BILL ANALYSIS                                                                                                                                                                                                    






                                                       Bill No:  AB  
          1649
          
                 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
                       Senator Roderick D. Wright, Chair
                           2009-2010 Regular Session
                                 Staff Analysis



          AB 1649  Author:  Chesbro
          As Amended:  March 15, 2010
          Hearing Date:  June 9, 2010
          Consultant:  Art Terzakis


                                     SUBJECT  
                              Alcoholic Beverages

                                   DESCRIPTION
           
          AB 1649 allows licensed winegrowers 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 measure:

          1.  Adds clarity to the definition of "distilled spirits  
            manufacturer," within the Alcoholic Beverage Control  
            (ABC) Act, by stipulating that a distilled spirits  
            manufacturer shall not include a winegrower that produces  
            spirits of wine, provided the spirits of wine are blended  
            into wine produced by the winegrower, are sold to an  
            industrial alcohol dealer, or are destroyed by the  
            winegrower.  

          2.  Expands the privileges afforded a licensed winegrower  
            to include the production of spirits of wine and blending  
            those spirits of wine into wine produced by the  
            winegrower or selling those spirits of wine to an  
            industrial alcohol dealer. 

          3.  Also, makes clarifying changes with respect to a  
            licensed winegrower's authorization to sell only their  
            own wine or brandy by the glass or bottle that is  
            produced under their original or duplicate license.   




          AB 1649 (Chesbro) continued                              
          Page 2
          


                                         
                                  EXISTING LAW

           Existing law establishes the Department of Alcoholic  
          Beverage Control (ABC) and grants it exclusive authority to  
          administer the provisions of the ABC Act in accordance with  
          laws enacted by the Legislature.  This involves licensing  
          individuals and businesses associated with the manufacture,  
          importation and sale of alcoholic beverages in this state  
          and the collection of license fees.  

          Existing law defines "distilled spirits manufacturer" to  
          mean any person who produces distilled spirits from  
          naturally fermented materials or in any other manner.

          Existing law 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.
           
          Existing law 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.

                                    BACKGROUND
           
           Purpose of AB 1649:   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  
          spirits manufacturer's license to deal with this byproduct.  
           The sponsor points out that many wineries use reverse  
          osmosis, or the spinning cone technique, to reduce the  
          alcohol content in their wines.  This measure would simply  
          clarify that 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 are blended into the wine produced by  
          the winegrower, are sold to an industrial alcohol dealer,  
          or are destroyed by the winegrower.  This measure would  
          also make minor clarifying changes to the newly enacted  
          wine-by-the-glass law.





          AB 1649 (Chesbro) continued                              
          Page 3
          


                            PRIOR/RELATED LEGISLATION
           
           AB 1470 (Evans) Chapter 535, Statutes of 2009.    Authorized  
          winegrowers to sell wine for consumption at a "branch  
          office," warehouse, or an off-site cellar, and removed the  
          requirement that the Department of ABC issue a "duplicate"  
          license "forthwith." Also, authorized an on-sale beer and  
          wine public premises licensee 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.

           AB 2004 (Evans) Chapter 127, Statutes of 2008.   Authorized  
          a winery to sell wine for consumption on the winery's  
          grounds, such as at a picnic area within the boundaries of  
          the winery.  Also, granted any winegrower the same  
          privilege that is currently available to any on-sale  
          licensee which maintains a restaurant, which permits the  
          licensee to allow a patron to remove from the premises upon  
          departure, a bottle of wine that has been opened (partially  
          consumed).
           
           SUPPORT:   As of June 4, 2010:

          Wine Institute
          Family Winemakers of California

           OPPOSE:   None on file as of June 4, 2010.

           FISCAL COMMITTEE:   Senate Appropriations Committee

                                   **********