BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                        AB 893|
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                                      CONSENT 


          Bill No:  AB 893
          Author:   Mark Stone (D), et al.
          Amended:  7/7/15 in Senate
          Vote:     21  

           SENATE GOVERNMENTAL ORG. COMMITTEE:  13-0, 7/14/15
           AYES:  Hall, Berryhill, Block, Gaines, Galgiani, Glazer,  
            Hernandez, Hill, Hueso, Lara, McGuire, Runner, Vidak

           SENATE APPROPRIATIONS COMMITTEE:  Senate Rule 28.8

           ASSEMBLY FLOOR:  78-0, 4/23/15 (Consent) - See last page for  
            vote

           SUBJECT:   Beer: labels


          SOURCE:    Author

          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  








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            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  
            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) 








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          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  
            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. 








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          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.

             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  








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          and Trade Bureau 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  
          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  








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          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 FAA 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:  (Verified  8/17/15)

          California Craft Brewers Association

          OPPOSITION:  (Verified  8/17/15)

          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."








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          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."


          ASSEMBLY FLOOR:  78-0, 4/23/15
          AYES:  Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,  
            Bonilla, Bonta, Brough, Brown, Burke, Calderon, 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,  
            Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner,  
            Waldron, Weber, Wilk, Williams, Wood, Atkins
          NO VOTE RECORDED:  Campos, Salas

          Prepared by:Arthur Terzakis / G.O. / (916) 651-1530
          8/18/15 17:03:29


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