BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 2004| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 2004 Author: Chesbro (D) Amended: 8/6/14 in Senate Vote: 21 SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 10-0, 6/24/14 AYES: Correa, Berryhill, Cannella, De León, Galgiani, Hernandez, Lieu, Padilla, Torres, Vidak SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 ASSEMBLY FLOOR : 75-0, 4/24/14 (Consent) - See last page for vote SUBJECT : Alcoholic beverage sales: beer manufacturers SOURCE : California Craft Brewers Association DIGEST : This bill authorizes a licensed beer manufacturer to apply to the Department of Alcoholic Beverage Control (ABC) for a certified farmers market beer sales permit which allows the licensee to sell packaged beer at a farmers' market, including any specified area, under certain conditions; and expands a licensed beer manufacturer's privileges under the Alcoholic Beverage Control Act (ABC Act) by authorizing a beer manufacturer to sell or serve all beer, wines, and brandies, regardless of source, to guests during private events held on the licensed beer manufacturer's premises. Senate Floor Amendments of 8/6/14 clarify that the licensee's CONTINUED AB 2004 Page 2 family member must be 21 years of age if they're engaged in selling beer at a certified farmers market. ANALYSIS : Existing law: 1.Establishes ABC and grants it exclusive authority to administer the provisions of the ABC Act in accordance with laws enacted by the Legislature. 2.Authorizes a licensed beer manufacturer, at the licensed premises of production, to sell to consumers for consumption off the premises beer that is produced and bottled by, or produced and packaged for, that manufacturer. 3.Grants licensed beer manufacturers the following privileges: (a) selling beer to any person holding a license authorizing the sale of beer; (b) selling beer to consumers for consumption on the manufacturer's licensed premises or on premises owned by the manufacturer which are contiguous to the licensed premises and which are operated by and for the manufacturer; and (c) selling beer and wine, regardless of source, to consumers for consumption at a bona fide public eating place on the manufacturer's licensed premises or at a bona fide public eating place on premises owned by the manufacturer which are contiguous to the licensed premises and which are operated by and for the manufacturer. 4.Provides that licensed beer manufacturers and holders of out-of-state beer manufacturer's certificates may be issued and may hold retail package off-sale beer and wine licenses. Stipulates that alcoholic beverages produced or sold at or from the off-sale premises which are not produced and bottled by, or produced and packaged for, the beer manufacturer must be purchased by the beer manufacturer only from a licensed wholesaler. 5.Authorizes ABC to issue special temporary licenses and permits to various entities for limited purposes including a certified farmers' market sales permit that authorizes a licensee under a winegrower's license, a member of the licensee's family who is 21 years of age or older, or an employee of the licensee to sell wine produced and bottled by the winegrower at certified CONTINUED AB 2004 Page 3 farmers' market locations. The farmers' market sales permit may be issued for up to 12 months but shall not be valid for more than one day a week at any single specified farmers' market location. Allows a winegrower to hold more than one certified farmers' market sales permit and requires ABC to notify local agencies and enforcement entities of the permits. Prohibits the licensed winegrower from selling more than 5,000 gallons of wine annually pursuant to all certified farmers' markets sales permits held by any single winegrower. 6.Provides for certified farmers' markets which are operated in accordance with regulations established in the Administrative Code pertaining to direct marketing and are governed by law under the Department of Food and Agriculture (CDFA). These rules are enforced by county agriculture commissioners in the counties in which the market operates. The markets also fall under the jurisdiction of the health departments in each county in which a market operates. This bill: 1.Authorizes a beer manufacturer to have upon the licensed premises, or on premises owned by the manufacturer that are contiguous to the licensed premises and are operated by and for the manufacturer all beer, wines, and brandies, regardless of source, for sale or service only to guests during private events not open to the general public. In addition, imposes the following requirements on the beer manufacturer: A. The alcoholic beverages sold at the premises that are not produced and bottled by, or produced and packaged for, the beer manufacturer must be purchased by the beer manufacturer only from a licensed wholesaler. B. All alcoholic beverages sold or served must be produced by a licensee authorized to manufacture the product. 1.Authorizes a licensed beer manufacturer to apply to ABC for a certified farmers' market beer sales permit that grants the beer manufacturer the privilege of selling beer, that has been produced by the beer manufacturer, at a certified farmers' market, including any permitted community event area adjacent to, and operated in conjunction with, a certified farmers' CONTINUED AB 2004 Page 4 market, as specified. Also, imposes the following conditions on the beer manufacturer: A. Subjects the permit to the respective discretion and managerial control of a certified farmers' market or community event operator and existing regulations governed by law under CDFA. B. Issues the permit for up to 12 months but validates it for no more than one day a week at any single specified farmers' market or community event location. Allows a beer manufacturer to hold more than one permit. C. Prohibits the licensed beer manufacturer from selling more than 5,000 gallons of beer annually pursuant to all certified farmers' markets permits held by any single beer manufacturer. D. Requires the licensed beer manufacturer to maintain records of annual beer sales made pursuant to all farmers' market beer sales permits issued. 1.Requires ABC to notify the local entity and applicable law enforcement agency where the certified farmers' market or community event is to be held of the issuance of the permit. 2.Establishes a $50 permit which is subject to adjustment pursuant to the ABC Act. Background According to industry sources, California currently has more craft breweries (approximately 440) than any other state in the country. In fact, California has more than twice as many craft breweries as Colorado - the state with the next highest number. An average of one in every five craft beers produced in the U.S. comes from California. In 2012, the California craft brewery industry had an annual impact of $4.7 billion on the state's economy and supported well over 45,000 jobs. Additionally, the state's craft brewery industry generated over $850 million in federal, state, and local revenues in 2012. Comments CONTINUED AB 2004 Page 5 According to the author's office, this bill allows beer manufacturers to sell beer and wine regardless of the source at private events such as weddings as long as the beer and wine is purchased through a distributor. This privilege of selling wine and beer from other brewers at private events is the same privilege that currently is enjoyed by wineries. As the popularity and number of craft breweries grows, the demand for private events, such as weddings, at these venues is becoming much more prevalent. This bill provides craft brewers parity with the privileges currently enjoyed by the wine industry. Additionally, this bill allows the sale of packaged beer at certified farmers markets including any community event adjacent to and operated in conjunction with the farmers market. The beer manufacturer must be located within the county or an adjacent county to the farmers market. The beer must be for off premises consumption and does not permit tasting or sampling the product prior to purchase. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes SUPPORT : (Verified 7/31/14) California Craft Brewers Association (source) ARGUMENTS IN SUPPORT : The California Craft Brewers Association states that certified farmers' markets require products sold within their event boundaries to be 100% grown and produced on the property owned by the farmer or manufacturer. Products that cannot meet this criterion must be sold in an area adjacent to the farmers' market called a 'community event' area. While most craft brewers cannot meet the certified farmers' market criteria there may be the rare instance where one does in fact grow all the ingredients (i.e., grain and hops) on their own property. As such, this bill reflects the necessary authority under both circumstances." ASSEMBLY FLOOR : 7 5-0, 4/24/14 AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom, Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley, Dababneh, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, CONTINUED AB 2004 Page 6 Gorell, Grove, Hagman, Hall, Roger Hernández, Holden, Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein, Medina, Melendez, Mullin, Muratsuchi, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, John A. Pérez NO VOTE RECORDED: Gray, Harkey, Mansoor, Nazarian, Vacancy MW:nl 8/6/14 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED