BILL ANALYSIS Ó
AB 2913
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB
2913 (Committee on Governmental Organization)
As Amended August 19, 2016
Majority vote
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|ASSEMBLY: | 78-0 |(May 12, 2016) |SENATE: |39-0 |(August 24, |
| | | | | |2016) |
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Original Committee Reference: G.O.
SUMMARY: Makes substantive, clarifying and technical changes to
certain provisions of the Alcoholic Beverage Control Act (Act).
Permits a licensee to sponsor or otherwise participate in an
event conducted by, and for the benefit of, a nonprofit
corporation in which retail and nonretail licensees are involved
as sponsors or participants. Revises the definition of a
licensed "distilled spirits rectifier", as defined.
Furthermore, this bill makes conforming and technical
modifications to AB 1295 (Levine), Chapter 640, Statutes of
2015, which created a "craft distiller's license" in the Act.
The Senate amendments:
1)Replace the term "distilled spirits rectifier" with
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"rectifier" in several provisions of the ABC Act to correctly
reflect there is no statutory definition for a "distilled
spirits rectifier."
2)Make the following changes to the Craft Distillers Act of
2015:
a) Define "manufacture" to mean the actual distillation of
distilled spirits from naturally fermented materials or the
redistillation of distilled spirits obtained from another
manufacturer of distilled spirits.
b) Provide that the term "produce" means to mix, color,
flavor, or blend distilled spirits, whether manufactured by
the licensee or by another manufacturer of distilled
spirits.
c) Provide that at least 65% of the total volume of
distilled spirits manufactured or produced shall be
actually manufactured by the licensee and that the volume
of distilled spirits shall be calculated by adding the
volume of distilled spirits, less waste, drawn off the
still with the volume of distilled spirits obtained by the
licensee from any other source that is not redistilled by
the licensee. Also, provide that the term "volume" means
the liquid volume and shall not be based on proof gallons
or packaged goods.
d) Modify a craft distiller's annual reporting requirements
to the ABC to account for the above-referenced change and
provides that if the report establishes that the licensee
no longer qualifies to hold a craft distiller's license
because the licensee has either exceeded the total amount
manufactured or produced or actually manufactured less than
65% of the total volume manufactured or produced, ABC must
renew the license as a distilled spirits manufacturer's
license.
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e) Clarify that a licensee that has an interest in one or
more on-sale retail licenses may continue to hold that
interest in the event the licensee no longer qualifies as a
craft distiller, provided that the interest was held, or an
application was pending, at a time when the licensee did
hold a craft distiller's license.
f) Clarify that a licensed craft distiller is not precluded
from holding a distilled spirits license authorizing the
importing of distilled spirits, provided, however, that any
distilled spirits imported by the licensee shall only be
used by the licensee to manufacture or produce distilled
spirits pursuant to a craft distiller's license.
3)Make other minor conforming and technical changes, as
specified.
FISCAL EFFECT: Unknown
AS PASSED BY THE ASSEMBLY, this bill modified provisions in the
Act that allow a retail or nonretail licensee to sponsor or
participate in an event conducted by, and for the benefit of, a
nonprofit corporation.
COMMENTS:
Purpose of the bill: This bill is the annual Assembly
Governmental Organization Committee (Committee) "clean-up" bill
that makes clarifying, technical, and non-controversial changes
to existing statutes.
According to the Committee, this bill corrects a drafting error
in AB 776 (Cooper), Chapter 519, Statutes of 2015.
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Specifically, AB 776 authorized licensed alcoholic beverage
manufacturers and retailers to participate together in
sponsoring and promoting events conducted by, and for the
benefit of, nonprofit organizations, subject to certain
conditions. As enacted, AB 776 inadvertently prohibited a
"retail" licensee from receiving, directly or indirectly, any
advertising, sale or promotional benefit from any permanent
retail licensee in connection with the sponsorship or
participation. This bill corrects the oversight and instead
would prohibit a "nonretail" licensee from receiving, directly
or indirectly, any advertising, sale, or promotional benefit
from any permanent retail licensee in connection with the
sponsorship or participation. In addition, this bill makes a
clarifying change with respect to the manner upon which a
nonretail licensee may advertise or communicate sponsorship or
participation in the event by deleting the word "initiating"
from that provision.
Additionally, this bill addresses the use of the term "distilled
spirits rectifier" in statute. Existing law provides for: a
rectifier (Type 07), wine rectifier (Type 08), and a distilled
spirits rectifier's general license (Type 24). The old ABC
handbook indicates that a Type 07 is often incorrectly referred
to as a distilled spirits rectifier however there is no
statutory definition for a "distilled spirits rectifier."
Furthermore, according to the Committee, this bill makes various
clarifying changes to AB 1295 (Levine) which created a "craft
distiller's license" in the ABC Act with specified privileges
including authorizing the new Type 74 licensee to manufacture up
to 100,000 gallons of distilled spirits annually, exclusive of
brandy production and sell a minimum amount of their products
directly to consumers.
AB 1295 authorized the licensee to package, rectify, mix,
flavor, color, label, and export only those distilled spirits
manufactured by the licensee. This means that if a distiller
packages, rectifies, mixes, flavors, colors, labels, or exports
distilled spirits manufactured by any other person (distilled
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spirits manufacturer, craft distiller, or rectifier) they may
not hold a craft distiller's license. In consulting with the
sponsors of AB 1295, the Department of ABC has determined that
this provision is not intended to preclude the use of grain
neutral spirits manufactured by another distiller in the
manufacture of distilled spirits by a craft distiller licensee -
this requires the actual redistillation of grain neutral
spirits.
This bill addresses the problem by defining "manufacture" to
mean the actual distillation of sprits either from raw materials
or redistilling so-called base spirits. This bill also defines
the term "produce" to mean production of spirits by mixing,
coloring, flavoring or blending distilled spirits from any
source. Additionally, the bright line between "running it
through the still" or just using bulk neutral spirits for some
sort of production is defined as a 65-35 split, where at least
65% of the total volume of distilled spirits manufactured or
produced shall actually meet the definition of manufacturing.
This bill does not change the 100,000-gallon threshold that
defines a craft distillery but it does change the existing law's
annual reporting requirements as to the amount of distilled
spirits manufactured or produced by a licensed craft distiller.
According to the Committee, there are currently 40 Type 74
licenses granted under last year's legislation and 33 pending
applications, many of which are from existing craft distillers
that produce, as defined, some of their product. Unknown others
may take advantage of this clarification of the definitions and
create business models to distill and craft artisanal distilled
spirits within these limitations of the Type 74 license. This
bill also makes other conforming, clarifying and technical
changes, as specified, to AB 1295.
Related Legislation: AB 1295 (Levine), Chapter 640, Statutes of
2015, among other things, created a craft distiller's license in
the ABC Act with specified privileges including authorizing the
new Type 74 licensee to manufacture up to 100,000 gallons of
distilled spirits annually, exclusive of brandy production and
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sell a minimum amount of their products directly to consumers.
AB 776 (Cooper), Chapter 519, Statutes of 2015, among other
things, authorized licensees to sponsor or otherwise participate
in an event conducted by, and for the benefit of, a nonprofit
organization subject to specified conditions, including that a
nonretail or retail licensee may choose to participate in any
level of sponsorship.
Analysis Prepared by:
Eric Johnson / G.O. / (916) 319-2531 FN:
0004853