BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 2609| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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 CONTINUED AB 2609 Page 2 (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: CONTINUED AB 2609 Page 3 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 CONTINUED AB 2609 Page 4 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 CONTINUED AB 2609 Page 5 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 CONTINUED AB 2609 Page 6 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 **** END **** CONTINUED