BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 933| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 933 Author: Skinner (D) and Hall (D) Amended: 6/19/13 in Senate Vote: 21 SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 10-0, 6/25/13 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: tastings 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 CONTINUED AB 933 Page 2 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.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 CONTINUED AB 933 Page 3 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. CONTINUED AB 933 Page 4 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. 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. 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 above. 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 CONTINUED AB 933 Page 5 techniques. 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 tastings." According to the sponsor, California currently has approximately CONTINUED AB 933 Page 6 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 **** END **** CONTINUED