BILL ANALYSIS                                                                                                                                                                                                    Ó






           ----------------------------------------------------------------- 
          |SENATE RULES COMMITTEE            |                        AB 774|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |
           ----------------------------------------------------------------- 


                                   THIRD READING 


          Bill No:  AB 774
          Author:   Levine (D)
          Amended:  5/28/15 in Senate
          Vote:     21  

           SENATE GOVERNMENTAL ORG. COMMITTEE:  13-0, 6/9/15
           AYES:  Hall, Berryhill, Block, Gaines, Galgiani, Glazer,  
            Hernandez, Hill, Hueso, Lara, McGuire, Runner, Vidak

           SENATE APPROPRIATIONS COMMITTEE:  Senate Rule 28.8

           ASSEMBLY FLOOR:  79-0, 5/11/15 - See last page for vote

           SUBJECT:   Alcoholic beverages: beer manufacturers: farmers  
                     market: tasting: nonprofit corporation: donated beer


          SOURCE:    Author

          DIGEST:    This bill allows a licensed beer manufacturer that  
          holds a certified farmers' market beer sales permit to provide  
          limited instructional tastings for consumers at the certified  
          farmers' market, under specified conditions.  

          ANALYSIS:
          
          Existing law:

           1) Establishes the Department of Alcoholic Beverage Control  
             (ABC) and grants it exclusive authority to regulate the  
             licensing, enforcement, and administration of the alcoholic  
             beverage control laws.









                                                                     AB 774  
                                                                    Page  2


           2) Provides for certified farmers' markets which are operated  
             in accordance with regulations established in the California  
             Administrative Code pertaining to direct marketing and are  
             governed by 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.

           3) Authorizes the Department of ABC to issue special temporary  
             licenses and permits to various entities for limited purposes  
             including a certified farmers' market sales permit that  
             authorizes a licensed winegrower to sell "wine" produced and  
             bottled by the winegrower at certified farmers' market  
             locations.  The farmers' market wine 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 farmers' market  
             location.  The law also allows a winegrower to hold more than  
             one certified farmers' market wine sales permit and requires  
             the Department of ABC to notify local agencies and  
             enforcement entities of the permits.  Additionally, the law  
             grants the licensed winegrower the privilege of conducting  
             limited "wine" tastings for consumers at farmers' markets  
             under certain circumstances.  Furthermore, the law prohibits  
             the licensed winegrower from selling more than 5,000 gallons  
             of wine annually pursuant to all certified farmers' markets  
             sales permits held by any single winegrower. 

           4) Authorizes a licensed beer manufacturer to apply to the  
             Department of ABC for a certified farmers' market "beer"  
             sales permit that grants the beer manufacturer the privilege  
             of selling beer, that has been produced by the beer  
             manufacturer, at a certified farmers' market, including any  
             permitted community event area adjacent to, and operated in  
             conjunction with, a certified farmers' market, as specified.   
             The farmers' market 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 farmers' market or community event  
             location.  The law also prohibits the licensed beer  
             manufacturer from selling more than 5,000 gallons of beer  
             annually pursuant to all certified farmers' markets permits  
             held by any single beer manufacturer.  Additionally, the  
             farmers' market sales permit is subject to the respective  
             discretion and managerial control of a certified farmers'  







                                                                     AB 774  
                                                                    Page  3


             market or community event operator and existing regulations  
             governed by law under the CDFA.

           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 the Department of ABC.  

           6) 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.

           7) 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 1/4 ounce of distilled spirits is  
             offered in one tasting; (b) no more than one ounce of wine 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.  

           8) 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.

           9) 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 the Department of ABC.  A retail  
             licensee, however, is not authorized to provide any free  
             samples of alcoholic beverages.

           10)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.







                                                                     AB 774  
                                                                    Page  4



           11)Defines "community event" to mean an event that is civic,  
             political, public, or educational nature, including state and  
             county fairs, city festivals, circuses, and other public  
             gathering events approved by the local enforcement agency.  
             (Section 113755 of the Health & Safety Code)

          This bill:

           1) Provides that a certified farmers' market beer sales permit  
             shall also authorize an instructional tasting event on the  
             subject of beer at a certified farmers' market, including any  
             permitted community event area adjacent to, and operated in  
             conjunction with, a certified farmers' market, located within  
             the county or an adjacent county of the physical location of  
             the licensed beer manufacturer.  In addition, imposes the  
             following conditions on such tasting events:

              a)    The tasting event is subject to the authorization and  
                managerial control of the operator of the farmers' market  
                or community event.

              b)    The tasting event may be conducted by the licensee, a  
                member of the licensee's family who is 21 years of age or  
                older, or an employee of the licensee.

              c)    At all times during a tasting event, the tasting event  
                area must be separated from the remainder of the farmers'  
                market or community event area by a wall, rope, cable,  
                cord, chain, fence, or other permanent or temporary  
                barrier.

              d)    Only one licensed beer manufacturer may conduct a  
                tasting event during the operational hours of any one  
                farmers' market or community event.

              e)    The licensee shall not pour more than eight ounces of  
                beer per person per day and the licensee shall not permit  
                any consumer to leave the tasting area with an open  
                container of beer.

           2) Modifies an existing provision of law relative to the  
             authorization for issuance of a special temporary on-sale or  
             off-sale wine license by the Department of ABC to certain  







                                                                     AB 774  
                                                                    Page  5


             nonprofits that receive wine donations for fundraising  
             purposes by extending the authorization to include beer  
             donations. 

           3) Modifies an existing provision of law that allows a  
             nonprofit that has not been issued a license authorizing the  
             sale of wine to receive and possess donated wine provided the  
             nonprofit has submitted a license application to sell wine  
             with the Department of ABC by extending such authorization to  
             include beer.   

          Background
          
          Purpose of AB 774.  Currently, a licensed winegrower and a  
          licensed beer manufacturer may apply for a permit, from the  
          Department of ABC, to sell wine or beer at a certified farmers'  
          market under specified conditions.  In addition, the law grants  
          a licensed winegrower, but not a licensed beer manufacturer, the  
          privilege of also conducting instructional wine tastings for  
          consumers at a farmers' market, as specified.  This bill is  
          intended to expand the privileges of a licensed beer  
          manufacturer that holds a certified farmers' market beer sales  
          permit by allowing the licensee to conduct instructional beer  
          tastings at the certified farmers' market in a specified manner  
          and with certain limitations.

          According to the author's office, very few craft brewers sell  
          beer at farmers' markets in part because consumers are  
          accustomed to sampling craft beer before purchasing.  The  
          author's office believes that this bill will help foster  
          relationships between local brewers and consumers - enabling the  
          brewers to build their brands by affiliating with farmers'  
          markets.  The author's office also points out that this bill  
          amends existing law to allow nonprofits to receive beer  
          donations from breweries to assist them in their fundraising  
          activities.  Currently, nonprofits may receive wine donations  
          for these purposes.

          The craft beer industry.  According to industry sources,  
          California currently has more craft breweries 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.  According  







                                                                     AB 774  
                                                                    Page  6


          to the California Craft Brewers Association, which represents  
          approximately 350 independently owned craft breweries producing  
          98% of the craft beer volume in California, in 2013, the craft  
          brewing industry contributed over $5.5 billion to California's  
          economy and supported 44,000 in-state jobs. 

          Prior/Related Legislation
          
          AB 2488 (Levine, Chapter 98, Statutes of 2014) expanded an  
          existing privilege in the ABC Act relating to the sale of wine  
          by a licensed winegrower at certified farmers' markets to also  
          allow a licensed winegrower the privilege of conducting limited  
          wine tastings for consumers at farmers' markets under certain  
          circumstances.

          AB 2004 (Chesbro, Chapter 806, Statutes of 2014), among other  
          things,  authorized a licensed beer manufacturer to apply to the  
          Department of ABC for a "certified farmers' market beer sales  
          permit" for the purpose of allowing the licensee to sell  
          packaged beer at a farmers' market, including any area outside  
          the footprint of the farmers' market, under specified  
          conditions.  

          AB 520 (Chesbro, Chapter 777, Statutes of 2014) expanded the  
          types of licensees that may provide instructional tastings  
          events regarding wine or distilled spirits at on-sale retail  
          licensed premises and placed additional restrictions on the  
          instructional tastings events, including restrictions on the  
          types of advertising that may be conducted prior to the  
          instructional tasting event.  

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

          SUPPORT:  (Verified 6/22/15) 

          California Craft Brewers Association

          OPPOSITION:  (Verified 6/22/15)

          Alcohol Justice
          California Council on Alcohol Problems

          ARGUMENTS IN SUPPORT:    Proponents state that AB 774 promotes  







                                                                     AB 774  
                                                                    Page  7


          buy local programs by providing conditional authorization to  
          craft breweries to conduct instructional tastings of craft beer  
          at farmers' market events.  Proponents point out that any  
          tasting event is subject to authorization and managerial control  
          of the operator of the certified farmers' market and adjacent  
          community event areas; and at all times the tasting event area  
          shall be separated from the remainder of the market by a wall,  
          fence, or temporary barrier.  Proponents emphasize this bill  
          places certain conditions on the licensed beer manufacturer to  
          ensure responsible conduct that are similar to those imposed  
          upon licensed winegrowers that offer wine tastings at farmers'  
          markets. 
          
          ARGUMENTS IN OPPOSITION:    Opponents believe that daytime  
          tastings, with little or no monitoring, in a family-friendly  
          setting, are inappropriate and potentially dangerous.  Opponents  
          state that, as currently drafted, there is no mechanism to  
          effectively monitor the tasting limit of eight ounces of beer  
          per person per day.  Opponents contend that AB 774 "will  
          negatively impact public health by allowing alcohol producers to  
          give away free beer where families shop for nutritious  
          vegetables, fruit and meat."  Additionally, opponents claim that  
          the most recent amendments to this bill could conceivably allow  
          for consumption of beer at fairs, craft and home shows, downtown  
          civic and celebratory parades, etc.  

          ASSEMBLY FLOOR:  79-0, 5/11/15
          AYES:  Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,  
            Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,  
            Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,  
            Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina  
            Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,  
            Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,  
            Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder,  
            Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,  
            Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,  
            Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez,  
            Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,  
            Wagner, Waldron, Weber, Wilk, Williams, Wood
          NO VOTE RECORDED:  Atkins

          Prepared by:Arthur Terzakis / G.O. / (916) 651-1530
          6/23/15 9:39:58








                                                                     AB 774  
                                                                    Page  8



                                   ****  END  ****