BILL ANALYSIS �
Bill No: AB
520
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Lou Correa, Chair
2013-2014 Regular Session
Staff Analysis
AB 520 Author: Chesbro
As Amended: February 11, 2014
Hearing Date: June 24, 2014
Consultant: Art Terzakis
SUBJECT
Alcoholic Beverages: instructional tastings
DESCRIPTION
AB 520 deletes an existing provision of the Alcoholic
Beverage Control (ABC) Act that grants a winery or
distilled spirits manufacturer the privilege of conducting
instructional consumer tastings at an on-sale retail
licensed premises and recasts that provision to create a
new Section of law that accounts for updates in the ABC Act
and for code conformity purposes. Specifically, this
measure:
1)Expands the types of "authorized licensees" that may
provide instructional tastings events at on-sale retail
licensed premises to also include, in addition to a
winery or distilled spirits manufacturer, the following
licensees: California winegrower's agent, beer and wine
importer general, beer and wine wholesaler, wine
rectifier, distilled spirits manufacturer's agent,
distilled spirits importer general, distilled spirits
rectifier, distilled spirits general rectifier,
rectifier, out-of-state distilled spirits shipper's
certificate holder, distilled spirits wholesaler, brandy
manufacturer, brandy importer, or California brandy
wholesaler.
2)Stipulates that an authorized licensee shall not include
any person that solely holds a combination of a beer and
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wine wholesaler license and an off-sale beer and wine
retail license or holds those licenses solely in
combination with any license not listed in item #1 above
or in combination with a beer and wine importer general
license, or holds a limited off-sale retail wine license.
3)Makes it explicit that no premium, gift, free goods, or
other things of value shall be given away by an
authorized licensee or its designated representative in
connection with an instructional tasting.
4)Permits the authorized licensee, with permission of the
retail on-sale licensee upon whose premises the
instructional tasting event will be held, to advertise
the event, subject to certain restrictions.
5)Also, permits the on-sale retail licensee to advertise an
instructional tasting event to the general public and
requires the costs of this advertising to be borne solely
by the on-sale retail licensee.
6)Stipulates that no more than one authorized licensee or
its designated representative shall conduct an
instructional tasting pursuant to this section at the
on-sale retail licensed premises of an on-sale retail
licensee at any time, and a person shall not act as the
designated representative for more than one authorized
licensee at that instructional tasting.
EXISTING LAW
Existing law establishes the Department of Alcoholic
Beverage Control (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.
Existing law, known as the "tied-house" law, separates the
alcoholic beverage industry into three component parts, or
tiers, of manufacturer (including breweries, wineries and
distilleries), wholesaler, and retailer (both on-sale and
off-sale).
Tied house refers to a practice in this country prior to
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Prohibition and still occurring in England today where a
bar or public house, from whence comes the "house" of tied
house, is tied to the products of a particular
manufacturer, either because the manufacturer owns the
house, or the house is contractually obligated to carry
only a particular manufacturer's products.
The original policy rationale for this body of law was to:
(a) promote the state's interest in an orderly market; (b)
prohibit the vertical integration and dominance by a single
producer in the marketplace; (c) prohibit commercial
bribery and protect the public from predatory marketing
practices; and, (d) discourage and/or prevent the
intemperate use of alcoholic beverages. Generally, other
than exceptions 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.
As a limited exception to the general tied-house rule,
existing law (Business and Professions Code Section
25503.4) permits winegrowers and their agents, including
wine importers, to conduct and participate in instructional
events known as "meet the winemaker" dinners held at a
retailer's premises featuring the winemaker's wine,
provided certain conditions are met. Although no wine can
be given away at the events, minimal amounts of wine, taken
from barrels or tanks, may be sample tasted. In addition,
no more than three one-ounce tastes of wine per consumer
may be offered at the instructional event from bottles of
wine provided by the authorized person. Furthermore, the
law provides that minimal amounts of the samples or tastes
provided at the instructional event do not constitute a
thing of value.
As a limited exception to the general tied-house rule,
existing law (Business and Professions Code Section
25503.5) permits a winegrower, beer manufacturer, beer or
wine wholesaler, distilled spirits manufacturer, distilled
spirits general rectifier, or distilled spirits general
importer to conduct "instructional" tastings for licensees
and their employees on the subject of wine, beer, or
distilled spirits. This section of law also permits a
winegrower or distilled spirits manufacturer to instruct
"consumers" at an on-sale licensed retail premise provided
the following conditions are met: (1) no more than ounce
of distilled spirits is offered in one tasting; (2) no more
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than one ounce of wine is offered in one tasting; and, (3)
no more than three tastings are offered to an individual in
one day. An instruction may include the history, nature,
values and characteristics of the product being offered,
and the methods of presenting and serving the product.
As a limited exception to the general tied-house rule,
existing law (Business and Professions Code Section
25503.55) authorizes beer manufacturers, beer wholesalers,
and beer importers to conduct instructional beer tastings
(not to exceed 8 ounces per person, per day) to consumers
of legal drinking age at on-sale retail licensed premises
under specified conditions.
Existing law prohibits any licensee from giving any
premium, gift, or free goods in connection with the sale or
distribution of any alcoholic beverage, except as
specifically authorized. The ABC Act provides that a
violation of any of its provisions for which another
penalty or punishment is not specifically provided is a
misdemeanor.
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.
BACKGROUND
Purpose of AB 520: According to the author's office, this
measure would simply update an existing 15 year-old statute
that permits a winery or distilled spirits manufacturer to
conduct a consumer tasting at an on-sale retailer's
licensed premises. The updates are twofold: (1) the
supplier and the on-sale retailer are separately authorized
to provide advertising for the event and (2) a wine and
spirits wholesaler is authorized to conduct the tasting for
their supplier. For simplicity's sake, the existing
privilege in Business and Professions Code Section 25503.5
is transferred into a new Section 25503.57. The language
is not verbatim to the off-sale tastings law due to the
fact that Legislative Counsel made some cleanup, but
non-substantive, changes.
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The author's office points out that other tastings laws
found in the ABC Act (e.g., the winemaker dinner and
off-sale tastings statutes) already permit the supplier and
retailer to provide their own advertising, such as on their
Facebook pages. The wine industry has asked that this
issue be addressed through the code conformity change. In
addition, the author's office states that the ABC has
opined that a wholesaler is required to obtain a
letter-of-approval from its supplier before conducting a
tasting at a restaurant - this is a paperwork hassle - and
AB 520 addresses this administrative burden, as well.
Arguments in Opposition: Writing in opposition, Alcohol
Justice "objects to AB 520 because it expands the types of
licensees that may provide instructional tastings events
regarding wine or distilled spirits at on-sale retail
licensed premises. Evidence shows that increased
availability of alcoholic beverages is correlated with an
increase in alcohol related harm."
PRIOR/RELATED LEGISLATION
AB 2488 (Levine), 2013-14 Session. Would expand an
existing provision of the ABC Act which currently allows a
licensed winegrower, under specified conditions, to sell
estate grown wine at certified farmers' markets to also
grant the licensed winegrower the privilege of conducting
limited wine tastings for consumers at farmers' markets
under certain circumstances. (Pending in Senate
Appropriations Committee)
AB 1424 (Committee on Governmental Organization), 2013-14
Session. Would permit winegrowers and beer manufacturers
to describe the "composition" of their products, in
addition to other characteristics already permitted, when
engaging in tastings or instructional events for their
licensees or employees. (Senate Inactive File)
AB 949 (Quirk), 2013-14 Session. Would have authorized
licensed distilled spirits manufacturers to charge
consumers for tastings and would have imposed additional
conditions on the provision of tastings by the licensee,
including limiting the size and number of tastes. Also,
would have provided that a distilled spirits manufacturer's
license authorizes the licensee to serve and sell food,
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general merchandise, and nonalcoholic beverages for
consumption on or off the premises. (Held in Assembly Rules
Committee)
AB 933 (Skinner), Chapter 366, Statutes of 2013. Granted
licensed distilled spirits manufacturers and licensed
brandy manufacturers the privilege to conduct consumer
tastings on their licensed premises and to charge for those
tastings.
AB 636 (Hall), Chapter 329, Statutes of 2013. Authorized,
under specified conditions and until January 1, 2016, the
appearance of a person for the purpose of providing
autographs at an instructional event for consumers that a
winegrower, California winegrower's agent, importer, or
other specified parties conduct, or participate in, that is
held at a retailer's premises featuring wines produced by
or for the winegrower or, imported by the wine importer.
SB 1101 (Wiggins), Chapter 177, Statutes of 2010.
Clarified that winemakers who participate in instructional
events or "meet the winemaker dinners," held at a
retailer's licensed premises for consumers, may offer
minimal samples of wine from bottles. Also, specified how
those wine bottles are removed and the amount allowed to be
provided as samples.
AB 605 (Portantino), Chapter 230, Statutes of 2010. Added
new provisions to the ABC Act authorizing the department to
issue to the holder of an "off-sale" retail license an
"instructional tasting license" for the purpose of
furnishing tastings of alcoholic beverages to consumers,
subject to certain limitations.
AB 2134 (Chesbro), Chapter 149, Statutes of 2010. Created
a new tied-house exception in the ABC Act that allows
licensed brewers to conduct and participate in events
called "Beer Maker Dinners" for consumers held at an
on-sale retail licensed premise.
AB 2293 (De Leon), Chapter 638, Statutes of 2008. Added a
new provision to the ABC Act that permits distilled spirits
manufacturers and winegrowers to provide their product
offerings directly to consumers (free of charge) during
invitation-only events on premises for which a caterer's
permit authorization has been issued.
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AB 1245 (Torrico), Chapter 629, Statutes of 2008. Provided
that no rule of the department of ABC may impose a dollar
limit for consumer advertising specialties furnished by a
beer manufacturer to the general public of other than $3
per unit original cost to the beer manufacturer who
purchased it.
SB 1548 (Murray), Chapter 670, Statutes of 2006.
Authorized beer manufacturers and wholesalers to offer beer
samples (not to exceed 8 ounces per person, per day) to
individuals of legal drinking age at on-sale retail
licensed premises under specified conditions.
AB 2285 (V. Brown), Chapter 248, Statutes of 1998. Allowed
on-sale retail licensees to offer limited tastings of wine
or distilled spirits at the licensed establishment.
SB 993 (Burton), Chapter 544, Statutes of 1997. Among
other things, provided that no rule of the Department of
ABC may impose a dollar limit for consumer advertising
specialties furnished by a distilled spirits supplier to a
retailer or to the general public of less than $5 per unit
original cost to the supplier who purchased it. Also,
authorized a licensed distilled spirits manufacturer to
conduct tastings of distilled spirits on the licensed
premises under specified conditions.
SUPPORT: As of June 20, 2014:
The Wine Institute
OPPOSE: As of June 20, 2014:
Alcohol Justice (formerly Marin Institute)
FISCAL COMMITTEE: Senate Appropriations Committee
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