BILL ANALYSIS                                                                                                                                                                                                    

                                                                  SB 1022
                                                                  Page  1

          Date of Hearing:   June 23, 2010

                                   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  

          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  

          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.  


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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  


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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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          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.  

          Boys & Girls Club of Ventura
          Napa Valley Limoncella Company
          Ventura Limoncello Company, LLC
          None on file.

          Analysis Prepared by  :    Eric Johnson / G. O. / (916) 319-2531