BILL ANALYSIS Ó
Bill No: AB
623
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2011-2012 Regular Session
Staff Analysis
AB 623 Author: Williams
As Amended: April 6, 2011
Hearing Date: June 14, 2011
Consultant: Art Terzakis
SUBJECT
Alcoholic Beverage Licensees: limited off-sale retail wine
license
DESCRIPTION
AB 623 creates a new limited off-sale retail license
category in the Alcoholic Beverage Control (ABC) Act that
permits licensees to sell wine to consumers via direct
mail, telephone, or the Internet. Specifically, this
measure:
1. Grants the Department of ABC the authority to issue
a limited off-sale retail wine license that permits
the licensee to sell wine provided all the following
conditions are met: (a) sales are restricted to those
solicited and accepted by direct mail, the telephone,
or the Internet; (b) sales are not conducted from a
retail premises open to the public; (c) the licensee
takes possession of and title to all wine sold by the
licensee; and, (d) all wine sold by the licensee is
delivered to the purchaser from the licensee's
licensed premises or from a licensed public warehouse.
2. Stipulates that the sale of wine shall only be to
consumers and not for resale in packages or quantities
of 52 gallons or less per sale, for consumption off
the premise where sold.
3. Requires the licensee to comply with specified
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notice and posting requirements of the ABC Act and
also exempts the licensee from certain notice
requirements of the Act.
4. Provides that the Department of ABC may impose
reasonable conditions upon the licensee as may be
needed in the interest of public health, safety, and
welfare.
5. Requires the license applicant to pay an initial
fee and an annual renewal fee that is equivalent to
the fee paid by off-sale beer and wine licensees, $100
and $246 respectively.
6. Additionally, makes several corresponding revisions
to the ABC Act resulting from this new license
category pertaining to: rights of purchaser to return
wine removed from the State (Section 23661.7 of the B
& P Code), assisting nonprofits in conducting wine
tasting (Section 24045.18 of the B & P Code),
instructional tasting events (Section 25503.56 of the
B & P Code), and sales or gifts to nonprofits (Section
25503.9 of the B & P Code).
EXISTING LAW
Existing law establishes the Department of ABC and grants
it the exclusive authority to administer the provisions of
the ABC Act in accordance with laws enacted by the
Legislature.
Existing law provides for various annual fees for the
issuance of alcoholic beverage licenses that vary depending
upon the type of license issued.
Existing law defines an "on-sale" license as authorizing
the sale of all types of alcoholic beverages: namely, beer,
wine and distilled spirits, for consumption on the premises
(such as at a restaurant or bar). An "off-sale" license
authorizes the sale of all types of alcoholic beverages for
consumption off the premises in original, sealed
containers.
Existing law provides that a violation of the ABC Act is a
misdemeanor, unless otherwise specified.
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BACKGROUND
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. AB 623
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). This
was in response to an emerging wine business on the
Internet that occurred approximately 10 years ago and
paralleled the continued growth in California's wine
industry. It created another sales channel for California
wine and the state's winegrape growers. 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 wholesalers,
but are either forced to do so or face disciplinary action
against their licenses. In addition, because the retail
license issued is the same license issued to retail stores
open to the public such as grocery stores, mini-marts and
gas stations, the license counts against the license
concentration limitations imposed by law, thus preventing
other businesses that do wish to operate a retail store
from obtaining a license. By creating a new license
category, this measure would alleviate the problem for
those that only want to sell directly to consumers while
enhancing the marketing of California produced wine.
Writing in support of this measure the Family Winemakers of
California (FWC) states, "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
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wholesalers, but are either forced to do so or face
disciplinary action against their licenses if sales are not
made." FWC emphasizes that relief from the wholesaler
requirement will encourage the transition from the Type
17/20 combo to the new license and revenue loss from
non-renewal of the wholesaler license will be mitigated by
revenue generated from new licensees.
PRIOR/RELATED LEGISLATION
AB 323 (Evans) Chapter 131, Statutes of 2007. Allowed a
licensed beer and wine wholesaler (Type 17) that also holds
an off-sale beer and wine retail license (Type 20) and only
sells wine, to assist a nonprofit organization holding a
temporary wine license (special daily license) in
conducting a winetasting.
SB 1923 (M. Thompson) Chapter 900, Statutes of 1996. Among
other things, permitted the application for and the
issuance of a retail off-sale beer and wine license to a
licensed beer and wine wholesaler, even though the premises
will be located in an area having an undue concentration of
off-sale beer and wine licenses, if certain conditions are
met.
AB 3144 (Floyd) Chapter 284, Statutes of 1988. Among other
things, permitted a wholesaler's beer and wine license if
restricted to the sale of wine to be renewed for the holder
of both an off-sale beer and wine license and a beer and
wine wholesaler's license, as specified.
SUPPORT: As of June 10, 2011:
Family Winemakers of California
Chambers of Commerce Alliance (Ventura and Santa Barbara
Counties)
OPPOSE: None on file as of June 10, 2011.
FISCAL COMMITTEE: Senate Appropriations Committee
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