Amended in Senate August 11, 2014

Amended in Senate June 12, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 2010

Introduced by Assembly Member Gray

February 20, 2014

An act to amend Section 23104.2 of, and to repeal and add Section 23389 of, the Business and Professions Code, relating to alcoholic beverages begin insert , and declaring the urgency thereof, to take effect immediately end insert .

LEGISLATIVE COUNSEL’S DIGEST

AB 2010, as amended, Gray. Alcoholic beverages: beer returns: product quality: beer manufacturers: duplicate licenses.

Existing law, the Alcoholic Beverage Control Act, generally permits a wholesaler or manufacturer to accept the return of beer from a retailer only if the beer is returned in exchange for the identical quantity and brand of beer. Existing law permits a credit memorandum to be issued when a package is broken or damaged when the return and corrections are completed within 15 days, as specified. Existing law provides exceptions from this limitation, including permitting the return of beer by a retailer to a seller, and by a seller to a manufacturer or importer, if the beer is recalled or presents a health or safety issue, as provided.

This bill would extend the exception provided for beer that is recalled or presents a health and safety issue, as described above, to beer that has product quality issues, subject to Department of Alcoholic Beverage Control approval.

The Alcoholic Beverage Control Act is administered by the Department of Alcoholic Beverage Control. Existing law requires a license or permit to manufacture beer, unless the beer is manufactured for personal or family use, under specified conditions. A licensed beer manufacturer may sell beer to consumers at a branch location. Existing law requires the department to issue a duplicate license to a beer manufacturer if the beer manufacturer applies for a duplicate license. Under existing law, for 30 days from the date of the issuance of a duplicate license, retail sales of beer are prohibited at a branch office for which the duplicate license was issued. The act provides that a violation of its provisions is a misdemeanor, unless otherwise specified.

This bill would, instead, allow the department to issue a duplicate license at its discretion where specified privileges are to be exercised at the branch office. The bill would prohibit the sale or tasting of alcoholic beverages to consumers at more than 6 branch office locations, and allow 2 of the branch office locations to be bona fide eating places owned and operated by and for the beer manufacturer, as provided. The bill would require the department to issue a begin insert beer manufacturer end insert temporary permit upon request begin insert and payment of a $100 fee end insert and would also authorize the department to issue a duplicate license when specified privileges are not going to be exercised at a branch office. The bill would eliminate the 30-day prohibition on retail sales of beer for a branch office with a duplicate license. Because the violation of a provision of a license is punishable as a misdemeanor, the bill expands the definition of an existing crime, thereby creating a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

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This bill would declare that it is to take effect immediately as an urgency statute.

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Vote:  begin delete majority end delete begin insert ²⁄₃ end insert . Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Section 23104.2 of the Business and Professions
Code is amended to read:

23104.2.  

(a) Subject to the exceptions specified in subdivision
(b), a retail licensee may return beer to the wholesaler or
manufacturer from whom the retail licensee purchased the beer,
or any successor thereto, and the wholesaler, manufacturer, or
successor thereto may accept that return if the beer is returned in
exchange for the identical quantity and brand of beer. No
wholesaler or manufacturer, or any successor thereto, shall accept
the return of any beer from a retail licensee except when the beer
delivered was not the brand or size container ordered by the retail
licensee or the amount delivered was other than the amount
ordered, in which case the order may be corrected by the wholesaler
or manufacturer who sold the beer, or any successor thereto. If a
package had been broken or otherwise damaged prior to or at the
time of actual delivery, a credit memorandum may be issued for
the returned package by the wholesaler or manufacturer who sold
the beer, or any successor thereto, in lieu of exchange for an
identical package when the return and corrections are completed
within 15 days from the date the beer was delivered to the retail
licensee.

(b) Notwithstanding subdivision (a), a wholesaler or
manufacturer, or any successor thereto, may accept the return of
beer purchased from that wholesaler, manufacturer, or successor
thereto, as follows:

(1) (A) From a seasonal or temporary licensee if at the
termination of the period of the license the seasonal or temporary
licensee has beer remaining unsold, or from an annual licensee
operating on a temporary basis if at the termination of the
temporary period the annual licensee has beer remaining unsold.

(B) For purposes of subparagraph (A), an annual licensee shall
be considered to be operating on a temporary basis if he or she
operates at seasonal resorts, including summer and winter resorts,
or at sporting or entertainment facilities, including racetracks,
arenas, concert halls, and convention centers. Temporary status
shall be deemed terminated when operations cease for 15 days or
more. No wholesaler or manufacturer, or successor thereto, shall
accept the return of beer from an annual licensee considered to be
operating on a temporary basis unless the licensee notifies that
wholesaler or manufacturer, or successor thereto, within 15 days
of the date the licensee’s operations ceased.

(2) (A) Subject to subparagraph (B), a wholesaler or
manufacturer, or any successor thereto, may, with department
approval, accept the return of a brand of beer discontinued in a
California market area or a seasonal brand of beer from a retail
licensee, provided that the beer is exchanged for a quantity of beer
of a brand produced or sold by the same manufacturer with a value
no greater than the original sales price to the retail licensee of the
returned beer. For purposes of this subparagraph, “seasonal brand
of beer” means a brand of beer, as defined in Section 23006, that
is brewed by a manufacturer to commemorate a specific holiday
season and is so identified by appropriate product packaging and
labeling.

(B) A discontinued brand of beer may not be reintroduced for
a period of 12 months in the same California market area in which
a return and exchange of that beer as described in subparagraph
(A) has taken place. A seasonal brand of beer may not be
reintroduced for a period of six months in the same California
market area in which a return and exchange of that beer as
described in subparagraph (A) has taken place.

(c) Notwithstanding subdivision (a), a wholesaler or
manufacturer, or any successor thereto, may accept the return of
beer purchased from that wholesaler or manufacturer, or any
successor thereto, by the holder of a retail license following the
revocation of, suspension of, voluntary surrender of, or failure to
renew the retail license.

(d) A wholesaler or manufacturer, or any successor thereto, may
credit the account of the retailer identified in subdivision (c) in an
amount not to exceed the original sales price to the retailer of the
returned beer, provided that the beer has been paid for in full.

(e) (1) Notwithstanding the 15-day time limit for the return of
beer described in subdivision (a), beer that is recalled or that is
considered by a manufacturer, importer, or governmental entity
to present health, safety, or product quality issues if distributed,
offered for sale, or sold in the state may be accepted for return at
anytime from a retailer and be picked up by the seller of beer. The
seller of beer may exchange the returned beer for identical product,
if safe inventory or quality-controlled product inventory is
available, issue a deferred exchange memorandum showing the
beer was picked up and is to be replaced when inventory is
available, or issue a credit memorandum to the retailer for the
returned beer. The seller of beer may exchange with the
manufacturer or importer the returned beer and the seller of beer’s
inventory that was recalled or considered to present health, safety,
or product quality issues. The returned beer may be exchanged for
identical product, if safe inventory or quality-controlled product
inventory is available, or the seller of beer may elect to receive
either a refund from or be issued a credit memorandum by the
manufacturer or importer for the returned beer and seller of beer’s
inventory that was recalled or considered to present health, safety,
or product quality issues.

(2) Returns for manufacturer or importer product quality issues
pursuant to this subdivision are subject to department approval,
and shall not include the return of beer due to the aging of beer.

(f) Notwithstanding subdivision (a), a licensee may accept the
return of unsold and unopened beer from an organization that
obtained a temporary license pursuant to Section 24045 or 24045.1.
The licensee may credit the account of the organization in an
amount not to exceed the original sales price of the returned beer,
provided that the beer has been paid for in full.

(g) (1) Notwithstanding subdivision (a), an on-sale retail
licensee that purchases beer for sale at an event for which a catering
authorization is issued by the department pursuant to Section 23399
may return the unused and unopened beer to the original selling
licensee at the conclusion of the catered event or upon expiration
of the catering authorization, provided the beer was purchased for
use or sale only at that event and the on-sale retail licensee does
not also provide any beer for use or sale at the event from its
permanent licensed premises. The on-sale retail licensee holding
the catering authorization shall record and maintain a record of
the inventory of all unused and unopened beer to be returned at
the conclusion of the catering event. The original selling licensee
shall prepare an invoice to reflect the returned beer that shall
reference the original sales invoice and shall provide the on-sale
retail licensee holding the catering authorization with a copy of
the invoice.

(2) Any beer returned pursuant to this subdivision must be
returned to the original selling licensee at the conclusion of the
catered event or upon expiration of the catering authorization. The
original selling licensee may credit the account of the on-sale retail
licensee in an amount not to exceed the original sales price of the
returned beer, provided the beer has been paid for in full.

SEC. 2.  

Section 23389 of the Business and Professions Code
is repealed.

SEC. 3.  

Section 23389 is added to the Business and Professions
Code, to read:

23389.  

(a) The department may issue to a beer manufacturer
a duplicate of its original license for a location or locations other
than its licensed premises of production or manufacture. A
duplicate license issued by the department authorizes the
maintenance and operation of each branch office by the beer
manufacturer and shall only have the license privileges set forth
in this section. The fee for each duplicate license, regardless of
type, shall be as specified in Section 23320.

(b) Subject to the limitations set forth in this section, a licensed
beer manufacturer may exercise all of the privileges under its
manufacturer’s license at branch offices licensed by the department,
except for production or manufacture; sales to consumers for
consumption on or off the branch office premises, except as
provided for in subdivision (c); and the sale of beer and wine to
consumers for consumption on the branch office premises where
a bona fide public eating place is owned and operated by and for
the beer manufacturer, except as provided for in subdivision (c).

(c) (1) A beer manufacturer shall not sell any alcoholic
beverages to consumers for consumption on or off the licensed
premises, or provide authorized tastings to consumers, at more
than six branch office locations, regardless of how many beer
manufacturer licenses are held by the beer manufacturer either
alone or under common ownership with any other licensed beer
manufacturer, and no more than two of the six branch locations
may be bona fide begin insert publ end insert begin insert ic end insert eating places owned and operated by and
for the beer manufacturer. A branch office location authorized to
sell an alcoholic beverage or provide a tasting to consumers for
consumption on or off the licensed premises or begin insert that end insert is a bona fide
begin insert public end insert eating place owned and operated by and for the beer
manufacturer before begin delete January 1, 2015, end delete begin insert the effective date of the act
adding this section, end insert shall be counted against the limit imposed by
this subdivision.

(2) A branch office location where consumer tastings or sales
for begin delete on or off end delete begin insert on- or off end insert begin insert - end insert premises consumption are authorized shall
not sell or serve any alcoholic beverages other than beer that is
produced and bottled by, or produced and packaged for, the beer
manufacturer.

(3) A branch office location where the sale of beer and wine to
consumers for consumption on the premises of a bona fide public
eating place is authorized shall not sell or serve alcoholic beverages
other than the following:

(A) Beer and wine that is produced and bottled by, or produced
and packaged for, the beer manufacturer.

(B) Beer and wine that is purchased by the beer manufacturer
from a licensed wholesaler that is not owned, either alone or under
common ownership, by the beer manufacturer.

(d) In order to obtain a duplicate license for a branch location
or begin delete produced and packaged for, end delete locations with the privileges
described in subdivision (c), a beer manufacturer shall submit any
application forms as the department may require. Upon request,
begin insert and upon payment by the beer manufacturer of a fee of one hundred
dollars ($100), end insert the department shall issue to a beer manufacturer
a begin insert beer manufacturer end insert temporary permit for use at a branch office
location during the period the application for a duplicate license
with privileges pursuant to subdivision (c) is pending. The begin insert beer
manufacturer end insert temporary permit shall authorize the beer
manufacturer to exercise all of the privileges under the duplicate
license except for those privileges described in subdivision (c).

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(e) A beer manufacturer temporary permit shall be effective for
a period of 120 days and may be extended at the discretion of the
department for additional 120-day periods as necessary and upon
payment of an additional fee of one hundred dollars ($100).

end insert begin delete

(e)

end delete

begin insert ( end insert begin insert f) end insert  In order to obtain a duplicate license for a branch office
location or locations without the privileges described in subdivision
(c), a beer manufacturer shall submit all application forms as the
department may require, and the department shall issue that
duplicate license forthwith; provided, however, that any duplicate
license issued forthwith by the department shall be contingent on
the beer manufacturer consenting to the imposition of a condition
that the beer manufacturer shall make no changes in the character
or mode of operation of the branch office premises that would
directly or indirectly expand the privileges under the duplicate
license, such as to include those privileges described in subdivision
(c), without notice to and approval by the department. begin insert If the
department receives any protest end insert begin insert concerning the issuance of the
duplicate license forthwith under this subdivision, the protest shall
be considered as an accusation against the licensee and a hearing
had thereon as if an accusation had been filed. end insert Any proposed
changes in the character or mode of operation of the branch office
premises that would directly or indirectly expand the privileges
under the duplicate license, such as to include those privileges
described in subdivision (c), shall require reapplication and
reissuance of the duplicate license pursuant to subdivision (d). begin delete In
the event any protest is received by the department concerning the
issuance of the duplicate license forthwith under this subdivision,
the protest shall be considered as an accusation against the licensee
and a hearing had thereon as if an accusation had been filed. end delete

begin delete

(f)

end delete

begin insert ( end insert begin insert g) end insert  Notwithstanding the provisions of any other section of this
division, a beer manufacturer may continue to exercise privileges
at all of its licensed branch offices that were in existence and
authorized by the department prior to the effective date of the act
adding this section, including any privileges resulting from any
renewal or transfer of the duplicate licenses for the branch
locations, that it was authorized to exercise prior to that date.

SEC. 4.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

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begin insert SEC. 5. end insert   

end insert begin insert

This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

end insert begin insert

In order to bolster California’s economy and to aid struggling
businesses in this economically stagnant time, it is necessary for
this act to take effect immediately.

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