BILL ANALYSIS �
Bill No: AB
2488
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Lou Correa, Chair
2013-2014 Regular Session
Staff Analysis
AB 2488 Author: Levine
As Amended: May 1, 2014
Hearing Date: June 10, 2014
Consultant: Art Terzakis
SUBJECT
Alcoholic Beverages: certified farmers' market sales permit
DESCRIPTION
AB 2488, an urgency measure, expands an existing provision
of the Alcoholic Beverage Control (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. Specifically, this
measure:
1)Provides that, pursuant to a certified farmers' market
sales permit issued by the department of ABC to a
licensed winegrower, the permit will also allow the
licensee to offer an instructional tasting event subject
to the authorization and managerial control of the
operator of the certified farmers' market.
2)Allows only one licensee to conduct an instructional
tasting event during the operational hours of any one
certified farmers' market and requires the licensee to
separate the tasting area from the remainder of the
market using a rope, fence, chain, cable or other
permanent or temporary barrier.
3)Stipulates that the licensee shall not pour more than
three ounces of wine per person per day and prohibits the
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licensee from allowing any consumer to leave the tasting
area with an open container of wine.
4)Prohibits the licensee from providing any premium, gift,
free goods, or other things of value, except as otherwise
provided in the ABC Act, in connection with the farmers'
market tasting event.
5)Contains an urgency clause to take effect immediately.
6)Also, makes minor code maintenance changes.
AB 2488 (Levine) continued
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EXISTING LAW
Existing law establishes the Department of 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 for this purpose.
Existing law authorizes the Department of ABC to issue
special temporary licenses and permits to various entities
for limited purposes including a "certified farmers' market
sales permit" that authorizes a licensee under a
winegrower's license, a member of the licensee's family, or
an employee of the licensee to sell wine produced and
bottled by the winegrower at certified farmers' market
locations. The farmers' market sales permit may be issued
for up to 12 months but shall not be valid for more than
one day a week at any single specified farmers' market
location. The law also allows a winegrower to hold more
than one certified farmers' market sales permit and
requires ABC to notify local agencies and enforcement
entities of the permits. Additionally, the law prohibits
the licensed winegrower from selling more than 5,000
gallons of wine annually pursuant to all certified farmers'
markets sales permits held by any single winegrower.
Existing law provides for certified farmers' markets which
are operated in accordance with regulations established in
the California Administrative Code pertaining to direct
marketing and are governed by law under the California
Department of Food and Agriculture (CDFA). These rules are
enforced by County Agriculture Commissioners in the
counties in which the market operates. The markets also
fall under the jurisdiction of the health departments in
each county in which a market operates.
Existing law permits a winegrower, beer manufacturer, or a
beer and wine wholesaler to instruct licensees and their
employees on the subject of wine or beer, including, but
not limited to, the history, nature, values, and
characteristics of those beverages, as provided.
Existing law also permits an on-sale retail licensee of
wine or distilled spirits to conduct "instructional"
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consumer tastings on the 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
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.
Additionally, existing law authorizes 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.
Furthermore, existing law permits a licensed winegrower,
manufacturer, importer, or wholesaler to provide samples of
the alcoholic beverages which are authorized to be sold by
the licensee in accordance with rules prescribed by the
ABC. A retail licensee, however, is not authorized to
provide any free samples of alcoholic beverages.
Moreover, ABC regulations provide that samples of alcoholic
beverages may only be given away to licensees or employees
of licensees who are in a position to purchase the product
or who are in need of additional information about the
product, as specified.
Existing law, known as the "tied-house" law, separates the
alcoholic beverage industry into three component parts of
manufacturer, wholesaler, and retailer. The original
policy rationale for this body of law was to prohibit the
vertical integration of the alcohol industry and to protect
the public from predatory marketing practices. Generally,
other than exemptions 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.
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.
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BACKGROUND
Purpose of AB 2488: Current law (AB 2520 - Thomson,
Chapter 384 of 2000) allows wine to be sold by the bottle
at certified farmers' markets. Specifically, the law
permits a licensed winegrower to sell estate grown wine (no
more than 5,000 gallons annually) to adult consumers at a
certified farmers' market provided the winegrower obtains
the proper sales permit (Type 79 license) from ABC. The
rationale for AB 2520 (Thomson) of 2000 was that estate
grown wine would be a good fit for these markets since they
emphasized small scale production and paired locally grown
produce with wine for consumers and local chefs. It also
gave small producers, who have difficulty in gaining retail
presence, an opportunity to develop another sales channel.
AB 2488 would expand this existing privilege and allow
licensed winegrowers who have obtained a Type 79 license to
also offer limited tastings at farmers' markets under
specific circumstances.
The author's office notes that according to the California
Farm Bureau Federation, more than 800 certified farmers'
markets are held in California each year but only 17 Type
79 licenses were issued by ABC in 2013. The author's
office points out that very few wineries sell wine at
certified farmers' markets, in part, because consumers are
accustomed to sampling wine before purchasing a bottle.
The author's office states that AB 2488 will provide an
important market access opportunity for small wineries to
build their brands and be a competitive force in the
marketplace. In addition, consumers will benefit from the
direct interaction with growers and vintners.
Arguments in Support: Proponents emphasize that "wine,
like many other products, is sold through sampling.
Consumers want to understand the wine, decide if they like
it and determine if it's a good value. A taste beats the
sales pitch every time. The years have demonstrated that
bottle sales at farmers' markets would grow if tastings
were allowed." According to proponents, nine states have
adopted laws approving wine tasting events at certified
farmers' markets.
Arguments in Opposition: Opponents contend that farmers'
markets are family friendly events commonly held in
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unrestrained public places (e.g., parking lots, streets,
sidewalks) and that allowing for alcoholic beverage
tastings in such venues with little or no monitoring is a
recipe for increased alcohol-related harm. Additionally,
opponents argue that "if wineries are allowed to offer
tastings and sales at farmers' markets, the spirits, beer
and microbrew industries will not be far behind."
PRIOR/RELATED LEGISLATION
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,
general merchandise, and nonalcoholic beverages for
consumption on or off the premises. (Held in Assembly Rules
Committee)
AB 520 (Chesbro), 2013-14 Session. Would expand the types
of licensees that may provide instructional tastings events
regarding wine or distilled spirits at on-sale retail
licensed premises and would place additional restrictions
on the instructional tastings events, including
restrictions on the types of advertising that may be
conducted prior to the instructional tasting event.
(Pending in this 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
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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 639 (Calderon), 2009-10 Session. Would have added a
new provision to the ABC Act authorizing ABC to issue an
"on-sale tasting license" to the holder of any off-sale
retail license for the purpose of furnishing tastings of
alcoholic beverages to consumers subject to certain
limitations. (Died on Senate Appropriations Suspense File)
SB 1068 (Hancock), 2009-10 Session. Would have added a new
provision to the ABC Act authorizing a licensed distiller
that distills fewer than 50,000 gallons of spirits annually
to self-distribute to consumers and licensed retailers
(restaurants, liquor stores). (Held in this Committee at
author's request)
AB 605 (Portantino), Chapter 230, Statutes of 2010. Among
other things, authorized ABC 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 2293 (De Leon), Chapter 638, Statutes of 2008. Added a
new provision to the ABC Act authorizing 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.
SB 995 (Maldonado), 2007-08 Session. Would have permitted
winegrowers, distilled spirits manufacturers, distilled
spirits rectifiers general, or distilled spirits importers
general, out-of-state distilled spirits shippers, and
authorized agents of any of the above to instruct consumers
on the premises of an off-sale licensee regarding wine and
distilled spirits, respectively, as provided. Also, would
have allowed the instruction to include the furnishing of
tastings under specified conditions and would have limited
the amount of instructions that include tastings per year
and require the licensees to notify the Department of ABC
when instructions with tastings would occur, as provided.
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(Held in Senate G.O. Committee at author's request.)
AB 2613 (Plescia), 2007-08 Session. Would have authorized
winegrowers, distilled spirits manufacturers, as well as
rectifiers, importers and shippers of these beverages to
offer tastings of wine or distilled spirits at off-sale
retail licensed premises (grocery stores and liquor stores)
in a segregated area. Also, would have required
verification of age at entrance to the segregated area and
placed limits on tastings (one-quarter ounce of spirits and
one ounce of wine) and limited tastings to three per person
each day. (Held in Assembly Appropriations Committee)
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 2520 (Thomson), Chapter 384, Statutes of 2000.
Authorized licensed winegrowers to obtain certified
farmers' market sales permits authorizing the sale of wine
at farmers' markets, as specified.
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, authorized a licensed distilled spirits
manufacturer to conduct tastings of distilled spirits on
the licensed premises under specified conditions.
SUPPORT: As of June 6, 2014:
California Association of Winegrape Growers
California Farm Bureau Federation
California Federation of Certified Farmers' Markets
Family Winemakers of California
Heringer Estates Family Vineyards & Winery
Wine Institute
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OPPOSE: As of June 6, 2014:
Alcohol Justice (formerly Marin Institute)
California Council on Alcohol Problems
And, numerous private individuals
FISCAL COMMITTEE: Senate Appropriations Committee
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