BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                    THIRD READING


          Bill No:  AB 2609
          Author:   Nestande (R), et al.
          Amended:  6/2/14 in Senate
          Vote:     21

           
           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:  home brewers and home  
          winemakers

           SOURCE  :     California Homebrewers Association


           DIGEST  :    This bill adds a new provision to the Alcoholic  
          Beverage Control Act (ABC Act) that allows nonprofit  
          organizations established for the purpose of promoting home  
          brewing to serve beer at fundraising events subject to specified  
          conditions.

           ANALYSIS  :    

          Existing law:

          1. Establishes the Department of Alcoholic Beverage Control  
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             (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 a person over 21 years of age to manufacture beer  
             or wine (200 gallons per calendar year if there are two or  
             more adults in the household or 100 gallons if there is only  
             one adult in the household) for personal or family use, and  
             not for sale, without the need for a license or permit.

          3. Authorizes the removal of beer or wine, manufactured for  
             personal or family use, from the premises where manufactured  
             only under the following circumstances:  (a) for use,  
             including tasting by judges, in a bona fide competition or  
             exhibition; (b) for personal or family use; and (c) when  
             donated to a nonprofit organization for sale at fundraising  
             events conducted solely by and for the benefit of the  
             nonprofit and pursuant to a license issued by ABC to the  
             nonprofit entity.  Explicitly prohibits nonprofit  
             organizations that promote home brewing or home winemaking or  
             are primarily composed of home brewers or home winemakers  
             from selling beer pursuant to this body of law. 

          4. Separates the alcoholic beverage industry into three  
             component parts of manufacturer, wholesaler, and retailer.   
             This is known as the "tied-house" law.  This is 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.

          This bill:

          1. Stipulates that a nonprofit organization established for the  
             purpose of promoting home production of beer shall be  
             eligible to serve beer at a fundraising event conducted  
             solely for the benefit of the nonprofit organization subject  
             to the following conditions:


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             A.    The beer that is served is donated by home brewers.

             B.    The nonprofit shall be issued no more than two  
                permits per calendar year by ABC for the serving of  
                beer.

             C.    The nonprofit must display a printed notice at the  
                event that home brewed beer is not a regulated product  
                subject to health and safety standards.

             D.    The event must have an educational component, as  
                specified.

             E.    Only bona fide members of the nonprofit may attend  
                the event and the nonprofit shall not solicit or sign up  
                individuals to be members on the day of the event at the  
                event premises.

             F.    If more than 50 members are expected to be in  
                attendance at the event, the nonprofit must provide ABC  
                with the number of members that have registered for the  
                event and the estimated number that will be in  
                attendance, 48 hours prior to the event.
           
          2. Modifies existing law permitting the removal of home brewed  
             beer or wine from the site of production for use, including  
             tasting by judges, in a bona fide competition or exhibition,  
             to instead, allow for such removal for use, including in a  
             bona fide competition or judging or a bona fide exhibition or  
             tasting. 

           Background
           
          According to the Senate Governmental Organization Committee,  
          this bill is intended to correct an unintended consequence of  
          enactment of AB 1425 (Chapter 463, Statutes of 2013).  Among  
          other things, AB 1425 addressed a problem which had arisen  
          regarding home winemakers and the use of their home-made wine at  
          community (nonprofit) fundraisers.  Specifically, ABC had  
          asserted that charging an admission fee to nonprofit sponsored  
          events, exhibitions or competitions was equivalent to selling  
          the tastings taking place.  ABC's conclusion resulted in the  
          cancellation of the decades old Napa Classic home winemakers'  
          festival which was the major support for the Dry Creek Volunteer  

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          Fire Department.

          AB 1425 allowed beer or wine made for personal or family use to  
          be donated to a non-profit organization for sale at a  
          fundraising event conducted solely by and for the benefit of the  
          nonprofit organization and only for consumption on the premises  
          of the fundraising event under a license issued by ABC to the  
          nonprofit.  AB 1425 also imposed various labeling requirements  
          on the donated beer or wine and stipulated that the label  
          identify its producer and state that the beer or wine is  
          homemade and not available for sale or for consumption off the  
          licensed premises.  Furthermore, AB 1425 excluded from this  
          authorization nonprofit organizations that either promote home  
          brewing or home winemaking or that are primarily composed of  
          home brewers or home winemakers. 

          The Senate Governmental Organization Committee further asserts  
          that, as currently drafted, this bill may not necessarily fix  
          the problem but could instead turn home brew events into  
          businesses and allow for an unregulated product (home brewed  
          beer) to be sold.  Additionally, several provisions of this bill  
          may be difficult if not impossible for ABC to verify and  
          enforce.  For example, this bill provides that only bona fide  
          members of the nonprofit may attend the event and the nonprofit  
          shall not solicit or sign up individuals to be members on the  
          day of the event at the event premises.  Furthermore, this bill  
          states that if more than 50 members are expected to be in  
          attendance at such an event, the nonprofit must provide ABC with  
          the number of members that have registered for the event and the  
          estimated number that will be in attendance, 48 hours prior to  
          the event.

           Comments
           
          According to the author's office, this bill is intended to  
          revise the description regarding the authorized removal of home  
          brewed beer from the home for use at a competition, judging,  
          exhibition, or tasting.  It also seeks to provide express  
          authorization for nonprofit home brew associations to host  
          annual or semi-annual events for their members to gather and  
          participate in exhibitions, judgings, tastings or competitions.   
          Additionally, this bill limits the number of permits that can be  
          issued for such events to two per each nonprofit, per calendar  
          year.   This bill also requires an educational component per  

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          event, and provides that the entity sponsoring the event must  
          display a printed notice at the event stipulating that the home  
          brewed beer is not subject to certain health and safety  
          standards pertaining to manufactured beverages.  

          The author's office points out that prior to the passage of AB  
          1425 (as referenced in Background), the California Homebrewers  
          Association (CHA) held an annual event for their members to  
          gather and share their craft.  These events featured judging,  
          tastings, educational components, and provided members the  
          opportunity to expand their knowledge about home brewed beer.   
          CHA had been issued permits by ABC to host such events.   
          Unfortunately, in light of the enactment of AB 1425, the  
          Southern California Home Brew Festival had to be cancelled this  
          year.  The author's office also notes that existing law might  
          prevent the 2015 National Homebrewers Conference, scheduled in  
          San Diego, from being held.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  Yes

           SUPPORT  :   (Verified  6/25/14)

          California Homebrewers Association (source) 
          American Homebrewers Association

           OPPOSITION  :    (Verified  6/25/14)

          Alcohol Justice

           ARGUMENTS IN SUPPORT  :    The California Homebrewers Association  
          (CHA) states that "the passage of AB 1425 of last year dealt a  
          devastating blow to our organization when the unintended  
          consequences of that law led to the cancellation of the 24th  
          year of the Southern California Homebrewers Festival."  The CHA  
          believes that passage of AB 2609 will clarify the law to allow  
          sharing between homebrew clubs as had been possible since the  
          1980s.

          The American Homebrewers Association (AHA) states that "if AB  
          2609 is not passed, the AHA may be forced to cancel the 37th  
          Annual National Homebrewers Conference planned to be held in San  
          Diego in 2015.  The National Homebrewers Conference is annually  
          the largest gathering of homebrewers in the world and is  

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          expected to draw 4000-5000 attendees in 2015, generating  
          approximately $8 million dollars for the local economy."

           ARGUMENTS IN OPPOSITION  :    Alcohol Justice argues that "AB 2609  
          will expand the availability of alcoholic products while eroding  
          the three-tier system which provides public health and safety  
          protections.  Evidence shows that increased availability of  
          alcoholic beverages is correlated with an increase in alcohol  
          related harm."  
           
           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:d:n  6/25/14   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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