BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                AB 2004
                                                                Page  1

        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)


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        |COMMITTEE VOTE:  |18-0 |(August 28, 2014)   |RECOMMENDATION: |concur    |
        |(G.O.)           |     |                    |                |          |
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        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.









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           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 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.   
          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  








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          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 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  








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          jurisdiction of the health departments in each 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  :  

        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.  

        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  








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        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


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