BILL ANALYSIS �
AB 623
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 623 (Williams)
As Amended August 15, 2011
Majority vote
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|ASSEMBLY: |76-0 |(April 28, |SENATE: |36-0 |(August 22, |
| | |2011) | | |2011) |
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Original Committee Reference: G.O.
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
annual renewal fee that is equal to the fee paid by off-sale
beer and wine licensees, as defined.
The Senate amendments make a technical change to the bill to
clarify the author's intent to limit sales of wine to 52 gallons
or less per sale.
AB 623
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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.
AS PASSED BY THE ASSEMBLY , this bill was substantially similar to
the version passed by the Senate. The Assembly-approved version
created a new limited off-sale retail license category in the ABC
Act that permits licensees to sell wine to consumers via direct
mail, telephone, or the Internet.
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
AB 623
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realities of the changing wine industry and the growing use of the
Internet, direct mail, and the telephone in purchasing 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) 319-2531FN:
0001879