BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 1295 (Levine) - Craft distillers: licenses. ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: July 16, 2015 |Policy Vote: G.O. 10 - 1 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 17, 2015 |Consultant: Jillian Kissee | | | | ----------------------------------------------------------------- This bill does not meet the criteria for referral to the Suspense File. Bill Summary: This bill authorizes the Department of Alcoholic Beverage Control (ABC) to issue a craft distiller's license to a person that has facilities and equipment for the commercial manufacture of distilled spirits. Fiscal Impact: Unknown, potentially significant costs to the Department of ABC offset by fee revenue. (Special fund) Background: The Department of ABC has exclusive authority to administer the provisions of the Alcoholic Beverage Control Act including licensing individuals and businesses associated with the manufacture, importation, and sale of alcoholic beverages in the state. Existing law permits a licensed distilled spirits manufacturer AB 1295 (Levine) Page 1 of ? to conduct tastings of distilled spirits produced or bottled by, or produced or bottled for, the licensee, on or off the licensee's premises. Additionally, existing law makes it explicit that no distilled spirits be sold or solicited for sale in that portion of the premises where the distilled tasting is being conducted. Existing law also permits wineries to sell their products to consumers on their licensed premises and directly to licensed, on-sale and off-sale retailers (e.g., restaurants and liquor stores). Existing law also provides for a brewpub-restaurant license, issued to a bona fide public eating place, which authorizes the sale of beer, wine, and distilled spirits for consumption on the premises and the sale of beer produced by the brewpub-restaurant licensee for consumption on the premises. This bill will allow California's licensed craft distillers to open restaurants on their licensed premises, as specified. Currently, distillers in California are authorized to conduct tastings (in limited quantities) on their licensed premises however they're precluded from selling the products to consumers - this bill will allow craft distillers to sell their products directly to consumers. According to the author's office, this bill is intended to provide greater licensing equity between small craft distilled spirits manufacturers and beer and wine producers. Proposed Law: This bill authorizes the Department of ABC to issue a craft distiller's license to a person that has facilities and equipment for the commercial manufacture of distilled spirits and to be able to conduct tastings on or off the licensee's premises. The bill establishes an original fee for the craft distiller's license to be $600, and the annual fee to be $300, in which fees are required to be deposited in the ABC Fund. This bill authorizes a licensed craft distiller to sell all beers, wines, brandies, or distilled spirits to consumers for consumption at a bona fide eating place on the licensed premises or on premises owned by the licensee, as specified. A licensed AB 1295 (Levine) Page 2 of ? craft distiller would be able to sell up to three bottles per day directly to a consumer who participates in a distilled spirits tasting on the distiller's licensed premises. This bill prohibits the issuance of a craft distiller's license to any person, or any affiliated person, that manufactures more than 100,000 gallons of distilled spirits per year within or outside the state. Licensed craft distillers are required to report to the department at the end of each fiscal year the amount of distilled spirits produced by or for the licensee during the previous fiscal year. Related Legislation: SB 639 (Calderon, 2009) would have created a new on-sale tasting license to allow off-sale retail licensees to furnish tastes of alcoholic beverages to consumers, as specified. SB 639 failed passage in this Committee. Staff Comments: There are currently 104 distilled spirits manufacturer's licenses that would be eligible to apply for the new on-sale distilled tasting license. Licensees will be required to pay an application fee of $600 and an annual renewal fee of $300 for the craft distiller's license. The ABC indicates that initial start-up costs to develop the program will be absorbable. Ongoing costs for administration and enforcement resulting from complaints or investigations will potentially be offset by fee revenue. -- END --