(1) DEFINITIONS. In this section: (a) “Alternating proprietorship” means an arrangement in which a host producer provides use of space and equipment, and may additionally provide personnel, to a guest producer for the production of alcohol beverages. (b) “Bottling” means placing alcohol beverages into sealed finished packages, including cans, bottles, boxes, bags, kegs, barrels, or any other packaging of finished products. When “bottle” is used as a verb, it has the same meaning as “bottling.” (c) “Contract producer” means a producer who directly manufactures, bottles, or labels alcohol beverages as an agent of a recipe producer or out-of-state recipe supplier. (d) “Contract production” means a contract, agreement, or business arrangement described in sub. (3) (b) whereby a recipe producer or out-of-state recipe supplier provides consideration to a contract producer for the production, bottling, or labeling of alcohol beverages. (e) “Guest producer” means a producer who enters into a contract, agreement, or business arrangement with a host producer whereby the producer has use of the host producer’s premises and equipment, and may have use of the host producer’s personnel, for the production of the guest producer’s alcohol beverages. (f) “Host producer” means a producer who enters into a contract, agreement, or business arrangement with a guest producer whereby the guest producer has use of the producer’s premises and equipment, and may have use of the producer’s personnel, for the production of the guest producer’s alcohol beverages. (g) “Licensing agreement” means an agreement between a licensor and a producer for the production of alcohol beverages containing the name, symbol, or mark of the licensor. (h) “Out-of-state recipe supplier” means a person to whom all of the following applies: 1. The person is located in another state and produces alcohol beverages in that state. 2. The person does not hold a permit under this chapter, other than a permit issued under s. 125.30, 125.535, or 125.58. 3. The person purchases alcohol beverages from a producer that are manufactured consistently with a recipe provided by the person or are bottled or labeled for the person. (i) “Producer” means a brewer holding a permit under s. 125.29, brewpub holding a permit under s. 125.295, winery holding a permit under s. 125.53, manufacturer holding a permit under s. 125.52, or rectifier holding a permit under s. 125.52. (j) “Recipe producer” means a producer who purchases alcohol beverages from another producer that are manufactured consistently with a recipe provided by the recipe producer or are bottled or labeled for the recipe producer. (2) PRODUCTION ARRANGEMENTS AUTHORIZED; AGREEMENTS BETWEEN SAME PRODUCER TYPE. (a) Production arrangements under subs. (3) to (5) are authorized as provided in this section. A permittee that enters into such a production arrangement does not act as an agent for or in the employ of another under s. 125.52 (3) or 125.53 (2), and such a production arrangement is not a prohibited interest under s. 125.20. (b) Except as provided in sub. (3) (b) 2. and 3., agreements authorized under this section may be entered into only by producers who hold permits issued under the same section of this chapter. (3) CONTRACT PRODUCTION. (a) An agreement for contract production shall comply with the requirements of this subsection. (b) An agreement for contract production may be entered into between any of the following: 1. Two producers possessing the same type of permit. 2. A permittee under s. 125.29, as the contract producer, and a permittee under s. 125.295, as the recipe producer. 3. A producer and an out-of-state recipe supplier. (c) All contract production activities shall occur pursuant to a written agreement between the contract producer and the recipe producer or out-of-state recipe supplier. (d) 1. Except as provided in subd. 2., alcohol beverages produced under an agreement for contract production between a contract producer and a recipe producer shall count toward the production volume of the recipe producer and shall be considered, for this purpose, as produced on the recipe producer’s premises. 2. Alcohol beverages produced under an agreement for contract production between a contract producer and a recipe producer may not be considered in determining production volume for purposes of ss. 125.29 (7), 125.52 (4), and 125.53 (3), but shall be considered as produced by the recipe producer for other purposes under ss. 125.29 (7), 125.52 (4), and 125.53 (3). (e) The recipe producer shall be considered the producer for purposes of filing reports under s. 139.11 (2) and taxation under ss. 139.02, 139.03, 139.05 (2), and 139.06 (1) and (2), as applicable, and shall include alcohol beverages manufactured under a contract production agreement in the report required under s. 139.11 (2). For alcohol beverages produced under an agreement for contract production between a contract producer and a recipe producer, the contract producer shall exclude the alcohol beverages from reports required under s. 139.11 (2). (4) ALTERNATING PROPRIETORSHIP. (a) An alternating proprietorship shall comply with the requirements of this subsection. (b) All alternating proprietorships shall occur pursuant to a written agreement between the host producer and guest producer. (c) The agreement under par. (b) shall provide that the guest producer retains the right to control the production of the alcohol beverages. If the agreement provides that the host producer and host producer’s personnel are agents of the guest producer or acting under the direction of the guest producer, the agreement shall specify the terms and compensation for the use of the host producer’s personnel. (d) The guest producer shall be considered the producer for purposes of filing reports under s. 139.11 (2) and taxation under ss. 139.02, 139.03, 139.05 (2), and 139.06 (1) and (2), as applicable, and shall include alcohol beverages manufactured under an alternating proprietorship in the report required under s. 139.11 (2). The host producer shall exclude alcohol beverages manufactured in an alternating proprietorship from reports required under s. 139.11 (2). (e) Alcohol beverages produced under an alternating proprietorship shall count toward the production volume of the guest producer and shall be considered, for this purpose, as produced on the guest producer’s premises. (5) LICENSING AGREEMENTS. (a) A producer may enter into a licensing agreement or contract with a licensor authorizing the producer-licensee to use the licensor’s trademark or name if all of the following requirements are satisfied: 1. The licensing agreement or contract is in writing. 2. The producer-licensee is entirely responsible for producing the alcohol beverages and for all related processing steps and regulatory requirements. (b) Alcohol beverages produced under the licensing agreement shall count toward the production volume of the producerlicensee and shall be considered, for this purpose, as produced on the producer-licensee’s premises.
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