BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                        SB 683|
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                                UNFINISHED BUSINESS 


          Bill No:  SB 683
          Author:   Wolk (D), et al.
          Amended:  6/21/16  
          Vote:     21 

           PRIOR VOTES NOT RELEVANT

           SENATE GOVERNMENTAL ORG. COMMITTEE:  11-0, 8/23/16 (pursuant to  
            Senate Rule 29.10)
           AYES:  Hall, Berryhill, Bates, Block, Gaines, Galgiani, Glazer,  
            Hill, Hueso, Lara, Vidak
           NO VOTE RECORDED:  Hernandez, McGuire

           ASSEMBLY FLOOR:  78-0, 8/18/16 - See last page for vote

           SUBJECT:   Alcoholic beverage licenses:  nonprofit sales  
                     license


          SOURCE:    Author
          


          DIGEST:  This bill grants the Department of Alcoholic Beverage  
          Control (ABC) the authority to issue a special nonprofit sales  
          license to a nonprofit mutual benefit corporation associated  
          with the Department of Viticulture and Enology at the University  
          of California Davis (UC Davis) and permits the licensee to,  
          among other things, accept up to 20,000 gallons of wine produced  
          by UC Davis and sell the wine to consumers or to other licensees  
          authorized to sell wine. 


          Assembly Amendments gut and amend the contents of the bill  
          relating to the State Library and add language that allows the  








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          Department of ABC to issue a special license, with certain  
          privileges, to a nonprofit associated with the Department of  
          Viticulture and Enology at UC Davis. 


          ANALYSIS:   


          Existing law:


          1)Establishes the Department of 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)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.  This  
            is known as the "tied-house" law.


          3)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 free goods, services, or advertising.


          4)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,  








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            horticultural organizations) for the purpose of assisting in  
            fund-raising efforts.


          5)Allows students who are at least 18 years of age and enrolled  
            in degree granting programs in enology or brewing at  
            accredited public postsecondary educational institutions to  
            taste, but not consume, an alcoholic beverage for educational  
            purposes as part of the instruction in a course required for a  
            degree.


          6)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 two such events that sell wine  
            or beer pursuant to this authorization per year.  


          7)Provides for 58 counties and 58 "classes" of counties - one  
            county to each class based on their 1970 Census populations.   
            (Government Code Section 28020)


          This bill:


          1)Authorizes the Department of ABC to issue a special nonprofit  
            sales license to a nonprofit mutual benefit corporation that  
            that has a board membership composed of the Dean of the  
            College of Agricultural and Environmental Sciences, the Chair  
            of the Department of Viticulture and Enology, and the Chair of  
            the Department of Food Services Technology of the public  
            university (UC Davis) located within the county of the 28th  
            class (Yolo County) that includes courses in viticulture and  
            enology in its curriculum.


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








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             a)   Accept the transfer of, and take title to, up to 20,000  
               gallons of wine per year produced by the public university,  
               notwithstanding that the public university does not hold  
               any license issued pursuant to this division.  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 received pursuant to item #2(a) above, 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  
               the tasting limitations in current law and any Department  
               of ABC regulations.


          3)Provides that 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 in this bill.


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


          5)Provides that the original fee for the special nonprofit sales  
            license shall be $500 and the annual renewal fee shall be  
            $100.    


          Background


          Purpose of SB 683.  According to the author's office, this bill  








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          is intended to create a special nonprofit sales license within  
          the ABC Act that will benefit the environment and the Department  
          of Viticulture and Enology at UC Davis.  UC Davis, through its  
          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 discarded.  


          The author's office states that "creating a specific nonprofit  
          entity, separate from the university, will allow wine to be  
          marketed, with the proceeds remitted to the department that  
          created the product to support its mission of teaching, research  
          and extension.  SB 683 will also help prevent unnecessary and  
          avoidable waste by allowing wine to be sold instead of  
          discarded." 


          Prior Legislation


          AB 1989 (Chesbro, Chapter 239, Statutes of 2014) created a  
          narrow exception to existing ABC Act provisions relating to  
          consumption or possession of alcoholic beverages by underage  
          persons by allowing students who are at least 18 years of age  
          and enrolled in degree granting programs in enology or brewing  
          at accredited public postsecondary educational institutions to  
          taste, but not consume, an alcoholic beverage for educational  
          purposes as part of the instruction in a course required for a  
          degree.


          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


          According to the Assembly Appropriations Committee, no  
          additional state costs.


          SUPPORT:   (Verified8/22/16)









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          California Association of Winegrape Growers
          Family Winemakers of California
          Germain-Robin Distillery
          Heitz Wine Cellars
          Ironstone Vineyards
          Long Meadow Ranch & Affiliates
          Moulds Family Vineyard
          Napa Valley Vintners
          Napa Valley Grapegrowers
          Paul Hobbs Winery
          Ramey Wine Cellars
          St. George Spirits, Inc.
          The Wine Group
          Treasury Wine Estates
          Wente Family Estates
          Wine Institute


          OPPOSITION:   (Verified8/22/16)


          Alcohol Justice
          California Alcohol Policy Alliance


          ARGUMENTS IN SUPPORT:     Proponents note that 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. 


          Proponents also contend that the current practice of disposing  
          of wine products is unsustainable from an environmental  
          point-of-view and that this bill makes fiscal sense.  The  
          privilege of selling the wine, predominantly in bulk, would  
          enable the UC Davis Department of Viticulture and Enology to  








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          recoup some of the production costs it incurs and also funnel  
          excess revenue into support for teaching, research, and  
          extension.


          ARGUMENTS IN OPPOSITION:     Opponents claim that SB 683 will  
          expand the number of alcohol license types and, in turn,  
          increase the availability of alcohol.  Opponents believe this  
          new license type opens the door to additional entities that  
          produce other alcohol products, thus creating greater problems  
          in more communities, which will negatively impact public health  
          and safety in California. 

          ASSEMBLY FLOOR:  78-0, 8/18/16
          AYES:  Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,  
            Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,  
            Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley,  
            Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth  
            Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto,  
            Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Holden,  
            Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder,  
            Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,  
            Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,  
            Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago,  
            Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,  
            Wilk, Williams, Wood, Rendon
          NO VOTE RECORDED:  Harper, Roger Hernández


          Prepared by:Arthur Terzakis / G.O. / (916) 651-1530
          8/23/16 20:03:09


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