BILL ANALYSIS Ó
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THIRD READING
Bill No: AB 2488
Author: Levine (D), et al.
Amended: 5/1/14 in Assembly
Vote: 27 - Urgency
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 8-0, 6/10/14
AYES: Correa, Cannella, De León, Galgiani, Hernandez, Padilla,
Torres, Vidak
NO VOTE RECORDED: Berryhill, Lieu, Vacancy
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 73-0, 5/8/14 (Consent) - See last page for vote
SUBJECT : Alcoholic beverages: CFMs sales permit
SOURCE : Family Winemakers of California
Wine Institute
DIGEST : This bill expands an existing provision of the
Alcoholic Beverage Control Act (ABC Act) which currently allows
a licensed winegrower, under specified conditions, to sell
estate grown wine at certified farmers' markets (CFMs) to also
grant the licensed winegrower the privilege of conducting
limited wine tastings for consumers at CFMs under certain
circumstances.
ANALYSIS :
Existing law:
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1. Establishes the Department of ABC (ABC) and grants it
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 for this
purpose.
2. Authorizes ABC to issue special temporary licenses and
permits to various entities for limited purposes including a
CFM 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 CFM locations. The CFM 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 CFM location.
The law also allows a winegrower to hold more than one CFM
sales permit and requires ABC to notify local agencies and
enforcement entities of the permits. Additionally, the law
prohibits the licensed winegrower from selling more than
5,000 gallons of wine annually pursuant to all CFM sales
permits held by any single winegrower.
3. Provides for CFMs which are operated in accordance with
regulations established in the California 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 CFMs operates. The CFMs also fall
under the jurisdiction of the health departments in each
county in which a CFM operates.
4. Permits a winegrower, beer manufacturer, or a beer and wine
wholesaler to instruct licensees and their employees on the
subject of wine or beer, including, but not limited to, the
history, nature, values, and characteristics of those
beverages, as provided.
5. Permits an on-sale retail licensee of wine or distilled
spirits to conduct "instructional" consumer tastings on the
licensed retail premise provided the following conditions are
met: (a) no more than one-fourth ounce of distilled spirits
is offered in one tasting; (b) no more than one ounce of wine
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is offered in one tasting; and (c) no more than three
tastings are offered to an individual in one day. An
instruction may include the history, nature, values and
characteristics of the product being offered, and the methods
of presenting and serving the product.
6. Authorizes beer manufacturers and wholesalers to offer beer
samples (not to exceed eight ounces per person, per day) to
individuals of legal drinking age at on-sale retail licensed
premises under specified conditions.
7. Permits a licensed winegrower, manufacturer, importer, or
wholesaler to provide samples of the alcoholic beverages
which are authorized to be sold by the licensee in accordance
with rules prescribed by ABC. A retail licensee, however, is
not authorized to provide any free samples of alcoholic
beverages.
Moreover, ABC regulations provide that samples of alcoholic
beverages may only be given away to licensees or employees of
licensees who are in a position to purchase the product or
who are in need of additional information about the product,
as specified.
8. Separates the alcoholic beverage industry into three
component parts of manufacturer, wholesaler, and retailer.
This is known as the "tied-house" law. The original policy
rationale for this body of law was to prohibit the vertical
integration of the alcohol industry and to protect the public
from predatory marketing practices. Generally, other than
exemptions granted by the Legislature, the holder of one type
of license is not permitted to do business as another type of
licensee within the "three-tier" system.
9. Prohibits any licensee from giving any premium, gift, or free
goods in connection with the sale or distribution of any
alcoholic beverage, except as specifically authorized. The
ABC Act provides that a violation of any of its provisions
for which another penalty or punishment is not specifically
provided is a misdemeanor.
This bill:
1. Provides that, pursuant to a CFM sales permit issued by ABC
to a licensed winegrower, the permit will also allow the
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licensee to offer an instructional tasting event subject to
the authorization and managerial control of the operator of
the CFM.
2. Allows only one licensee to conduct an instructional tasting
event during the operational hours of any one CFM and
requires the licensee to separate the tasting area from the
remainder of the market using a rope, fence, chain, cable or
other permanent or temporary barrier.
3. Stipulates that the licensee shall not pour more than three
ounces of wine per person per day and prohibits the licensee
from allowing any consumer to leave the tasting area with an
open container of wine.
4. Prohibits the licensee from providing any premium, gift,
free goods, or other things of value, except as otherwise
provided in the ABC Act, in connection with the CFM tasting
event.
5. Also, makes minor code maintenance changes.
Background
Existing law (AB 2520, Thomson, Chapter 384, Statutes of 2000)
allows wine to be sold by the bottle at CFMs. Specifically, the
law permits a licensed winegrower to sell estate grown wine (no
more than 5,000 gallons annually) to adult consumers at a CFM
provided the winegrower obtains the proper sales permit (Type 79
license) from ABC. The rationale for AB 2520 (Thomson) was that
estate grown wine would be a good fit for these CFMs since they
emphasized small scale production and paired locally grown
produce with wine for consumers and local chefs. It also gave
small producers, who have difficulty in gaining retail presence,
an opportunity to develop another sales channel. This bill
expands this existing privilege and allows licensed winegrowers
who have obtained a Type 79 license to also offer limited
tastings at CFMs under specific circumstances. The CDFA reports
787 CFMs statewide. There are presently only 17 Type 79 license
holders.
Comments
The author's office points out that very few wineries sell wine
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at CFMs, in part, because consumers are accustomed to sampling
wine before purchasing a bottle. The author's office states
that this bill will provide an important market access
opportunity for small wineries to build their brands and be a
competitive force in the marketplace. In addition, consumers
will benefit from the direct interaction with growers and
vintners.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 6/23/14)
Family Winemakers of California (co-source)
Wine Institute (co-source)
Agricultural Institute of Marin
California Association of Winegrape Growers
California Farm Bureau Federation
California Federation of Certified Farmers' Market
Heringer Estates Family Vineyards & Winery
Marin County Mart Farmers' Market
Marin County Winegrowers Association
Sonoma County Farm Bureau
OPPOSITION : (Verified 6/23/14)
Alcohol Justice
California Council on Alcohol Problems
ARGUMENTS IN SUPPORT : Proponents emphasize that "wine, like
many other products, is sold through sampling. Consumers want
to understand the wine, decide if they like it and determine if
it's a good value. The years have demonstrated that bottle
sales at farmers' markets would grow if tastings were allowed."
According to the author, "nine states have adopted laws
approving wine tasting events at CFMs. In Washington, after a
similar bill passed, the sale of the wine tripled at some of the
markets."
ARGUMENTS IN OPPOSITION : Opponents contend that CFMs are
family friendly events commonly held in unrestrained public
places (e.g., parking lots, streets, sidewalks) and that
allowing for alcoholic beverage tastings in such venues with
little or no monitoring is a recipe for increased
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alcohol-related harm. Additionally, opponents argue that "if
wineries are allowed to offer tastings and sales at farmers'
markets, the spirits, beer and microbrew industries will not be
far behind."
ASSEMBLY FLOOR : 73-0, 5/8/14
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, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Grove, Hagman, Harkey, Roger Hernández, Holden, Jones,
Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein,
Medina, Melendez, Mullin, Muratsuchi, Nazarian, Nestande,
Olsen, Pan, Patterson, Perea, Quirk, Quirk-Silva, Rendon,
Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Wagner,
Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, John A.
Pérez
NO VOTE RECORDED: Eggman, Gorell, Gray, Hall, Mansoor, V.
Manuel Pérez, Vacancy
MW:kd 6/24/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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