BILL ANALYSIS                                                                                                                                                                                                    



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          Date of Hearing:  June 30, 2016


                   ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION


                                  Adam Gray, Chair


          SB  
          683 (Wolk) - As Amended June 21, 2016


          SENATE VOTE:  34-0


          SUBJECT:  Alcoholic beverage licenses: nonprofit sales license


          SUMMARY:  Authorizes the Department of Alcoholic Beverage  
          Control (ABC) to issue a special non-profit sales license to a  
          non-profit mutual benefit corporation that is associated with  
          the Department of Viticulture and Enology at UC Davis.  The  
          designated licensee would be authorized to accept the transfer  
          of, and take title to, up to 20,000 gallons of wine per year  
          produced by the public university and sell transferred, donated,  
          and bequeathed wine to consumers and licensees, as specified.   
          Specifically, this bill:  




          1)  Provides ABC may issue a special nonprofit sales license to  
          a nonprofit mutual benefit corporation, as described, that has a  
          board membership composed of the Dean of the College of  
          Agricultural and Environmental Sciences, or his or her designee,  
          the Chair of the Department of Viticulture and Enology, or his  
          or her designee, and the Chair of the Department of Food Science  
          and Technology, or his or her designee, of the public university  








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          located within the county of the 28th class that includes  
          courses in viticulture and enology in its curriculum.



          2)  Provides a special nonprofit sales license authorizes the  
          licensee to do all of the following:


            a)  Accept the transfer of, and take title to, up to 20,000  
          gallons of wine per year produced by the public university, as  
          described,  even though that the public university does not hold  
          a license.  For purposes of this bill, "produced" includes wine  
          donated to, or purchased by, the public university for  
          educational or experimental purposes and that are thereafter  
          treated or  processed by the public university.


            b)  Sell wine to consumers for consumption off the licensed  
          premises or to other licensees authorized to sell wine.


            c)  Give licensees samples of the wine it sells, subject to  
          specified limitations and any ABC regulations.


          3)  Provides the special nonprofit sales license does not  
          authorize the licensee to purchase or otherwise obtain wine from  
          a licensee or other manufacturer or seller of wine, except as  
          specified.


          4)  Provides a public university, as described, may transfer  
          wine produced by the public university to a special nonprofit  
          sales licensee.


          5)  Imposes an original fee for the special nonprofit sales  
          license shall be five hundred dollars ($500) and the annual  








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          renewal fee shall be one hundred dollars ($100), as specified.


          EXISTING LAW:   


          1)  The enactment of the 21st Amendment to the U.S. Constitution  
          in 1933 repealed the 18th Amendment and ended the era of  
          Prohibition.  Accordingly, states were granted the authority to  
          establish alcoholic beverage laws and administrative structures  
          to regulate the sale and distribution of alcoholic beverages.  





          2)  Establishes ABC and grants it exclusive authority to  
          administer the provisions of the Alcoholic Beverage Control Act  
          (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.


          3)  Existing law, known as the "tied-house" law, separates the  
          alcoholic beverage industry into three component parts of  
          manufacturer, wholesaler, and retailer.  The original policy  
          rationale for this body of law was to prohibit the vertical  
          integration of the alcohol industry and to protect the public  
          from predatory marketing practices.  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.


          4)  Prohibits, in general, an alcohol manufacturer, wholesaler,  
          or any officer, director, or agent of any such person from  
          owning, directly, or indirectly, any interest in any on-sale  
          license, or from providing anything of value to retailers, be it  








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          free goods, services, or advertising.





          5)  Allows wineries, breweries, distilled spirits manufacturers,  
          and importers to donate their product(s) to certain nonprofit  
          organizations (e.g., fraternal orders, social organizations,  
          civic leagues, veterans' organizations, religious groups,  
          horticultural organizations) for the purpose of assisting in  
          fund-raising efforts.





          6)  Generally prohibits the sale or consumption of alcoholic  
          beverages at a public schoolhouse or any grounds thereof.   
          Existing law provides that this prohibition does not apply if  
          the alcoholic beverage is possessed, consumed, or used during an  
          event at a community center owned by a community services  
          district, as provided.





          7)  Allows students between the ages of 18 to 21, enrolled in  
          winemaking and brewery science programs at the University of  
          California, the California State University, and the California  
          Community Colleges, to receive an exemption from current state  
          age restrictions in order to fully participate in bona fide  
          classes and programs where tasting of wine or beer is a  
          necessary aspect of the class or program












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          8)  Allows nonprofit organizations that either promote home  
          brewing or home winemaking, or that are primarily composed of  
          home brewers or home winemakers, to sell beer or wine at  
          fundraising events subject to specified conditions, including  
          requiring an educational component to the event and limiting the  
          nonprofit organization to "2 events" that sell wine or beer  
          pursuant to this authorization per year.  


          FISCAL EFFECT:  Unknown


          COMMENTS:  


           Background  :  California is a global leader in wine production -  
          accounting for more than 90% of all U.S. wine produced.   
          California is also the fourth largest producer in the world  
          after France, Italy and Spain.  When it comes to brewing,  
          California is equally fortunate to have a robust array of beer  
          makers - both large and small.  In both instances, many of these  
          products are made with the help of California college and  
          university graduates who, in many cases, diligently complete the  
          bulk of their career training in beer or wine production prior  
          to reaching the age of 21.  





          On April 15, 1880, the California Legislature mandated the  
          Regents of the University of California to establish a program  
          providing for instruction and research in viticulture and  
          enology.  The current Department of Viticulture and Enology was  
          established on the Davis campus in 1935 following the repeal of  
          Prohibition. Today the department is unique in combining the  
          sciences of viticulture and enology in a single research and  
          teaching unit that encompasses all of the scientific disciplines  








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          that impact grape growing and winemaking.  Marketplace interest  
          in wine has further increased due to recent department research  
          that point to various components in wine that may have  
          beneficial human health effects.  





           Purpose of the bill  :  According to the author, this bill would  
          allow ABC to offer a special non-profit sales license that will  
          benefit the environment and the Department of Viticulture and  
          Enology at UC Davis.  UC Davis, through their College of  
          Agricultural and Environmental Sciences, offers undergraduate  
          and graduate degrees in the areas of grape growing and wine  
          making.  Currently, any product produced through the program is  
          disposed of, essentially tossed down the drain.  The dumping of  
          wine creates unnecessary and avoidable waste and pollution in  
          the form of high biological oxygen demand.


          The author's office states that the creation of a specific  
          non-profit entity, separate from the university, would allow  
          wine to be marketed, with the proceeds to be remitted to the  
          university departments that created the product to support its  
          mission of teaching, research and extension.


           In Support  :  The Wine Group states the UC Davis Department of  
          Viticulture and Enology has played a vital role in providing the  
          California wine industry and grape growers with the knowledge  
          and techniques to continuously improve winemaking and farming  
          methods.  Their research has enabled California grape growers  
          and winemakers to produce some of the best wines in the world.    
          Allowing the university to recoup some of its operational costs  
          would result in more funds for research to the benefit of the  
          entire wine industry in California. 










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          The Wine Institute states the current disposing of wine products  
          is unsustainable from an environmental point-of-view.  This bill  
          makes fiscal sense.  Selling the wine, predominantly in bulk,  
          would enable the department to recover some of the costs it  
          incurs while producing it.  The department will then be able to  
          use the revenue to support teaching, research, and extension.


           Prior legislation  : AB 1989 (Chesbro), Chapter 162, Statutes of  
          2014.  Allows students between the ages of 18 to 21, enrolled in  
          winemaking and brewery science programs at the University of  
          California, the California State University, and the California  
          Community Colleges, to receive an exemption from current state  
          age restrictions in order to fully participate in bona fide  
          classes and programs where tasting of wine or beer is a  
          necessary aspect of the class or program.  


          AB 2609 (Nestande), Chapter 239, Statutes of 2014.  Added a  
          provision to the Act that allows nonprofit organizations  
          established for the purpose of promoting home brewing to serve  
          beer at fundraising events subject to specified conditions; and  
          provides that home brewed beer or wine may only be provided or  
          served within a clearly identified area.


          SB 1531 (Wolk), Chapter 334, Statutes of 2012.  Provides a  
          narrow tied-house exception that allows the Napa Valley Opera  
          House to accept wine and monetary donations from wineries  
          located within the Counties of Napa, Sonoma, Lake, and  
          Mendocino.  This exemption sunsets on January 1, 2018.





          SB 339 (Wolk), Chapter 702, Statutes of 2011.  Added a new  
          provision to the Act relating to the establishment of cooking  
          schools as bona fide eating-places for the purpose of obtaining  








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          a license to sell beer and wine.  The bill authorized the sale  
          and consumption of alcoholic beverages at a city-owned community  
          center, as specified.





          AB 1643 (Smyth), Chapter 79, Statutes of 2010.  Removes the  
          prohibition against serving alcohol at a public kindergarten  
          K-12 school housed on the campus of a college, as long as the  
          event is held at a time when children are not present.  In  
          addition, the only allowable events at which alcohol can be  
          served in this instance are fundraisers held to benefit a  
          nonprofit corporation.





          AB 172 (Smyth), Chapter 398, Statutes of 2009.  Allows public  
          colleges to serve alcoholic beverages during fundraisers in  
          college facilities that are used to support school K-12  
          students, if the event is held at a time when students are not  
          present at the facility.





          AB 1598 (Price), Chapter 149, Statutes of 2007.  Creates a new  
          exception to the existing prohibition against the sale or  
          consumption of alcoholic beverages on the grounds of a public  
          school to enable culinary arts programs at a campus of a  
          California Community College to buy, use, sell or consume wine  
          or beer only in connection with a sponsored dinner, course of  
          instruction, or meal demonstration.










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          SB 220 (Chesbro), Chapter 203, Statutes of 2005.  Exempts from  
          the prohibition wine produced by a bonded winery owned or  
          operated as part of an instructional program in viticulture and  
          enology.





          REGISTERED SUPPORT / OPPOSITION:




          Support


          California Association of Winegrape Growers


          Family Winemakers of California


          Germain-Robin Distillery


          Heitz Wine Cellars


          Ironstone Winery


          Long Meadow Ranch & Affiliates


          Moulds Family Vineyard








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          Napa Valley Grapegrowers


          Napa Valley Vintners


          Paul Hobbs Winery


          Ramey Wine Cellars


          St. George Spirits, Inc.


          The Wine Group


          Treasury Wine Estates


          Wente Family Estates


          Wine Institute




          Opposition


          Alcohol Justice


          California Alcohol Policy Alliance









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