BILL ANALYSIS Ó SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION Senator Isadore Hall, III Chair 2015 - 2016 Regular Bill No: AB 893 Hearing Date: 7/14/2015 ----------------------------------------------------------------- |Author: |Mark Stone | |-----------+-----------------------------------------------------| |Version: |7/7/2015 Amended | ----------------------------------------------------------------- ------------------------------------------------------------------ |Urgency: |No |Fiscal: |Yes | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant:|Arthur Terzakis | | | | ----------------------------------------------------------------- SUBJECT: Beer: labels DIGEST: This bill repeals existing provisions of the Alcoholic Beverage Control (ABC) Act relating to the process for filing of beer label applications with the Department of ABC by manufacturers of beer and instead creates a simplified and streamlined product registration process, as specified, to be used by beer manufacturers. ANALYSIS: Existing law: 1)Establishes the Department of 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)Specifies that all beer sold in the state must have a label affixed to its package or container with the true and correct name and address of the manufacturer of the beer and the true and correct name of the bottler of the beer if other than the manufacturer. (B&P Code Section 25200) 3)Requires a beer manufacturer that refills any container supplied by a consumer to affix a label, as specified, on the container prior to its resale to the consumer. Also, any AB 893 (Mark Stone) Page 2 of ? information concerning any beer previously packaged in the container, including, but not limited to, information regarding the manufacturer and bottler of the beer, or any associated brands or trademarks must be removed or completely obscured in a manner not readily removable by the consumer prior to resale. Additionally, prohibits a beer manufacturer from refilling a container supplied by a consumer with a capacity of five liquid gallons or more. (B&P Code Section 25200) 4)Requires every manufacturer or bottler of beer in this state or elsewhere whose beer is sold within the state to file with ABC the brand name or names under which they sell or label their beer. (B&P Code Section 25203) 5)Provides for specified labeling requirements for containers of alcoholic beverages sold within this state, as specified. For beer, existing law requires compliance with federal regulations requiring a statement of alcohol content as a percentage of alcohol by volume, as specified. (B&P Code Section 25204) 6)Requires the container of any beer or alcoholic beverage, other than sake, that derives 0.5% or more of its alcoholic content by volume from flavors or other ingredients containing distilled alcohol and that is sold by a manufacturer or importer to a wholesaler or retailer within this state to bear a label or a firmly affixed sticker that includes specified information regarding its alcohol content and its status as an alcoholic beverage. (B&P Code Section 25205) 7)Defines "beer manufacturer" to mean any person that has facilities and equipment for the purposes of, and is engaged in, the commercial manufacture of beer. (B&P Code Section 23012) 8)Defines "beer" to mean any alcoholic beverage obtained by the fermentation of any infusion or decoction of barley, malt, hops, or any other similar product, or any combination thereof in water, and includes ale, porter, brown, stout, lager beer, small beer, and strong beer, but does not include sake, known as Japanese rice wine. Beer aged in an empty wooden barrel previously used to contain wine or distilled spirits shall be defined exclusively as "beer" and shall not be considered a dilution or mixture of any other alcoholic beverage. (B&P AB 893 (Mark Stone) Page 3 of ? Code Section 23006) This bill: 1)Stipulates that a package or sealed container of beer shall not be sold in this state without having a label affixed to such package or container that meets specified federal requirements. In addition to the label requirements, if not already included, the following requirements must appear on the label: a) The brand, and class or type, of beer and the true and correct name and address of the manufacturer of the beer. If multiple beer manufacturers are involved in the production of the beer, each of those manufacturers may be identified on the label. b) The true and correct name of the bottler of the beer, if other than the manufacturer and a statement of alcoholic content if the beer contains more than 5.7% alcohol by volume. 2)Stipulates that the true and correct name of a manufacturer, bottler, or packager shall be deemed to include a fictitious business name for which the manufacturer, bottler, or packager has duly filed a fictitious business name pursuant to existing business regulations. 3)Provides that prior to the first sale of a brand of beer in this state, the manufacturer of that beer must register the brand with the Department of ABC and the brand may be sold in this state without further action by the Department of ABC. 4)Specifies that the registration must include the following information: a) The true name and address of the actual manufacturer of the beer. b) Any fictitious business name of the manufacturer under which the beer is manufactured. c) The class or type of beer and all brand names under which the beer is to be sold in this state. AB 893 (Mark Stone) Page 4 of ? d) If manufactured under contract for another beer manufacturer or other person, the true name of such other beer manufacturer or person. e) If manufactured pursuant to a joint venture or other collaborative arrangement, the name and address of all manufacturers involved in the joint venture or other collaborative arrangement. 5)Makes it explicit that the manufacturer of the beer shall be responsible for compliance with the requirements of this bill. Also, provides that in the case of beer manufactured pursuant to a joint venture or other collaborative arrangement, only the actual manufacturer of the beer need comply. 6)Authorizes the Department of ABC to take action it deems reasonable and necessary including, but not limited to, ordering that the beer not be sold, or allowing it to be sold for a reasonable time, until the requirements of this bill are met. Background 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. California Law. As noted above, the ABC Act 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 the Department of ABC the brand name or names under which the beer is sold or labeled, as specified. Purpose of AB 893. The author's office points out that existing law requires a beer producer to fill out a form and attach a label to it for every beer label it seeks approval from the Department of ABC. Due to the incredible growth of craft breweries, this existing requirement has resulted in an incredible back log of label approvals. This bill seeks to eliminate the existing label filing process and establish a AB 893 (Mark Stone) Page 5 of ? simplified label registration process that is intended to place compliance burden squarely on the beer manufacturer so that the manufacturer can get product to the market quicker. Additionally, the author's office notes that this bill grants the Department of ABC full authorization to deal with beer manufacturers who are not in compliance. The author's office emphasizes that AB 893 will enable the Department of ABC to obtain all the necessary labeling information from a manufacturer and allow the manufacturer to sell product without waiting for approval. Furthermore, the author's office notes that a trend has developed in the craft brewing world whereby two small manufacturers enter into joint ventures or other collaborative arrangement to blend their product and make special seasonal beers. Current law allows for only one brewer to be listed on a beer label. This bill addresses that issue by allowing the names of all brewers involved in the special brew to appear on the label. Prior/Related Legislation 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. AB 346 (Beall, Chapter 624, Statutes of 2008) provided that any container of beer or alcoholic beverage, other than sake, that is approved for labeling as a malt beverage under the Federal Alcohol Administration Act, 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. FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes SUPPORT: California Craft Brewers Association AB 893 (Mark Stone) Page 6 of ? OPPOSITION: None received ARGUMENTS IN SUPPORT: Writing in support, proponents reference the fact that California's craft brew industry continues to grow and now stands at more than 540 businesses throughout the state supporting more than 50,000 jobs with an annual impact of $6.5 billion on the state economy. Proponents note that "existing law provides that beer labels are required for all beer sold in this state. ABC conducts label approval for each new beer product and whenever there is any change to existing beer content or size of container for those beers. On average, a single craft brewery will seek label approval from the ABC more than 200 times per year. Understandably, the sheer volume of beer label approvals can be difficult to handle on a timely basis by ABC. For affected breweries, these delays result in reduced product availability and diminished sales." Proponents contend that "AB 893 clarifies California's label registration laws so that beer manufacturers will no longer be required to await approval from ABC before placing labeled products into commerce. Under this bill, beer manufacturers themselves bear the responsibility to comply with state and federal alcohol labeling laws; and ABC is no longer burdened with having to individually review each of these labels for legal compliance. This bill streamlines the beer labeling process and reduces significant costs to the state."