BILL ANALYSIS                                                                                                                                                                                                    Ó

                                                                  AB 933
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          AB 933 (Skinner and Hall)
          As Amended  May 15, 2013
          Majority vote 

          |Ayes:|Hall, Nestande, Bigelow,  |Ayes:|Gatto, Harkey, Bigelow,   |
          |     |Chesbro, Cooley, Gray,    |     |Bocanegra, Bradford, Ian  |
          |     |Hagman,                   |     |Calderon, Campos,         |
          |     |Roger Hernández, Jones,   |     |Donnelly, Eggman, Gomez,  |
          |     |Jones-Sawyer, Levine,     |     |Hall, Ammiano, Linder,    |
          |     |Medina, Perea, V. Manuel  |     |Pan, Quirk, Wagner, Weber |
          |     |Pérez, Salas, Torres,     |     |                          |
          |     |Waldron                   |     |                          |
          |     |                          |     |                          |
           SUMMARY  :  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.  
            Tastings shall only include the products that are authorized  
            to be sold by the licensee.  In addition, a person under 21  
            years of age shall not serve tastes of distilled spirits.

          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 to obtain a  
            permit from the Department of Alcoholic Beverage Control  

          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  


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            numbers, e-mail addresses, or Internet Web site addresses, of  
            two or more unaffiliated off-sale retailers selling their  
          EXISTING LAW  :

          1)Establishes ABC and grants it exclusive authority to  
            administer the provisions of the Alcoholic Beverage Control  
            Act (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)Permits a licensed distilled spirits manufacturer to conduct  
            tastings of distilled spirits produced or bottled by, or  
            produced or bottled for, the licensee, on or off the  
            licensee's premises.  Tastings conducted by the licensee off  
            the licensee's premises must be for an event sponsored by a  
            nonprofit organization, as defined, and only if persons  
            attending the event are affiliated with the sponsor.  Existing  
            law also makes it explicit that no distilled spirits shall be  
            sold or solicited for sale in that portion of the premises  
            where the distilled tasting is being conducted.   

          3)Authorizes ABC to issue to the holder of an "off-sale" retail  
            license an "instructional tasting license" for the purpose of  
            furnishing tastings of alcoholic beverages to consumers,  
            subject to certain limitations.

          4)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: a) no more than a quarter ounce of distilled spirits is  
            offered in one tasting; b) no more than one ounce of wine is  
            offered in one tasting; and, c) 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.  

          5)Authorizes beer manufacturers and wholesalers to offer beer  
            samples (not to exceed eight ounces per person, per day) to  
            individuals of legal drinking age at on-sale retail licensed  


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            premises under specified conditions.

          6)Authorizes licensed winegrowers to conduct wine tastings  
            featuring their products either on or off the winegrower's  
            premises, as provided for in rules and regulations adopted by  

          7)Permits, until January 1, 2014, a manufacturer, winegrower,  
            rectifier, or distiller, distilled spirits manufacturer's  
            agent or any authorized agent of that person to provide, free  
            of charge, entertainment, food, and distilled spirits, wine,  
            or nonalcoholic beverages to consumers over 21 years of age at  
            an invitation-only event in connection with the sale or  
            distribution of wine or distilled spirits, as specified. 

           FISCAL EFFECT  :  According to the Assembly Appropriations  
          Committee, negligible non-reimbursable costs for prosecution  
          and/or incarceration, offset by fine revenue, for misdemeanor  
          violations of these provisions of the ABC Act.

           COMMENTS  :   

           Background  :  Existing law, known as the "tied-house" law,  
          separates the alcoholic beverage industry into three component  
          parts, or tiers, of manufacturer (including breweries, wineries  
          and distilleries), wholesaler, and retailer (both on-sale and  

          Tied house refers to a practice in this country prior to  
          Prohibition and still occurring in England today where a bar or  
          public house, from whence comes the "house" of tied house, is  
          tied to the products of a particular manufacturer, either  
          because the manufacturer owns the house, or the house is  
          contractually obligated to carry only a particular  
          manufacturer's products.   

          The original policy rationale for this body of law was to:  1)  
          promote the state's interest in an orderly market; 2) prohibit  
          the vertical integration and dominance by a single producer in  
          the marketplace; 3) prohibit commercial bribery and protect the  
          public from predatory marketing practices; and, 4) discourage  
          and/or prevent the intemperate use of alcoholic beverages.   
          Generally, other than exceptions granted by the Legislature, the  
          holder of one type of license is not permitted to do business as  


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          another type of licensee within the "three-tier" system.

          Numerous exceptions to these restrictions have been enacted  
          through the years in those specific instances where the  
          Legislature determined that the public's interests were  
          protected.  Generally, the business community is interested in  
          removing unnecessary business regulations and creating  
          conditions that facilitate investment and expansion  
          opportunities for companies that have some degree of ownership  
          in multiple segments of the industry.  However, the Legislature  
          traditionally does not grant exemptions that favor the products  
          of the entity seeking the exemption, or exemptions that unfairly  
          compromise the role of the distributors. 
          Purpose of the bill  :  According to the author, tastings are a  
          traditional means of allowing responsible adult consumers to  
          sample and learn about the wide variety of alcoholic beverage  
          products available in the marketplace.  There are roughly 32  
          small business distilleries in the state; some common brands  
          produced are Hangar One Vodka and St. James Spirits. These  
          distilleries manufacture a variety of products including but not  
          limited to gin, vodka, rum and bourbon.  California distillers  
          make award-winning products using raw ingredients which are  
          primarily purchased, sourced or grown by California farmers or  

          The author points out, 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 also 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.

          According to the author's office, this measure is intended to  
          give adult consumers who enjoy distilled spirits the opportunity  
          to sample new products, in modest quantities, and in a  
          responsible environment (at the distillery).  This measure is  
          carefully crafted to give distilled spirits and brandy  
          manufacturers a marketing tool to educate current and future  
          consumers while taking into consideration California's  
          three-tier system.


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          In support  :  According to the bill's sponsor, California  
          Artisanal Distillers Guild, granting artisanal distillers the  
          ability to charge for tastings will induce growth and long-term  
          sustainability for the overall industry.  

           In opposition  :  The California Council on Alcohol Problems,  
          "Beyond the fiscal context of our general opposition to AB 933  
          -- and bills like it, CCAP members are concerned about expanding  
          the tastings exemption to Tied-House and licensure limitations,  
          and most especially allowing such tastings to be sold like an  
          on-sale premise.  This unprecedented authorization for the sell  
          and consumption of distilled spirits outside of a properly  
          licensed, on-sale establishment is deeply troubling, even if  
          this measure limits such consumption to a manufacturer's  
          business location."

           Prior legislation  :  AB 2184 (Hall), Chapter 480, Statutes of  
          2012.  Permits, until January 1, 2016, the appearance of a  
          person employed or engaged by an "authorized licensee," as  
          defined, at a promotional event held at the premises of an  
          off-sale retail licensee for the purpose of providing autographs  
          under specified conditions.

          SB 1022 (Strickland), Chapter 281, Statutes of 2010.  Expands an  
          existing tied-house exception to enable licensed distilled  
          spirits "rectifiers" to donate or sell their products to  
          specified nonprofit entities for the purpose of assisting in  
          fund-raising efforts.

          AB 605 (Portantino) Chapter 230, Statutes of 2010.   Added  
          provisions to the ABC Act authorizing the department to issue to  
          the holder of an "off-sale" retail license an "instructional  
          tasting license" for the purpose of furnishing tastings of  
          alcoholic beverages to consumers, subject to certain  

          AB 2134 (Chesbro) Chapter 149, Statutes of 2010.   Created a new  
          tied-house exception in the ABC Act that allows licensed brewers  
          to conduct and participate in events called "Beer Maker Dinners"  
          for consumers held at an on-sale retail licensed premise.    

          AB 2293 (De Leon), Chapter 638, Statutes of 2008.  Adds a new  
          provision to the ABC Act that permits a manufacturer of  


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          distilled spirits, winegrower, rectifier, or distiller, or its  
          authorized agent to provide their product, as well as  
          entertainment and food to consumers over 21 years of age during  
          invitation-only events (free of charge), as specified.  The  
          events must occur on premises for which a caterer's permit  
          authorization has been issued.  The bill sunsets on January 1,  

          SB 1548 (Murray), Chapter 670, Statutes of 2006.  Permits a beer  
          manufacturer, a licensed beer and wine importer general, or a  
          licensed beer and wine wholesaler to instruct consumers  
          regarding beer and allows for the furnishing of a tasting at a  
          retail on-sale licensee authorized to sell beer, under specified  

          AB 2285 (Valerie Brown), Chapter 248, Statutes of 1998.  Allows  
          on-sale retail licensees to offer limited tastings of wine or  
          distilled spirits at the licensed establishment.

          SB 993 (Burton) Chapter 544, Statutes of 1997.  Among other  
          things, authorized a licensed distilled spirits manufacturer to  
          conduct tastings of distilled spirits on the licensed premises  
          under specified conditions.  

          Analysis Prepared by  :    Eric Johnson / G. O. / (916) 319-2531 

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