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.





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          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  




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          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  




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          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  




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          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. 






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          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

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