BILL ANALYSIS AB 2134 Page 1 Date of Hearing: April 12, 2010 ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION Joe Coto, Chair AB 2134 (Chesbro) - As Introduced: February 18, 2010 SUBJECT : Alcoholic beverage control: tied-house restrictions: instructional events: beer. SUMMARY : Allows craft brewers to conduct and participate in events called "Beer Maker Dinners" for consumers held at retail accounts (restaurants that purchase a craft brewer's products) featuring craft beers paired with food. This measure creates a tied house exception very similar to one in existing law for winemakers. Specifically, this bill : 1)Allows licensed beer manufacturers and holder's of a beer and wine importer's general license, or any director, partner, officer, agent, or representative of that person, to conduct an instructional event held at an on-sale retail licensee's premises featuring beer, subject to specified conditions. 2)Provides that no alcoholic beverage may be given away in connection with the instructional event, as specified. 3)Includes provisions that, if violated, would result in a misdemeanor, would impose a state-mandated local program. EXISTING LAW : 1)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 the licensing and regulation of businesses involved in the manufacture, importation, and sale of alcoholic beverages in the state. 2)Permits an on-sale retail licensee of wine or distilled spirits to conduct "instructional" consumer tastings on the licensed retail premise provided the following conditions are met: a) no more than ounce of distilled spirits is offered in one tasting; b) no more than one ounce of wine is offered in one tasting; and, c) no more than three tastings are offered to an individual in one day. An instruction may include the history, nature, values and characteristics of the product AB 2134 Page 2 being offered, and the methods of presenting and serving the product. 3)Authorizes beer manufacturers and wholesalers to offer beer samples (not to exceed eight ounces per person, per day) to individuals of legal drinking age at on-sale retail licensed premises under specified conditions. 4)Permits a licensed winegrower, manufacturer, importer, or wholesaler to provide samples of the alcoholic beverages, which are authorized to be sold by the licensee in accordance with rules prescribed by the ABC. A retail licensee, however, is not authorized to provide any free samples of alcoholic beverages. Moreover, ABC regulations provide that samples of alcoholic beverages may only be given away to licensees or employees of licensees who are in a position to purchase the product or who are in need of additional information about the product, as specified. 5)Authorizes distilled spirits manufacturers to conduct tastings and provide distilled sprits without charge for events sponsored by nonprofit organizations. Only persons affiliated with the nonprofit organization, including up to three guests, may attend. No distilled spirits may be sold or solicited for sale at the tasting, and the organization must obtain a permit from ABC prior to the event. 6)States that the "Tied-House" Law, separates the alcoholic beverage industry into three component parts of manufacturer, wholesaler, and retailer. The original policy rationale for this body of law was to prohibit the vertical integration of the alcohol industry and to protect the public from predatory marketing practices. Generally, other than exemptions granted by the Legislature, the holder of one type of license is not permitted to do business as another type of licensee within the "three-tier" system. FISCAL EFFECT : Unknown COMMENTS : According to the sponsor, the California Small Brewers Association, this bill will allow beer manufacturers and importers the privilege of participating in "Beer Maker Dinners" at licensed on-sale retail premises (i.e. restaurants) and AB 2134 Page 3 communicating the date, time and location of these events to their customers. The sponsor states, these events will provide a unique opportunity for brewers and their representatives to personally meet with consumers and provide instruction on existing and emerging craft beer products while being paired with food. Unfortunately, under current law, several restrictions make it difficult for craft brewers to engage in these types of instructional events for consumers. Current law requires: 1) The brewer and/or their representatives must be paid an "honorarium" by the retail account to attend; and 2) The brewer cannot advertise the location of the "Beer Maker Dinner" to interested parties. Under current law, winegrowers are able to conduct "Wine Maker Dinners" at licensed retail accounts. The law allows a winegrower representative to conduct the educational event without compensation from the retail establishment; and allows the winegrower to advertise the event under specified conditions. This measure will allow California craft brewers to conduct "Beer Maker Dinners" with the same privileges and protections currently enjoyed by winegrowers when they conduct "Wine Maker Dinners" under current law. Specifically, the craft brewer or their representative can: 1) Participate in the "Beer Maker Dinner" without having to be paid an "honorarium" by the retail account; and 2) Advertise the location of the "Beer Maker Dinner" to interested parties. The one exception is that under this bill no alcohol may be given away at the "Beer Maker Dinners." Clarifying amendment : To clarify the intent of the bill, the author might want to consider the following amendment: Page 3, Line 10, Strike ", without limitation," and Page 3, Line 11, after the word "licensee", add "to the consumer" Prior legislation : AB 1245 (Torrico), Chapter 629, Statutes of 2008. Modifies an existing provision of the Alcoholic Beverage Control Act (ABC Act) to allow beer manufacturers to give adult consumers promotional advertising items valued up to $3. AB 2293 (DeLeon), Chapter 638, Statutes of 2008. Allows a manufacturer of distilled spirits, winegrower, rectifier, AB 2134 Page 4 distiller, bottler, importer, or wholesaler of distilled spirits or wine or its authorized agent to entertain consumers by invitation at private parties and events in connection with the sale or distribution of wine or distilled spirits, subject to certain conditions. SB 1548 (Murray) Chapter 670, Statutes of 2006. Authorizes beer manufacturers and wholesalers to offer beer samples (not to exceed eight ounces per person, per day) to individuals of legal drinking age at on-sale retail licensed premises, as specified. AB 2285 (V. Brown) Chapter 248, Statutes of 1998. Allows on-sale retail licensees to offer limited tastings of wine or distilled spirits at the licensed establishment. REGISTERED SUPPORT / OPPOSITION : Support California Small Brewers Association Opposition None on file Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531