BILL ANALYSIS Ó Bill No: AB 647 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION Senator Roderick D. Wright, Chair 2013-2014 Regular Session Staff Analysis AB 647 Author: Chesbro As Amended: June 5, 2013 Hearing Date: June 11, 2013 Consultant: Art Terzakis SUBJECT Alcoholic Beverages: beer manufacturers: containers DESCRIPTION AB 647 adds clarity to existing provisions of the Alcoholic Beverage Control (ABC) Act relative to labeling requirements for the refilling of off-sale consumer sized beer containers, known as "growlers," by beer manufacturers. Specifically, this measure: 1)Modifies the definition of "beer manufacturer" to include only those persons that have facilities and equipment for the purposes of, and are engaged in, the commercial manufacture of beer. 2)Clarifies that all beer sold in California must have a label affixed to the package or container that includes the "brand and type of beer." 3)Requires a beer manufacturer that refills any container supplied by a consumer to affix a label, as specified, on the container prior to its resale to the consumer. 4)Makes it explicit that any information concerning any beer previously packaged in the container, including, but not limited to, information regarding the manufacturer and bottler of the beer, or any associated brands or trademarks must be removed or completely obscured in a manner not readily removable by the consumer prior to resale. AB 647 (Chesbro) continued Page 2 5)Prohibits a beer manufacturer from refilling a container supplied by a consumer with a capacity of five liquid gallons or more. 6)Also, adds a new provision to the ABC Act authorizing beer manufacturers and members of brewers' guilds to share samples of beer products with one another, at no charge, during trade meetings held on the licensed premises of a beer manufacturer. EXISTING LAW The enactment of the 21st Amendment to the U.S. Constitution in 1933 repealed the 18th Amendment and ended the era of Prohibition. Accordingly, states were granted the authority to establish alcoholic beverage laws and administrative structures to regulate the sale and distribution of alcoholic beverages. The ABC Act, administered by the Department of ABC, regulates the sale and distribution of alcoholic beverages and the granting of licenses for the manufacture, distribution, and sale of alcoholic beverages within the state. Existing law (B&P Code Section 25200) specifies that all beer sold in the state must have a label affixed to its package or container with the true and correct name and address of the manufacturer of the beer and the true and correct name of the bottler of the beer if other than the manufacturer. Existing law (B&P Code Section 25203) requires every manufacturer or bottler of beer in this state or elsewhere whose beer is sold within the state to file with ABC the brand name or names under which they sell or label their beer. Existing law also provides for specified labeling requirements for containers of alcoholic beverages sold within this state, as specified. For beer, current law (B&P Code Section 25204) requires compliance with federal regulations requiring a statement of alcohol content as a percentage of alcohol by volume, as specified. Existing law (B&P Code Section 25205) requires the AB 647 (Chesbro) continued Page 3 container of any beer or alcoholic beverage, other than sake, that derives 0.5% or more of its alcoholic content by volume from flavors or other ingredients containing distilled alcohol and that is sold by a manufacturer or importer to a wholesaler or retailer within this state to bear a label or a firmly affixed sticker that includes specified information regarding its alcohol content and its status as an alcoholic beverage. Existing law (B&P Code Section 25206) prohibits any retail licensee from dispensing any draught beer if the manufacturer's proper tap sign or draught beer sign is not displayed. Existing law (B&P Code Section 23012) defines "beer manufacturer" to mean any person engaged in the manufacture of beer. Existing law (B&P Code Section 23006) defines "beer" to mean any alcoholic beverage obtained by the fermentation of any infusion or decoction of barley, malt, hops, or any other similar product, or any combination thereof in water, and includes ale, porter, brown, stout, lager beer, small beer, and strong beer, but does not include sake, known as Japanese rice wine. Beer aged in an empty wooden barrel previously used to contain wine or distilled spirits shall be defined exclusively as "beer" and shall not be considered a dilution or mixture of any other alcoholic beverage. Existing law (B&P Code Section 23386) permits a holder of a manufacturer's license to give away samples of alcoholic beverages that are authorized to be sold by the licensee under the rules prescribed by the Department of ABC. The law also permits an on-sale retail licensee of wine or distilled spirits to conduct "instructional" consumer tastings on the licensed retail premise provided the following conditions are met: (1) no more than ounce of distilled spirits is offered in one tasting; (2) no more than one ounce of wine is offered in one tasting; and, (3) no more than three tastings are offered to an individual in one day. An instruction may include the history, nature, values and characteristics of the product being offered, and the methods of presenting and serving the product. Additionally, existing law authorizes beer manufacturers AB 647 (Chesbro) continued Page 4 and wholesalers to offer beer samples (not to exceed 8 ounces per person, per day) to individuals of legal drinking age at on-sale retail licensed premises under specified conditions. 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. Federal Law: The Treasury Department's Alcohol and Tobacco Tax and Trade Bureau (TTB) is responsible for implementing and enforcing a broad range of statutory and compliance provisions and ensuring that alcohol products are created, labeled, and marketed in accordance with the Federal Alcohol Administration (FAA) Act. BACKGROUND Purpose of AB 647: According to the author's office, this measure is intended to address concerns relative to: (1) the abuse of the statutory definition of "beer manufacturer" by licensed entities that do not possess or use facilities or equipment to actually manufacture beer and (2) the uncertainty of labeling requirements for the re-filling of off-sale consumer sized beer containers, known as "growlers," by licensed beer manufacturers. The author's office notes that a brewery as "beer manufacturer" has both privileges and responsibilities that accompany their licensed status in California. What defines a "beer manufacturer" in statute is important to state regulatory agencies and law enforcement, as well as, industry and other stakeholders. A "beer manufacturer" is currently defined by Business and Professions Code Section 23012 as: "any person engaged in the manufacture of beer." The author's office states that AB 647 proposes to strengthen the current definition of "beer manufacturer" to ensure that the law is clear and not ambiguous and that the licensed privileges and responsibilities of beer manufacturers are taken seriously and not abused. Specifically, this measure would add a requirement to AB 647 (Chesbro) continued Page 5 current law that a "beer manufacturer" not just be engaged in the manufacture of beer, but that a beer manufacturer actually has the facilities and equipment for the purposes of, and is engaged in, the commercial manufacture of beer. Additionally, the author's office points out that this measure proposes to clarify under what conditions a beer manufacturer may refill consumer beer containers for off-sale purposes. The author's office notes that refilling of off-sale consumer sized beer containers, known as growlers, by beer manufacturers has become a popular way for consumers to sample beers from different breweries in an affordable way and offers an environmentally favorable method of doing so. Currently, if you buy a growler container it can only be filled with beer from the brewery that sold that growler. Consumers would like to re-use their containers from one brewery to the next but existing labeling requirements and compliance with the law have posed a barrier to refilling beer containers in California. The author's office contends that this measure provides the additional statutory guidance on the labeling which is warranted and needed. Furthermore, this measure would add language to existing law that allows licensed manufacturers to provide free samples, as specified, so that brewers can share tastes of beers with each other during trade association or guild meetings without violating their licensed privileges. What's a Growler?: Beer aficionados note the term likely dates back to the late 19th century when fresh beer was carried from the local pub to one's home by means of a small galvanized pail. It is claimed the sound that the CO2 made when it escaped from the lid as the beer sloshed around sounded like a growl. A growler is typically a glass or ceramic jug with a capacity of a gallon of beer with either a screw-on cap or a hinged porcelain gasket cap, which can provide freshness for a week or more. They are commonly sold at breweries and brewpubs as a means to sell take-out craft beer. AB 647 (Chesbro) continued Page 6 The ABC Act does not define the term "growler" but since a growler is a container used to carry beer it is subject to ABC laws that regulate beer packaging and labeling. PRIOR/RELATED LEGISLATION SB 533 (Knight) 2013-14 Session. Would add clarity to the ABC Act by modifying language pertaining to labeling and refilling requirements for returnable beer containers known as "growlers." (Pending in Assembly policy committee) AB 346 (Beall), Chapter 624, Statutes of 2008. Provided that any container of beer or alcoholic beverage, other than sake, that is approved for labeling as a malt beverage under the Federal Alcohol Administration Act (FAAA), that derives 0.5% or more of its alcoholic content by volume from flavors or other ingredients containing distilled alcohol and that is sold within this state on or after July 1, 2009, shall bear a distinctive, conspicuous, and prominently displayed label, or firmly affixed sticker, as defined. SUPPORT: As of June 7, 2013: California Craft Brewers Association OPPOSE: None on file as of June 7, 2013. FISCAL COMMITTEE: Senate Appropriations Committee **********