This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

(1) The posted price of liquor is determined by:

(a) adding:

(i) the wholesale price as set forth in (2);

(ii) the liquor excise tax as determined under 16-1-401, MCA; and

(iii) the liquor license tax as determined under 16-1-404, MCA;

(b) dividing the total from (a) by the number of individual units within the case; and

(c) rounding the total from (b) up to the next nickel increment.

(2) The wholesale price is determined by:

(a) adding:

(i) the vendor's current quoted price per case; and

(ii) the department's current freight rate per case to agency liquor stores; and

(b) multiplying the total from (a) by the state markup as set forth in (3).

(3) Unless a vendor qualifies for a reduced state markup under ARM 42.11.106, the state markup is as follows:

(a) 40.5 percent on any liquor other than fortified or sacramental wine;

(b) 51 percent on fortified wine containing more than 16 but no greater than 24 percent alcohol by volume; and

(c) 20 percent on sacramental wine containing more than 16 but no greater than 24 percent alcohol by volume.

The following definitions apply to subchapters 1, 2, and 4:

(1) "Bailment" means the product at the state liquor warehouse that is owned by the vendor.

(2) "Consumer advertising specialties" are items designed to be carried away by the consumer, including trading stamps, nonalcoholic mixers, pouring racks, ashtrays, bottle openers, cork screws, shopping bags, matches, pamphlets, pencils, shirts, caps, and visors.

(3) "Discontinued product" means a product that is no longer available to the state.

(4) "Point-of-sale advertising materials" are items designed to be used within a retail establishment to attract consumer attention to the product, including posters, placards, designs, inside signs, window decorations, trays, coasters, mats, menu cards, meal checks, paper napkins, foam scrapers, back bar mats, thermometers, clocks, calendars, and alcoholic beverage menus.

(5) "Primary packaging" means the container that holds the alcoholic beverage, including aluminum cans, glass bottles, and a box containing a plastic bladder or other soft flexible container.

(6) "Product" means a liquor item, identified by a unique identification number or stock-keeping unit.

(7) "Promote" means to undertake efforts with the intention of increasing sales or public awareness of a product or distiller, including soliciting product orders from agency liquor store agents and retail licensees, disseminating product information or promotional materials, and distributing product samples.

(8) "Registered vendor representative" means an individual registered, as provided by these rules, to promote a vendor's product in Montana.

(9) "Regular product" means product that:

(a) is among the highest-selling 1,300 products in the state based on case sales in the 12-month period prior to the department's quarterly review where sales are not erratic or based upon closeout or overstock;

(b) is available year-round; and

(c) has been in the state for at least six months prior to the review.

(10) "Seasonal product" means a product that is only available during certain times of the year.

(11) "Special order product" means a product that does not meet the criteria to be classified as a regular product.

(12) "State liquor warehouse" means the designated building in Helena where product is received and stored and from which product is shipped to agency liquor stores.

(13) "Vendor" means a party that sells product to the department and to which the department makes payment for product depleted from the vendor's bailment inventory held at the state liquor warehouse.

(14) "Vendor permit" means a permit issued to a vendor entitling the vendor to promote its products in Montana through registered vendor representatives. 

(1) For purposes of applying 16-2-211, MCA, a reduced markup rate of 20 percent will be applied to all liquor products acquired from a distillery that manufactures, distills, rectifies, bottles, or processes 25,000 proof gallons or less of liquor nationwide annually.

(2) The 20 percent reduced markup rate is determined using a 100 percent reduction in markup after agency liquor store commissions and the costs to operate the state liquor warehouse have been accounted for. These costs account for approximately half of the standard markup normally collected on product sold by the department. The department will annually review the associated agency liquor store commissions and the costs to operate the state liquor warehouse to ensure these costs do not exceed the reduced markup. The department will publish any adjustments to the reduced markup based on the results of the annual review.

(3) A distillery requesting a reduction in the state markup must certify with a sworn statement, on a form supplied by the department, that the number of proof gallons they have manufactured, distilled, rectified, bottled, or processed nationwide annually is at or below the 25,000 proof gallon threshold. A distillery requesting a reduced markup rate must submit this form and meet the specified requirements at the time of initially registering with the department and by February 15 of each of the following calendar years in order to receive the reduced markup rate.

(4) Failure to submit the form described in (3) to the department each year by February 15 will result in a 40.5 percent markup rate for liquor products, 20 percent for sacramental wine products, and 51 percent for fortified wine products. The effective date of any changes in a distillery's markup rate will coincide with the publication date of the next quarterly price book.

(5) Each new liquor product a vendor introduces will be assigned the distillery's current applicable markup rate.

(6) The department may request and examine any distillery's books and records for the purpose of determining the accuracy of the total number of proof gallons reported by the distillery.

(7) For the purpose of this rule, a distillery is considered a vendor. 

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

(1) A vendor seeking to promote product must do so through registered vendor representatives. A vendor is not required to register individuals who only promote product at the distiller's licensed premises. The vendor must also obtain a vendor permit pursuant to ARM 42.11.213.

(2) An electronic application and the registration fee must be submitted for each applicant seeking to represent a vendor.

(3) The department shall approve an application upon determining that the applicant:

(a) possesses no ownership interest in any Montana alcoholic beverage retail license or an agency liquor store;

(b) is 21 years of age or older; and

(c) is a resident of Montana.

(4) A representative's registration is effective upon the department's approval of the application. All registrations expire on September 30 of each year.

(5) A representative seeking registration renewal shall submit an electronic renewal application and the vendor representative registration fee on or before September 1 of each year.

(6) The department shall cancel the registration of a vendor's representative if requested in writing by the vendor.

(7) The annual registration fee for each applicant is $50. This fee must be paid when the applicant first seeks approval to represent a vendor and upon each renewal of the registration thereafter.

This rule has been repealed.

(1) A vendor seeking to promote the sale of its liquor in Montana shall obtain a vendor permit from the department and employ at least one representative pursuant to ARM 42.11.211.

(2) An applicant for a vendor permit must submit an electronic application and the vendor permit fee.

(3) The department shall deny an application upon determining that the applicant possesses an ownership interest in any Montana alcoholic beverage retail license or state agency liquor store.

(4) A vendor permit is effective upon the department's approval of the application. All vendor permits expire on September 30 of each year.

(5) A vendor seeking renewal of its vendor permit shall submit an electronic renewal application and the vendor permit fee on or before September 1 of each year.

(6) The annual vendor permit fee is based upon the total number of cases the vendor sold to the department during the preceding fiscal year (July 1 to June 30) as follows:

(a) 0-24 cases = no charge;

(b) 25-100 cases = $100;

(c) 101-1,000 cases = $200;

(d) 1,001 - 2,000 cases = $300; and

(e) 2,001 or more cases = $400.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

(1) The distribution of samples in Montana may only be conducted as follows:

(a) the vendor must hold a current vendor permit as required under ARM 42.11.213;

(b) the vendor representative must be registered as required under ARM 42.11.211;

(c) except as provided for in 16-4-311, MCA, the vendor must ship the samples to the state liquor warehouse at no charge to the department;

(d) an agency liquor store may only sell samples to a registered vendor representative and the cost shall be $12.00 per case; and

(e) only registered vendor representatives may provide samples.

(2) Each vendor is subject to an annual sample limitation of 200 liters per product. Samples are limited to primary packaging containing no more than 750 milliliters. If a vendor does not produce a product in a size of 750 milliliters or less, the next largest size may be substituted.

(3) For samples to be removed from bailment, the vendor must submit a request on a form provided by the department at least seven days prior to the requested ship date.

(4) A registered vendor representative may only provide samples as follows:

(a) samples may only be provided to licensed all-beverage retailers or agency liquor store agents;

(b) samples may not be provided to an all-beverage retailer or agency liquor store that purchased the product within the previous 12 months; and

(c) no more than three liters of a product may be provided to a retailer or agency liquor store.

(5) Samples may not be consumed on the premises of an agency liquor store.

(2) The department may, at any reasonable time and place, examine the records of a registered representative. For the purposes of this rule, reasonable time and place means normal business hours at the representative's place of business.

(1) Registered vendor representatives may distribute point-of-sale advertising materials and consumer advertising specialties to a retailer as set forth in Title 27 of the Code of Federal Regulations, regulation number 6.84. Copies may be obtained at www.ttb.gov.

(2) Registered vendor representatives may not directly or indirectly pay or credit the retailer for using these materials.

(1) Sections 16-1-304, 16-2-105, 16-3-101, 16-3-103, 16-6-104, and 16-6-301, MCA, provide that certain practices in connection with the sale of alcoholic beverages shall be unlawful. All vendors and registered vendor representatives shall be familiar with and abide by these statutes.

(2) Although not limiting the scope of the statutory provisions, and with the exception of the consumer advertising specialties stated in ARM 42.11.245, the following practices are prohibited:

(a) to grant, allow, pay, or rebate merchandise or any other thing of value to any licensee, state liquor store agent or anyone affiliated with either, including the purchase of merchandise at retail for delivery to a licensee;

(b) to grant, allow, or pay anything of value to a licensee, state liquor store agent, or anyone affiliated with either, for the privilege of displaying advertising;

(c) to purchase drinks "for the house" to induce the purchase of a product;

(d) to induce department personnel to promote the sale of a product. This prohibition does not apply to discussions between vendors or registered vendor representatives and department employees with regard to the department's purchase of liquor;

(e) to grant, allow, or pay money or anything of substantial value to licensees or their agents or employees to induce the sale of a product;

(f) to represent, expressly or by implication, that a vendor or registered vendor representative is affiliated with or has any influence over any department of the state government; or

(g) to repurchase, replace, or exchange any product purchased by licensees or other persons from agency liquor stores.

(2) A vendor or representative whose permit or registration has been denied or revoked is ineligible to hold any permit or registration under this chapter, any other rule of the department or any law of Montana relating to liquor for a period up to three years from the date the permit or registration was denied or revoked.

As used in this subchapter, the following definitions apply:

(1) "Adult" means a person 18 years of age or older.

(2) "Agency liquor store" means a liquor store operated by an agent.

(3) "Agent" means a person or entity authorized under an agency franchise agreement with the department to operate an agency liquor store.

(4) "Community boundary" means:

(a) in the case of an incorporated city or town, the city or town limits; and

(b) in other communities, the area identified by the United States Census Bureau as a community for census purposes.

(5) "Minimum qualified petitioners" means the number of adults who reside in the community, which equals 5 percent of the community population as determined in the most recently available census estimate for the community or 20 adults who reside in the community if 5 percent of the community population is less than 20.

(6) "New agency liquor store" means an agency liquor store that begins operation in a community that has not had an agency liquor store in operation for one or more years or is eligible for an additional agency liquor store.

(7) "Public hearing" is a public meeting to solicit public comments and is not an administrative adjudication between opposing parties. 

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

(1) The number of agency liquor stores that may be located in a community may vary as prescribed in 16-2-109, MCA. For example, there may be no more than:

(a) one agency liquor store if the population is 0 – 12,000;

(b) two agency liquor stores if the population is 12,001 – 52,000;

(c) three agency liquor stores if the population is 52,001 – 92,000;

(d) four agency liquor stores if the population is 92,001 – 132,000; or

(e) five agency liquor stores if the population is 132,001 – 172,000; and

(f) one additional agency liquor store within increments of population of 40,000 inhabitants above 172,000.

(2) The department shall use the most recent data available from the United States Census Bureau to determine a community's population.

(3) A new agency liquor store will be operated by an agent.

(4) The department shall conduct a public hearing to open a new agency liquor store when all of the following conditions are met:

(a) The department receives a petition signed by at least the minimum qualified petitioners to open a new agency liquor store in the community. The petition must clearly state that its purpose is to have the department open a new agency liquor store in the community. The petition must show the printed name, mailing address, and signature of each person signing the petition.

(b) The department receives a letter from a person willing to submit a proposal or bid to operate a new agency liquor store in the community. Agency liquor stores may only be located at premises in which the agent has possessory interest.

(c) The number of agency liquor stores currently operating in the community does not exceed the limit in 16-2-109, MCA.

(d) The nearest community with an operating agency liquor store is more than 35 miles, as measured from the nearest community boundaries along the shortest route on a paved road between the two communities, unless the new agency liquor store is to be located in a community eligible for more than one agency liquor store pursuant to 16-2-109, MCA.

(e) The department has not solicited for an agent in the community within the previous three years.

(f) The petition identified in (a) and the letter from a potential agent in (b) must be received within six months of each other. 

(5) When all of the conditions in (4) are met, the department may hold a public hearing to receive comments from interested parties concerning the department's intention to advertise for proposals or bids for a new agency liquor store. The procedures to determine if a public hearing will be held, and if so, the location of the public hearing are:

(a) the department will publish a notice to the public that will contain the following:

(i) the department's intent to open a new agency liquor store and the community it intends to open it in; and

(ii) an outline of how the public can provide written protests; and

(b) notice of the department's intent will be advertised twice during a two-week period in the legal section of:

(i) the nearest daily newspaper in general circulation for the affected area; and

(ii) in the local community newspaper, if there is one.

(6) If the department receives no written public protests from residents in the county or adjoining counties, the department may solicit to open a new agency liquor store in the proposed community without holding a public hearing.

(7) If the department receives at least one written public protest from residents in the county or adjoining counties, the department shall schedule a public hearing to determine whether the protest presents sufficient cause to deny the request.

(8) If the department receives a specified number of written public protests from residents in the county or adjoining counties, the public hearing will be held in the community in which the new agency liquor store is proposed. The specified number of written public protests from residents shall equal:

(a) a quantity greater than 25 percent of the number of all-beverage licenses determined for that quota area according to 16-4-201, MCA; and

(b) no less than two.

(9) If the provisions in (8) are not met, the hearing will be held in Helena.

(10) If the need for a public hearing is determined, all qualified protesters will be notified of:

(a) the date, time, and place where the public hearing will be conducted; and

(b) the name and address of the hearing officer appointed by the department to conduct the hearing.

(11) The hearing officer will preside over the hearing, which is not a contested case proceeding as defined in 2-4-102, MCA, and collect the information presented. The hearing will address the following:

(a) whether the department should proceed with its intention to advertise for a new agency liquor store for the community;

(b) whether any limitations or restrictions on the location and operation of the new agency liquor store should be considered; and

(c) whether any other issues directly related to the operation of the proposed new agency liquor store in the community or its possible effects on the community should be considered in the department's determination of whether to proceed with its intention to advertise for a new agency liquor store in the community.

(12) Within six weeks following the public hearing, the hearing officer will submit a report to the department. This report will:

(a) identify all issues raised at the hearing;

(b) recommend whether proceeding with the advertisement for a new agency liquor store is in the best interest of the state and the community; and

(c) recommend whether any limitations or restrictions on the location and operation of the new agency liquor store should be considered.

(13) The department shall decide what action will be taken in response to the hearing officer's recommendations within 30 business days of receipt of the hearing officer's report.

(14) Notice of the department's decision will be mailed to all parties who signed the petition, submitted a written protest, or attended the public hearing and provided a mailing address.

(15) If the decision is to proceed with advertising for a new agency liquor store, the agent will be selected by competitive sealed bids according to the procedures under the Montana Procurement Act, Title 18, chapter 4, MCA. To be eligible for consideration, a bid must meet all requirements set forth in the department's notice, including but not limited to an initial commission rate not to exceed 16 percent.

(16) If no bids are received or none of the bids received meet the minimum requirements specified in the request, the department will make no further solicitation for a new agency liquor store in the community for three years. If the conditions in (4) and (5) are met after the three-year period, the department will begin the solicitation process to open a new agency liquor store in the community.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

(1) Agency liquor stores may not be located in or adjacent to grocery stores in communities with populations over 3,000.

(2) The department shall consider a retail establishment to be a grocery store if:

(a) the establishment maintains food inventory with a cost of $5,000 or greater; and

(b) the department determines that the establishment's primary purpose is to sell products other than alcoholic beverages.

(3) An agency liquor store and a grocery store shall not be considered to be adjacent to one another where the stores are located across a street from one another. The department shall consider the agency liquor store and grocery store to be adjacent to one another if:

(a) the agency liquor store and the grocery store share a common internal or external wall; or

(b) there is an absence of a building between the agency liquor store and the grocery store that is owned by a party unrelated to any party with an ownership interest in the grocery store; and

(c) the distance between the nearest exterior wall of the agency liquor store and the grocery store is equal to or less than 100 feet.

(4) The prohibition in (1) does not apply when an agency liquor store was located on the site prior to a grocery store undertaking occupancy adjacent to the agency liquor store.

(5) The definition of a grocery store in (2) and the criteria for stores being adjacent to one another in (3) shall not be applied to determine the location suitability for agency liquor stores that are in operation as of January 1, 2016, unless the agency liquor store elects to relocate or expand an existing store.

(1) An agency liquor store may order product directly from a distillery pursuant to 16-4-311, MCA, without notification to the department.

(2) The date of the invoice issued by the department for product an agency liquor store receives directly from a distillery shall be the date of delivery.

(3) The agency liquor store shall maintain at its place of business a copy of the signed bill of lading provided by the distillery for each delivery.

(4) The agency liquor store shall notify the distillery of any deficient or defective product received. If adjustment of the invoice issued by the department is necessary, the agency liquor store shall notify the department within six months of the invoice date.

This rule has been repealed.

(1) Liquor products that can be obtained without substantial inventory investment to the department will be made available for sale to state agency liquor stores based on historical demand.

(2) Each product a vendor seeks to sell in Montana must be approved by the department. In order to consider the product for approval, the department must receive a picture copy of the product's primary packaging.

(3) Liquor products are a mature product category, restricted by law to only consumers age 21 or older and who are not intoxicated, and therefore should be marketed in a responsible and appropriate manner. The department, in its discretion and on a case-by-case basis, will not approve a liquor product that:

(a) blurs the distinction between an alcoholic and nonalcoholic product by utilizing labeling and/or primary packaging that emphasize features that are most commonly associated with nonalcoholic consumable products including, but not limited to:

(i) aerosol cans;

(ii) gelatin cups;

(iii) hollow candies; or

(iv) mason jars that contain fruit;

(b) uses flavors that are designed to target or particularly appeal to underage persons, such as:

(i) bubble gum; or

(ii) cotton candy;

(c) contains graphics or elements that:

(i) are designed to target or particularly appeal to underage persons;

(ii) minimizes, fails to identify, or disguises that the product contains alcohol; or

(iii) alludes to or suggests irresponsible, excessive, or underage consumption;

(d) requires specialized handling requirements such as frozen or refrigerated products; or

(e) is in powdered or crystalline form.

(4) Products will not be made available in the state of Montana through the state liquor warehouse if the container, flavor, label, or advertising contains inappropriate or illegal content.

(1) Liquor products will be made available for sale in the following classifications:

(a) Regular products will be designated in the department's quarterly price book and have sufficient supply maintained in the state liquor warehouse in accordance with ARM 42.11.421. An agent shall give an all-beverage licensee a reduction of eight percent off the posted price for purchasing regular products in unbroken case lots.

(b) Special order products that have sold at least one case in the prior 12 months will be published in the department's quarterly price book. An agent may not give an all-beverage licensee an eight percent discount for purchasing special order products in unbroken case lots.

(i) Inventories will be maintained in the state liquor warehouse in accordance with ARM 42.11.421 on the highest-selling 350 special order products based on case sales in the 12-month period prior to the department's quarterly review.

(ii) Inventories will not be maintained in the state liquor warehouse for all other special order products. These products will be available on an order-by-order basis and, depending on vendor requirements and availability, the order may take six weeks or more to be filled.

(A) A vendor with a vendor permit and at least one registered vendor representative may ship these products to the state liquor warehouse on a promotional contract. To seek approval for the shipment, the vendor must submit the request on a form prescribed by the department. The department shall notify the vendor upon approval. The promotional contract should state:

(I) that the product will be maintained in the state liquor warehouse;

(II) the test market locations proposed for the product and the expected initial order amount;

(III) the promotional strategy that the vendor and the vendor's registered representative will undertake during the six-month promotion period; and

(IV) a return address for excess product at the end of the promotional period.

(B) No additional vendor promotions will be allowed until excess product is removed from the state liquor warehouse. If arrangements have not been made to ship excess product back within 30 days of notification, product will be destroyed at the vendor's expense.

(c) Seasonal products are not published in the department's quarterly price book. The department will notify agency liquor stores when seasonal products become available. An agent may not give an all-beverage licensee an eight percent discount for purchasing seasonal products in unbroken case lots.

(d) Discontinued products are not published in the department's quarterly price book. Discontinued products are available until all inventories have been depleted. An agent is not required to give an all-beverage licensee an eight percent discount for purchasing discontinued products in unbroken case lots. An agent may sell discontinued products to licensees at or below the last price on file with the department and may sell discontinued products at any price to the general public.

(1) Each January, April, July, and October, the department shall classify all products based on the criteria set forth in ARM 42.11.405. Changes in product classification are effective as follows:

(a) January reviews are effective May 1;

(b) April reviews are effective August 1;

(c) July reviews are effective November 1; and

(d) October reviews are effective February 1.

This rule has been repealed.

This rule has been repealed.

(1) A product that no longer meets the current criteria in ARM 42.11.405 will be listed in a classification commensurate with its sales volume and effective with the quarterly price book.

(2) Inventory in excess of a historical eight-week case demand for a product will be treated as overstock.

(3) The department shall provide a vendor with written notice of any inventory identified as overstock. The vendor shall remove the overstock from the state liquor warehouse within 30 days of the department's notice. If the vendor fails to remove the overstock by the prescribed date in the notice, the department may, in its discretion, dispose of the overstock or return it to the vendor at the vendor's expense.

This rule has been repealed.

(1) Vendors shall supply the state liquor warehouse with regular products and maintained special order products in an amount above the minimum level and below the maximum level as set forth in (2) and (3).

(2) The minimum level is a historical three-week case demand. The historical three-week case demand is calculated by taking the product's sales from the previous 12 months and dividing by 52 to obtain a weekly demand. This figure is then multiplied by three to obtain a three-week demand.

(3) The maximum level is a historical eight-week case demand. The historical eight-week case demand is calculated by taking the product's sales from the previous 12 months and dividing by 52 to obtain a weekly demand. This figure is then multiplied by eight to obtain an eight-week demand. The maximum level may be exceeded if a vendor demonstrates to the department's satisfaction that a larger amount is needed to meet a sales forecast or to obtain an economical shipment.

(4) Vendors will be charged a bailment fee equivalent to one dollar per case based on a historical three-week case demand for each day a regular product is out of stock. A bailment fee will not be charged if the unavailability of supply is due to an incident beyond the vendor's control or it is based on department error.

(5) Vendors shall honor a product's sale price for agency liquor store orders that were not filled during a sale month due to insufficient inventory.

(6) Fees and credits will be offset against the department's payment for products.

(1) Vendors shall provide the department a bill of lading for each shipment to the state liquor warehouse by fax or e-mail ten days in advance of the expected date of arrival. The bill of lading must include the quantity, the National Alcoholic Beverage Control Association control state code, and a description of each product shipped.

(2) The department shall send vendors an acknowledgement of receipt within 24 hours noting any variance from the bill of lading.

(3) The number of cases received per product will be credited to the vendor's bailment inventory.

(4) Damaged cases will be adjusted from the vendor's bailment inventory.

(1) The department may deplete products from the vendor's bailment inventory if the department is purchasing the product.

(2) The department shall pay the vendor for products purchased within 15 days from the close of the month as follows:

(a) for regular products, the department shall pay the vendor the price stated on the standard price quotation form submitted for publication in the most recent quarterly price book;

(b) for special order, seasonal, and discontinued products, the department shall pay the price currently on file with the department; and

(c) all prices in (a) and (b) shall be freight on board to the state liquor warehouse.

(3) For regular products, vendors shall submit the standard price quotation form not less than 75 days prior to the publication of the department's quarterly price book.

(4) The number of cases depleted per product will be debited from the vendor's bailment inventory, and upon request, a vendor shall be notified weekly of the amount and date the products were depleted.

(1) A vendor's bailment inventory will be adjusted for withdrawals, purchases, deliveries, defective merchandise, destructions, and errors.

(2) Vendors may withdraw their products from the state liquor warehouse by sending a written request to the department.

(3) Upon request, the department shall notify a vendor weekly of the number of cases credited to the vendor's bailment inventory that were deficient or defective, (e.g., hidden breakage, packed short, or bottles with no fill or low fill). A vendor may ask the department to return or destroy defective cases at the vendor's cost.

(4) Upon request, the department shall notify a vendor weekly of the number of cases credited or debited to the vendor's bailment inventory in error and an explanation of the errors.

(5) The department may charge a vendor for reasonable costs associated with handling the vendor's products at the state liquor warehouse beyond the normal receipt, storage, and shipping of products. Handling includes, but is not limited to, affixing labels on cases, repackaging cases, restacking cases, destroying product, and assembling product for return. Charges will be offset against the department's payment for products.

(1) Only department personnel are authorized to handle products in the state liquor warehouse.

(2) Vendors may arrange with the department for the temporary transfer of selected cases of product to a work area within the state liquor warehouse. Vendors or registered vendor representatives may inspect or modify cases of their product in the work area. The department must approve any modifications that may affect the vendor's bailment inventory. Vendors will be charged the direct and indirect costs the department incurs for transferring cases to and from the work area.

(3) Vendors and registered vendor representatives may request to observe the operation of the state liquor warehouse at any time during regular working hours.

(4) While on a visit to the state liquor warehouse, vendors and registered vendor representatives must observe all safety rules.

(5) The department will take physical inventory in the state liquor warehouse four times a year and reconcile the vendor's bailment inventory.

(2) If an informal resolution is not successful, a vendor may contest the decision in accordance with the provisions for contested cases in the Montana Administrative Procedure Act.

This rule has been repealed.