BILL ANALYSIS                                                                                                                                                                                                    Ó






                                                       Bill No:  AB  
          1424
          
                 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
                       Senator Roderick D. Wright, Chair
                           2013-2014 Regular Session
                                 Staff Analysis

          AB 1424  Author:  Committee on Governmental Organization
          As Introduced:  March 21, 2013
          Hearing Date:  June 11, 2013
          Consultant:  Art Terzakis

                                     SUBJECT  
                              Alcoholic Beverages

                                   DESCRIPTION
           
          AB 1424 permits 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.

                                   EXISTING LAW

           Existing law establishes the Department of 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 for this purpose. 

          Existing law permits a winegrower, beer manufacturer, or a  
          beer and wine wholesaler to instruct licensees and their  
          employees on the subject of wine or beer, including, but  
          not limited to, the history, nature, values, and  
          characteristics of those beverages, as provided.

          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)  




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          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, known as the "tied-house" law, separates the  
          alcoholic beverage industry into three component parts of  
          manufacturer, wholesaler, and retailer.  The original  
          policy rationale for this body of law was to prohibit the  
          vertical integration of the alcohol industry and to protect  
          the public from predatory marketing practices.  Generally,  
          other than exemptions 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.
           
                                   BACKGROUND
           
           Purpose of AB 1424:   According to the author's office,  
          craft brewers are producing award-winning beers that are  
          recognized and purchased in national and international  
          markets.  These brewers have also installed tasting rooms  
          to accommodate consumers and to facilitate tourism and  
          economic growth in their respective local communities.  In  
          addition, craft breweries have taken advantage of expanded  
          opportunities for on-site beer tastings at restaurants and  
          bars.  During such tasting events, consumers usually  
          inquire as to the actual "composition" of the beers - they  




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          are also curious about specific ingredients due to various  
          gastronomic interests or food allergies.  The author's  
          office claims that existing law does not explicitly permit  
          a response to questions relating to "composition" of the  
          beer.  This measure is simply intended to affirmatively  
          provide that authority.

                            PRIOR/RELATED LEGISLATION
           
           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.

           AB 2293 (De Leon), Chapter 638, Statutes of 2008.  Added a  
          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 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.  

           SUPPORT:   None on file as of June 7, 2013.
           
          OPPOSE:   None on file as of June 7, 2013.
           
          FISCAL COMMITTEE:   No.
                                        
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