BILL ANALYSIS Ó
SB 683
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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