BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 2010|
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THIRD READING
Bill No: AB 2010
Author: Gray (D)
Amended: 8/11/14 in Senate
Vote: 27 - Urgency
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 10-0, 6/24/14
AYES: Correa, Berryhill, Cannella, De Le�n, Galgiani,
Hernandez, Lieu, Padilla, Torres, Vidak
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 75-0, 4/24/14 (Consent) - See last page for
vote
SUBJECT : Alcoholic beverages: beer returns: duplicate
licenses
SOURCE : California Beer and Beverage Distributors
DIGEST : This bill adds beer that a brewer considers to have
product quality issues to the list of conditions under which
beer may be returned to a wholesaler or manufacturer; and
repeals an existing Section of the Alcoholic Beverage Control
Act (ABC Act) relating to duplicate licenses and the sale and
delivery of beer from branch offices and recasts those
provisions, as specified.
Senate Floor Amendments of 8/11/14 add an urgency clause; delete
the bill's current grandfathering in date for any existing
duplicate license and instead grandfathers in any existing
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2
duplicate license issued as of the effective date of this bill;
impose a $100 fee for issuance of a beer manufacturer temporary
permit, as specified, and provide that the permit is effective
for 120 days and may be extended at ABC's discretion; and make
other technical, clarifying, and conforming changes.
ANALYSIS :
Existing law:
1.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.
2.Permits the return of beer for errors in delivery, health and
safety recalls and the identical exchange of out-of-code
products.
3.Authorizes a wholesaler or manufacturer of beer to accept the
return of quantities of discontinued or seasonal brands of
beer from a retail licensee, provided that the returned beer
is exchanged for a quantity of beer of a brand produced or
sold by the same manufacturer with a value not greater than
the original sales price to the retail licensee of the
returned beer.
4.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. Provides for
exceptions to that provision, including permitting the return
of beer from a seasonal or temporary licensee or an annual
licensee operating on a temporary basis, permitting the return
of unsold and unopened beer from an organization that obtained
a specified temporary license, and permitting the return of
beer that is recalled or presents a health and safety issue as
provided.
5.Permits a licensed beer manufacturer to sell and deliver beer
to consumers from branch offices located away from the
licensee's place of manufacture and exercise all privileges,
other than manufacture, at or from the branch offices.
Requires ABC to issue a duplicate license to a beer
manufacturer if the beer manufacturer applies for a duplicate
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license. Provides that, 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. Provides that a violation of ABC Act provisions
is a misdemeanor, unless otherwise specified.
This bill:
1. Permits the return of beer by a retailer to a seller and by
a seller to a manufacturer or importer, if the beer has
product quality issues.
2. Provides that a seller of beer may exchange with the
manufacturer or importer the returned beer that was recalled
or considered to present product quality issues. Also,
provides that 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 or be issued a credit
memorandum by the manufacturer or importer.
3. Stipulates that returns for manufacturer or importer quality
issues are subject to ABC approval and shall not include the
return of beer due to aging.
4. Deletes an existing Section of law within the ABC Act that
requires ABC to issue a duplicate license to a beer
manufacturer if the beer manufacturer applies for a duplicate
license that permits the beer manufacturer to sell and
deliver beer at or from branch offices and instead,
authorizes ABC to issue to a beer manufacturer a duplicate of
its original license where specified privileges are to be
exercised at the branch office.
5. Prohibits the sale or tasting of alcoholic beverages to
consumers at more than six branch office locations and allows
two of the branch office locations to be bona fide public
eating places owned and operated by and for the beer
manufacturer, as specified. Also, provides that beer
manufacturers who are conducting these activities under an
existing duplicate license issued before the effective date
of this bill, will not be affected by the limitations imposed
by this bill.
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6. Prohibits a branch office location, where consumer tastings
or sales for on- or off-premises consumption are authorized,
from selling or serving alcoholic beverages other than beer
that is produced and bottled by, or produced and packaged
for, the beer manufacturer.
7. Specifies that 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 (a) beer and wine
that is produced and bottled by, or produced and packaged
for, the beer manufacturer and (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.
8. Requires, in order to obtain a duplicate license, with or
without certain privileges as specified, a beer manufacturer
to submit any application forms as ABC may require and, upon
request and payment of a $100 fee by the beer manufacturer,
be issued a beer manufacturer temporary permit for use at a
branch office location during the period the application for
a duplicate license is pending. Provides that a beer
manufacturer temporary permit is effective for 120 days and
may be extended at ABC's discretion for additional 120-day
periods as necessary and upon payment of an additional fee of
$100.
9. Provides that any duplicate license issued is contingent on
the beer manufacturer consenting to make no changes in the
character or mode of operation of the branch office premises
that directly or indirectly expands the privileges under the
duplicate license and specifies that any such changes shall
require reapplication and reissuance of the duplicate
license.
10.Provides that, if any protest is received by ABC concerning
the issuance of the duplicate license, the protest shall be
considered as an accusation against the licensee and a
hearing had thereon as if an accusation had been filed.
11.Permits a beer manufacturer to continue to exercise
privileges at all of its licensed branch offices that were in
existence and authorized by ABC prior to the effective date
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of this bill's provisions, 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.
12.Eliminates the existing 30-day prohibition on retail sales
of beer for a branch office with a duplicate license.
Background
In 2014, two instances have occurred in which beer manufacturers
have identified "product quality issues" in beer that had been
delivered to retailers. Although the beer at issue did not
present health and safety concerns when consumed, the yeast in
the beer had soured its flavor, and as a result, the beer did
not achieve the quality the brewers desired and consumers
expected to enjoy. The producers asked their distributors to
remove this beer from retail accounts but existing law did not
permit that action. In response, ABC granted a one-time waiver
to each brewer to accept the return of the beer from retailers.
The author's office contends that this bill remedies this
situation and permits beer removal for product quality concerns,
subject to ABC approval.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/12/14)
California Beer and Beverage Distributors (source)
Anheuser-Busch In-Bev
California Craft Brewers Association
MillerCoors
ARGUMENTS IN SUPPORT : According to the author's office, this
bill simply adds product quality issues as a reason to allow
retailers and distributors to return beer to the manufacturer.
This bill also levels the playing field between duplicate
license holders and all other retail licensees.
ASSEMBLY FLOOR : 75-0, 4/24/14
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Ch�vez, Chesbro, Conway, Cooley,
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Dababneh, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Gorell, Grove, Hagman, Hall, Roger Hern�ndez, Holden, Jones,
Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein,
Medina, Melendez, Mullin, Muratsuchi, Nestande, Olsen, Pan,
Patterson, Perea, V. Manuel P�rez, Quirk, Quirk-Silva, Rendon,
Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Wagner,
Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, John A.
P�rez
NO VOTE RECORDED: Gray, Harkey, Mansoor, Nazarian, Vacancy
MW:nl 8/12/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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