BILL ANALYSIS                                                                                                                                                                                                    Ó


          |SENATE RULES COMMITTEE            |                        AB 933|
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                                    THIRD READING

          Bill No:  AB 933
          Author:   Skinner (D) and Hall (D)
          Amended:  6/19/13 in Senate
          Vote:     21

          AYES:  Wright, Nielsen, Berryhill, Calderon, Cannella, De León,  
            Galgiani, Hernandez, Lieu, Padilla
          NO VOTE RECORDED:  Correa

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8

           ASSEMBLY FLOOR  :  76-0, 5/30/13 - See last page for vote

           SUBJECT  :    Distilled spirits manufacturers:  licenses:   

           SOURCE  :     California Artisanal Distillers Guild

           DIGEST  :    This bill 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.  

           ANALYSIS  :    

          Existing law:

          1.Establishes the Department of Alcoholic Beverage Control (ABC)  
            and grants it exclusive authority to administer the provisions  


                                                                     AB 933

            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  

          2.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).  This is known as the "tied-house" law.

          3.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.  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.  
           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  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  
            premises under specified conditions.

          6.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  



                                                                     AB 933

            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.

          7.Permits a licensed winegrower or brandy manufacturer to be  
            issued an off-sale general license.  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).  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 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.  Requires the brewpub-restaurant licensee to offer  
            for sale on the licensed premises other commercially available  
            beers available from licensed wholesalers.  

          8.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.  

          This bill 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 bill:

          1.Makes legislative findings and declarations 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.



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          2.Stipulates that tastings of "distilled spirits" on the  
            licensee's premises shall be subject to the following  

             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.

             C.   Prohibits individuals under 21 years of age from serving  

             D.   Prohibits single tastings in the form of a cocktail or  
               mixed drink.

             E.   Permits the distilled spirits licensee to charge for  
               such tastings.

          1.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.)

          2.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 #2  

          3.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  



                                                                     AB 933


          4.Makes minor technical and code maintenance changes to existing  
            provisions of the ABC Act. 

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  Yes

           SUPPORT  :   (Verified  8/8/13)

          California Artisanal Distillers Guild (source) 
          California Farm Bureau Federation

           OPPOSITION :    (Verified  8/8/13)

          California Council on Alcohol Problems

           ARGUMENTS IN SUPPORT  :    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 bill 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 bill 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 bill's sponsor, the California Artisanal Distillers Guild,  
          writes:  "California's artisanal distillers compete at a great  
          disadvantage to distillers from almost all the other states.   
          Twenty-seven states allow distillers to sell their product  
          directly to consumers. More importantly for the purposes of this  
          bill, California is one of only four states that do not allow  
          distillers to charge for tastings.  AB 933 would help California  
          distillers to be more competitive by allowing them to charge for  

          According to the sponsor, California currently has approximately  



                                                                     AB 933

          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 :    The California Council on Alcohol  
          Problems has expressed concern 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 bill limits such consumption to a manufacturer's  
          licensed business location.

           ASSEMBLY FLOOR  :  76-0, 5/30/13
          AYES:  Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,  
            Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,  
            Buchanan, Ian Calderon, Campos, Chau, Chávez, Conway, Cooley,  
            Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Frazier, Beth  
            Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray,  
            Grove, Hagman, Hall, Harkey, Roger Hernández, Jones,  
            Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein,  
            Mansoor, Medina, Melendez, Mitchell, Morrell, Mullin, 
          Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V.  
            Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner,  
            Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk,  
            Williams, Yamada, John A. Pérez
          NO VOTE RECORDED:  Chesbro, Fox, Holden, Vacancy

          MW:nl  8/9/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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