BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1649
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          ASSEMBLY THIRD READING
          AB 1649 (Chesbro)
          As Amended  March 15, 2010
          Majority vote 

           GOVERNMENTAL ORGANIZATION   20-0APPROPRIATIONS      17-0        
           
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          |Ayes:|Coto, Blakeslee, Chesbro, |Ayes:|Fuentes, Conway, Ammiano, |
          |     |Cook,                     |     |Bradford, Charles         |
          |     |De Leon, Evans, Galgiani, |     |Calderon, Coto, Davis,    |
          |     |Hernandez, Hill,          |     |Nava, Hall, Harkey,       |
          |     |Jeffries, Lieu, Ma,       |     |Miller, Nielsen, Norby,   |
          |     |Mendoza, Nestande,        |     |Skinner, Solorio,         |
          |     |V. Manuel Perez,          |     |Torlakson, Torrico        |
          |     |Portantino, Silva,        |     |                          |
          |     |Torres, Torrico, Tran     |     |                          |
          |     |                          |     |                          |
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           SUMMARY  :   Allows a winery to produce spirits of wine (byproduct  
          of wine fermentation) under specified conditions without having  
          to additionally obtain a distilled spirits manufacturer's  
          license.  This measure also clarifies current statutes related  
          to privileges of wineries and branch offices.  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, as specified.

          2)Makes conforming changes with regard to a licensed  
            winegrower's authorization to sell wine and brandy for  
            consumption to consumers on the licensed premises, as  
            specified. 

          3)Clarifies that current law is not intended to expand the  
            privilege for selling wine to consumers at a premises of  
            branch office to all of a licensee's branch offices but only  
            the office as approved by the Department of Alcoholic Beverage  
            Control (ABC). 

           EXISTING LAW  :








                                                                  AB 1649
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           1)Establishes ABC and grants it the exclusive authority to  
            administer the provisions of the Alcoholic Beverage Control  
            Act (Act) in accordance with laws enacted by the Legislature. 

          2)Establishes ABC and grants it exclusive authority to  
            administer the provisions of the ABC Act in accordance with  
            laws enacted by the Legislature.  This involves the licensing  
            and regulation of businesses involved in the manufacture,  
            importation, and sale of alcoholic beverages in the state.

          3)Authorizes a licensed winegrower to conduct specified  
            activities, including authorizing a licensed winegrower to  
            sell wine and brandy for consumption to consumers for  
            on-premises consumption, as specified.

          4)Authorizes an on-sale beer and wine public premises licensee  
            and a licensed winegrower who exercises his or her license  
            privileges at specified locations to allow a person who has     
                    purchased and partially consumed a bottle of wine to  
            remove the partially consumed bottle from the premises upon  
            departure.

          5)Allows a licensed winegrower or brandy manufacturer to sell  
            wine for consumption on the premises of a branch office.  In  
            essence, extends the wine-by-the-glass privilege that a Type  
            02's master license has to its duplicate license.

          6)Defines an "on-sale" license as authorizing the sale of all  
            types of alcoholic beverages: namely, beer, wine and distilled  
            spirits, for consumption on the premises (e.g. at a restaurant  
            or bar).  An "off-sale" license authorizes the sale of all  
            types of alcoholic beverages for consumption off the premises  
            in original, sealed containers.  

           FISCAL EFFECT  :  According to the Assembly Appropriations  
          Committee, any costs associated with this legislation would be  
          minor and absorbable within ABC's existing resources.
           
          COMMENTS  :  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 winegrower (winery) does not  








                                                                  AB 1649
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          need to purchase a separate distilled spirits manufacturer's  
          license when producing spirits of wine (byproduct of wine  
          fermentation) provided the spirits of wine are blended into the  
          wine produced by the winegrower, are sold to an industrial  
          alcohol dealer, or are destroyed by the winegrower.  Many  
          wineries use reverse osmosis or the spinning cone technique to  
          reduce the alcohol content in their wines. 

          This bill also clarifies current statue relating to the recent  
          enactments of AB 2004 (Evans), Chapter 127, Statutes of 2008 and  
          AB 1470 (Evans) Chapter 535, Statutes of 2009.  A provision of  
          current law is amended to state that wineries are only  
          authorized to sell their own wine by the glass or bottle not  
          wine which is produced for other businesses.  In addition, a  
          provision within AB 1470 is clarified by stating that the  
          privilege for selling wine for consumption on the premises of a  
          branch office is only for the "specific branch office" as  
          approved by ABC.  This measure does not change the customary  
          30-day public notice process that applies to the master license  
          under current law.

           Background  :  According to ABC, there are approximately 2,730  
          licenses issued to winegrowers for production facilities  
          throughout the State.  Currently, there are approximately 69  
          licenses issued to distilled manufacturers.  Approximately 50  
          winegrowers have distilled manufacturer's licenses.  Some  
          wineries use either a reverse osmosis apparatus or a spinning  
          cone system on the winery's premises for the purpose of reducing  
          the alcohol content in wine.  This procedure produces spirits of  
          wine which is a non potable distilled spirit.  
           
           
          Analysis Prepared by:    Eric Johnson / G. O. / (916) 319-2531 

                                                               FN:  0004004