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 ****