BILL ANALYSIS Ó AB 573 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 573 (Chesbro) As Amended June 15, 2012 Majority vote ----------------------------------------------------------------- |ASSEMBLY: | |(May 12, 2011) |SENATE: |36-0 |(August 9, | | | | | | |2012) | ----------------------------------------------------------------- (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 Page 2 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 Page 3 Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531 FN: 0004684