BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 2004
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          CONCURRENCE IN SENATE AMENDMENTS
          AB 2004 (Chesbro)
          As Amended  August 13, 2014
          Majority vote
           
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          |ASSEMBLY:  |     |(April 24,      |SENATE: |36-0 |(August 18,    |
          |           |     |2014)           |        |     |2014)          |
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                     (vote not relevant)

          Original Committee Reference:    G.O.  

           SUMMARY  :  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 beers and wines, regardless of  
          source, to guests during private events held on the licensed  
          beer manufacturer's premises.  

           The Senate amendments  delete the Assembly version of the bill,  
          and instead: 

          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 beers and wines, 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.

          2)Authorizes a licensed beer manufacturer to apply to ABC for a  
            certified farmers' market beer sales permit that grants the  








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            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'  
            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.

          3)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.

          4)Establishes a $50 permit which is subject to adjustment  
            pursuant to the ABC Act.

           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:   








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            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  
            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  








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            county in which a market operates.

           AS PASSED BY THE ASSEMBLY  , this bill required ABC to include in  
          its annual report to the Legislature the number of active field  
          agents employed by it and the number and type of enforcement  
          activities conducted by it and by local law enforcement agencies  
          in conjunction with ABC by license type and by region or county.

           FISCAL EFFECT  :  According to the Senate Appropriations  
          Committee, pursuant to Senate Rule 28.8, negligible state costs.

           COMMENTS  :  This bill was substantially amended in the Senate and  
          the Assembly-approved provisions of this bill were deleted.   
          This bill is inconsistent with Assembly actions.

          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 United States 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.

          Purpose of the bill:  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.  









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          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."


           Analysis Prepared by  :    Eric Johnson / G.O. / (916) 319-2531  
          FN: 0004955