BILL ANALYSIS �
AB 2010
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 2010 (Gray)
As Amended August 11, 2014
2/3 vote. Urgency
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|ASSEMBLY: | |(April 24, |SENATE: |35-0 |(August 14, |
| | |2014) | | |2014) |
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(vote not relevant)
Original Committee Reference: G.O.
SUMMARY : 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, subject to
Department of Alcoholic Beverage Control (ABC) approval. In
addition, this bill 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.
The Senate amendments :
1)Delete an existing section of law within the ABC Act that
requires the 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 the
department to issue to a beer manufacturer a duplicate of its
original license where specified privileges are to be
exercised at the branch office.
2)Prohibit 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 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 prior to the effective date of this act will
not be affected by the limitations imposed by this measure.
3)Prohibit 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
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produced and bottled by, or produced and packaged for, the
beer manufacturer.
4)Specify 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.
5)Require 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.
Provide that any duplicate license issued shall be contingent on
the beer manufacturer consenting to 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 and any such changes shall require
reapplication and reissuance of the duplicate license.
6)Permit a beer manufacturer may continue to exercise privileges
at all of its licensed branch offices that were in existence
and authorized by ABC prior to the effective date of this
bill, 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.
7)Eliminate the existing 30-day prohibition on retail sales of
beer for a branch office with a duplicate license.
8)Add an urgency clause.
EXISTING LAW :
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1)Establishes 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.
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
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.
6)Provides a narrow tied-house exception that permits the holder
of no more than six on-sale licenses to also own a licensed
beer manufacturer holding a license, as specified. This
particular tied-house exception provides that the on-sale
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licensee shall purchase no alcoholic beverages for sale in
this state other than from a wholesale or winegrower licensee,
except for any alcoholic beverages manufactured by the
licensed beer manufacturer at a single location contiguous or
adjacent to the premises of the on-sale licensee.
AS PASSED BY THE ASSEMBLY , this bill allowed a retail licensee
to return beer to the wholesaler or manufacturer if it is
recalled or considered by a manufacturer, importer, or
governmental entity to present issues of "product quality." It
allows beer returned for product quality issues to be exchanged
for "quality-controlled product inventory," if available from
the wholesaler or manufacturer.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS :
Purpose of the bill: According to the author's office, this
bill limits the existing expedited duplicate licensing process
to the licensure of a beer manufacturer's storage facility and
its operations that are conducted for this purpose alone. Also,
this bill requires a beer manufacturer's duplicate license for a
taproom or bona fide public eating place to undergo the same
local review and approval process that every bar, tavern and
restaurant owner must comply with in order to be licensed. In
addition, this bill limits the number of duplicate licenses to a
maximum of six taprooms, and of these, up to two may be for bona
fide eating places. The author's office states that a beer
manufacturer who is now conducting these on-premises activities
under any existing duplicate license issued prior to January 1,
2015, will not be affected by this bill. Furthermore, the
author's office emphasizes that this measure is simply intended
to update the beer manufacturer's duplicate license by leveling
the playing field between duplicate licenses and all other
retail licensees.
The author's office points out that the second component of this
bill is intended to address at least two recent instances 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
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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 would remedy this situation and permit beer removal for
product quality concerns, subject to ABC approval.
Prior legislation: AB 782 (Bocanegra), Chapter 242, Statutes of
2013, added a new provision to the ABC Act that authorizes a
licensed caterer who has obtained a caterer's event permit to
return unsold beer to the beer distributor or manufacturer for
credit, thereby eliminating the need for a beer distributor or
manufacturer to continuously exchange out-of-code beer involving
catered events.
SB 1393 (Negrete McLeod), Chapter 163, Statutes of 2012, allowed
an alcoholic beverage licensee to accept the return of unsold
and unopened beer from organizations that obtain a particular
license, as specified, and allowed the return of beer that is
recalled or that is considered to present a health and safety
issue by the manufacturer, importer, or governmental entity if
distributed, offered for sale, or sold in the state. Also,
allowed for the exchange of beer or a credit memorandum.
AB 517 (Hall), Chapter 12, Statutes of 2012, as introduced,
would have allowed a wholesaler or manufacturer to accept the
return of unsold and unopened beer from an organization that
obtained a specified temporary license, as provided. This
measure was eventually gutted and amended in the Senate to
contain a tribal gaming compact for the Federated Indians of
Graton Rancheria.
SB 487 (Negrete McLeod), of the 2011-12 legislative session,
would have added a new provision to the ABC Act authorizing the
return of unsold and unopened beer from an organization that
obtained a temporary license. (Held in Assembly G.O. Committee
at author's request)
AB 3071 (Governmental Organization), Chapter 508, Statutes of
2008, among other things, authorized beer that is recalled for
health or safety issues to be accepted for return at any time
from a retailer and be picked up by the seller of beer. Also,
permitted the seller of beer to exchange the returned beer for
identical product, issue a deferred exchange memorandum showing
the beer was picked-up and is to be replaced when inventory is
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available, or issue a credit to the retailer for the returned
beer.
SB 1035 (Perata), Chapter 657, Statutes of 2001, allowed a
person in possession of a stock of lawfully acquired alcoholic
beverages following the revocation or voluntary surrender of, or
failure to renew, an alcoholic beverage license to sell that
stock to licensees, as authorized by ABC.
SB 452 (Maddy), Chapter 273, Statutes of 1998, among other
things, authorized a wholesaler or manufacturer of beer to
accept the return 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.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
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