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) AB 1424 (Committee on Governmental Organization) continued Page 2 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 AB 1424 (Committee on Governmental Organization) continued Page 3 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. **********