BILL ANALYSIS Ó
AB 573
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Date of Hearing: April 13, 2011
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Isadore Hall, Chair
AB 573 (Chesbro) - As Amended: March 31, 2011
SUBJECT : Alcoholic beverages: wine exports and returns.
SUMMARY : Allows a holder of a beer and wine wholesalers
license and an off-sale retail license, who only sell wine to
return wine they have exported from the state. Specifically,
this bill :
1) Provides for the return of wine exported out of state, to be
returned in the same manner by a holder of a beer and wine
wholesaler's license and an off-sale retail license that sells
only wine, as specified.
2) Makes technical, non-substantive changes to the Alcoholic
Beverage Control Act (Act).
EXISTING LAW
1) Establishes the Department of Alcoholic Beverage Control
(ABC) and grants it exclusive authority to administer the
provisions of the Act in accordance with laws enacted by the
Legislature.
2) Permits a licensed winegrower, who in the course of business
exports wine from California to another state, to subsequently
return to his or her licensed premises all or any portion of
that wine in private vehicles owned or under the control of the
winegrower, subject to certain tax provisions.
3) Establishes a beer and wine wholesaler license. Authorizes
a beer and wine wholesaler licensee to obtain an off-sale beer
and wine license, but limits sales to those accepted via mail,
telephone, or computer and prohibits operations conducted from a
retail store open to the public.
4) Provides that a licensed winegrower, who obtains a wine
direct shipper permit, as described, may sell and ship wine
directly to a California resident, for personal use, under
specific conditions. Knowing violation of these provisions would
be a misdemeanor.
AB 573
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5) Existing law, known as 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 :
Purpose of the bill : According to the sponsor of this bill, the
Family Winemakers of California, current law allows a licensed
winegrower, who in the course of business exports wine from
California to another state, to subsequently return to his or
her licensed premises all or any portion of that wine in his/her
private vehicle. Over the past several years, hundreds of
virtual wineries holding a combined Type 17 and Type 20 license
have sold wine for use out of state. AB 573 fixes a technical
problem within the ABC Act, so this specific license can bring
their wine back into the state under the same provisions as a
winegrower. Section 32175 of the Revenue and Taxation Code will
still apply to any wine returned.
Background : Presently, ABC issues two licenses to facilitate
Internet retail sales: a beer and wine wholesaler/Type 17
together with an off-sale beer and wine/Type 20. Current law
requires the holder of a wholesale license to operate as bona
fide wholesaler "in good faith". This means that they must sell
to retailers other than themselves.
Related legislation : AB 623 (Williams) of 2011, creates a new
limited off-sale retail wine license to sell wine via the
Internet, direct mail, or the telephone. (Pending in Assembly
Appropriations Committee)
Prior legislation : SB 118 (Chesbro), Chapter 157, Statutes of
2005. Provides that a licensed winegrower, who obtains a wine
AB 573
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direct shipper permit, as described, may sell wine and ship wine
directly to a California resident, for personal use, as
specified. Also, eliminated the requirement that an unlicensed
adult apply and be issued a permit to receive a shipment of
wine, as described.
AB 611 (Cortese), Chapter 394, Statutes of 1994. Encourages the
adoption of reciprocal wine shipping privileges in other states
to improve fairness and equality for small, family vintners and
winegrowers of California by authorizing this formula for
the direct shipment of wine to an individual in this state.
REGISTERED SUPPORT / OPPOSITION :
Support
Family Winemakers of California
Opposition
None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531