BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 573
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          CONCURRENCE IN SENATE AMENDMENTS
          AB 573 (Chesbro)
          As Amended  June 15, 2012
          Majority vote
           
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          |ASSEMBLY:  |     |(May 12, 2011)  |SENATE: |36-0 |(August 9,     |
          |           |     |                |        |     |2012)          |
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                            (vote not relevant)
           
           Original Committee Reference:    G.O.  

           SUMMARY  :  Corrects inconsistencies in existing provisions of the 
          Alcoholic Beverage Control (ABC) Act in order to allow all 
          licensed manufacturers and wholesalers the same opportunity to 
          inspect, clean and replace their tapping equipment.

           The Senate amendments  delete the Assembly version of the bill, 
          and instead change an inconsistency in current law with regards 
          to the Act in order to allow manufacturers to furnish, inspect, 
          and service keg and barrel tapping equipment for on-sale 
          licensees.

           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)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.

          3)Exempts from specified tied-house restrictions the occasional 
            inspection and cleaning by beer manufacturers and wholesalers 
            of beer taps and tapping equipment, as provided. 

          4)Permits a beer manufacturer or beer wholesaler to furnish, 








                                                                  AB 573
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            give, rent, lend, or sell, any equipment, fixtures, or 
            supplies, other than alcoholic beverages, to a retailer whose 
            equipment, fixtures, or supplies were lost or damaged as a 
            result of a natural disaster, as provided.
           
          AS PASSED BY THE ASSEMBLY  , this bill 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.

           FISCAL EFFECT  :  According to the Senate Appropriations 
          Committee, pursuant to Senate Rule 28.8, negligible state costs.

           COMMENTS :  This bill was substantially amended in the Senate and 
          the Assembly-approved provisions of this bill were deleted.

           Purpose the bill  :  The author's office notes that this measure 
          would not expand any existing privileges within the Act but 
          rather it is "code cleanup."  Specifically, existing law, 
          Business and Professions Code Section 25510, permits a 
          manufacturer to furnish to a licensed wholesaler, and a licensed 
          wholesaler or manufacturer to furnish to an on-sale licensee 
          specified maintenance on any licensed beverage tapping 
          equipment.  However, language in Business and Professions Code 
          Sections 25504.5 and 25511 limits access to this cleaning 
          service to "beer" manufacturers and their wholesalers.  The 
          author's office states that this bill would simply strike the 
          reference to "beer" in Sections 25504.5 and 25511 so that those 
          provisions are consistent with Section 25510.

           In Support  :  Writing in support, the Wine Institute points out 
          that when it consulted with ABC staff regarding the 
          inconsistencies in these statutes, the ABC suggested that the 
          changes incorporated in this bill would provide uniformity and 
          clarity.  Also writing in support, the Family Winemakers of 
          California indicates that wine casks have recently emerged as a 
          most cost effective way to supply licensed on-sale premises that 
          sell wine by glass and that this bill would allow wineries to 
          supply and service such equipment.  
                     
           Related legislation  :  AB 2878 (Aghazarian) Chapter 604, Statutes 
          of 2004, added "filters" to the list of alcoholic beverage 
          tapping equipment that can be furnished by a licensed wholesaler 
          or manufacturer to an on-sale licensee.










                                                                  AB 573
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           Analysis Prepared by  :    Eric Johnson / G. O. / (916) 319-2531


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