BILL ANALYSIS �
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THIRD READING
Bill No: AB 623
Author: Williams (D), et al.
Amended: 8/15/11 in Senate
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE : 12-0, 6/14/11
AYES: Wright, Anderson, Calderon, Cannella, Corbett, De
Le�n, Evans, Hernandez, Padilla, Strickland, Wyland, Yee
NO VOTE RECORDED: Berryhill
ASSEMBLY FLOOR : 76-0, 4/28/11 - See last page for vote
SUBJECT : Alcoholic beverage licensees: limited
off-sale retail wine license
SOURCE : Author
DIGEST : This bill authorizes the department to issue a
limited off-sale retail wine license that allows the
licenseholder to sell wine if certain conditions are met
and grants specified privileges to the licenseholder, as
provided. Also, this bill imposes an original fee and an
annual renewal fee for the license, which will be deposited
in the Alcohol Beverage Control Fund.
ANALYSIS : Existing law establishes the Department of
Alcoholic Beverage Control (ABC) and grants it the
exclusive authority to administer the provisions of the
Alcoholic Beverage Control Act (Act) in accordance with
laws enacted by the Legislature.
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AB 623
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Existing law provides for various annual fees for the
issuance of alcoholic beverage licenses that vary depending
upon the type of license issued.
Existing law defines an "on-sale" license as authorizing
the sale of all types of alcoholic beverages: namely, beer,
wine and distilled spirits, for consumption on the premises
(such as at a restaurant or bar). An "off-sale" license
authorizes the sale of all types of alcoholic beverages for
consumption off the premises in original, sealed
containers.
Existing law provides that a violation of the Act is a
misdemeanor, unless otherwise specified.
This bill creates a new limited off-sale retail license
category in the Act that permits licensees to sell wine to
consumers via direct mail, telephone, or the Internet.
Specifically, this bill:
1. Grants the ABC the authority to issue a limited off-sale
retail wine license that permits the licensee to sell
wine provided all the following conditions are met: (a)
sales are restricted to those solicited and accepted by
direct mail, the telephone, or the Internet; (b) sales
are not conducted from a retail premises open to the
public; (c) the licensee takes possession of and title
to all wine sold by the licensee; and, (d) all wine sold
by the licensee is delivered to the purchaser from the
licensee's licensed premises or from a licensed public
warehouse.
2. Stipulates that 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.
3. Requires the licensee to comply with specified notice
and posting requirements of the Act and also exempts the
licensee from certain notice requirements of the Act.
4. Provides that the ABC may impose reasonable conditions
upon the licensee as may be needed in the interest of
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public health, safety, and welfare.
5. Requires the license applicant to pay an initial fee and
an annual renewal fee that is equivalent to the fee paid
by off-sale beer and wine licensees, $100 and $246
respectively.
6. Additionally, makes several corresponding revisions to
the Act resulting from this new license category
pertaining to: rights of purchaser to return wine
removed from the State, assisting nonprofits in
conducting wine tasting, instructional tasting events,
and sales or gifts to nonprofits.
Background
This bill 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 products and services. This 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). This
was in response to an emerging wine business on the
Internet that occurred approximately 10 years ago and
paralleled the continued growth in California's wine
industry. It created another sales channel for California
wine and the state's winegrape growers. 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 wholesalers,
but are either forced to do so or face disciplinary action
against their licenses. In addition, because the retail
license issued is the same license issued to retail stores
open to the public such as grocery stores, mini-marts and
gas stations, the license counts against the license
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concentration limitations imposed by law, thus preventing
other businesses that do wish to operate a retail store
from obtaining a license. By creating a new license
category, this bill alleviates the problem for those that
only want to sell directly to consumers while enhancing the
marketing of California produced wine.
Prior/Related Legislation
AB 323 (Evans), Chapter 131, Statutes of 2007, allows a
licensed beer and wine wholesaler (Type 17) that also holds
an off-sale beer and wine retail license (Type 20) and only
sells wine, to assist a nonprofit organization holding a
temporary wine license (special daily license) in
conducting a winetasting.
SB 1923 (M. Thompson), Chapter 900, Statutes of 1996, among
other things, permits the application for and the issuance
of a retail off-sale beer and wine license to a licensed
beer and wine wholesaler, even though the premises will be
located in an area having an undue concentration of
off-sale beer and wine licenses, if certain conditions are
met.
AB 3144 (Floyd), Chapter 284, Statutes of 1988, among other
things, permits a wholesaler's beer and wine license if
restricted to the sale of wine to be renewed for the holder
of both an off-sale beer and wine license and a beer and
wine wholesaler's license, as specified.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/15/11)
Family Winemakers of California
Chambers of Commerce Alliance - Ventura and Santa Barbara
Counties
ARGUMENTS IN SUPPORT : Writing in support of this bill
the Family Winemakers of California (FWC) states,
"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,
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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 if
sales are not made." FWC emphasizes that relief from the
wholesaler requirement will encourage the transition from
the Type 17/20 combo to the new license and revenue loss
from non-renewal of the wholesaler license will be
mitigated by revenue generated from new licensees.
ASSEMBLY FLOOR : 76-0, 4/28/11
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani,
Galgiani, Garrick, Gatto, Gordon, Grove, Hagman,
Halderman, Hall, Harkey, Hayashi, Roger Hern�ndez, Hill,
Huber, Hueso, Huffman, Jeffries, Jones, Knight, Lara,
Logue, Bonnie Lowenthal, Ma, Mansoor, Miller, Mitchell,
Monning, Morrell, Nestande, Nielsen, Norby, Olsen, Pan,
Perea, V. Manuel P�rez, Portantino, Silva, Skinner,
Smyth, Solorio, Swanson, Torres, Valadao, Wagner,
Wieckowski, Williams, John A. P�rez
NO VOTE RECORDED: Gorell, Mendoza, Yamada, Vacancy
PQ:kc 8/16/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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