BILL ANALYSIS                                                                                                                                                                                                    



                                                                     AB 893


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          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          893 (Mark Stone)


          As Amended  July 7, 2015


          Majority vote


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          |ASSEMBLY:  |78-0  |(April 23,     |SENATE: |38-0  |(August 20,      |
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          Original Committee Reference:  G.O.


          SUMMARY:  Repeals existing provisions of the Alcoholic Beverage  
          Control Act (ABC Act) relating to the process for filing of beer  
          label applications with the Department of Alcoholic Beverage  
          Control (ABC) by manufacturers of beer and instead creates a  
          simplified and streamlined product registration process, as  
          specified, to be used by beer manufacturers.  Specifically, 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  








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               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 ABC and the brand may be sold in this state without  
            further action by 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  








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               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 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.    


          The Senate amendments:


          1)Repeal existing provisions of the ABC Act relating to the  
            process for filing of beer label applications with ABC.


          2)Require a beer manufacturer, before the first sale of beer in  
            this state, to register the product with ABC, as specified,  
            and would make the manufacturer responsible for compliance  
            with labeling and registration requirements, as defined.


          3)State that if the beer is sold or offered for sale in this  
            state without first complying with specified provisions or  
            other provisions of the ABC Act, ABC would be authorized 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 these  








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            requirements are met.


          4)Stipulate 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.


          5)Make technical and conforming changes.


          6)Add coauthors.


          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  
            the ABC Act Sections 2500-25206 and Rule 130 of the California  
            Code of Regulations.


          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  








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            created, labeled, and marketed in accordance with the Federal  
            Alcohol Administration (FAA) Act.  


          AS PASSED BY THE ASSEMBLY, this bill prohibits beer from being  
          imported into or sold within the state unless the label for that  
          beer is first filed with ABC.  The bill permits ABC to accept  
          the filing of labels by any means it determines are appropriate,  
          including electronically, and specifies that a violation of this  
          requirement does not subject the licensee to the civil or  
          criminal provisions of the ABC Act.


          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee, pursuant to Senate Rule 28.8, negligible state costs.


          COMMENTS:  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 ABC.  Due to  
          the incredible growth of craft breweries, this existing  
          requirement has resulted in an incredible backlog 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 ABC full authorization to deal with beer  
          manufacturers who are not in compliance.  The author's office  
          emphasizes that this bill will enable 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.








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          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 United States Code Section 201 et seq.).   
          Existing law provides every manufacturer or bottler of beer in  
          this state or 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 United States Code Section 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  








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          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 Internal Revenue Code, 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 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 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 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.


          Analysis Prepared by:                                             
                          Eric Johnson / G.O. / (916) 319-2531  FN:  
          0001440








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