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