BILL ANALYSIS Ó
AB 933
Page 1
ASSEMBLY THIRD READING
AB 933 (Skinner and Hall)
As Amended May 15, 2013
Majority vote
GOVERNMENTAL ORGANIZATION 17-0 APPROPRIATIONS 17-0
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|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 | | |
| | | | |
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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
(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
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numbers, e-mail addresses, or Internet Web site addresses, of
two or more unaffiliated off-sale retailers selling their
products.
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
ABC.
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
off-sale).
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
suppliers.
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
limitations.
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,
2014.
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
conditions.
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
FN: 0000956