BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 1295 (Levine) - Craft distillers: licenses.
          
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          |Version: July 16, 2015          |Policy Vote: G.O. 10 - 1        |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: August 17, 2015   |Consultant: Jillian Kissee      |
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          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  







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          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  








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          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.


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