BILL ANALYSIS Ó SB 1393 Page 1 Date of Hearing: June 20, 2012 ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION Isadore Hall, Chair SB 1393 (Negrete McLeod) - As Introduced: February 24, 2012 SENATE VOTE : 39-0 SUBJECT : Alcoholic beverage control: licensees: returns. SUMMARY : Makes changes to an existing provision of the Alcoholic Beverage Control Act (Act) that allows a manufacturer or wholesaler of beer to accept the return of recalled beer for health or safety issues and exchange the beer or credit the retailer. Specifically, this bill : 1) Permits the return of recalled beer that is "considered" by a manufacturer, importer, or governmental entity to present health or safety issues if distributed, offered for sale or sold in the state. 2) Allows the seller of beer to exchange with the manufacturer or importer the returned beer and the seller of beer's inventory that was recalled or considered to present health or safety issue for identical product provided safe inventory is available. If safe product is unavailable then the manufacturer or importer must provide the seller of beer a refund or a credit memorandum. 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. This involves licensing individuals and businesses associated with the manufacture, importation and sale of alcoholic beverages in this state and the collection of license fees or occupation taxes for this purpose. 2) Separates the alcoholic beverage industry into three component parts, or tiers, of manufacturer (including breweries, wineries and distilleries), wholesaler, and retailer (both on-sale and off-sale). 3) Permits the return of beer for errors in delivery, health SB 1393 Page 2 and safety recalls and the identical exchange of out-of-code products. 4) Authorizes a wholesaler or manufacturer of beer to accept the return of quantities of discontinued or seasonal brands of beer from a retail licensee, provided that the returned beer is exchanged for a quantity of beer of a brand produced or sold by the same manufacturer with a value not greater than the original sales price to the retail licensee of the returned beer. FISCAL EFFECT : Unknown. COMMENTS : Purpose of the bill : According to the author's office, this measure is intended to allow a retailer to return beer that has been recalled or declared to pose a health and safety threat to the public by the manufacturer, importer, or governmental entity, for a full exchange, refund or credit memorandum. Background : In April 2008, Boston Beer Company voluntarily recalled select 12 oz. glass bottles of Sam Adams beer after their Cincinnati brewery detected defects in some of the bottles, which might cause small bits of glass to break off and possibly fall into the bottle. Wholesalers were asked to pick up the Sam Adams product to inspect code dates, packaging, and pull the potentially defective bottles off retail shelves. In 2008, AB 3071 (Assembly G.O. Committee) was chaptered which authorized alcohol suppliers to pick up beer that is recalled for health or safety issues at any time from a retailer. SB 1393 expands upon this privilege by not only allowing alcohol suppliers to pick up "recalled beer" but product which is "considered" by a manufacturer, importer, or governmental entity to present health or safety issues. Related legislation : SB 487 (Negrete McLeod) 2011-12 Session. Would add a new provision to the Act that permits the return of unsold and unopened beer from an organization that obtained a temporary license. (Pending in Assembly G.O. Committee) Prior legislation : SB 192 (Negrete McLeod) 2009-10 Session. Identical to SB 487 of 2011. (Amended in the Assembly and held in Assembly Rules Committee. AB 3071 (Assembly G.O. Committee) Chapter 508, Statutes of 2008. SB 1393 Page 3 Among other things, authorized beer that is recalled for health or safety issues to be accepted for return at any time from a retailer and be picked up by the seller of beer. Also, permitted the seller of beer to exchange the returned beer for identical product, issue a deferred exchange memorandum showing the beer was picked-up and is to be replaced when inventory is available, or issue a credit to the retailer for the returned beer. AB 3065 (Assembly G.O. Committee) Chapter 910, Statutes of 2006. Among other things, extended the time frame (from six weeks to three months) in which a beer manufacturer or beer wholesaler is authorized to provide assistance to retailers whose equipment, fixtures, or supplies were lost or damaged as a result of a natural disaster and whose premises are located in an area proclaimed to be in a state of disaster by the Governor. REGISTERED SUPPORT / OPPOSITION : Support California Beer & Beverage Distributors Opposition None on file Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531