BILL ANALYSIS AB 1649 Page 1 Date of Hearing: April 21, 2010 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair AB 1649 (Chesbro) - As Amended: March 15, 2010 Policy Committee: Governmental Organization Vote: 20 - 0 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill allows a winery to produce spirits of wine (a byproduct of wine fermentation) under specified conditions without having to additionally obtain a distilled spirits manufacturer's license. Specifically, this bill: 1)Expands the authorized activities that a licensed winegrower may conduct to include the production of spirits of wine, provided those spirits of wine are either blended into wine produced by the winegrower, sold to an industrial alcohol dealer, or destroyed by the winegrower. 2)Makes other conforming and clarifying changes with regard to a licensed winegrower's authorization to sell wine and brandy. FISCAL EFFECT Any costs associated with this legislation would be minor and absorbable within the Department of Alcoholic Beverage Control's existing resources. COMMENTS 1)Rationale . According to the bill's sponsor, the Wine Institute, while existing law authorizes a winery to produce the spirits of wine byproduct it is unclear whether or not the winery needs to obtain a Type 04 distilled manufacturer's license to deal with this byproduct. AB 1649 states a winery does not need to purchase a separate distilled spirits manufacturer's license when producing spirits of wine (byproduct of wine fermentation) provided the spirits of wine AB 1649 Page 2 are blended into the wine produced by the winegrower, are sold to an industrial alcohol dealer, or are destroyed by the winegrower. 2)Related Legislation . AB 1470 (Evans; Chapter 535, Statutes of 2009) removed the prohibition against licensed winegrowers or brandy manufacturers from selling wine for consumption at a branch office, essentially extending wine-by-the-glass privileges to a duplicate license. AB 2004 (Evans; Chapter 127, Statutes of 2008) authorized a licensed winegrower to sell wine to consumers for on-premises consumption. Analysis Prepared by : Julie Salley-Gray / APPR. / (916) 319-2081