BILL ANALYSIS Ó
AB 623
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Date of Hearing: April 13, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 623 (Williams) - As Amended: April 6, 2011
Policy Committee: Governmental
Organization Vote: 14 - 0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill creates a new limited off-sale retail license category
that allows licensees 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)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, $100 and $246 respectively.
FISCAL EFFECT
There are currently 1,500 licensees who hold combined beer and
wine wholesaler/off-sale beer and wine licenses that are
currently required in order to conduct Internet sales in the
state. If one-third of these licensees shift to the new license
rather than maintaining two licenses, the loss in revenue for
the Department of Alcoholic Beverage Control (ABC) could reach
$150,000 (ABC fund). However, that loss could be partially
offset by new licensees who are taking advantage of the
simplified licensing structure to establish Internet and
mail-order wine businesses. Every 100 new licenses will bring in
an additional $25,000 in revenue (ABC fund).
COMMENTS
1)Purpose . This measure authorizes ABC to issue an off-sale
retail wine license that would allow entrepreneurs who do not
AB 623
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have a physical store to sell directly to consumers.
According to the author, 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.
2)Current Licensing Requirements . Under current law, a licensee
who wishes to sell wine directly to retail customers through
the mail, the Internet, or telephone sales and does not want
to maintain a store-front must obtain two separate ABC
licenses: a beer and wine wholesaler license (Type 17) and an
off-sale beer and wine license (Type 20). In addition, any
licensee who obtains a wholesaler license must in good faith
operate as a wholesaler. This means that Internet wine
retailers who have no interest in acting as wholesalers must
do so or face disciplinary action from the ABC.
3)ABC Staffing . There are approximately 82,000 permanently
licensed establishments in California, with an average of
12,000 applications for license transfers and new businesses
made each year. On average, an additional 33,000 temporary
"special event" licenses are issued to non-profit and
charitable organizations for their events annually. Although
the majority of these businesses/venues are run in an orderly
fashion, some present significant public safety problems.
As of March 2011, ABC is authorized 142 sworn investigators to
conduct its enforcement operations to police the activities at
these 115,000 licensed venues. Currently, there are 45 vacant
investigator positions which have not been filled due to
several factors, including hiring freeze restrictions in place
since July 2010. If ABC were able to maintain a zero percent
vacancy rate, each investigator would be responsible for
approximately 810 licensed venues.
4)Related Legislation . This bill is identical to language
included in AB 1896 (Jeffries) in 2010. While that bill was
ultimately chaptered, this language was removed while the bill
was on suspense in this committee.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081
AB 623
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