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
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          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
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           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