(1) A special nonbeverage alcohol license shall authorize the holder to purchase alcohol for nonbeverage purposes only from the holder of a distiller's license, wholesaler's license, or distributor's license and possess alcohol for use in the manufacture and sale of any of the following products, when they are unfit for beverage purposes:
(a) Denatured alcohol produced, and sold pursuant to Acts of Congress and regulations promulgated thereunder;
(b) Patent, proprietary, medicinal, pharmaceutical, antiseptic, and toilet preparations;
(c) Flavoring extracts, syrups, and food products; and (d) Scientific, chemical, mechanical, and industrial products.
(2) KRS Chapter 242 shall not prevent the issuance of special nonbeverage alcohol licenses to persons located in dry or moist territory nor prevent licensees from exercising the privileges granted in the license.
(3) A special nonbeverage alcohol license may also be issued to any duly authorized and bona fide hospital, museum, laboratory, charitable, educational, or similar public or private institution, to a drug store employing a licensed pharmacist, or to a licensed physician. The license shall authorize the licensee to purchase or possess alcohol and to use it only for nonbeverage purposes.
(4) The holder of a special nonbeverage alcohol license may produce, possess, and use alcohol in the manufacture of nonbeverage fuel ethanol if the holder also holds a basic permit from the applicable federal agency authorizing ethanol production.