BILL ANALYSIS Ó
Bill No: AB
933
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2013-2014 Regular Session
Staff Analysis
AB 933 Author: Skinner
As Amended: June 19, 2013
Hearing Date: June 25, 2013
Consultant: Art Terzakis
SUBJECT
Alcoholic Beverages: Distilled Spirits Manufacturers:
tastings
DESCRIPTION
AB 933 grants licensed distilled spirits manufacturers and
licensed brandy manufacturers the privilege to conduct
consumer tastings on their licensed premises and to charge
for those tastings. Specifically, this measure:
1)Finds and declares that a tasting of distilled spirits or
brandy is a presentation of samples of alcoholic
beverages representing one or more manufacturers to a
group of consumers for the purpose of acquainting the
tasters with the characteristics of the distilled spirits
or brandy tasted.
2)Stipulates that tastings of "distilled spirits" on the
licensee's premises shall be subject to the following
conditions:
a) Tastings must not exceed of an ounce and must be
limited to no more than four tastes per individual per
day.
b) Tastings must include the products that are
authorized to be produced or bottled by or for the
licensee.
AB 933 (Skinner) continued
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c) Prohibits individuals under 21 years of age from
serving tastings.
d) Prohibits single tastings in the form of a cocktail
or mixed drink.
e) Permits the distilled spirits licensee to charge
for such tastings.
3)Adds a new Section of law to the ABC Act authorizing a
licensed "brandy" manufacturer to conduct tastings of
brandy produced or bottled by, or produced or bottled
for, the licensee, on or off the licensee's premises for
events sponsored by a nonprofit organization, as defined,
and only if persons attending the event are affiliated
with the sponsor. (This provision mirrors existing ABC
law relative to authorization granted to distilled
spirits manufacturers.)
4)Also, makes it explicit that no brandy shall be sold or
solicited for sale at the event and mandates that the
sponsoring organization obtain a permit for such an event
from the ABC. Additionally, grants brandy manufacturers
the privilege of conducting tastings on their licensed
premises and charging for those tastings subject to the
same conditions afforded distilled spirits manufacturers
as referenced in item # 2 (a-e) above.
5)Includes "boiler plate" findings and declarations
relative to the necessity of requiring a separation
between the three-tiers of the alcoholic beverage
industry in order to prevent suppliers from dominating
local markets through vertical integration and to prevent
excessive sales of alcoholic beverages produced by overly
aggressive marketing techniques.
6)Makes minor technical and code maintenance changes to
existing provisions of the ABC Act (Section 23363.1 of
the Business & Professions Code).
EXISTING LAW
The enactment of the 21st Amendment to the U.S.
Constitution in 1933 repealed the 18th Amendment and ended
the era of Prohibition. Accordingly, states were granted
the authority to establish alcoholic beverage laws and
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administrative structures to regulate the sale and
distribution of alcoholic beverages.
Existing law 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.
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:
(a) promote the state's interest in an orderly market; (b)
prohibit the vertical integration and dominance by a single
producer in the marketplace; (c) prohibit commercial
bribery and protect the public from predatory marketing
practices; and, (d) 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
another type of licensee within the "three-tier" system.
Existing law (Business and Professions Code Section
23363.1) 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
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distilled spirits shall be sold or solicited for sale in
that portion of the premises where the distilled tasting is
being conducted.
Existing law also 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: (1) no more than ounce
of distilled spirits is offered in one tasting; (2) no more
than one ounce of wine is offered in one tasting; and, (3)
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.
Additionally, existing law authorizes beer manufacturers
and wholesalers to offer beer samples (not to exceed 8
ounces per person, per day) to individuals of legal
drinking age at on-sale retail licensed premises under
specified conditions.
Furthermore, existing law permits a licensed winegrower,
manufacturer, importer, or wholesaler to provide samples of
the alcoholic beverages which are authorized to be sold by
the licensee in accordance with rules prescribed by the
ABC. A retail licensee, however, is not authorized to
provide any free samples of alcoholic beverages. Moreover,
ABC regulations provide that samples of alcoholic beverages
may only be given away to licensees or employees of
licensees who are in a position to purchase the product or
who are in need of additional information about the
product, as specified.
Existing law permits a licensed winegrower or brandy
manufacturer to be issued an off-sale general license.
Existing law also permits wineries to sell their products
to consumers on their licensed premises and directly to
licensed, on-sale and off-sale retailers (e.g., restaurants
and liquor stores). Additionally, existing law provides
for a brewpub-restaurant license, issued to a bona fide
public eating place, which authorizes the sale of beer,
wine, and distilled spirits for consumption on the premises
and the sale of beer produced by the brewpub-restaurant
licensee for consumption on the premises. The license also
authorizes the sale of beer produced by the licensed
brewpub-restaurant licensee to a licensed beer and wine
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wholesaler. The brewpub-restaurant licensee must purchase
all beer, wine, or distilled spirits for sale on the
licensed premises from a licensed wholesaler or winegrower,
except for the beer produced by the brewpub-restaurant
licensee on the licensed premises. Additionally, the law
also requires the brewpub-restaurant licensee to offer for
sale on the licensed premises other commercially available
beers available from licensed wholesalers.
Existing law defines an "on-sale" license as authorizing
the sale of all types of alcoholic beverages: namely, beer,
wine and distilled spirits, for consumption on the premises
(such as at a restaurant or bar). An "off-sale" license
authorizes the sale of all types of alcoholic beverages for
consumption off the premises in original, sealed
containers.
BACKGROUND
Purpose of AB 933: The author's office points out that
existing law permits distilleries to provide their
customers with complementary tastings of the products they
manufacture however the law precludes them from charging
for those tastings. 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). The author's office maintains that the
ability to charge for tastings is also aligned with
existing privileges afforded the wine and beer industry.
Additionally, the author's office emphasizes that 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.
The sponsor of this measure, the California Artisanal
Distillers Guild, states that California currently has
approximately 32 small business distilleries producing
common brands such as 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.
Arguments in Opposition: Opponents have expressed concern
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about the expansion of the tastings exemption in tied-house
law and the unprecedented authorization for the sale and
consumption of distilled spirits and brandy outside of a
properly licensed, on-sale establishment even if this
measure limits such consumption to a manufacturer's
licensed business location.
PRIOR/RELATED LEGISLATION
AB 1424 (Committee on Governmental Organization), 2013-14
Session. Would permit winegrowers and beer manufacturers
to describe the "composition" of their products, in
addition to other characteristics already permitted, when
engaging in tastings or instructional events for their
licensees or employees. (Pending on Senate floor)
AB 949 (Quirk), 2013-14 Session. Would authorize licensed
distilled spirits manufacturers to charge consumers for
tastings and would impose additional conditions on the
provision of tastings by the licensee, including limiting
the size and number of tastes. Also, would provide that a
distilled spirits manufacturer's license authorizes the
licensee to serve and sell food, general merchandise, and
nonalcoholic beverages for consumption on or off the
premises. (Held in Assembly Rules Committee)
SB 1068 (Hancock), 2009-10 Session. Would have added a new
provision to the ABC Act authorizing a licensed distiller
that distills fewer than 50,000 gallons of spirits annually
to self-distribute to consumers and licensed retailers
(restaurants, liquor stores). (Held in this Committee at
author's request)
AB 605 (Portantino), Chapter 230, Statutes of 2010. Among
other things, authorized 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.
SB 639 (Calderon), 2009-10 Session. Would have created a
new on-sale tasting license to allow off-sale retail
licensees to furnish tastes of alcoholic beverages to
consumers, as specified. (Died on Senate Appropriations
Suspense File)
AB 2293 (De Leon), Chapter 638, Statutes of 2008. Added a
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new provision to the ABC Act authorizing distilled spirits
manufacturers and winegrowers to provide their product
offerings directly to consumers (free of charge) during
invitation-only events on premises for which a caterer's
permit authorization has been issued.
SB 995 (Maldonado), 2007-08 Session. Would have permitted
winegrowers, distilled spirits manufacturers, distilled
spirits rectifiers general, or distilled spirits importers
general, out-of-state distilled spirits shippers, and
authorized agents of any of the above to instruct consumers
on the premises of an off-sale licensee regarding wine and
distilled spirits, respectively, as provided. Also, would
have allowed the instruction to include the furnishing of
tastings under specified conditions. (Held in this
Committee at author's request.)
AB 2613 (Plescia), 2007-08 Session. Would have authorized
winegrowers, distilled spirits manufacturers, as well as
rectifiers, importers and shippers of these beverages to
offer tastings of wine or distilled spirits at off-sale
retail licensed premises (grocery stores and liquor stores)
in a segregated area. Also, would have required
verification of age at entrance to the
segregated area and placed limits on tastings (one-quarter
ounce of spirits and one ounce of wine) and limited
tastings to three per person each day. (Held in Assembly
Appropriations Committee)
SB 1548 (Murray), Chapter 670, Statutes of 2006.
Authorized beer manufacturers and wholesalers to offer beer
samples (not to exceed 8 ounces per person, per day) to
individuals of legal drinking age at on-sale retail
licensed premises under specified conditions.
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.
SUPPORT: As of June 21, 2013:
California Artisanal Distillers Guild
California Farm Bureau Federation
OPPOSE: As of June 21, 2013:
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California Council on Alcohol Problems
FISCAL COMMITTEE: Senate Appropriations Committee
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