 3-5-408 was repealed by Acts 2007, No. 668, § 3. This section as promulgated prior to codification into the Code of Arkansas Rules provided as follows: "(Amended 8-19-93)"