BILL ANALYSIS Ó Bill No: AB 517 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION Senator Roderick D. Wright, Chair 2011-2012 Regular Session Staff Analysis AB 517 Author: Hall As Introduced: February 15, 2011 Hearing Date: June 28, 2011 Consultant: Art Terzakis SUBJECT Alcoholic Beverages DESCRIPTION AB 517 adds a new provision to the Alcoholic Beverage Control Act (ABC) that permits wholesalers and manufacturers to accept the return of unsold and unopened beer from an organization that obtained a temporary license. Specifically, this measure: 1. Authorizes an alcoholic beverage wholesaler or manufacturer to accept the return of unsold and unopened beer purchased from that wholesaler or manufacturer by an organization that has obtained a temporary daily license. 2. Permits the licensee to credit the account of the organization in an amount not to exceed the original sales price of the returned beer, provided that the beer was paid for in full. 3. Also, adds clarity to an existing provision of law relating to the reintroduction of discontinued/seasonal brands of beer in the same California market area in which a return and exchange of that beer has taken place. EXISTING LAW AB 517 (Hall) continued Page 2 Existing law permits the return of beer for errors in delivery, health and safety recalls and the identical exchange of out-of-code products. Existing law also authorizes a wholesaler or manufacturer of beer to accept the return of quantities of discontinued or seasonal brands of beer from a retail licensee, provided that the returned beer is exchanged for a quantity of beer of a brand produced or sold by the same manufacturer with a value not greater than the original sales price to the retail licensee of the returned beer. Existing law authorizes the ABC to issue special licenses for the sale of beer or wine on a temporary basis (usually one to three days) for premises temporarily occupied by the licensee for a picnic, social gathering, or similar occasion at a fee equal to the actual cost of issuing the license, but not to exceed $25 per day. Also, under existing law, ABC may, in its discretion, issue on a temporary basis a daily on-sale general license and the fee for such license shall be $25 per day. BACKGROUND Purpose of AB 517 : According to the author's office, this measure has been introduced on behalf of beer distributors in California who have experienced increasing demands to accept the return of unsold or unopened beer from nonprofits that are the holders of temporary on-sale licenses (issued for special events, fundraisers, parties, etc.). Currently, holders of such licenses may choose to keep the unopened and unused beer for a future event for which another temporary license may be issued. However, they have no legal option to sell or dispose of the beer in their possession at the expiration of their daily license. AB 517 would permit the return of unsold and unopened beer by daily licensees to the licensee from whom the beer was purchased. PRIOR/RELATED LEGISLATION SB 487 (Negrete McLeod) 2011-12 Session. Would add a new provision to the ABC Act that permits the return of unsold and unopened beer from an organization that obtained a temporary license. (Pending in Assembly G.O. Committee) AB 517 (Hall) continued Page 3 SB 192 (Negrete McLeod) 2009-10 Session. Identical to SB 487 of 2011. (Gutted in the Assembly - relating to career technical education - in late August and held in Rules Committee) AB 3071 (Assembly G.O. Committee) Chapter 508, Statutes of 2008. Among other things, authorized beer that is recalled for health or safety issues to be accepted for return at any time from a retailer and be picked up by the seller of beer. Also, permitted the seller of beer to exchange the returned beer for identical product, issue a deferred exchange memorandum showing the beer was picked-up and is to be replaced when inventory is available, or issue a credit to the retailer for the returned beer. SB 1035 (Perata) Chapter 657, Statutes of 2001. Allowed a person in possession of a stock of lawfully acquired alcoholic beverages following the revocation or voluntary surrender of, or failure to renew, an alcoholic beverage license to sell that stock to licensees, as authorized by the Department of ABC. SB 452 (Maddy) Chapter 273, Statutes of 1998. Among other things, authorized a wholesaler or manufacturer of beer to accept the return of discontinued or seasonal brands of beer from a retail licensee, provided that the returned beer is exchanged for a quantity of beer of a brand produced or sold by the same manufacturer with a value not greater than the original sales price to the retail licensee of the returned beer. SUPPORT: None on file as of June 24, 2011. OPPOSE: None on file as of June 24, 2011. FISCAL COMMITTEE: Senate Appropriations Committee