BILL ANALYSIS
SB 1022
Page 1
Date of Hearing: June 23, 2010
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Joe Coto, Chair
SB 1022 (Strickland) - As Amended: March 15, 2010
SENATE VOTE : 34-0
SUBJECT : Alcoholic beverages: licensees: donations.
SUMMARY : Expands an existing tied-house exception within the
Alcoholic Beverage Control Act (Act) to enable licensed
distilled spirits "rectifiers" to donate or sell their products
to specified nonprofit entities for the purpose of assisting in
fund-raising efforts.
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.
2)Existing law, known as the "tied-house" law, separates the
alcoholic beverage industry into three component parts, or
tiers, of manufacturer (including breweries, wineries and
distilleries), wholesaler, and retailer (both on-sale and
off-sale).
3)Tied house refers to a practice in this country prior to
Prohibition and still occurring in England today where a bar
or public house, from whence comes the "house" of tied house,
is tied to the products of a particular manufacturer, either
because the manufacturer owns the house, or the house is
contractually obligated to carry only a particular
manufacturer's products.
4)Provides that nothing in that body of law prohibits a wine
grower or a beer and wine wholesaler from giving or selling
wine, a beer manufacturer from giving or selling beer, a
distilled spirits manufacturer or its agent from giving or
selling distilled spirits, or a licensed importer from giving
or selling beer, wine, or spirits to certain nonprofit
organizations, as specified, at prices other than those
contained in schedules filed with ABC.
SB 1022
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5)Defines "rectifier" to mean every person who colors, flavors,
or otherwise processes distilled spirits by distillation,
blending, percolating, or other processes.
FISCAL EFFECT : Unknown.
COMMENTS :
As an exception to the general tied-house rule, existing law
allows wineries, breweries, distilled spirits manufacturers, and
importers to donate their product(s) to certain nonprofit
organizations (e.g., fraternal orders, social organizations,
civic leagues, veterans' organizations, religious groups,
horticultural organizations) for the purpose of assisting in
fund-raising efforts. This measure would grant licensed
"rectifiers" the same privilege.
Purpose of the bill : The author's office notes that current
law does not allow holders of a "rectifiers" license to give or
sell rectified distilled spirits to nonprofit organizations to
assist them in fund-raising efforts. However, current law
permits licensed "importers" to perform this function.
As an example, the author's office points to a local rectifier,
Ventura Limoncello Company, which cannot donate a gift basket
containing a bottle of Ventura Limoncello, produced in the
County of Ventura, to a local charity for its silent auction.
Yet, the importer of Il Convento Limoncello, produced in
Italy, can be donated (by the importer) to any charitable event.
According to the author's office, this measure is simply
intended to allow licensed rectifiers to support charities in
the same manner as the State's wineries, breweries, and
distilled spirits manufacturers and importers.
Staff Comments : "Limoncello," the national drink of Italy, is a
blended - or rectified - liquor. Grain alcohol is combined with
lemon zest and sugar. It rests for 30 to 45 days over which
time the grain alcohol absorbs the essence of the lemon creating
a sweet, lemony liquor. It is traditionally served chilled as
an after dinner digestivo.
Rectification is any process or procedure whereby distilled
spirits are cut, blended, mixed or infused with any ingredient
SB 1022
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which reacts with the constituents of the distilled spirits and
changes the character and nature or standards of identity of the
distilled spirits.
In late February 2010, the Department of ABC announced that it
would be cracking down on bars and restaurants that make their
own "infused" drinks, such as limoncellos. ABC initially had
issued a warning in May 2008 that was designed to prevent
bartenders from modifying drinks to increase the alcohol
content of distilled spirits.
Prior/Related Legislation : SB 1273 (Wiggins) 2009-10 Session.
Would make various substantive changes to existing
provisions of the ABC Act that allow winegrowers to sell bottled
wine at certain events held by qualified nonprofit
organizations, if approved by the Department of ABC.
SB 157 (Wiggins) Chapter 337, Statutes of 2008. Enacted the
"Nonprofit Organization Equal Participation Act" for the purpose
of providing continuity and equal participation for non-profit
organizations in sanctioned wine related events and to provide
orderly direction for wine producers
SB 108 (Wiggins) Chapter 246, Statutes of 2007. Modified an
existing provision of law that allows wine orders to be taken at
wine tasting events held by specified non-profit organizations
to include three additional types of non-profit organizations -
civic leagues, social organizations and voluntary employees'
beneficiary associations.
AB 323 (Evans) Chapter 131, Statutes of 2007. Made
modifications to the ABC Act to enable custom crush wine
producers (boutique wineries) to donate and pour their wine at
winetasting events conducted by nonprofit organizations.
SB 88 (Chesbro) Chapter 588, Statutes of 2003. Created a new
ABC wine sales event permit to allow a winegrowers to sell
bottled wine at charity events.
AB 1505 (Wiggins) Chapter 270, Statutes of 2003. Provided that
wine may not be sold or orders solicited, when a wine tasting is
held off the winegrower's premises at an event sponsored
by a private nonprofit organization, as defined, except that the
winegrower would be permitted to accept orders for the sale of
wine when the sales transaction is completed at the winegrower's
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premises.
AB 2520 (Thomson) Chapter 384, Statutes of 2000. Authorized the
ABC to issue a certified farmers market permit to allow
winegrowers to sell wine produced and bottled by the winegrower
entirely from grapes grown by the winegrower at such venues.
REGISTERED SUPPORT / OPPOSITION :
Support
Boys & Girls Club of Ventura
Napa Valley Limoncella Company
Ventura Limoncello Company, LLC
Opposition
None on file.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531