BILL ANALYSIS Ó
AB 623
Page 1
Date of Hearing: March 30, 2011
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Isadore Hall, Chair
AB 623 (Williams) - As Amended: March 24, 2011
SUBJECT : Alcoholic beverage licensees: limited off-sale retail
wine license.
SUMMARY : Creates a new limited off-sale retail wine license
to sell wine via the Internet, direct mail, or the telephone.
Specifically, this bill :
1) Authorizes the issuance of a limited off-sale retail wine
license that would allow the licensee to sell wine only by
direct mail, the telephone, or the Internet.
2) Provides sales may not be conducted from a retail premises
open to the public.
3) Allows the holder of a limited off-sale retail wine license
to assist a nonprofit organization holding a temporary wine
license in conducting a winetasting event (donate, sell, and/or
pour), as defined.
4) Requires the new license type to accept returns of wine sold
to consumers and removed from the state.
5) Provides that the Department of Alcoholic Beverage Control
(ABC) may impose reasonable conditions upon the licensee as may
be needed in the interest of public health, safety, and welfare.
6) Requires the license applicant to pay an initial fee and an
annual renewal fee that is equal to the fee paid by off-sale
beer and wine licensees.
EXISTING LAW :
1) Establishes ABC and grants it the exclusive authority to
administer the provisions of the Act in accordance with laws
enacted by the Legislature.
2) 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,
AB 623
Page 2
telephone, or computer and prohibits operations conducted from a
retail store open to the public.
3) Provides for various annual fees for the issuance of
alcoholic beverage licenses that vary depending upon the type of
license issued.
4) Prohibits ABC from issuing a wholesale license to any person
who does not in good faith actually carry on or intend to carry
on a bona fide wholesale business by sale to retail licensees of
the alcoholic beverage designated in the wholesale license, and
authorizes ABC to revoke any wholesale license when the licensee
fails for a period of 45 days to actively and in good faith to
engage in the wholesale business
FISCAL EFFECT : Unknown.
COMMENTS :
This measure allows ABC to issue an off-sale retail wine license
to entrepreneurs who do not have a physical store to sell wine
directly to consumers. This concept recognizes the realities of
the changing wine industry and the growing use of the Internet,
direct mail, and the telephone in purchasing products and
services. The bill establishes a $100 initial fee with a $246
annual renewal fee for this new limited off-sale Internet retail
wine license, which is consistent with the current "beer
and wine retailer" license fees. All revenue would be deposited
into the ABC Fund to cover ABC's costs.
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. Many Internet retailers have no desire to act
as wholesaler, but are either forced to do so or face
disciplinary action against their licenses.
In addition, because the license is the same one issued to
retail stores (open to the public) such as grocery stores,
mini-marts and gas stations, the license counts against
concentration limitations imposed by law, thus preventing other
businesses that do wish to operate a retail store from obtaining
a license. AB 623 creates a new license to alleviate the
AB 623
Page 3
problem for those that only want to sell directly to consumers
while enhancing the marketing of California produced wine.
In support : According to the Family Winemakers of California
(FWC), "currently, many custom crush producers operate under a
Type 17/20 combo license that allows them to sell wine directly
to consumers by taking orders only through mail, telephone or
the Internet. Holding a Type 17 wholesalers license requires a
good faith effort to sell to a retailer every 45 days. However,
many wine Internet retailers have no desire to act as
wholesalers, but are either forced to do so or face disciplinary
action against their licenses." This bill will be effective in
codifying current practices in existing law into one
well-defined license under the ABC Act.
REGISTERED SUPPORT / OPPOSITION :
Support
Chambers of Commerce Alliance of Ventura and Santa Barbara
Counties
Family Winemakers of California
Opposition
None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531