(a) For the purposes of this section:

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(1) “Certificate of label approval” has the same meaning as provided in 27 C.F.R. § 4.10, as amended from time to time;

(2) “Contract manufacturing agreement” or “agreement” means a written agreement, including, but not limited to, a custom crush agreement, in which a primary manufacturer agrees to produce an alcoholic beverage on behalf of a contracting party;

(3) “Contracting party” means the holder of a manufacturer permit issued under section 30-16, a wholesaler permit issued under section 30-17 or an out-of-state shipper’s permit for alcoholic liquor issued under section 30-18 that owns the recipe for an alcoholic beverage;

(4) “Custom crush agreement” means a contract manufacturing agreement under which a primary manufacturer that holds a manufacturer permit issued under section 30-16 for the production of wine produces wine on behalf of a contracting party by using grapes or other fruit provided by the contracting party; and

(5) “Primary manufacturer” means a manufacturer who produces an alcoholic beverage on behalf of a contracting party on the manufacturer’s permit premises pursuant to a contract manufacturing agreement.

(b) A contracting party may enter into a contract manufacturing agreement with a primary manufacturer, provided:

(1) The primary manufacturer shall:

(A) Maintain, at all times during the term of such agreement, exclusive control and possession of all premises on which the primary manufacturer produces alcoholic beverages on behalf of the contracting party pursuant to such agreement;

(B) Bear sole responsibility for production of all alcoholic beverages on behalf of the contracting party pursuant to such agreement;

(C) Label with the primary manufacturer’s business name and address all alcoholic beverages the primary manufacturer produces on behalf of the contracting party pursuant to such agreement;

(D) Maintain title to (i) all ingredients that the primary manufacturer uses during the production process for an alcoholic beverage that the primary manufacturer produces on behalf of the contracting party pursuant to such agreement unless such agreement is a custom crush agreement, (ii) all machinery and supplies that the primary manufacturer uses during the production process for an alcoholic beverage that the primary manufacturer produces on behalf of the contracting party pursuant to such agreement, and (iii) each alcoholic beverage the primary manufacturer produces on behalf of the contracting party pursuant to such agreement until such alcoholic beverage is removed from such primary manufacturer’s permit premises;

(E) Maintain appropriate production records concerning all alcoholic beverages the primary manufacturer produces on behalf of the contracting party pursuant to such agreement;

(F) Obtain from the federal Alcohol and Tobacco Tax and Trade Bureau any certificate of label approval required for an alcoholic beverage that the primary manufacturer produces on behalf of the contracting party pursuant to such agreement;

(G) File any registration required under section 30-63 for an alcoholic beverage that the primary manufacturer produces on behalf of the contracting party pursuant to such agreement;

(H) Pay any tax due on the alcoholic beverages the primary manufacturer has produced on behalf of the contracting party pursuant to such agreement, which agreement may require the contracting party to reimburse the primary manufacturer for the cost of such tax;

(I) Provide to the department, upon inspection or request, an up-to-date list and copies of all contract manufacturing agreements to which the primary manufacturer is a party and production records concerning such agreements, which list, copies and records shall be provided to the department in an electronic format unless it is commercially impractical; and

(J) Not sell at retail for off-premises consumption or at wholesale any alcoholic beverage such primary manufacturer produces on behalf of the contracting party if any wholesaler permittee under section 30-17 has the distribution rights for such alcoholic beverage; and

(2) The contracting party shall not produce any alcoholic beverage on the primary manufacturer’s permit premises.

(c) The department may adopt regulations, in accordance with the provisions of chapter 54, to implement the provisions of this section.