BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 933
                                                                  Page  1

          Date of Hearing:   May 24, 2013

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                    AB 933 (Skinner) - As Amended:  May 15, 2013 

          Policy Committee:                              Governmental  
          Organization Vote:                            17 - 0 

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              No

           SUMMARY  

          This bill allows a licensed distilled spirits or brandy  
          manufacturer to charge consumers for tastings on its licensed  
          premises.  Specifically, this bill:  

          1)Authorizes a licensed distilled spirits or brandy manufacturer  
            to charge consumers for tastings on its licensed premises, and  
            would impose additional conditions on the provision of  
            tastings by the licensee on the licensed premises. 

          2)Limits tastings of distilled spirits to one-quarter ounce per  
            taste and to a total of four tastings per person, per day. 

          3)Provides that distilled spirits tastings may be conducted by  
            the licensee off the licensee's premises only for an event  
            sponsored by a nonprofit organization. 

          4)Requires the sponsoring nonprofit organization obtain a permit  
            from Department of Alcoholic Beverage Control (ABC).

          5)Permits a distilled spirits manufacturer, for tastings  
            conducted at a licensee's premises, to display or provide to  
            individuals a listing of the names, addresses, telephone  
            numbers, e-mail addresses, or Internet Web site addresses, of  
            two or more unaffiliated off-sale retailers selling their  
            products.

           FISCAL EFFECT  

          Negligible non-reimbursable costs for prosecution and/or  
          incarceration, offset by fine revenue, for misdemeanor  








                                                                  AB 933
                                                                  Page  2

          violations of these provisions of the ABC Act.

           COMMENTS  

           1)Purpose  . This bill provides a tied house exemption for  
            distilled spirits and brandy manufacturers by allowing them to  
            charge consumers for tastings at their licensed facility. The  
            author notes that currently, distilleries may provide their  
            customers complementary tastings of their products, but may  
            not charge for tastings.  In order to educate consumers about  
            their products, distilleries must hire staff.  The ability to  
            charge for tastings will allow distilleries to provide better  
            customer service to market their product while remaining  
            financially sustainable. The author points out that the  
            ability to charge for tastings is also aligned with what the  
            wine and beer industry are allowed to do under the ABC Act. 

           2)Tied house laws  , developed after prohibition, sought to break  
            up and separate the liquor industry by categorizing and  
            regulating each aspect of the business. It is essentially  
            divided into manufacturing, wholesaling, and retailing. Each  
            category is independent of the other with specific laws  
            ensuring that the relationship between manufacturers,  
            distributors and retailers remains distinct. The original  
            policy rationale for this body of law was to prohibit the  
            vertical integration of the alcohol industry and to protect  
            the public from predatory marketing practices. Generally,  
            other than exemptions granted by the Legislature, the holder  
            of one type of license is not permitted to do business as  
            another type of licensee within the three-tier system. 

            The current tied house laws are specific about who can sell  
            alcoholic beverage products to whom. Generally, manufacturers  
            must sell their products through wholesalers so that there is  
            no direct contact between the manufacturer and the retailer or  
            the consumer.

           Analysis Prepared by  :    Julie Salley-Gray / APPR. / (916)  
          319-2081