BILL ANALYSIS Ó
AB 774
Page 1
ASSEMBLY THIRD READING
AB
774 (Levine)
As Amended April 6, 2015
Majority vote
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|Committee |Votes |Ayes |Noes |
| | | | |
| | | | |
|----------------+------+-----------------------+-----------------|
|Governmental |20-0 |Gray, Linder, | |
|Organization | |Achadjian, Alejo, | |
| | |Bigelow, Cooley, | |
| | |Cooper, Daly, Cristina | |
| | |Garcia, Eduardo | |
| | |Garcia, Gipson, Roger | |
| | |Hernández, | |
| | |Jones-Sawyer, Levine, | |
| | |Mayes, Perea, Salas, | |
| | |Steinorth, Waldron, | |
| | |Wilk | |
| | | | |
|----------------+------+-----------------------+-----------------|
|Appropriations |17-0 |Gomez, Bigelow, Bloom, | |
| | |Bonta, Calderon, | |
| | |Chang, Daly, Eggman, | |
| | |Gallagher, Eduardo | |
| | |Garcia, Holden, Jones, | |
| | |Quirk, Rendon, Wagner, | |
| | |Weber, Wood | |
| | | | |
AB 774
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| | | | |
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SUMMARY: Allows a permitted licensed beer manufacturer to conduct
instructional tastings on the subject of beer at a certified
farmers' market (CFM), under specified conditions. Specifically,
this bill:
1)Provides that a CFM beer sales permit shall also authorize an
instructional tasting event on the subject of beer at a CFM,
including any permitted community event area adjacent to, and
operated in conjunction with, a CFM, located within the county
or an adjacent county of the physical location of the licensed
beer manufacturer.
2)Provides that an instructional tasting event is subject to the
authorization and managerial control of the operator of the CFM.
The licensee, a member of the licensee's family who is 21 years
of age or older, or an employee of the licensee may conduct the
instructional tasting event.
3)States 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.
4)Provides that only one licensed beer manufacturer may conduct an
instructional tasting event during the operational hours of any
one CFM. The licensee shall not pour more than eight ounces of
beer per person per day.
5)States that the licensee shall not permit any consumer to leave
the instructional tasting area with an open container of beer.
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6)Existing law authorizes specified nonprofit corporations that
have not been issued a license authorizing the sale of wine to
receive and possess wine donated to that nonprofit corporation,
if the nonprofit corporation has submitted a license application
to sell wine with the Department of Alcoholic Beverage Control
(ABC). This bill would additionally authorize those nonprofit
corporations to receive and possess beer under the same
circumstances.
7)Existing law authorizes ABC to issue a special temporary on-sale
or off-sale wine license to a nonprofit corporation that is
exempt from payment of income taxes, subject to specified
requirements and limitations. This bill would extend this
authorization to issue a special temporary on-sale or off-sale
license to sell beer.
8)Makes clarifying changes.
EXISTING LAW:
1)Establishes ABC and grants it exclusive authority to administer
the provisions of the Alcoholic Beverage Control Act (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 licensed winegrower or a licensed beer manufacturer
to apply to ABC for a CFM sales permit, which allows, among
others, the licensee to sell wine or beer at a certified
farmers' market, under specified conditions, and requires the
licensee to pay a fee of $50 for the permit.
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3)Requires certified farmers' market sales permit issued to a
licensed winegrower, but not a licensed beer manufacturer, to
allow an instructional tasting event on the subject of wine at a
certified farmers' market, under specified conditions. Requires
ABC to notify the local entity and applicable law enforcement
agency where the CFM or community event is to be held of the
issuance of the permit.
4)Authorizes a licensed beer manufacturer to apply to ABC for a
CFM beer sales permit that allows the licensee to sell packaged
beer at a farmers' market, including any area outside the
footprint of the farmers' market, under specified conditions.
5)Authorizes specified nonprofit corporations that have not been
issued a license authorizing the sale of wine to receive and
possess wine donated to that nonprofit corporation, if the
nonprofit corporation has submitted a license application to
sell wine with ABC.
6)Authorizes ABC to issue a special temporary on-sale or off-sale
wine license to a nonprofit corporation that is exempt from
payment of income taxes, subject to specified requirements and
limitations.
7)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.
8)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
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misdemeanor.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, minor and absorbable enforcement costs to ABC. These
costs could increase if sales at CFMs especially popular and
brewers begin using farmers' markets as a primary marketing
channel.
COMMENTS:
Purpose of the bill. The author's office points out that very few
craft brewers sell beer at CFMs, in part, because consumers are
accustomed to sampling beer before making a purchase. The
author's office states that this bill will provide an important
market access opportunity for small brewers to build their brands
and be a competitive force in the marketplace. In addition,
consumers will benefit from the direct interaction with brewers.
According to the author, this bill simply allows tastings where
brewers are already selling their products at CFMs. In recent
years, craft brewing in California has experienced exponential
growth. This bill seeks to foster a relationship between local
brewers and those purchasing their products. This bill would
greatly help local brewers educate consumers and build their
brands at CFMs.
Currently, ABC allows beer manufacturers (Types 01 and 23) to
apply for a CFM beer sales permit, which has been designated as a
Type 84. The permit allows for sale of sealed beer containers to
consumers at certified farmers' markets. Permits may only be
issued to breweries for CFMs held in the county where their
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manufacturing facility is located or the adjacent county.
Unfortunately, unlike other products at the market, current law
does not permit a brewery to offer tastings.
In 2014, the Legislature overwhelmingly approved and the Governor
signed AB 2488 (Levine), Chapter 98, Statutes of 2014, which
provided wineries or cider makers the ability to offer tastings to
help educate consumers about the product prior to purchase. Since
the enactment of the bill, sale of wine has increased at CFMs.
Similar to the effect of AB 2844 on wineries, this bill would
greatly help local brewers.
In addition, under existing law, beer manufacturers can donate
beer to a non-profit to be sold at a fundraising event for
consumption on-site. However, they cannot donate beer to a
non-profit for the purposes of being auctioned for consumption
off-site. Craft brewers receive frequent requests from local and
statewide non-profits for beer donations in the form of "beer
baskets" to be sold at a fundraising auction. Craft brewers
cannot satisfy those requests without putting the non-profit and
their own license at risk.
The same non-profits can receive wine donations from wineries to
be auctioned but cannot receive beer for the same purpose. AB 774
seeks to provide some clarity and uniformity in the ABC Act for
beer donations.
Background: According to industry sources, California currently
has more craft breweries (approximately 440) than any other state
in the country. In fact, California has more than twice as many
craft breweries as Colorado - the state with the next highest
number. An average of one in every five craft beers produced in
the United States comes from California. In 2012, the California
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craft brewery industry had an annual impact of $4.7 billion on the
state's economy and supported well over 45,000 jobs.
Additionally, the state's craft brewery industry generated over
$850 million in federal, state, and local revenues in 2012.
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. According to the California Farm Bureau
Federation, more than 800 certified farmers' markets are held in
California each year. ABC issued 52-Type 79 (wine tastings at
CFMs) licenses in 2014 and so far 31 - Type 84 (sell beer at CFMs)
licenses in 2015.
CFMs require products sold within their event boundaries to be
100% grown and produced on the property owned by the farmer or
manufacturer. Products that cannot meet this criterion must be
sold in an area adjacent to the farmers' market called a
'community event' area. While most craft brewers cannot meet the
CFM criteria there may be the rare instance where one does in fact
grow all the ingredients (i.e., grain and hops) on their own
property.
Arguments in support: Proponents emphasize, "Beer, like many
other products, is sold through sampling. Consumers want to
understand the beer, decide if they like it and determine if it is
a good value. The years have demonstrated that beer sales at
farmers' markets would grow if tastings were allowed."
The California Craft Brewers Association writes this bill would
enhance the protections of the Tied-house laws by allowing local
craft brewers to provide educational tastings of their products at
farmers markets. This ability will support buy-local programs and
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help to sustain horizontal competition in the marketplace; a key
objective of tied-house laws. This measure will also allow
non-profits to receive beer donations from breweries to assist
them in their fundraising activities including auctions.
Arguments in opposition: The California Council on Alcohol
Problems writes, "We are uncomfortable with the idea of alcoholic
beverages being consumed at farmers' markets, and we don't believe
ABC has the resources to properly regulate such wine tastings
events all over the state. As is typical with these statutorily
created, expanded venues for alcohol marketing and distribution,
what begins as a modest new avenue to market alcohol for one
segment of the industry expands into other segments, while the
modest limitations originally included are slowly eroded over
time. Such is the case with wine tastings events at farmers'
markets - authorized in statute just last year - with this
subsequent legislation to now include beer consumption."
Prior legislation: AB 2488, expanded an existing provision of the
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.
AB 2004 (Chesbro), Chapter 806, Statutes of 2014. Authorized a
licensed beer manufacturer to apply to ABC for a certified
farmers' market beer sales permit, which allows the licensee to
sell packaged beer at a farmers' market, including any specified
area, under certain conditions. The bill also allowed a beer
manufacturer to sell beer and wine on their own premises during
private events.
AB 949 (Quirk) of 2014. Would have authorized licensed distilled
spirits manufacturers to charge consumers for tastings and would
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have imposed additional conditions on the provision of tastings by
the licensee, including limiting the size and number of tastes.
Also, would have provided that a distilled spirits manufacturer's
license authorizes the licensee to serve and sell food, general
merchandise, and nonalcoholic beverages for consumption on or off
the premises. (Held in Assembly Rules Committee)
AB 520 (Chesbro), Chapter 777, Statutes of 2014. Would expand the
types of licensees that may provide instructional tastings events
regarding wine or distilled spirits at on-sale retail licensed
premises and would place additional restrictions on the
instructional tastings events, including restrictions on the types
of advertising that may be conducted prior to the instructional
tasting event.
AB 933 (Skinner), Chapter 366, Statutes of 2013. Granted licensed
distilled spirits manufacturers and licensed brandy manufacturers
the privilege to conduct consumer tastings on their licensed
premises and to charge for those tastings.
AB 636 (Hall), Chapter 329, Statutes of 2013. Authorized, under
specified conditions and until January 1, 2016, the appearance of
a person for the purpose of providing AB 2488 continued 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 605 (Portantino), Chapter 230, Statutes of 2010. Among other
things, authorized 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.
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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 2520 (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.
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.
SB 993 (Burton), Chapter 544, Statutes of 1997. Among other
things, authorized a licensed distilled spirits manufacturer to
conduct tastings of distilled spirits on the licensed premises
under specified conditions.
Analysis Prepared by:
Eric Johnson / G.O. / (916) 319-2531 FN: 0000343
AB 774
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