SB 1556
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ARIZONA HOUSE OF REPRESENTATIVES
Fifty-seventh Legislature
First Regular Session
Senate: RAGE DP 6-1-0-0 | 3
rd
Read 23-6-1-0
House: COM W/D
SB 1556: adult hemp beverages; policies; procedures
Sponsor: Senator Shope, LD 16
Committee on Appropriations
Overview
Establishes requirements for the manufacture, distribution and sale of adult hemp
beverages, including licensure and taxation requirements.
History
The Department of Liquor Licenses and Control (DLLC) regulates the manufacture,
distribution and sale of liquor in Arizona through the issuance of a series of licenses and
investigating licensee compliance with liquor laws. Certain liquor licenses have on-sale retail
privileges allowing a customer to purchase and consume liquor on the licensed premises.
In 2018, the Legislature established a state agricultural pilot program, and authorized
industrial hemp production, processing, manufacturing, distribution and commerce
conducted by licensed growers, harvesters, transporters and processors. The legislation
established licensing and regulation requirements of industrial hemp and the Industrial
Hemp Trust Fund (Laws 2018, Ch. 287).
On December 20, 2018, the federal Agriculture Improvement Act of 2018 (2018 Farm Bill)
was enacted and federally authorized the production of hemp and removed hemp and hemp
seeds from the U.S. Drug Enforcement Administration's (DEA's) schedule of Controlled
Substances. Under the 2018 Farm Bill, the U.S. Department of Agriculture must issue
regulations and guidance to implement various hemp production programs and to create a
consistent regulatory framework and federal oversight around the production of hemp (2018
Farm Act).
Provisions
Adult Hemp Beverage Manufacturer License
1. Requires an adult hemp beverages manufacturer license to manufacturer industrial
hemp into adult hemp beverages products and to offer those products for sale in Arizona.
(Sec. 30)
2. Authorizes DLLC to issue an adult hemp beverages manufacturer license to any person,
including a licensed producer or craft producer, who has demonstrated or demonstrates
the capability to meet statutory requirements. (Sec. 30)
3. Allows a licensed producer or craft producer to elect to apply for an adult hemp beverages
manufacturer license under the producer’s current license or apply for a new license
through another legal entity under common ownership. (Sec. 30)
☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal Note SB 1556
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4. Exempts a currently licensed producer or craft producer from a new demonstration of
qualifications, capability and reliability for licensure in accordance with statute if the
right to also manufacture adult hemp beverages is applied for under a current license.
(Sec. 30)
5. Requires each location that engages in the manufacturing of adult hemp beverage
products to obtain a separate license. (Sec. 30)
6. Prohibits a licensee from transferring the license from person to person or from location
to location. (Sec. 30)
7. Requires an applicant, at the time of filing the application for an adult hemp beverages
manufacturer license, to accompany the application with the fee for adding to a current
license or obtaining a new license. (Sec. 30)
8. Allows DLLC Director to determine the amount of the adult hemp beverages
manufacturer license application fee. (Sec. 30)
9. Instructs a licensee to annually report to DLLC the amount of adult hemp beverages
manufactured during the calendar year. (Sec. 30)
10. Outlines permissible actions of licensee. (Sec. 30)
11. Prohibits a licensee, except as expressly authorized by statute, from holding any retail
liquor license or selling directly to a retailer or consumer. (Sec. 30)
12. Allows an adult hemp beverages manufacturer license to be stacked on the same or
contiguous premises with a producer or craft producer license held under common
ownership. (Sec. 30)
13. Requires DLLC, by July 1, 2026, to adopt rules to carry out the licensing of adult hemp
beverages manufacturers. (Sec. 30)
14. Exempts, from industrial hemp licensing requirements, an adult hemp beverages
manufacturer that is not engaged as a grower, harvester, transporter or processor of
industrial hemp. (Sec. 1)
Adult Hemp Beverages Testing and Labeling
15. Requires adult hemp beverages be tested before distribution to a wholesaler to determine
the potency and amounts of pesticides, microbials, residual solvents and heavy metals.
(Sec. 36)
16. Prohibits adult hemp beverages products from being distributed or sold in Arizona if the
product:
a) has not been tested;
b) contains more than the maximum allowable amount of total tetrahydrocannabinol; or
c) contains more than the prescribed amounts of pesticides, microbials, residual solvents
and heavy metals. (Sec. 36)
17. Asserts an adult hemp beverages product cannot have a variance of more than 10% below
or above the maximum total tetrahydrocannabinol limit. (Sec. 36)
18. Instructs DLLC, by July 1, 2026, to adopt rules specifying pass and fail action levels and
variance levels that are allowed for potency, safety and toxicity with respect to required
testing. (Sec. 36) SB 1556
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19. Specifies all adult hemp beverages offered for sale or distribution in Arizona must contain
only naturally occurring cannabinoids. (Sec. 36)
20. Instructs a producer or adult hemp beverages manufacturer to contract with an approved
independent testing laboratory to provide the required testing and certificate of analysis.
(Sec. 36)
21. Requires an independent testing laboratory that provides testing to use high-performance
liquid chromatography for any separation and measurement that is required in the
testing. (Sec. 36)
22. Outlines requirements for an independent testing laboratory that performs testing of
adult hemp beverages. (Sec. 36)
23. Specifies each adult hemp beverage must undergo testing and be accompanied by a
validly issued certificate of analysis that demonstrates specified factors. (Sec. 36)
24. Requires all adult hemp beverages to have an expiration date on the label that conforms
with applicable law and is not more than two years after the date of publication of the
product’s certificate of analysis. (Sec. 36)
25. Provides requirements for DLLC relating to posting a registry of approved independent
testing laboratories and developing a permit application for which independent testing
laboratories are approved. (Sec. 36)
26. Outlines information that a label of an adult hemp beverage offered for distribution and
sale must contain and information that all adult hemp beverage packaging must include.
(Sec. 36)
Adult Hemp Beverages Serving Sizes
27. Requires adult hemp beverages containing a single serving of an adult hemp beverage
per container to be in an adult hemp beverages single-serving container that has an
internal volume of at least 200 milliliters or 6.76 fluid ounces. (Sec. 49)
28. Prohibits the single-serving container from having a total tetrahydrocannabinol content
of:
a) more than 10 milligrams of total tetrahydrocannabinol per container for sale in off-
premises licensed retail establishments; or
b) more than 5 milligrams of total tetrahydrocannabinol per container for sale in on-
premises licensed retail establishments. (Sec. 49)
29. Requires adult hemp beverages containing multiple services of an adult hemp beverage
per container to be in an adult hemp beverages multiple-serving container that has an
internal volume of at least 375 milliliters or 12.68 fluid ounces. (Sec. 49)
30. Prohibits the multi-serving container from having a tetrahydrocannabinol content of
more than 30 milligrams per liter or 0.887 milligrams per fluid ounces of the total volume
of the container. (Sec. 49)
31. Prohibits a person from processing, distributing, selling or offering for sale in Arizona
any:
a) adult hemp beverages products without a license;
b) adult hemp beverages products in powdered form or as a concentrated tincture for
mixing with water or other liquids; or SB 1556
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c) spirituous liquor product containing any adult hemp beverages or cannabinoid. (Sec.
49)
32. Prohibits a licensee or an employee of a licensee from combining spirituous liquor and
adult hemp beverages or cannabinoids. (Sec. 49)
33. Prohibits a producer from using any distillate or concentrate containing any derivative of
a tetrahydrocannabinol component that is not hemp-derived tetrahydrocannabinol. (Sec.
49)
Adult Hemp Beverages Sampling and Deliveries
34. Limits the sampling of adult hemp beverages products at an on-sale retail establishment
to 6 ounces of the adult hemp beverages products per person, per brand. (Sec. 42)
35. Limits the sampling of adult hemp beverages products on an off-sale retail's premises to:
a) 2 ounces of adult hemp beverages products per person, per day for consumption on the
premise; and
b) up to 12 ounces of adult hemp beverages products per person, per day for consumption
off the premise. (Sec. 42)
36. Prohibits an on-sale retailer from delivering more than 10 milligrams of total
tetrahydrocannabinol in adult hemp beverages to one person at one time for that person's
consumption. (Sec. 46)
37. Limits the amount of adult hemp beverages that may be imported to 48 ounces, unless as
prescribed by federal law or if the importee is a member of the armed services returning
from a tour of duty. (Sec. 47)
Taxation
38. Includes adult hemp beverages to the luxury tax classification. (Sec. 59)
39. Imposes, on each sealed container of adult hemp beverages, a tax rate of $1.50 per gallon
and at a proportionate rate for any lesser or greater quantity than one gallon. (Sec. 60)
40. Imposes, on each sealed container of a ready-to-drink spirits product, a tax rate of $1.50
per gallon and at a proportionate rate for any lesser or greater quantity that one gallon.
(Sec. 60)
41. Applies the statutes governing the Arizona Department of Revenue (DOR) bond
requirements for wholesalers of spirituous, vinous and malt liquors to wholesalers of
ready-to-drink spirits products and adult hemp beverages. (Sec. 61)
42. Requires a manufacturer of adult hemp beverages that sells products to wholesalers
within Arizona to maintain in its records a copy of the invoice of the sale. (Sec. 62)
43. Instructs a wholesaler of ready-to-drink spirits products to pay the required luxury
privilege tax on the products sold within Arizona and add the amount to the sales price.
(Sec. 63)
44. Requires a craft distiller selling ready-to-drink spirits products or adult hemp beverages
at retail or to a retail licensee that are manufactured or produced on the premises to pay
the required luxury privilege tax and add the amount of tax to the sales price. (Sec. 64)
45. Requires each wholesaler that purchases adult hemp beverages for resale within Arizona
to pay the required luxury privilege tax on all products that are purchased and add the
amount of tax to the sales price. (Sec. 65) SB 1556
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46. Instructs the wholesaler to pay the tax to DOR monthly by the 20th day of the month
next succeeding the month in which the tax accrues. (Sec. 65)
47. Requires the wholesaler to prepare a sworn return as prescribed for the month in which
the tax accrues. (Sec. 65)
48. Provides requirements for a taxpayer relating to remittance and reporting of the tax due.
(Sec. 65)
49. Applies the classifications of ready-to-drink spirits products and adult hemp beverages to
taxable periods beginning on or after the first day of the month following the effective
date. (Sec. 71)
DLLC Licensing Requirements
50. Requires a person desiring to manufacture, produce, sell or deal in adult hemp beverages
to be licensed by DLLC. (Sec. 6)
51. Requires DLLC to issue an adult hemp beverages manufacturer license only after
satisfactory showing of the capability, qualifications and reliability of the applicant. (Sec.
8)
52. Allows new owners of a transferred spirituous liquor license that includes licensing for
adult hemp beverages to elect to remove adult hemp beverages from the transferred
licensed by notifying DLLC. (Sec. 8)
53. Requires DLLC to establish a fee for the issuance of an adult hemp beverages
manufacturer's license and a independent testing laboratory permit. (Sec. 24)
Farm Wineries, Microbreweries and Craft Distillers
54. Limits the total quantity of adult hemp beverages sold or manufactured to 20,000 gallons
in a calendar year for a farm winery, microbrewery and craft distiller licensee. (Sec. 13,
16, 17)
55. Prohibits the total quantity of adult hemp beverages manufactured by a farm winery,
microbrewery or craft distiller licensee from being aggregated with the total quantity of
wine, beer or distilled spirits produced. (Sec. 13, 16, 17)
56. Authorizes a farm winery, microbrewery and craft distiller licensee to sell, serve, deliver
and sample adult hemp beverages, under the same privileges and limitations prescribed
for the wine, beer or distilled spirits produced. (Sec. 13, 16, 17)
57. Reduces the required amount of beer to be produced for a microbrewery license from 5,000
gallons to not less than 1,000 gallons in a calendar year. (Sec. 16)
Appropriation
58. Appropriates $1,000,000 from the Liquor Licenses Fund, in FY 2026, to DLLC for adult
hemp beverages regulation. (Sec. 69)
59. Considers the appropriation as ongoing funding for future years. (Sec. 69)
60. Exempts the appropriation from lapsing. (Sec 69)
Miscellaneous
61. Applies various statutory provisions, requirements and restrictions relating to spirituous
liquor to adult hemp beverages. (Sec. 4-27, 29, 32-34, 38-48, 50, 51, 53-56, 64) SB 1556
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62. Allows a producer licensee, craft producer licensee, or a wholesaler licensee to apply to
add an adult hemp beverages manufacturer license, or apply to purchase and sell adult
hemp beverages under such license. (Sec. 66)
63. Allows a liquor store, beer and wine store, bar, beer and wine bar, club, hotel-motel or
restaurant licensee to apply to sell adult hemp beverages under such retail license. (Sec.
66)
64. Allows a registered alcohol delivery contractor permittee to apply to deliver adult hemp
beverages under such permit. (Sec. 66)
65. Adds that a city or town cannot charge any fee relating to the issuance or approval of
adult hemp beverages licenses or permit applications. (Sec. 66)
66. Repeals the federal food safety preemption statute relating to the production and storage
spaces of licensed producers, craft distillers, brewers and farm wineries. (Sec. 35)
67. Exempts the extraction of cannabinoids from industrial hemp, the product of which is an
extract used to manufacture an adult hemp beverages product from statute governing
spirituous liquor. (Sec. 37)
68. Exempts manufactured adult hemp beverages that are under the governance of DLLC
from the Department of Health Service's rules on food and drink safety standards. (Sec.
57)
69. Contains language relating to allowing DLLC to approve license and permit applications
before the adoption of rules. (Sec. 67)
70. Contains language relating to a 90-day grace period for selling adult hemp beverages.
(Sec. 68)
71. Contains a severability clause. (Sec. 70)
72. Contain language relating to the applicability of existing rules. (Sec. 72)
73. Contains a legislative intent clause. (Sec. 73)
74. Defines pertinent terms. (Sec 3, 13, 16, 17, 30, 58)
75. Makes technical and conforming changes. (various sections)