BILL ANALYSIS �
AB 623
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ASSEMBLY THIRD READING
AB 623 (Williams)
As Amended April 6, 2011
Majority vote
GOVERNMENTAL ORGANIZATION 14-0 APPROPRIATIONS 15-0
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|Ayes:|Hall, Nestande, Atkins, |Ayes:|Fuentes, Harkey, |
| |Block, Blumenfield, | |Blumenfield, Bradford, |
| |Chesbro, Galgiani, Gatto, | |Charles Calderon, Campos, |
| |Hill, Jeffries, Ma, | |Davis, Donnelly, Gatto, |
| |Perea, | |Hall, Hill, Lara, |
| |V. Manuel P�rez, Silva | |Mitchell, Nielsen, |
| | | |Solorio |
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SUMMARY : Creates a new limited off-sale retail license category
that allows licensees to sell wine via the Internet, direct
mail, or the telephone. Specifically, this bill :
1) Authorizes the issuance of a limited off-sale retail wine
license that would allow the licensee to sell wine only by
direct mail, the telephone, or the Internet.
2) Provides sales may not be conducted from a retail premises
open to the public, as specified.
3) Specifies the sale of wine shall only be to consumers and
not for resale in packages or quantities of 52 gallons or less
per sale, for consumption off the premise where sold.
4) Allows the holder of a limited off-sale retail wine license
to assist a nonprofit organization holding a temporary wine
license in conducting a winetasting event (donate, sell, and/or
pour), as defined.
5) Requires the new license type to accept returns of wine sold
to consumers and removed from the state.
6) Provides that the Department of Alcoholic Beverage Control
(ABC) may impose reasonable conditions upon the licensee as may
be needed in the interest of public health, safety, and welfare.
7) Requires the license applicant to pay an initial fee and an
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annual renewal fee that is equal to the fee paid by off-sale
beer and wine licensees, as defined.
EXISTING LAW :
1) Establishes ABC and grants it the exclusive authority to
administer the provisions of the Alcoholic Beverage Control Act
in accordance with laws enacted by the Legislature.
2) Establishes a beer and wine wholesaler license. Authorizes
a beer and wine wholesaler licensee to obtain an off-sale beer
and wine license, but limits sales to those accepted via mail,
telephone, or computer and prohibits operations conducted from a
retail store open to the public.
3) Provides for various annual fees for the issuance of
alcoholic beverage licenses that vary depending upon the type of
license issued.
4) Prohibits ABC from issuing a wholesale license to any person
who does not in good faith actually carry on or intend to carry
on a bona fide wholesale business by sale to retail licensees of
the alcoholic beverage designated in the wholesale license, and
authorizes ABC to revoke any wholesale license when the licensee
fails for a period of 45 days to actively and in good faith to
engage in the wholesale business.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, there are currently 1,500 licensees who hold combined
beer and wine wholesaler/off-sale beer and wine licenses that
are currently required in order to conduct Internet sales in the
state. If one-third of these licensees shift to the new license
rather than maintaining two licenses, the loss in revenue for
ABC could reach $150,000 (ABC fund). However, that loss could
be partially offset by new licensees who are taking advantage of
the simplified licensing structure to establish Internet and
mail-order wine businesses. Every 100 new licenses will bring
in an additional $25,000 in revenue (ABC fund).
COMMENTS : This measure allows ABC to issue an off-sale retail
wine license to entrepreneurs who do not have a physical store
to sell wine directly to consumers. This concept recognizes the
realities of the changing wine industry and the growing use of
the Internet, direct mail, and the telephone in purchasing
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products and services. The bill establishes a $100 initial fee
with a $246 annual renewal fee for this new limited off-sale
Internet retail wine license, which is consistent with the
current "beer and wine retailer" license fees. All revenue
would be deposited into the ABC Fund to cover ABC's costs.
Presently, ABC issues two licenses to facilitate Internet retail
sales: a beer and wine wholesaler (Type 17) together with an
off-sale beer and wine (Type 20). Current law requires the
holder of a wholesale license to operate as bona fide wholesaler
"in good faith." This means that they must sell to retailers
other than themselves. Many Internet retailers have no desire
to act as wholesaler, but are either forced to do so or face
disciplinary action against their licenses.
In addition, because the license is the same one issued to
retail stores (open to the public) such as grocery stores,
mini-marts and gas stations, the license counts against
concentration limitations imposed by law, thus preventing other
businesses that do wish to operate a retail store from obtaining
a license. This bill creates a new license to alleviate the
problem for those that only want to sell directly to consumers
while enhancing the marketing of California produced wine.
According to the Family Winemakers of California (FWC),
"currently, many custom crush producers operate under a Type
17/20 combo license that allows them to sell wine directly to
consumers by taking orders only through mail, telephone or the
Internet. Holding a Type 17 wholesalers license requires a good
faith effort to sell to a retailer every 45 days. However, many
wine Internet retailers have no desire to act as wholesalers,
but are either forced to do so or face disciplinary action
against their licenses." This bill will be effective in
codifying current practices in existing law into one
well-defined license under the ABC Act.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0000299
AB 623
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