                                 CODE OF VIRGINIA

FURTHER LIMITATIONS ON MANUFACTURERS, BOTTLERS, IMPORTERS, BROKERS OR
WHOLESALERS; OWNERSHIP INTERESTS PROHIBITED; EXCEPTIONS; PROHIBITED TRADE
PRACTICES (§ 4.1-216)

A. As used in this section:
			&#8220;Broker&#8221; means any person, other than a manufacturer or a
licensed beer or wine importer, who regularly engages in the business of
bringing together sellers and purchasers of alcoholic beverages for resale and
arranges for or consummates such transactions with persons in the Commonwealth
to whom such alcoholic beverages may lawfully be sold and shipped into the
Commonwealth pursuant to the provisions of this subtitle.			&#8220;Manufacturer,
bottler, importer, broker or wholesaler of alcoholic beverages&#8221; includes
any officers or directors of any such manufacturer, bottler, importer, broker or
wholesaler.

B. Except as provided in this subtitle, no manufacturer, importer, bottler,
broker or wholesaler of alcoholic beverages, whether licensed in the
Commonwealth or not, shall acquire or hold any financial interest, direct or
indirect, (i) in the business for which any retail license is issued or (ii) in
the premises where the business of a retail licensee is conducted.

   1. Subdivision B (ii) shall not apply so long as such manufacturer, bottler,
   importer, broker or wholesaler does not sell or otherwise furnish, directly or
   indirectly, alcoholic beverages or other merchandise to such retail licensee.

   2. Service as a member of the board of directors of a corporation licensed as
   a retailer, the shares of stock of which are sold to the general public on any
   national or local stock exchange, shall not be deemed to be a financial
   interest, direct or indirect, in the business or the premises of the retail
   licensee.

   3. A brewery, winery or subsidiary or affiliate thereof, hereinafter
   collectively referred to as a financing corporation, may participate in
   financing the business of a wholesale licensee in the Commonwealth by
   providing debt or equity capital or both but only if done in accordance with
   the provisions of this subsection.
   				a. In order to assist a proposed new owner of an existing wholesale
   licensee, a financing corporation may provide debt or equity capital, or both,
   if prior approval of the Board has been obtained pursuant to subdivision 3 b
   of subsection B. A financing corporation which proposes to provide equity
   capital shall cause the proposed new owner to form a Virginia limited
   partnership in which the new owner is the general partner and the financing
   corporation is a limited partner. If the general partner defaults on any
   financial obligation to the limited partner, which default has been
   specifically defined in the partnership agreement, or, if the new owner
   defaults on its obligation to pay principal and interest when due to the
   financing corporation as specifically defined in the loan documents, then, and
   only then, shall such financing corporation be allowed to take title to the
   business of the wholesale licensee. Notwithstanding any other law to the
   contrary and provided written notice has been given to the Board within two
   business days after taking title, the wholesale licensee may be managed and
   operated by such financing corporation pursuant to the existing wholesale
   license for a period of time not to exceed 180 days as if the license had been
   issued in the name of the financing corporation. On or before the expiration
   of such 180-day period, the financing corporation shall cause ownership of the
   wholesale licensee&#8217;s business to be transferred to a new owner.
   Otherwise, on the 181st day, the license shall be deemed terminated. The
   financing corporation may not participate in financing the transfer of
   ownership to the new owner or to any other subsequent owner for a period of
   twenty years following the effective date of the original financing
   transaction; except where a transfer takes place before the expiration of the
   eighth full year following the effective date of the original financing
   transaction in which case the financing corporation may finance such transfer
   as long as the new owner is required to return such debt or equity capital
   within the originally prescribed eight-year period. The financing corporation
   may exercise its right to take title to, manage and operate the business of,
   the wholesale licensee only once during such eight-year period.				b. In any
   case in which a financing corporation proposes to provide debt or equity
   capital in order to assist in a change of ownership of an existing wholesale
   licensee, the parties to the transaction shall first submit an application for
   a wholesale license in the name of the proposed new owner to the Board.				The
   Board shall be provided with all documents that pertain to the transaction at
   the time of the license application and shall ensure that the application
   complies with all requirements of law pertaining to the issuance of wholesale
   licenses except that if the financing corporation proposes to provide equity
   capital and thereby take a limited partnership interest in the applicant
   entity, the financing corporation shall not be required to comply with any
   Virginia residency requirement applicable to the issuance of wholesale
   licenses. In addition to the foregoing, the applicant entity shall certify to
   the Board and provide supporting documentation that the following requirements
   are met prior to issuance of the wholesale license: (i) the terms and
   conditions of any debt financing which the financing corporation proposes to
   provide are substantially the same as those available in the financial markets
   to other wholesale licensees who will be in competition with the applicant,
   (ii) the terms of any proposed equity financing transaction are such that
   future profits of the applicant&#8217;s business shall be distributed annually
   to the financing corporation in direct proportion to its percentage of
   ownership interest received in return for its investment of equity capital,
   (iii) if the financing corporation proposes to provide equity capital, it
   shall hold an ownership interest in the applicant entity through a limited
   partnership interest and no other arrangement and (iv) the applicant entity
   shall be contractually obligated to return such debt or equity capital to the
   financing corporation not later than the end of the eighth full year following
   the effective date of the transaction thereby terminating any ownership
   interest or right thereto of the financing corporation.				Once the Board has
   issued a wholesale license pursuant to an application filed in accordance with
   this subdivision 3 b, any subsequent change in the partnership agreement or
   the financing documents shall be subject to the prior approval of the Board.
   In accordance with the previous paragraph, the Board may require the licensee
   to resubmit certifications and documentation.				c. If a financing corporation
   wishes to provide debt financing, including inventory financing, but not
   equity financing, to an existing wholesale licensee or a proposed new owner of
   an existing wholesale licensee, it may do so without regard to the provisions
   of subdivisions 3 a and 3 b of subsection B under the following circumstances
   and subject to the following conditions: (i) in order to secure such debt
   financing, a wholesale licensee or a proposed new owner thereof may grant a
   security interest in any of its assets, including inventory, other than the
   wholesale license itself or corporate stock of the wholesale licensee; in the
   event of default, the financing corporation may take title to any assets
   pledged to secure such debt but may not take title to the business of the
   wholesale licensee and may not manage or operate such business; (ii) debt
   capital may be supplied by such financing corporation to an existing wholesale
   licensee or a proposed new owner of an existing wholesale licensee so long as
   debt capital is provided on terms and conditions which are substantially the
   same as those available in the financial markets to other wholesale licensees
   in competition with the wholesale licensee which is being so financed; and
   (iii) the licensee or proposed new owner shall certify to the Board and
   provide supporting documentation that the requirements of (i) and (ii) of this
   subdivision 3 c have been met.				Nothing in this section shall eliminate,
   affect or in any way modify the requirements of law pertaining to issuance and
   retention of a wholesale license as they may apply to existing wholesale
   licensees or new owners thereof which have received debt financing prior to
   the enactment of this subdivision 3 c.

   4. Except for holders of retail licenses issued pursuant to subdivision A 5 of
   &#xA7; 4.1-201, brewery licensees may sell beer to retail licensees for resale
   only under the following conditions: If such brewery or an affiliate or
   subsidiary thereof has taken title to the business of a wholesale licensee
   pursuant to the provisions of subdivision 3 a of subsection B, direct sale to
   retail licensees may be made during the 180-day period of operation allowed
   under that subdivision. Moreover, the holder of a brewery license may make
   sales of alcoholic beverages directly to retail licensees for a period not to
   exceed thirty days in the event that such retail licensees are normally
   serviced by a wholesale licensee representing that brewery which has been
   forced to suspend wholesale operations as a result of a natural disaster or
   other act of God or which has been terminated by the brewery for fraud, loss
   of license or assignment of assets for the benefit of creditors not in the
   ordinary course of business.

   5. Notwithstanding any provision of this section, including but not limited to
   those provisions whereby certain ownership or lease arrangements may be
   permissible, no manufacturer, bottler, importer, broker or wholesaler of
   alcoholic beverages shall make an agreement, or attempt to make an agreement,
   with a retail licensee pursuant to which any products sold by a competitor are
   excluded in whole or in part from the premises on which the retail
   licensee&#8217;s business is conducted.

   6. Nothing in this section shall prohibit a winery, brewery, or distillery
   licensee from paying a royalty to a historical preservation entity pursuant to
   a bona fide intellectual property agreement that (i) authorizes the winery,
   brewery, or distillery licensee to manufacture wine, beer, or spirits based on
   authentic historical recipes and identified with brand names owned and
   trademarked by the historical preservation entity; (ii) provides for royalties
   to be paid based solely on the volume of wine, beer, or spirits manufactured
   using such recipes and trademarks, rather than on the sales revenues generated
   from such wine, beer, or spirits; and (iii) has been approved by the Board.
   				For purposes of this subdivision, &#8220;historical preservation
   entity&#8221; means an entity (a) that is exempt from income taxation under
   &#xA7; 501(c)(3) of the Internal Revenue Code; (b) whose declared purposes
   include the preservation, restoration, and protection of a historic community
   in the Commonwealth that is the site of at least 50 historically significant
   houses, shops, and public buildings dating to the eighteenth century; and (c)
   that owns not more than 12 retail establishments in the Commonwealth for which
   retail licenses have been issued by the Board.

C. Subject to such exceptions as may be provided by statute or Board
regulations, no manufacturer, bottler, importer, broker or wholesaler of
alcoholic beverages, whether licensed in the Commonwealth or not, shall sell,
rent, lend, buy for or give to any retail licensee, or to the owner of the
premises in which the business of any retail licensee is conducted, any (i)
money, equipment, furniture, fixtures, property, services or anything of value
with which the business of such retail licensee is or may be conducted, or for
any other purpose; (ii) advertising materials; and (iii) business entertainment,
provided that no transaction permitted under this section or by Board regulation
shall be used to require the retail licensee to partially or totally exclude
from sale at its establishment alcoholic beverages of other manufacturers or
wholesalers.
			The provisions of this subsection shall apply to manufacturers, bottlers,
importers, brokers and wholesalers selling alcoholic beverages to any
governmental instrumentality or employee thereof selling alcoholic beverages at
retail within the exterior limits of the Commonwealth, including all territory
within these limits owned by or ceded to the United States of America.			The
provisions of this subsection shall not apply to any commercial lifestyle center
licensee.

HISTORY: 1989, c. 528, § 4-79.1; 1992, c. 349; 1993, c. 866; 2015, c. 421;
2020, cc. 1113, 1114; 2025, cc. 126, 130.