BILL ANALYSIS Ó 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