BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 2488
                                                                  Page  1

          Date of Hearing:   April 9, 2014

                   ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
                                 Isadore Hall, Chair
                  AB 2488 (Levine) - As Amended:  February 21, 2014
           
          SUBJECT  :   Alcoholic beverages: licenses: suspension and  
          revocation.

           SUMMARY  :   Authorizes the operator of the certified farmers'  
          market to allow a licensed winegrower to conduct an  
          instructional tastings on the subject of wine, subject to  
          specified conditions.  Only "one licensed winegrower" may  
          conduct an instructional tasting during the operational hours of  
          the certified farmers' market event.  Specifically,  this bill  : 

          1)  Provides that a licensed winegrower, a member of the  
          licensee's family, or an employee of the licensee may conduct an  
          instructional wine tasting for consumers at a certified farmers'  
          market, subject to the authorization and managerial control of  
          the operator of the certified farmers' market.  

          2)  Specifies that at all times during an instructional tasting  
          event, the instructional tasting event area shall be separated  
          from the remainder of the market by a wall, rope, cable, cord,  
          chain, fence, or other permanent or temporary barrier. Only one  
          licensee may conduct an instructional tasting event during the  
          operational hours of any one certified farmers' market.

          3)  Provides that the licensee shall not permit any consumer to  
          leave the instructional tasting area with an open container of  
          wine.

          4)  States that the licensee shall not pour more than three  
          ounces of wine per person per day.

          5)  States that no premium, gift, free goods, or other thing of  
          value shall be given away by an authorized licensee or its  
          designated representative in connection with an instructional  
          tasting event conducted pursuant to this section that includes  
          tastings of wine, as specified.

           EXISTING LAW  :

          1)  Establishes the Department of Alcoholic Beverage Control  








                                                                  AB 2488
                                                                  Page  2

          (ABC) and grants it the 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 or occupation taxes for this purpose.

          2)  Existing law, known as the "tied-house" law, separates the  
          alcoholic beverage industry into three component parts, or  
          tiers, of manufacturer (including breweries, wineries and  
          distilleries), wholesaler, and retailer (both on-sale and  
          off-sale).  

          3)  Allows ABC to issue a certified farmers' market sales permit  
          that authorizes a licensee under a winegrower's license, a  
          member of the licensee's family, or an employee of the licensee  
          to sell wine produced and bottled by the winegrower at certified  
          farmers' market locations, under specified conditions.  Requires  
          ABC to notify local enforcement agencies of the permits.

          4)  Authorizes a winegrower license to sell bottled wine  
          produced by the winegrower for consumption off the premises  
          where sold and only at fairs, festivals or cultural events  
          sponsored by designated tax exempt organizations. The licensee  
          must notify the city and/or county where the event is being held  
          and obtain approval from ABC for each event.

          5)  Authorizes licensed winegrowers to sell wine directly to any  
          person holding a license authorizing the sale of wine or brandy,  
          and to consumers for consumption off the premises of the winery.

          6)  Permits a winegrower or distilled spirits manufacturer, or  
          its authorized agent, to instruct consumers at an "on-sale"  
          retail licensed premises authorized to sell its product on the  
          subject of wine or distilled spirits under the following  
          conditions: (a) The instruction of consumers may include the  
          furnishing of not more than three tastings to any individual in  
          one day; (b) A single tasting of distilled spirits may not  
          exceed one-fourth of one ounce and a single tasting of wine may  
          not exceed one ounce; and, (c) An instruction may include the  
          history, nature, values and characteristics of the product being  
          offered, and the methods of presenting and serving the product.   
           

           FISCAL EFFECT  :   Unknown.








                                                                  AB 2488
                                                                  Page  3


           COMMENTS  :   

           Purpose of the bill  :  According to the author, current law  
          permits a winegrower who grows 100% of the grapes at their  
          winery to sell the wine to adult consumers who attend a  
          certified farmers' market, as defined.  Certified Farmers'  
          Markets (CFMs) are governed by California Law, under the  
          California 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.

          Under the ABC Act, a winegrower can be issued a "Certified  
          Farmers' Market Sales Permit" (Type 79 license) which allows  
          them to sell no more than 5,000 gallons annually.  Business and  
          Professions Code Section §23103 defines a "winegrower" as any  
          individual producing "grapes, berries, or other fruit into  
          wine."  According to the California Farm Bureau Federation, more  
          than 800 certified farmers' markets are held in California each  
          year but only 17 Type 79 licenses were issued by ABC in 2013.

          According to the Wine Institute, there are so few wineries  
          selling wine at certified farmers' markets, in part, because  
          consumers are accustomed to sampling wine before purchasing a  
          $15-$25 bottle.  Currently, there are 9 states that have adopted  
          laws approving wine tasting events at certified farmers'  
          markets.  

          The author states, this bill would replicate these other states'  
          laws by permitting a Type 79 license holder to offer samples of  
          wine to interested shoppers at the markets.  AB 2488 would  
          additionally extend this privilege to cider makers and other  
          fruit winemakers. The bill mandates safeguards that licensed  
          winegrowers and cider makers must adhere to while offering  
          tastings of their product at CFMs.  They include: 1) with the  
          consent of the market manager, one winery or cider maker alone  
          would be permitted to conduct a tasting at a CFM on any given  
          day; 2) the tasting event must be corded off from the main  
          market area; and 3) the winegrower would be limited to pour no  
          more than 3 ounces of wine or cider per adult consumer.

          The author further notes, this bill will grant an important  
          market access opportunity for small wineries to build their  








                                                                  AB 2488
                                                                  Page  4

          brands and be a competitive force in the marketplace.  In  
          addition, consumers will benefit from the direct interaction  
          with growers and vintners.  

           In support  :  According to the sponsor of this bill, the Family  
          Winemakers of California, "Traditionally wine, like many  
          products, is sold through sampling.  Consumers want to  
          understand the wine, decide if they like it and decide if it's a  
          good value.  A taste beats the sales pitch every time.  AB 2488  
          provides for tastings at certified farmers' markets under  
          specific circumstances that limit tasting to one winery on any  
          one day, and limits the number of tastes to no more than three  
          total ounces.  The decision on whether to allow tasting falls to  
          the certified farmers' market operator since they know whether  
          this activity is a good fit for the specific market."  

           Related legislation  :  AB 1424 (Assembly Governmental  
          Organization Committee), 2013-2014 Legislative Session.  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.  (Senate Inactive File) 

           Prior legislation  :  AB 636 (Hall), Chapter 329, Statutes of  
          2013.  Permits, under specified conditions and until January 1,  
          2016, the appearance of a person for the purpose of providing     
             autographs at an instructional event for consumers that a  
          winegrower, California winegrower's agent, importer, or other  
          specified parties conduct, or participate in, that is held at a  
          retailer's premises featuring wines produced by or for the  
          winegrower or, imported by the wine importer.

          AB 933 (Skinner and Hall), Chapter 366, Statutes of 2013.   
          Grants licensed distilled spirits manufacturers and licensed  
          brandy manufacturers the privilege to conduct consumer tastings   
             on their licensed premises and to charge for those tastings,  
          as defined.

          AB 605 (Portantino) Chapter 230, Statutes of 2010.  Authorizes  
          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.  Permits  








                                                                  AB 2488
                                                                  Page  5

          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.  

          AB 2285 (V. Brown) Chapter 248, Statutes of 1998.  Allowed  
          on-sale retail licensees to offer limited tastings of wine or  
          distilled spirits at the licensed establishment.

          AB2520 (Thomson), Chapter 384, Statutes of 2000.  Authorized  
          licensed winegrowers to obtain certified farmers' market sales  
          permits authorizing the sale of wine at farmers' markets, as  
          specified.

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 

           California Association of Winegrape Growers
          California Farm Bureau Federation
          Family Winemakers of California
          Wine Institute

           Opposition 
           
          None on file
           

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