BILL ANALYSIS                                                                                                                                                                                                    



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          Date of Hearing:   April 8, 2015


                   ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION


                                  Adam Gray, Chair


          AB 893  
          (Mark Stone) - As Introduced February 26, 2015


          SUBJECT:  Beer:  labels


          SUMMARY:  Would allow the Department of Alcoholic Beverage  
          Control (ABC) to accept the filing of beer label applications by  
          any means it determines are appropriate, including filing by  
          mail or electronic filing.  Specifically, this bill:  





          1)  Provides that beer shall not be imported into, or sold  
          within, this state unless the label for that beer is first filed  
          with ABC, in accordance with any rules and regulations of the  
          department.





          2)  Provides ABC may accept the filing of labels by any means it  
          determines are appropriate, including filing by mail or  
          electronic filing. Provides ABC may elect to waive all or part  
          of any fees paid or incurred by licensees in filing labels as  
          required.








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          3)  Specifies for the purpose of insuring consistency in the  
          filings, ABC may promulgate guidelines by rules and regulations  
          establishing the label information it deems necessary. 





          4)  Specifies that a violation of this section shall not subject  
          the licensee to any civil or criminal penalties. 


          EXISTING LAW:  


          1)  Establishes 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 or occupation taxes for this purpose. 





          2)  Imposes various requirements relating to the labels and  
          containers of alcoholic beverages sold within the state,  
          including a requirement that every manufacturer or bottler of  
          beer whose beer is sold within the state file with ABC the brand  
          name or names under which the beer is sold or labeled, as  
          provided.  California labeling requirements are detailed in  
          Sections 25200-25206 of the Alcoholic Beverage Control Act (ABC  
          Act) and Rule 130 of the California Code of Regulations.








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          3)  Under  Federal law, the Treasury Department's Alcohol and  
          Tobacco Tax and Trade Bureau (TTB) is responsible for  
          implementing and enforcing a broad range of statutory and  
          compliance provisions and ensuring that alcohol products are  
          created, labeled, and marketed in accordance with the Federal  
          Alcohol Administration (FAA) Act.  


          FISCAL EFFECT:  Unknown


          COMMENTS:  


           Purpose of the bill  :  According to the author's office, a  
          manufacturer of beer must have their labels approved by ABC,  
          which contains specific information about the product.  This  
          information includes: the name and location of the manufacturer  
          (city and state) and bottler (if different), name of the beer in  
          the container, alcohol content is mandatory if 5.7% abv or  
          greater (It is optional if below) and the net contents of the  
          container.  Currently, the label application (ABC form 412) can  
          be sent to ABC by mail or fax.  





          The author states as the beer industry grows, it still must  
          comply with our state's labeling laws.  Much of the success of  
          the craft brewing industry is a result of its ability to offer  
          new products to the market, based on seasonal demand and market  
          trends.  Under current law, each change in beverage product  
          requires the brewer to seek label approval for that product in  
          every quantity that the brewer intends to sell.  Because of the  
          rapid growth of this industry, ABC has received a dramatic  
          increase in label approval applications that it struggles to  








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          approve in a timely manner.  





          AB 893 will help ABC streamline the label application process.   
          In addition, the bill will provide California's craft brewers  
          with the ability to update their labels to match their current  
          products on a timeline that meets the expectations of the  
          consumer.





          The author points out that several states have implemented  
          electronic systems to approve labels, and it has proven to  
          expedite the review and approval process.


           Background  :  The mission of ABC is to administer the provisions  
          of the ABC Act in a manner that fosters and protects the health,  
          safety, welfare, and economic well-being of the people of the  
          State.  California Constitution, Article XX, Section 22, vests  
          ABC with the exclusive right and power to license and regulate  
          the manufacture, importation, and sale of alcoholic beverages  
          within the State.





          Any beer container sold within this state shall bear a label  
          that conforms with the alcohol content labeling requirements  
          prescribed in Section 7.71 of Part 7 of Title 27 of the Code of  
          Federal Regulations, as adopted pursuant to the Federal Alcohol  
          Administration Act (27 U.S.C. Sec. 201 et seq.).  Existing law  
          provides every manufacturer or bottler of beer in this state or  








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          elsewhere whose beer is sold within the state shall file with  
          ABC (Form ABC-412, Label Approval Application) the brand name or  
          names under which they sell or label their beer.  An original  
          label of each brand and size listed on Form 412 must be included  
          with the form.  Photocopies are not acceptable. 





          Any labels or notices affixed to beer must, if such beer is  
          produced in this state, be affixed prior to the first sale, and  
          in the case of beer produced outside the state and imported into  
          California, must be affixed prior to delivery in this state.  





           Who regulates alcohol labeling at the Federal level  ? TTB is  
          responsible for regulating the labeling of alcohol beverages  
          under the provisions of the Federal Alcohol Administration (FAA)  
          Act, 27 U.S.C. 205(e). TTB's statutory mandate is to prevent  
          consumer deception and ensure the label provides the consumer  
          with adequate information as to the identity and quality of the  
          product. 





          The FAA Act requires that the alcoholic beverage industry seek  
          approval of their labels. The administration and enforcement is  
          done through the issuance of permits and through procedures that  
          require the prior approval of all labels.  In addition, TTB is  
          charged with the administration and enforcement of Chapter 51 of  
          the IRC, relating to Distilled Spirits, Wines and Beer. This  
          chapter in conjunction with the FAA Act establishes a system of  
          control of alcoholic beverages, including formulas showing each  








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          ingredient to be used in the product.





          TTB issues regulations governing the labeling and advertising of  
          wine, distilled spirits, and malt beer. Pursuant to the FAA Act,  
          Section 5, TTB is vested with the authority to promulgate  
          regulations to make sure that they provide the consumer with  
          adequate information concerning the identity and quality of such  
          products.  The TTB also enforces the Alcohol Beverage Labeling  
          Act of 1988 requiring the appearance of a health warning  
          statement on all alcohol beverages for sale and distribution in  
          the United States (U.S.) containing 0.5% or more alcohol by  
          volume.





           Prior legislation : AB 2203 (Chesbro), Chapter 236, Statutes of  
          2014.  Adds metal kegs to an existing provision of the ABC Act  
          that prohibits the obliteration, mutilation, or marking out of a  
          manufacturer's name on returnable beer containers or cartons  
          made of wood or fiber board.


          AB 647 (Chesbro), Chapter 686, Statutes of 2013.  Added clarity  
          to existing provisions of the ABC Act relative to labeling  
          requirements for the refilling of off-sale consumer-sized beer  
          containers, known as "growlers," by beer manufacturers, and the  
          serving of beer, as specified, by a beer manufacturer or  
          brewpub-restaurant licensee; and makes technical code  
          maintenance changes.  


          AB 346 (Beall), Chapter 624, Statutes of 2008.  Provided that  
          any container of beer or alcoholic beverage, other than sake,  








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          that is approved for labeling as a malt beverage under the  
          Federal Alcohol Administration Act (FAAA), that derives 0.5% or  
          more of its alcoholic content by volume from flavors or other  
          ingredients containing distilled alcohol and that is sold within  
          this state on or after July 1, 2009, shall bear a distinctive,  
          conspicuous, and prominently displayed label, or firmly affixed  
          sticker, as defined.


          REGISTERED SUPPORT / OPPOSITION:




          Support


          California Craft Brewers Association




          Opposition


          None on file




          Analysis Prepared by:Eric Johnson / G.O. / (916) 319-2531
















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