BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 779
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          CONCURRENCE IN SENATE AMENDMENTS
          AB 779 (Bocanegra)
          As Amended  June 11, 2013
          Majority vote
           
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          |ASSEMBLY:  |72-0 |(May 24, 2013)  |SENATE: |38-0 |(September 3,  |
          |           |     |                |        |     |2013)          |
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           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. 








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          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
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          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


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