BILL ANALYSIS �
SB 32
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Date of Hearing: July 6, 2011
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Isadore Hall, Chair
SB 32 (Leno) - As Amended: May 26, 2011
SENATE VOTE : 39-0
SUBJECT : Alcoholic beverages: definitions: rectifiers.
SUMMARY : Adds clarity to the definition of rectifier within
the Alcoholic Beverage Control Act (Act) by expressly excluding
from the definition any on-sale licensee that colors, flavors,
or blends distilled spirits or wine products on the licensed
premises for consumption on those premises. Specifically, this
bill :
1) Excludes from the definition of "rectifier" any on-sale
licensee that colors, flavors, or blends distilled spirits or
wine products on the licensed premises for consumption on those
premises.
2) Contains an urgency clause.
EXISTING LAW :
1) Establishes the Department of Alcoholic Beverage Control
(ABC) and grants it exclusive authority to administer the
provisions of the Act in accordance with laws enacted by the
Legislature.
2) Defines "rectifier" to mean every person who colors,
flavors, or otherwise processes distilled spirits by
distillation, blending, percolating, or other processes.
3) Defines "distilled spirits" to mean an alcoholic beverage
obtained by the distillation of fermented agricultural
products, and includes alcohol for beverage use, spirits of
wine, whiskey, rum, brandy, and gin, including all dilutions and
mixtures thereof.
4) Relating to a "distilled spirits rectifier's general
license," authorizes the licensee to cut, blend,
rectify, mix, flavor, and color distilled spirits, and whether
so cut, blended, mixed, flavored, or colored by him or any other
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person to package, label, export, and sell the distilled spirits
to distilled spirits manufacturers, distilled spirits
manufacturer's agents, distilled spirits wholesalers,
distilled spirits general importers, rectifiers, and distilled
spirits general rectifiers.
5) 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.
FISCAL EFFECT : Unknown.
COMMENTS :
In late February 2010, ABC announced that it would be cracking
down on bars and restaurants that were breaking the law (e.g.,
altering alcohol) by making their own "infused" drinks. ABC
initially had issued an industry advisory, or warning, in May
2008 relating to rectification of distilled spirits in on-sale
premises (bars and restaurants) that was designed to prevent
bartenders from modifying drinks to increase the alcohol content
of distilled spirits in violation of existing license
privileges. "Rectification" is defined as any process or
procedure whereby distilled spirits (vodka, gin, tequila) are
cut, blended, mixed or infused with any ingredient (spices,
herbs, fruit, vegetables, etc.) which reacts with the
constituents of the distilled spirits and changes the character
and nature or standards of identity of the distilled spirits.
One example of rectification is, but not necessarily limited to,
creating products such as 'lemoncello" or "limoncello" in which
sugar and citrus products are combined with vodka and stored,
initiating a maturation process which consequently changes the
character and nature of the vodka, and possibly its alcohol
content. The simple mixing of alcoholic beverages with other
ingredients for immediate consumption (e.g., mint leaves in
mojitos) is not considered rectification.
The author's office notes that the original intent of ABC law
referenced above was to protect the public from watered down or
adulterated - and potentially dangerous - alcoholic beverages.
The author's office contends that such concerns no longer apply
to the current practice of treating spirits as an element of
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culinary creativity. The author's office estimates that
approximately 50% of San Francisco area bars created and served
infusions prior to the department taking action to issue
warnings to licensees. Many of these establishments stopped
serving infusions with a resulting drop in business.
SB 32 would modify the definition of rectifier within the Act so
as not to require that an on-sale licensee obtain a separate
rectifier license for this business activity (infusion).
Specifically, this measure is intended to permit on-sale
licensees to engage in the artisanal practice of making small
amounts of spirits flavored with fruit, vegetables and spices on
the licensed premises for consumption solely on the licensee's
premises. The author's office emphasizes that SB 32 would
simply update existing law to recognize this innovation and
validate the existing practice.
In support : Proponents argue that the act or art of mixing
drinks from distilled spirits or wine for consumption on
licensed premises should not be considered a production process
requiring a separate license. Proponents believe that this bill
is a straightforward solution that relieves a potential
enforcement situation for tens of thousands of license holders
throughout the state.
Tied-House Law : Under tied-house law, alcoholic beverages are
required to be distributed through a "three-tier" system of
licensed manufacturers, wholesalers, and retailers. The
rationale for these laws is to prevent corrupt sales practices,
the formation of vertical monopolies, and dominance by a single
producer in the market place. Tied-house restrictions avoid
undue influence, unfair trade practices, and cross-ownership
within the three-tier system. The tied-house system has been
credited with eliminating commercial bribery and predatory
marketing practices.
Prior legislation : SB 1022 (Strickland), Chapter 281, Statutes
of 2010, expanded an existing tied-house exception within the
ABC Act to enable licensed distilled spirits "rectifiers" to
donate or sell their products to specified nonprofit entities
for the purpose of assisting in fund-raising efforts.
REGISTERED SUPPORT / OPPOSITION :
Support
SB 32
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California Music and Culture Association
California Restaurant Association
Family Winemakers of California
Future Bars, Inc.
Golden Gate Restaurant Association
San Francisco Small Business Commission
Small Business California
Opposition
None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531