BILL ANALYSIS Ó AB 779 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 779 (Bocanegra) As Amended June 11, 2013 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |72-0 |(May 24, 2013) |SENATE: |38-0 |(September 3, | | | | | | |2013) | ----------------------------------------------------------------- Original Committee Reference: G.O. SUMMARY : Adds a new provision to the Alcoholic Beverage Control Act (ABC Act) that grants beer manufacturers producing more than 60,000 barrels of beer per year the privilege of also manufacturing "cider or perry" at their licensed premises and to sell the product to any licensee authorized to sell wine. The Senate amendments : 1) Make technical changes to the bill. 2) Add coauthors. EXISTING LAW: 1)Establishes the Department of Alcoholic Beverage Control (ABC) and grants it exclusive authority to administer the provisions of the ABC 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)Specifies that a licensed beer manufacturer may, at the licensed premises of production, sell to consumers for consumption off the premises beer which is produced and bottled by, or produced and packaged for that manufacturer. 3)Provides that a licensed beer manufacturer may also sell beer to any person holding a license authorizing the sale of beer and may sell beer to consumers for consumption on the manufacturer's licensed premises or on premises owned by the manufacturer which are contiguous to the licensed premises and which are operated by and for the manufacturer. AB 779 Page 2 4)Provides that a licensed beer manufacturers may also sell beer and wine, regardless of source, to consumers for consumption at a bona fide public eating place on the manufacturer's licensed premises or at a bona fide public eating place on premises owned by the manufacturer which are contiguous to the licensed premises and which are operated by and for the manufacturer. 5)Separates, under the law known as the "tied-house" law, 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). AS PASSED BY THE ASSEMBLY , authorized a licensed beer manufacturer that produces more than 60,000 barrels of beer per year to manufacture cider or perry, as defined, at the licensed premises of production and to sell cider or perry to any licensee authorized to sell wine, as described. FISCAL EFFECT : According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs. COMMENTS : This bill, as amended in the Senate is consistent with Assembly actions. Purpose of the bill : According to the author's office, cider is the nation's fastest-growing beverage category yet it makes up only a very small portion (less than 1%) of total U.S. alcoholic beverage sales and thus has the potential for greater growth. The author's office references the fact that existing ABC law establishes a number of licensure categories for alcoholic beverage manufacturers. For example, breweries must possess a Type 01 (Beer Manufacturer) license for the production of beer while wine producers must possess a Type 02 license. In some cases, a beer manufacturer may have the capacity, technology and workforce to produce more than one type of alcoholic beverage (e.g., beer and cider) yet the law limits that licensed manufacturer to only one type of alcoholic beverage per licensed manufacturing site. The author's office states that this bill is intended to simplify the licensure process for alcoholic beverage AB 779 Page 3 manufacturers who can produce more than one beverage type by allowing the holder of a Type 01 license to produce not only beer but also cider and perry. The author's office believes that the growth of the cider market in California will occur at bars and restaurants in light of the fact that they have more open taps for various craft beers and also because they have shown a willingness to expand their alcoholic beverage offerings. Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531 FN: 0001702