(a) Any municipality having a population of 7,000 or more may change its classification from dry to wet or wet to dry by a municipal option election, in the following manner:

(b) Upon petition of 25 percent of the number of voters voting in the last preceding general election of the municipality being filed with the city or town clerk or governing body of said municipality, said governing body must call a municipal option election for said municipality to determine the sentiment of the people as to whether or not alcoholic beverages can be legally sold or distributed in said municipality. Said petition for municipal option election shall contain the following: 'It is petitioned that a municipal option election be held to permit the legal sale and distribution of alcoholic beverages within this municipality.' On the ballot to be used for such municipal option election, the question shall be in the following form: 'Do you favor the legal sale and distribution of alcoholic beverages within this municipality? Yes _____ No _____.'

(c) Said municipal option election shall be held and the officers appointed to hold same in the manner provided by law for holding other municipal elections and the returns thereof tabulated and the results certified as provided by law for such municipal elections. Said municipal option election shall be held at the time of the primary, general, county-wide or municipal election next succeeding the date of the filing of said petition, provided, however, said election shall not be held within less than 30 days from the date of the filing of said petition. Notice of said municipal option election shall be given by the governing body of the municipality by publication at least three weeks before the date of election, in a newspaper in the municipality, or, if there be none, in a newspaper in the county, or, if there be neither, by posting such notice at the town or city hall, apprising the voters of the municipality that a municipal option election shall be held to determine whether such municipality shall be wet or dry under this article. The cost of said municipal option election, including the cost of notice by publication, shall be paid out of the general fund of the municipality.

(d) Only qualified voters shall vote in said municipal option election. If a majority of the voters in said municipal option election vote 'yes,' said municipality shall be wet, and alcoholic beverages can be legally sold, distributed and consumed within the corporate limits of said municipality, and all of the provisions of Title 28, relating to alcoholic beverages in wet counties, including Chapters 3, 3A, 6 and 7, shall be immediately put into operation with respect to and effective within the corporate limits of said municipality. Said municipality shall remain wet until said municipality shall be in subsequent municipal option election held under this article changed to a dry municipality, notwithstanding the results of any subsequent county election or special method referendum. All other laws to the contrary notwithstanding, the electors residing within the corporate limits of any such municipality that has become wet pursuant to a municipal option election held under this article shall not be entitled to vote in any subsequent county election or special method referendum held to determine if the county in which such municipality is located shall become wet. The question of whether such county shall become wet shall be decided by the electors of such county residing outside the corporate limits of such wet municipality as otherwise provided by law.

(e) If a majority of the voters voting in said municipal option election vote 'no,' said municipality shall be a dry municipality under the terms of this article until the county shall by subsequent election or special referendum, vote wet, or the municipality shall by a subsequent municipal option election held under this article, vote wet.

(f) Said municipal option election in said municipality may be held at the time of any primary, general, county-wide or municipal election, provided a period of not less than 720 days must elapse between the dates of such municipal option elections; provided further, that a county wet-dry election or special method referendum may be held at any time without regard to the lapse of time between the dates of any municipal option elections.

The distribution of funds pursuant to Chapter 28, Title 40, and Chapter 3, Title 40, both as amended, shall not be affected by this article. County school systems may receive revenue from the sale of alcoholic beverages upon approval by the city council of said municipality or by the sale of alcoholic beverages authorized by a municipal option election pursuant to this article.

In addition to the procedure established pursuant to Article 1, the governing body of any Class 1, 2, or 3 municipality or any municipality having a population of 18,500 or more, which is legally wet, and which has previously annexed or hereinafter annexes territory into the municipality which lies in a county which is legally dry, shall, before the annexed territory becomes wet, pass an ordinance calling for a city-wide referendum to be held to determine whether the annexed portions of the municipality shall be legally wet as herein provided. If the governing body of the municipality adopts an ordinance determining that all of the area within the corporate limits of the municipality should be legally wet, and if this decision is approved at a subsequent referendum called to decide this issue, alcoholic beverages may be lawfully sold, distributed, and consumed within the newly annexed portions of corporate limits of the municipality. If a municipality adopts such an ordinance, and if the results of the subsequent referendum are in favor of making the annexed portions of the municipality wet as evidenced by a majority of the electors of the municipality voting in the referendum voting in favor of the proposition, all of the provisions of this title, relating to alcoholic beverages in wet counties, including Chapters 3, 3A, 6, and 7, shall be immediately put into operation with respect to and effective throughout the corporate limits of the municipality. If, however, after the passage of an ordinance, the called referendum shall fail, the annexed portions of the municipality shall remain legally dry, but the vote shall not affect the wet status of those portions of the municipality which were legally wet before the referendum was conducted.

It is hereby declared the intention and the purpose of this article to permit an election by the citizens of certain municipalities to determine the wet or dry status of such municipalities with regard to the sale, distribution and consumption of alcoholic beverages within the corporate limits of such municipalities; and further that such election shall be provided only in those municipalities which can provide safeguards for the protection of the public welfare, health, peace and morals of the people. In the furtherance of the protection of the public welfare, health, peace and morals, the Legislature has determined that a population classification should be established to provide this method of municipal option election only in those municipalities with a population of 7,000 or more people within a county, it being the judgment of the Legislature that municipalities with a lesser population would be unable to support and maintain such protection where such municipality is located in a dry county, whereas a municipality of 7,000 or more population would have the resources and ability to support and maintain such safeguards.

If any municipality having a population of 7,000 or more, of any county, votes to allow the sale of alcoholic beverages in its corporate limits pursuant to this article, then every other municipality having a population of 4,000 or more in the county shall be likewise authorized to petition for and hold an election on whether to legalize the sale of such beverages in the same manner, and under the same conditions, as municipalities of 7,000 or more.