BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
                              Senator Isadore Hall, III
                                        Chair
                                2015 - 2016  Regular 

          Bill No:           AB 2172          Hearing Date:    6/28/2016
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          |Author:    |Jones                                                |
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          |Version:   |6/8/2016    Amended                                  |
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          |Urgency:   |No                     |Fiscal:      |Yes             |
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          |Consultant:|Arthur Terzakis                                      |
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          SUBJECT: Homebrewery clubs:  meetings:  competitions


            DIGEST:    This bill permits the removal and use of home brewed  
          beer in connection with a homebrewers club meeting or home  
          brewed beer competition that is held on the premises of an  
          authorized licensee.

          ANALYSIS:
          
          Existing law:
          
          1)Establishes the Department of Alcoholic Beverage Control (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)Authorizes a person over 21 years of age to manufacture beer  
            or wine (200 gallons per calendar year if there are two or  
            more adults in the household or 100 gallons if there is only  
            one adult in the household) for personal or family use, and  
            not for sale, without the need for a license or permit.

          3)Authorizes the removal of beer or wine, manufactured for  
            personal or family use, from the premises where manufactured  
            only under the following circumstances: (1) for use, including  







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            tasting by judges, in a bona fide competition or exhibition;  
            (2) for personal or family use; and, (3) when donated to a  
            nonprofit organization for sale at fundraising events  
            conducted solely by and for the benefit of the nonprofit and  
            pursuant to a license issued by ABC to the nonprofit entity,  
            and subject to specified conditions.   

          4)Separates the alcoholic beverage industry into three component  
            parts or tiers (referred to as the "tied-house" law or  
            "three-tier" system), of manufacturer (including breweries,  
            wineries and distillers), wholesaler, and retailer (both  
            on-sale and off-sale).  The original policy rationale for this  
            body of law was to: (a) promote the state's interest in an  
            orderly market; (b) prohibit the vertical integration and  
            dominance by a single producer in the market place; (c)  
            prohibit commercial bribery and to protect the public from  
            predatory marketing practices; and, (d) discourage and/or  
            prevent the intemperate use of alcoholic beverages.   
            Generally, other than exemptions granted by the Legislature,  
            the holder of one type of license is not permitted to do  
            business as another type of licensee within the "three-tier"  
            system.

          5)Defines an "on-sale" licensee as authorizing the sale of all  
            types of alcoholic beverages: namely, beer, wine and distilled  
            spirits, for consumption on the premises (such as at a  
            restaurant or bar.  An "off-sale" license authorizes the sale  
            of all types of alcoholic beverages for consumption off the  
            premises in original, sealed containers.  

          This bill:

          1)Permits beer manufactured for personal or family use by a  
            person over the age of 21 to be removed from the premises  
            where the beer was made for a homebrewers club meeting or bona  
            fide home brewed beer competition that is held on the premises  
            of an authorized licensee.

          2)Provides that homebrewers may exchange containers of home  
            brewed beer during the club meeting or beer competition.   
            Also, permits home brewed beer made by the club members to be  
            consumed by club members while on the licensed premises during  
            the club meeting or by competition organizers, judges, and  
            stewards on licensed premises during a bona fide home brewed  
            beer competition.








          AB 2172 (Jones)                                    Page 3 of ?
          
          

          3)Makes it explicit that patrons of the authorized licensee that  
            are not club members, competition organizers, competition  
            judges, or competition stewards shall not consume any home  
            brewed beer.

          4)Stipulates that the authorized licensee must designate which  
            tables within the licensed premises will be used by club  
            members during the club meeting or beer competition.

          5)Defines "authorized licensee" as a licensee that holds an  
            on-sale beer license, an on-sale beer and wine license for a  
            bona fide public eating place, an on-sale beer and wine for  
            public premises license, an on-sale general license for a bona  
            fide eating place, a club license, a veterans' club license,  
            an on-sale general brew pub license, an on-sale general  
            license for public premises, a beer manufacturer's license, or  
            a small beer manufacturer's license. 

          Background

          Purpose of AB 2172.  The author's office states that this bill  
          is intended to give home brew clubs the ability to conduct  
          meetings and competitions in licensed establishments and share  
          their home brewed beer amongst themselves at such meetings.  The  
          author's office believes that allowing homebrew clubs to meet at  
          licensed establishments (such as brewpubs) not only gives these  
          clubs alternative meeting options, it also provides a  
          significant financial benefit to licensed establishments in  
          light of the fact that homebrewers are some of the biggest  
          supporters of craft beer.  

          Prior/Related Legislation
          
          AB 2609 (Nestande, Chapter 239, Statutes of 2014) authorized the  
          removal and use of home brewed beer or homemade wine in  
          connection with a bona fide competition or judging or a bona  
          fide exhibition or tasting.  The bill also allowed nonprofit  
          organizations that promote home brewing to serve beer at  
          fundraising events subject to specified conditions, including  
          requiring an educational component to the event and limiting the  
          nonprofit organization to two of these types of events that  
          serve beer pursuant to this authorization per year.

          AB 1425 (Governmental Organization Committee, Chapter 463,  








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          Statutes of 2013) among other things, allowed beer or wine made  
          for personal or family use to be donated to a non-profit  
          organization and used at a fundraising event conducted solely by  
          and solely for the benefit of the nonprofit organization and  
          only for consumption on the premises of the fundraising event,  
          provided that a license is issued by the ABC.

          SB 607 (Wiggins, Chapter 28, Statutes of 2008) authorized a  
          person to manufacture wine for personal or family use in an  
          amount not to exceed 100 or 200 gallons per household per  
          calendar year without the need for a license or permit, as  
          provided.  Also, authorized the removal of wine, manufactured  
          for personal or family use, from the premises where manufactured  
          for use, including use at organized affairs, exhibitions or  
          competitions, such as homemakers' contests, tastings, or  
          judgings.

          FISCAL EFFECT:                 Appropriation:  No    Fiscal  
          Com.:             Yes          Local:          No


            
          SUPPORT:  

          American Homebrewers Association
          California Homebrewers Association (sponsor)
          And, letters from homebrewers throughout the State

          OPPOSITION:

          None received

          ARGUMENTS IN SUPPORT:  Proponents note that there are currently  
          over 150,000 homebrewers in California, with well over 200  
          organized clubs meeting on a regular basis.   Proponents state  
          that home brewing is a hobby that has seen rapid growth  
          nationwide for more than a decade and the participants in this  
          hobby are primarily well educated members of the middle to  
          upper-middle class, including many that have started small  
          businesses in this country.  Proponents also point out that part  
          of the challenge in home brewing is to elicit feedback from  
          others regarding the quality of the beer being produced.  
          
          Proponents claim that virtually all of the 815 homebrew supply  
          shops operating in the United States were started by  








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          homebrewers, and most of this nation's 4000 small, independent  
          breweries were founded by homebrewers.  Proponents emphasize  
          that a vibrant home brewing community supports these small  
          businesses, as well as the farmers that grow the barley and hops  
          used to make beer.