Existing law, the Alcoholic Beverage Control Act, authorizes a licensed winegrower or a licensed beer manufacturer to apply to the Department of Alcoholic Beverage Control for a certified farmers market sales permit, which allows, among others, the licensee to sell wine or beer at a certified farmers market, under specified conditions, and requires the licensee to pay a fee of $50 for the permit. Existing law requires a certified farmers market sales permit issued to a licensed winegrower, but not a licensed beer manufacturer, to allow an instructional tasting event on the subject of wine at a certified farmers market, under specified conditions. Existing law provides that moneys collected as fees pursuant to the act are to be deposited in the Alcohol Beverage Control Fund. These moneys are generally allocated to the Department of Alcoholic Beverage Control upon appropriation by the Legislature.

This bill would also require a certified farmers market sales permit issued to a licensed beer manufacturer to allow an instructional tasting event on the subject of beer at a certified farmers market, under specified conditions.

Existing law authorizes specified nonprofit corporations that have not been issued a license authorizing the sale of wine to receive and possess wine donated to that nonprofit corporation, if the nonprofit corporation has submitted a license application to sell wine with the Department of Alcoholic Beverage Control.

This bill would additionally authorize those nonprofit corporations to receive and possess beer under the same circumstances.

Existing law authorizes the Department of Alcoholic Beverage Control to issue a special temporary on-sale or off-sale wine license to a nonprofit corporation that is exempt from payment of income taxes, subject to specified requirements and limitations.

This bill would extend this authorization to issue a special temporary on-sale or off-sale license to sell beer.

Existing law, the Alcoholic Beverage Control Act, authorizes a licensed winegrower or a licensed beer manufacturer to apply to the Department of Alcoholic Beverage Control for a certified farmers market sales permit, which allows, among others, the licensee to sell wine or beer at a certified farmers market, under specified conditions, and requires the licensee to pay a fee of $50 for the permit. Existing law requires a certified farmers market sales permit issued to a licensed winegrower, but not a licensed beer manufacturer, to allow an instructional tasting event on the subject of wine at a certified farmers market, under specified conditions. Existing law provides that moneys collected as fees pursuant to the act are to be deposited in the Alcohol Beverage Control Fund. These moneys are generally allocated to the Department of Alcoholic Beverage Control upon appropriation by the Legislature.

This bill would also require a certified farmers market sales permit issued to a licensed beer manufacturer to allow an instructional tasting event on the subject of beer at a certified farmers market, under specified conditions.

Existing law authorizes specified nonprofit corporations that have not been issued a license authorizing the sale of wine to receive and possess wine donated to that nonprofit corporation, if the nonprofit corporation has submitted a license application to sell wine with the Department of Alcoholic Beverage Control.

This bill would additionally authorize those nonprofit corporations to receive and possess beer under the same circumstances.

Existing law authorizes the Department of Alcoholic Beverage Control to issue a special temporary on-sale or off-sale wine license to a nonprofit corporation that is exempt from payment of income taxes, subject to specified requirements and limitations.

This bill would extend this authorization to issue a special temporary on-sale or off-sale license to sell beer.

Existing law, the Alcoholic Beverage Control Act, authorizes a licensed winegrower or a licensed beer manufacturer to apply to the Department of Alcoholic Beverage Control for a certified farmers market sales permit, which allows, among others, the licensee to sell wine or beer at a certified farmers market, under specified conditions, and requires the licensee to pay a fee of $50 for the permit. Existing law requires a certified farmers market sales permit issued to a licensed winegrower, but not a licensed beer manufacturer, to allow an instructional tasting event on the subject of wine at a certified farmers market, under specified conditions. Existing law provides that moneys collected as fees pursuant to the act are to be deposited in the Alcohol Beverage Control Fund. These moneys are generally allocated to the Department of Alcoholic Beverage Control upon appropriation by the Legislature.

This bill would also require a certified farmers market sales permit issued to a licensed beer manufacturer to allow an instructional tasting event on the subject of beer at a certified farmers market, under specified conditions.

Existing law authorizes specified nonprofit corporations that have not been issued a license authorizing the sale of wine to receive and possess wine donated to that nonprofit corporation, if the nonprofit corporation has submitted a license application to sell wine with the Department of Alcoholic Beverage Control.

This bill would additionally authorize those nonprofit corporations to receive and possess beer under the same circumstances.

Existing law authorizes the Department of Alcoholic Beverage Control to issue a special temporary on-sale or off-sale wine license to a nonprofit corporation that is exempt from payment of income taxes, subject to specified requirements and limitations.

This bill would extend this authorization to issue a special temporary on-sale or off-sale license to sell beer.

Existing law, the Alcoholic Beverage Control Act, authorizes a licensed winegrower or a licensed beer manufacturer to apply to the Department of Alcoholic Beverage Control for a certified farmers market sales permit, which allows, among others, the licensee to sell wine or beer at a certified farmers market, under specified conditions, and requires the licensee to pay a fee of $50 for the permit. Existing law requires a certified farmers market sales permit issued to a licensed winegrower, but not a licensed beer manufacturer, to allow an instructional tasting event on the subject of wine at a certified farmers market, under specified conditions. Under existing law, a violation of the act is a misdemeanor, unless another penalty or punishment is specified. Existing law provides that moneys collected as fees pursuant to the act are to be deposited in the Alcohol Beverage Control Fund. These moneys are generally allocated to the Department of Alcoholic Beverage Control upon appropriation by the Legislature.

This bill would also require a certified farmers market sales permit issued to a licensed beer manufacturer to allow an instructional tasting event on the subject of beer at a certified farmers market, under specified conditions.

Existing law authorizes specified nonprofit corporations that have not been issued a license authorizing the sale of wine to receive and possess wine donated to that nonprofit corporation, if the nonprofit corporation has submitted a license application to sell wine with the Department of Alcoholic Beverage Control.

This bill would additionally authorize those nonprofit corporations to receive and possess beer under the same circumstances.

Existing law authorizes the Department of Alcoholic Beverage Control to issue a special temporary on-sale or off-sale wine license to a nonprofit corporation that is exempt from payment of income taxes, subject to specified requirements and limitations.

This bill would extend this authorization to issue a special temporary on-sale or off-sale license to sell beer.

Existing law, the Alcoholic Beverage Control Act, authorizes a licensed winegrower or a licensed beer manufacturer to apply to the Department of Alcoholic Beverage Control for a certified farmers market sales permit, which allows, among others, the licensee to sell wine or beer at a certified farmers market, under specified conditions, and requires the licensee to pay a fee of $50 for the permit. Existing law requires a certified farmers market sales permit issued to a licensed winegrower, but not a licensed beer manufacturer, to allow an instructional tasting event on the subject of wine at a certified farmers market, under specified conditions. Under existing law, a violation of the act is a misdemeanor, unless another penalty or punishment is specified. Existing law provides that moneys collected as fees pursuant to the act are to be deposited in the Alcohol Beverage Control Fund. These moneys are generally allocated to the Department of Alcoholic Beverage Control upon appropriation by the Legislature.

This bill would also require a certified farmers market sales permit issued to a licensed beer manufacturer to allow an instructional tasting event on the subject of beer at a certified farmers market, under specified conditions.

Existing law authorizes specified nonprofit corporations that have not been issued a license authorizing the sale of wine to receive and possess wine donated to that nonprofit corporation, if the nonprofit corporation has submitted a license application to sell wine with the Department of Alcoholic Beverage Control.

This bill would additionally authorize those nonprofit corporations to receive and possess beer under the same circumstances.

Existing law authorizes the Department of Alcoholic Beverage Control to issue a special temporary on-sale or off-sale wine license to a nonprofit corporation that is exempt from payment of income taxes, subject to specified requirements and limitations.

This bill would extend this authorization to issue a special temporary on-sale or off-sale license to sell beer.

Because a violation of the provisions of this bill would be a misdemeanor under the Alcoholic Beverage Control Act, the bill would impose 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.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 774

Author:(Levine)

As Amended Ver:May 28, 2015

Majority vote

Original Committee Reference: G.O.

SUMMARY: Provides that a certified farmers' market beer sales permit shall also authorize an instructional tasting event on the subject of beer at a certified farmers' market (CFM), including any permitted community event area adjacent to, and operated in conjunction with, a certified farmers' market, located within the county or an adjacent county of the physical location of the licensed beer manufacturer, under specified conditions.

The Senate amendments:

1. Clarify that the community event area shall be adjacent to, and operated in conjunction with, the CFM and the procedures for conducting the instructional beer tastings.

2. Make a conforming change.

EXISTING LAW:

1. Establishes the Department of Alcoholic Beverage Control (ABC) and grants it exclusive authority to regulate the licensing, enforcement, and administration of the alcoholic beverage control laws.

2. 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.

3. 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 licensed winegrower to sell "wine" produced and bottled by the winegrower at certified farmers' market locations. The farmers' market wine 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 wine sales permit and requires the Department of ABC to notify local agencies and enforcement entities of the permits. Additionally, the law grants the licensed winegrower the privilege of conducting limited "wine" tastings for consumers at farmers' markets under certain circumstances. Furthermore, 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.

4. Authorizes a licensed beer manufacturer to apply to the Department of ABC for a certified farmers' market "beer" sales permit that grants the beer manufacturer the privilege of selling beer, that has been produced by the beer manufacturer, at a certified farmers' market, including any permitted community event area adjacent to, and operated in conjunction with, a certified farmers' market, as specified. 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 or community event location. The law also prohibits the licensed beer manufacturer from selling more than 5,000 gallons of beer annually pursuant to all certified farmers' markets permits held by any single beer manufacturer. Additionally, the farmers' market sales permit is subject to the respective discretion and managerial control of a certified farmers' market or community event operator and existing regulations governed by law under the CDFA.

5. Authorizes specified nonprofit corporations that have not been issued a license authorizing the sale of wine to receive and possess wine donated to that nonprofit corporation, if the nonprofit corporation has submitted a license application to sell wine with the Department of ABC.

6. 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.

7. Permits an on-sale retail licensee of wine or distilled spirits to conduct "instructional" consumer tastings on the licensed retail premise provided the following conditions are met: a) no more than 1/4 ounce of distilled spirits is offered in one tasting; b) no more than one ounce of wine is offered in one tasting; and, c) 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.

8. Authorizes beer manufacturers and wholesalers to offer beer samples (not to exceed eight ounces per person, per day) to individuals of legal drinking age at on-sale retail licensed premises under specified conditions.

9. 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 Department of ABC. A retail licensee, however, is not authorized to provide any free samples of alcoholic beverages.

10. 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.

11. Defines "community event" to mean an event that is civic, political, public, or educational nature, including state and county fairs, city festivals, circuses, and other public gathering events approved by the local enforcement agency. (Health and Safety Code Section 113755)

AS PASSED BY THE ASSEMBLY, this bill allowed a licensed beer manufacturer that holds a certified farmers' market beer sales permit to conduct instructional beer tastings for consumers at the certified farmers' market, and specifies the manner in which the tasting may be conducted.

FISCAL EFFECT: According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs.

COMMENTS: This bill as amended in the Senate is consistent with Assembly actions.

Purpose of the bill. Currently, a licensed winegrower and a licensed beer manufacturer may apply for a permit, from the Department of ABC, to sell wine or beer at a certified farmers' market under specified conditions. In addition, the law grants a licensed winegrower, but not a licensed beer manufacturer, the privilege of also conducting instructional wine tastings for consumers at a farmers' market, as specified. This bill is intended to expand the privileges of a licensed beer manufacturer that holds a certified farmers' market beer sales permit by allowing the licensee to conduct instructional beer tastings at the certified farmers' market in a specified manner and with certain limitations.

According to the author's office, very few craft brewers sell beer at farmers' markets in part because consumers are accustomed to sampling craft beer before purchasing. The author's office believes that this bill will help foster relationships between local brewers and consumers – enabling the brewers to build their brands by affiliating with farmers' markets. The author's office also points out that this bill amends existing law to allow nonprofits to receive beer donations from breweries to assist them in their fundraising activities. Currently, nonprofits may receive wine donations for these purposes.

The craft beer industry. According to industry sources, California currently has more craft breweries than any other state in the country. In fact, California has more than twice as many craft breweries as Colorado ‑ the state with the next highest number. An average of one in every five craft beers produced in the United States comes from California. According to the California Craft Brewers Association, which represents approximately 350 independently owned craft breweries producing 98% of the craft beer volume in California, in 2013, the craft brewing industry contributed over $5.5 billion to California's economy and supported 44,000 in-state jobs.

In support: Proponents state that this bill promotes buy local programs by providing conditional authorization to craft breweries to conduct instructional tastings of craft beer at farmers' market events. Proponents point out that any tasting event is subject to authorization and managerial control of the operator of the certified farmers' market and adjacent community event areas; and at all times the "tasting event area" shall be separated from the remainder of the market by a wall, fence, or temporary barrier. Proponents emphasize this bill places certain conditions on the licensed beer manufacturer to ensure responsible conduct that are similar to those imposed upon licensed winegrowers that offer wine tastings at farmers' markets.

In opposition: Opponents believe that daytime tastings, with little or no monitoring, in a family-friendly setting, are inappropriate and potentially dangerous. Opponents state that, as currently drafted, there is no mechanism to effectively monitor the tasting limit of eight ounces of beer per person per day. Opponents contend that this bill "will negatively impact public health by allowing alcohol producers to give away free beer where families shop for nutritious vegetables, fruit and meat." Additionally, opponents claim that the most recent amendments to this bill could conceivably allow for consumption of beer at fairs, craft and home shows, downtown civic and celebratory parades, etc.

Prior Legislation: AB 2488 (Levine), Chapter 98, Statutes of 2014, expanded an existing privilege in the ABC Act relating to the sale of wine by a licensed winegrower at certified farmers' markets to also allow a licensed winegrower the privilege of conducting limited wine tastings for consumers at farmers' markets under certain circumstances.

AB 2004 (Chesbro), Chapter 806, Statutes of 2014, among other things, authorized a licensed beer manufacturer to apply to the Department of ABC for a "certified farmers' market beer sales permit" for the purpose of allowing the licensee to sell packaged beer at a farmers' market, including any area outside the footprint of the farmers' market, under specified conditions.

AB 520 (Chesbro), Chapter 777, Statutes of 2014, expanded the types of licensees that may provide instructional tastings events regarding wine or distilled spirits at on-sale retail licensed premises and placed additional restrictions on the instructional tastings events, including restrictions on the types of advertising that may be conducted prior to the instructional tasting event.

Analysis Prepared by: Eric Johnson / G.O. / (916) 319-2531 FN: 0001090

 THIRD READING  

Bill No: AB 774

Author: Levine (D)

Amended: 5/28/15 in Senate

Vote: 21

SENATE GOVERNMENTAL ORG. COMMITTEE: 13-0, 6/9/15

AYES: Hall, Berryhill, Block, Gaines, Galgiani, Glazer, Hernandez, Hill, Hueso, Lara, McGuire, Runner, Vidak

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 79-0, 5/11/15 - See last page for vote

SUBJECT: Alcoholic beverages: beer manufacturers: farmers’ market: tasting: nonprofit corporation: donated beer

SOURCE: Author

DIGEST: This bill allows a licensed beer manufacturer that holds a certified farmers’ market beer sales permit to provide limited instructional tastings for consumers at the certified farmers’ market, under specified conditions.

ANALYSIS:

Existing law:

1. Establishes the Department of Alcoholic Beverage Control (ABC) and grants it exclusive authority to regulate the licensing, enforcement, and administration of the alcoholic beverage control laws.
   
   

2. 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.
   
   

3. 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 licensed winegrower to sell “wine” produced and bottled by the winegrower at certified farmers’ market locations. The farmers’ market wine 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 wine sales permit and requires the Department of ABC to notify local agencies and enforcement entities of the permits. Additionally, the law grants the licensed winegrower the privilege of conducting limited “wine” tastings for consumers at farmers’ markets under certain circumstances. Furthermore, 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.
   
   

4. Authorizes a licensed beer manufacturer to apply to the Department of ABC for a certified farmers’ market “beer” sales permit that grants the beer manufacturer the privilege of selling beer, that has been produced by the beer manufacturer, at a certified farmers’ market, including any permitted community event area adjacent to, and operated in conjunction with, a certified farmers’ market, as specified. 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 or community event location. The law also prohibits the licensed beer manufacturer from selling more than 5,000 gallons of beer annually pursuant to all certified farmers’ markets permits held by any single beer manufacturer. Additionally, the farmers’ market sales permit is subject to the respective discretion and managerial control of a certified farmers’ market or community event operator and existing regulations governed by law under the CDFA.
   
   

5. Authorizes specified nonprofit corporations that have not been issued a license authorizing the sale of wine to receive and possess wine donated to that nonprofit corporation, if the nonprofit corporation has submitted a license application to sell wine with the Department of ABC.
   
   

6. 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.

7. Permits an on-sale retail licensee of wine or distilled spirits to conduct “instructional” consumer tastings on the licensed retail premise provided the following conditions are met: (a) no more than 1/4 ounce of distilled spirits is offered in one tasting; (b) no more than one ounce of wine is offered in one tasting; and, (c) 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.

8. Authorizes beer manufacturers and wholesalers to offer beer samples (not to exceed eight ounces per person, per day) to individuals of legal drinking age at on-sale retail licensed premises under specified conditions.

9. 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 Department of ABC. A retail licensee, however, is not authorized to provide any free samples of alcoholic beverages.
   
   

10. 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.
    
    

11. Defines “community event” to mean an event that is civic, political, public, or educational nature, including state and county fairs, city festivals, circuses, and other public gathering events approved by the local enforcement agency. (Section 113755 of the Health & Safety Code)

This bill:

1. Provides that a certified farmers’ market beer sales permit shall also authorize an instructional tasting event on the subject of beer at a certified farmers’ market, including any permitted community event area adjacent to, and operated in conjunction with, a certified farmers’ market, located within the county or an adjacent county of the physical location of the licensed beer manufacturer. In addition, imposes the following conditions on such tasting events:
   
   

   1. The tasting event is subject to the authorization and managerial control of the operator of the farmers’ market or community event.
      
      

   2. The tasting event may be conducted by the licensee, a member of the licensee’s family who is 21 years of age or older, or an employee of the licensee.
      
      

   3. At all times during a tasting event, the tasting event area must be separated from the remainder of the farmers’ market or community event area by a wall, rope, cable, cord, chain, fence, or other permanent or temporary barrier.
      
      

   4. Only one licensed beer manufacturer may conduct a tasting event during the operational hours of any one farmers’ market or community event.
      
      

   5. The licensee shall not pour more than eight ounces of beer per person per day and the licensee shall not permit any consumer to leave the tasting area with an open container of beer.
      
      

2. Modifies an existing provision of law relative to the authorization for issuance of a special temporary on-sale or off-sale wine license by the Department of ABC to certain nonprofits that receive wine donations for fundraising purposes by extending the authorization to include beer donations.
   
   

3. Modifies an existing provision of law that allows a nonprofit that has not been issued a license authorizing the sale of wine to receive and possess donated wine provided the nonprofit has submitted a license application to sell wine with the Department of ABC by extending such authorization to include beer.
   
   

Background

Purpose of AB 774. Currently, a licensed winegrower and a licensed beer manufacturer may apply for a permit, from the Department of ABC, to sell wine or beer at a certified farmers’ market under specified conditions. In addition, the law grants a licensed winegrower, but not a licensed beer manufacturer, the privilege of also conducting instructional wine tastings for consumers at a farmers’ market, as specified. This bill is intended to expand the privileges of a licensed beer manufacturer that holds a certified farmers’ market beer sales permit by allowing the licensee to conduct instructional beer tastings at the certified farmers’ market in a specified manner and with certain limitations.

According to the author’s office, very few craft brewers sell beer at farmers’ markets in part because consumers are accustomed to sampling craft beer before purchasing. The author’s office believes that this bill will help foster relationships between local brewers and consumers – enabling the brewers to build their brands by affiliating with farmers’ markets. The author’s office also points out that this bill amends existing law to allow nonprofits to receive beer donations from breweries to assist them in their fundraising activities. Currently, nonprofits may receive wine donations for these purposes.

The craft beer industry. According to industry sources, California currently has more craft breweries than any other state in the country. In fact, California has more than twice as many craft breweries as Colorado - the state with the next highest number. An average of one in every five craft beers produced in the United States comes from California. According to the California Craft Brewers Association, which represents approximately 350 independently owned craft breweries producing 98% of the craft beer volume in California, in 2013, the craft brewing industry contributed over $5.5 billion to California’s economy and supported 44,000 in-state jobs.

Prior/Related Legislation

AB 2488 (Levine, Chapter 98, Statutes of 2014) expanded an existing privilege in the ABC Act relating to the sale of wine by a licensed winegrower at certified farmers’ markets to also allow a licensed winegrower the privilege of conducting limited wine tastings for consumers at farmers’ markets under certain circumstances.

AB 2004 (Chesbro, Chapter 806, Statutes of 2014), among other things, authorized a licensed beer manufacturer to apply to the Department of ABC for a “certified farmers’ market beer sales permit” for the purpose of allowing the licensee to sell packaged beer at a farmers’ market, including any area outside the footprint of the farmers’ market, under specified conditions.

AB 520 (Chesbro, Chapter 777, Statutes of 2014) expanded the types of licensees that may provide instructional tastings events regarding wine or distilled spirits at on-sale retail licensed premises and placed additional restrictions on the instructional tastings events, including restrictions on the types of advertising that may be conducted prior to the instructional tasting event.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT:

(Verified 6/22/15)

California Craft Brewers Association

OPPOSITION: (Verified 6/22/15)

Alcohol Justice

California Council on Alcohol Problems

ARGUMENTS IN SUPPORT: Proponents state that AB 774 promotes buy local programs by providing conditional authorization to craft breweries to conduct instructional tastings of craft beer at farmers’ market events. Proponents point out that any tasting event is subject to authorization and managerial control of the operator of the certified farmers’ market and adjacent community event areas; and at all times the tasting event area shall be separated from the remainder of the market by a wall, fence, or temporary barrier. Proponents emphasize this bill places certain conditions on the licensed beer manufacturer to ensure responsible conduct that are similar to those imposed upon licensed winegrowers that offer wine tastings at farmers’ markets.

ARGUMENTS IN OPPOSITION: Opponents believe that daytime tastings, with little or no monitoring, in a family-friendly setting, are inappropriate and potentially dangerous. Opponents state that, as currently drafted, there is no mechanism to effectively monitor the tasting limit of eight ounces of beer per person per day. Opponents contend that AB 774 “will negatively impact public health by allowing alcohol producers to give away free beer where families shop for nutritious vegetables, fruit and meat.” Additionally, opponents claim that the most recent amendments to this bill could conceivably allow for consumption of beer at fairs, craft and home shows, downtown civic and celebratory parades, etc.

ASSEMBLY FLOOR: 79-0, 5/11/15

AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O’Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood

NO VOTE RECORDED: Atkins

Prepared by: Arthur Terzakis / G.O. / (916) 651-1530

6/23/15 9:39:58

**** END ****

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Isadore Hall, III

Chair

2015 - 2016 Regular

Bill No: AB 774 Hearing Date: 6/9/2015

SUBJECT: Alcoholic beverages: beer manufacturers: farmers’ market: tasting: nonprofit corporation: donated beer.

DIGEST: This bill allows a licensed beer manufacturer that holds a certified farmers’ market beer sales permit to provide limited instructional tastings for consumers at the certified farmers’ market, under specified conditions.

ANALYSIS:

Existing law:

1. Establishes the Department of Alcoholic Beverage Control (ABC) and grants it exclusive authority to regulate the licensing, enforcement, and administration of the alcoholic beverage control laws.
   
   

2. 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.
   
   

3. 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 licensed winegrower to sell “wine” produced and bottled by the winegrower at certified farmers’ market locations. The farmers’ market wine 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 wine sales permit and requires the Department of ABC to notify local agencies and enforcement entities of the permits. Additionally, the law grants the licensed winegrower the privilege of conducting limited “wine” tastings for consumers at farmers' markets under certain circumstances. Furthermore, 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.
   
   

4. Authorizes a licensed beer manufacturer to apply to the Department of ABC for a certified farmers’ market “beer” sales permit that grants the beer manufacturer the privilege of selling beer, that has been produced by the beer manufacturer, at a certified farmers’ market, including any permitted community event area adjacent to, and operated in conjunction with, a certified farmers’ market, as specified. 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 or community event location. The law also prohibits the licensed beer manufacturer from selling more than 5,000 gallons of beer annually pursuant to all certified farmers’ markets permits held by any single beer manufacturer. Additionally, the farmers’ market sales permit is subject to the respective discretion and managerial control of a certified farmers’ market or community event operator and existing regulations governed by law under the California Department of Food and Agriculture.
   
   

5. Authorizes specified nonprofit corporations that have not been issued a license authorizing the sale of wine to receive and possess wine donated to that nonprofit corporation, if the nonprofit corporation has submitted a license application to sell wine with the Department of ABC.
   
   

6. 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.

7. Permits an on-sale retail licensee of wine or distilled spirits to conduct “instructional” consumer tastings on the licensed retail premise provided the following conditions are met: (1) no more than ¼ 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.

8. 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.

9. 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 Department of ABC. A retail licensee, however, is not authorized to provide any free samples of alcoholic beverages.
   
   

10. 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.
    
    

11. Defines “community event” to mean an event that is civic, political, public, or educational nature, including state and county fairs, city festivals, circuses, and other public gathering events approved by the local enforcement agency. (Section 113755 of the Health & Safety Code)

This bill:

1. Provides that a certified farmers’ market beer sales permit shall also authorize an instructional tasting event on the subject of beer at a certified farmers’ market, including any permitted community event area adjacent to, and operated in conjunction with, a certified farmers’ market, located within the county or an adjacent county of the physical location of the licensed beer manufacturer. In addition, imposes the following conditions on such tasting events:
   
   

   1. The tasting event is subject to the authorization and managerial control of the operator of the farmers’ market or community event.
      
      

   2. The tasting event may be conducted by the licensee, a member of the licensee’s family who is 21 years of age or older, or an employee of the licensee.
      
      

   3. At all times during a tasting event, the tasting event area must be separated from the remainder of the farmers’ market or community event area by a wall, rope, cable, cord, chain, fence, or other permanent or temporary barrier.
      
      

   4. Only one licensed beer manufacturer may conduct a tasting event during the operational hours of any one farmers’ market or community event.
      
      

   5. The licensee shall not pour more than eight ounces of beer per person per day and the licensee shall not permit any consumer to leave the tasting area with an open container of beer.
      
      

2. Modifies an existing provision of law relative to the authorization for issuance of a special temporary on-sale or off-sale wine license by the Department of ABC to certain nonprofits that receive wine donations for fundraising purposes by extending the authorization to include beer donations.
   
   

3. Modifies an existing provision of law that allows a nonprofit that has not been issued a license authorizing the sale of wine to receive and possess donated wine provided the nonprofit has submitted a license application to sell wine with the Department of ABC by extending such authorization to include beer.
   
   

Background

Purpose of AB 774. Currently, a licensed winegrower and a licensed beer manufacturer may apply for a permit, from the Department of ABC, to sell wine or beer at a certified farmers’ market under specified conditions. In addition, the law grants a licensed winegrower, but not a licensed beer manufacturer, the privilege of also conducting instructional wine tastings for consumers at a farmers' market, as specified. This bill is intended to expand the privileges of a licensed beer manufacturer that holds a certified farmers’ market beer sales permit by allowing the licensee to conduct instructional beer tastings at the certified farmers’ market in a specified manner and with certain limitations.

According to the author’s office, very few craft brewers sell beer at farmers’ markets in part because consumers are accustomed to sampling craft beer before purchasing. The author’s office believes that this bill will help foster relationships between local brewers and consumers – enabling the brewers to build their brands by affiliating with farmers’ markets. The author’s office also points out that this bill amends existing law to allow nonprofits to receive beer donations from breweries to assist them in their fundraising activities. Currently, nonprofits may receive wine donations for these purposes.

The craft beer industry. According to industry sources, California currently has more craft breweries than any other state in the country. In fact, California has more than twice as many craft breweries as Colorado - the state with the next highest number. An average of one in every five craft beers produced in the United States comes from California. According to the California Craft Brewers Association, which represents approximately 350 independently owned craft breweries producing 98% of the craft beer volume in California, in 2013, the craft brewing industry contributed over $5.5 billion to California’s economy and supported 44,000 in-state jobs.

Prior/Related Legislation

AB 2488 (Levine, Chapter 98, Statutes of 2014) expanded an existing privilege in the ABC Act relating to the sale of wine by a licensed winegrower at certified farmers’ markets to also allow a licensed winegrower the privilege of conducting limited wine tastings for consumers at farmers' markets under certain circumstances.

AB 2004 (Chesbro, Chapter 806, Statutes of 2014), among other things, authorized a licensed beer manufacturer to apply to the Department of ABC for a “certified farmers’ market beer sales permit” for the purpose of allowing the licensee to sell packaged beer at a farmers’ market, including any area outside the footprint of the farmers’ market, under specified conditions.

AB 520 (Chesbro, Chapter 777, Statutes of 2014) expanded the types of licensees that may provide instructional tastings events regarding wine or distilled spirits at on-sale retail licensed premises and placed additional restrictions on the instructional tastings events, including restrictions on the types of advertising that may be conducted prior to the instructional tasting event.

AB 949 (Quirk, 2013) 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 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 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.

AB 2004 (Evans, Chapter 127, Statutes of 2008) authorized a licensed winegrower to sell wine for consumption to consumers on the winery’s premises.

SB 995 (Maldonado, 2007) would have permitted specified alcoholic beverage licensees 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. (Held in this Committee at author’s request)

AB 2613 (Plescia, 2008) would have authorized specified alcoholic beverage licensees 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.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT:

California Craft Brewers Association

OPPOSITION:

Alcohol Justice

California Council on Alcohol Problems

ARGUMENTS IN SUPPORT: Proponents state that AB 774 promotes buy local programs by providing conditional authorization to craft breweries to conduct instructional tastings of craft beer at farmers’ market events. Proponents point out that any tasting event is subject to authorization and managerial control of the operator of the certified farmers’ market and adjacent community event areas; and at all times the tasting event area shall be separated from the remainder of the market by a wall, fence, or temporary barrier. Proponents emphasize this bill places certain conditions on the licensed beer manufacturer to ensure responsible conduct that are similar to those imposed upon licensed winegrowers that offer wine tastings at farmers’ markets.

ARGUMENTS IN OPPOSITION: Opponents believe that daytime tastings, with little or no monitoring, in a family-friendly setting, are inappropriate and potentially dangerous. Opponents state that, as currently drafted, there is no mechanism to effectively monitor the tasting limit of eight ounces of beer per person per day. Opponents contend that AB 774 “will negatively impact public health by allowing alcohol producers to give away free beer where families shop for nutritious vegetables, fruit and meat.” Additionally, opponents claim that the most recent amendments to this bill could conceivably allow for consumption of beer at fairs, craft and home shows, downtown civic and celebratory parades, etc.

ASSEMBLY THIRD READING

ATR Bill Id:AB 774

Author:(Levine)

As Amended Ver:April 6, 2015

Majority vote

SUMMARY: Allows a permitted licensed beer manufacturer to conduct instructional tastings on the subject of beer at a certified farmers' market (CFM), under specified conditions. Specifically, this bill:

1. Provides that a CFM beer sales permit shall also authorize an instructional tasting event on the subject of beer at a CFM, including any permitted community event area adjacent to, and operated in conjunction with, a CFM, located within the county or an adjacent county of the physical location of the licensed beer manufacturer.

2. Provides that an instructional tasting event is subject to the authorization and managerial control of the operator of the CFM. The licensee, a member of the licensee's family who is 21 years of age or older, or an employee of the licensee may conduct the instructional tasting event.

3. States that at all times during an instructional tasting event, the instructional tasting event area shall be separated from the remainder of the market by a wall, rope, cable, cord, chain, fence, or other permanent or temporary barrier.

4. Provides that only one licensed beer manufacturer may conduct an instructional tasting event during the operational hours of any one CFM. The licensee shall not pour more than eight ounces of beer per person per day.

5. States that the licensee shall not permit any consumer to leave the instructional tasting area with an open container of beer.

6. Existing law authorizes specified nonprofit corporations that have not been issued a license authorizing the sale of wine to receive and possess wine donated to that nonprofit corporation, if the nonprofit corporation has submitted a license application to sell wine with the Department of Alcoholic Beverage Control (ABC). This bill would additionally authorize those nonprofit corporations to receive and possess beer under the same circumstances.

7. Existing law authorizes ABC to issue a special temporary on-sale or off-sale wine license to a nonprofit corporation that is exempt from payment of income taxes, subject to specified requirements and limitations. This bill would extend this authorization to issue a special temporary on-sale or off-sale license to sell beer.

8. Makes clarifying changes.

EXISTING LAW:

1. Establishes ABC and grants it exclusive authority to administer the provisions of the Alcoholic Beverage Control Act (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.

2. Authorizes a licensed winegrower or a licensed beer manufacturer to apply to ABC for a CFM sales permit, which allows, among others, the licensee to sell wine or beer at a certified farmers’ market, under specified conditions, and requires the licensee to pay a fee of $50 for the permit.

3. Requires certified farmers' market sales permit issued to a licensed winegrower, but not a licensed beer manufacturer, to allow an instructional tasting event on the subject of wine at a certified farmers' market, under specified conditions. Requires ABC to notify the local entity and applicable law enforcement agency where the CFM or community event is to be held of the issuance of the permit.

4. Authorizes a licensed beer manufacturer to apply to ABC for a CFM beer sales permit that allows the licensee to sell packaged beer at a farmers' market, including any area outside the footprint of the farmers' market, under specified conditions.

5. Authorizes specified nonprofit corporations that have not been issued a license authorizing the sale of wine to receive and possess wine donated to that nonprofit corporation, if the nonprofit corporation has submitted a license application to sell wine with ABC.

6. Authorizes ABC to issue a special temporary on-sale or off-sale wine license to a nonprofit corporation that is exempt from payment of income taxes, subject to specified requirements and limitations.

7. Authorizes beer manufacturers and wholesalers to offer beer samples (not to exceed eight ounces per person, per day) to individuals of legal drinking age at on-sale retail licensed premises under specified conditions.

8. 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.

FISCAL EFFECT: According to the Assembly Appropriations Committee, minor and absorbable enforcement costs to ABC. These costs could increase if sales at CFMs especially popular and brewers begin using farmers' markets as a primary marketing channel.

COMMENTS:

Purpose of the bill. The author's office points out that very few craft brewers sell beer at CFMs, in part, because consumers are accustomed to sampling beer before making a purchase. The author's office states that this bill will provide an important market access opportunity for small brewers to build their brands and be a competitive force in the marketplace. In addition, consumers will benefit from the direct interaction with brewers.

According to the author, this bill simply allows tastings where brewers are already selling their products at CFMs. In recent years, craft brewing in California has experienced exponential growth. This bill seeks to foster a relationship between local brewers and those purchasing their products. This bill would greatly help local brewers educate consumers and build their brands at CFMs.

Currently, ABC allows beer manufacturers (Types 01 and 23) to apply for a CFM beer sales permit, which has been designated as a Type 84. The permit allows for sale of sealed beer containers to consumers at certified farmers’ markets. Permits may only be issued to breweries for CFMs held in the county where their manufacturing facility is located or the adjacent county. Unfortunately, unlike other products at the market, current law does not permit a brewery to offer tastings.

In 2014, the Legislature overwhelmingly approved and the Governor signed AB 2488 (Levine), Chapter 98, Statutes of 2014, which provided wineries or cider makers the ability to offer tastings to help educate consumers about the product prior to purchase. Since the enactment of the bill, sale of wine has increased at CFMs.

Similar to the effect of AB 2844 on wineries, this bill would greatly help local brewers.

In addition, under existing law, beer manufacturers can donate beer to a non-profit to be sold at a fundraising event for consumption on-site. However, they cannot donate beer to a non-profit for the purposes of being auctioned for consumption off-site. Craft brewers receive frequent requests from local and statewide non-profits for beer donations in the form of "beer baskets" to be sold at a fundraising auction. Craft brewers cannot satisfy those requests without putting the non-profit and their own license at risk.

The same non-profits can receive wine donations from wineries to be auctioned but cannot receive beer for the same purpose. AB 774 seeks to provide some clarity and uniformity in the ABC Act for beer donations.

Background: According to industry sources, California currently has more craft breweries (approximately 440) than any other state in the country. In fact, California has more than twice as many craft breweries as Colorado – the state with the next highest number. An average of one in every five craft beers produced in the United States comes from California. In 2012, the California craft brewery industry had an annual impact of $4.7 billion on the state's economy and supported well over 45,000 jobs. Additionally, the state's craft brewery industry generated over $850 million in federal, state, and local revenues in 2012.

CFMs are governed by California 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. According to the California Farm Bureau Federation, more than 800 certified farmers’ markets are held in California each year. ABC issued 52-Type 79 (wine tastings at CFMs) licenses in 2014 and so far 31 – Type 84 (sell beer at CFMs) licenses in 2015.

CFMs require products sold within their event boundaries to be 100% grown and produced on the property owned by the farmer or manufacturer. Products that cannot meet this criterion must be sold in an area adjacent to the farmers' market called a 'community event' area. While most craft brewers cannot meet the CFM criteria there may be the rare instance where one does in fact grow all the ingredients (i.e., grain and hops) on their own property.

Arguments in support: Proponents emphasize, "Beer, like many other products, is sold through sampling. Consumers want to understand the beer, decide if they like it and determine if it is a good value. The years have demonstrated that beer sales at farmers' markets would grow if tastings were allowed."

The California Craft Brewers Association writes this bill would enhance the protections of the Tied-house laws by allowing local craft brewers to provide educational tastings of their products at farmers markets. This ability will support buy-local programs and help to sustain horizontal competition in the marketplace; a key objective of tied-house laws. This measure will also allow non-profits to receive beer donations from breweries to assist them in their fundraising activities including auctions.

Arguments in opposition: The California Council on Alcohol Problems writes, "We are uncomfortable with the idea of alcoholic beverages being consumed at farmers’ markets, and we don’t believe ABC has the resources to properly regulate such wine tastings events all over the state. As is typical with these statutorily created, expanded venues for alcohol marketing and distribution, what begins as a modest new avenue to market alcohol for one segment of the industry expands into other segments, while the modest limitations originally included are slowly eroded over time. Such is the case with wine tastings events at farmers' markets – authorized in statute just last year – with this subsequent legislation to now include beer consumption."

Prior legislation: AB 2488, expanded 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 (CFMs) to also grant the licensed winegrower the privilege of conducting limited wine tastings for consumers at CFMs under certain circumstances.

AB 2004 (Chesbro), Chapter 806, Statutes of 2014. Authorized a licensed beer manufacturer to apply to ABC for a certified farmers' market beer sales permit, which allows the licensee to sell packaged beer at a farmers' market, including any specified area, under certain conditions. The bill also allowed a beer manufacturer to sell beer and wine on their own premises during private events.

AB 949 (Quirk) of 2014. 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), Chapter 777, Statutes of 2014. 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.

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 AB 2488 continued 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.

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.

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.

Analysis Prepared by: Eric Johnson / G.O. / (916) 319-2531 FN: 0000343

Date of Hearing: April 29, 2015

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Jimmy Gomez, Chair

ABPCA Bill Id:AB 774

Author:(Levine) – As Amended Ver:April 6, 2015

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill allows a licensed beer manufacturer that holds a certified farmers' market beer sales permit to conduct instructional beer tastings for consumers at the certified farmers' market, and specifies the manner in which the tasting may be conducted.

FISCAL EFFECT:

Minor and absorbable enforcement costs to the Department of Alcoholic Beverage Control. These costs could increase if sales at certified farmers' markets prove especially popular and brewers begin using farmers' markets as a primary marketing channel.

COMMENTS:

1) Purpose. According to the author, very few craft brewers sell beer at farmers' markets, in part because consumers are accustomed to sampling craft beer before purchasing. The author believes this bill provides an important market access opportunity for small brewers.

2) Hoppy Times Are Here To Stay. In recent years, craft brewing in California has experienced spectacular growth. According to the Brewers Association, a new craft brewery opens every 16 hours in the United States, and a disproportionate number of these are on the west coast. The author believes this bill will foster relationships between local brewers and consumers, enabling the brewers to build their brands by affiliating with farmers' markets.

3) Tasting Rules. AB 2488 (Levine), Statutes of 2014, permitted wineries selling at certified farmers' markets to offer instructional tastings, and this bill does the same for brewers. The certified farmers' market beer sales permit will allow one licensed manufacturer to conduct tastings, subject to managerial control by the farmers' market operator, so long as:

a) The instructional tasting is conducted by the licensee, a family member who is 21 years of age or older, or an employee of the licensee;

b) The tasting area is separated from the remainder of the market; and

c) No more than eight ounces of beer are served per person, per day, and no consumer is permitted to leave the tasting area with an open container of beer.

Analysis Prepared by: Joel Tashjian / APPR. / (916) 319-2081

Date of Hearing: April 22, 2015

ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION

Adam Gray, Chair

ABPCA Bill Id:AB 774

Author:Levine – As Amended Ver:April 6, 2015

SUBJECT: Alcoholic beverages: beer manufacturers: farmers’ market: tasting: nonprofit corporation: donated beer

SUMMARY: Allows a permitted licensed beer manufacturer to conduct instructional tastings on the subject of beer at a certified farmers’ market (CFM), under specified conditions. Specifically, this bill:

1) Provides that a "certified farmers’ market beer sales permit" shall also authorize an instructional tasting event on the subject of beer at a CFM, including any permitted community event area adjacent to, and operated in conjunction with, a CFM, located within the county or an adjacent county of the physical location of the licensed beer manufacturer.

2) Provides that an instructional tasting event is subject to the authorization and managerial control of the operator of the CFM. The licensee, a member of the licensee’s family who is 21 years of age or older, or an employee of the licensee may conduct the instructional tasting event.

3) States that at all times during an instructional tasting event, the instructional tasting event area shall be separated from the remainder of the market by a wall, rope, cable, cord, chain, fence, or other permanent or temporary barrier.

4) Provides that only one licensed beer manufacturer may conduct an instructional tasting event during the operational hours of any one CFM. The licensee shall not pour more than eight ounces of beer per person per day.

5) States that the licensee shall not permit any consumer to leave the instructional tasting area with an open container of beer.

6) Existing law authorizes specified nonprofit corporations that have not been issued a license authorizing the sale of wine to receive and possess wine donated to that nonprofit corporation, if the nonprofit corporation has submitted a license application to sell wine with the Department of Alcoholic Beverage Control (ABC). This bill would additionally authorize those nonprofit corporations to receive and possess beer under the same circumstances.

7) Existing law authorizes ABC to issue a special temporary on-sale or off-sale wine license to a nonprofit corporation that is exempt from payment of income taxes, subject to specified requirements and limitations. This bill would extend this authorization to issue a special temporary on-sale or off-sale license to sell beer.

8) Makes clarifying changes.

EXISTING LAW:

1) Establishes ABC and grants it exclusive authority to administer the provisions of the Alcoholic Beverage Control Act (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.

2) Authorizes a licensed winegrower or a licensed beer manufacturer to apply to ABC for a CFM sales permit, which allows, among others, the licensee to sell wine or beer at a certified farmers’ market, under specified conditions, and requires the licensee to pay a fee of $50 for the permit.

3) Requires certified farmers ’ market sales permit issued to a licensed winegrower, but not a licensed beer manufacturer, to allow an instructional tasting event on the subject of wine at a certified farmers’ market, under specified conditions. Requires ABC to notify the local entity and applicable law enforcement agency where the CFM or community event is to be held of the issuance of the permit.

4) Authorizes a licensed beer manufacturer to apply to ABC for a CFM beer sales permit that allows the licensee to sell packaged beer at a farmers' market, including any area outside the footprint of the farmers' market, under specified conditions.

5) Authorizes specified nonprofit corporations that have not been issued a license authorizing the sale of wine to receive and possess wine donated to that nonprofit corporation, if the nonprofit corporation has submitted a license application to sell wine with ABC.

6) Authorizes ABC to issue a special temporary on-sale or off-sale wine license to a nonprofit corporation that is exempt from payment of income taxes, subject to specified requirements and limitations.

7) Authorizes beer manufacturers and wholesalers to offer beer samples (not to exceed eight ounces per person, per day) to individuals of legal drinking age at on-sale retail licensed premises under specified conditions.

8) 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.

FISCAL EFFECT: Unknown

COMMENTS:

Purpose of the bill. The author's office points out that very few craft brewers sell beer at CFMs, in part, because consumers are accustomed to sampling beer before making a purchase. The author's office states that this bill will provide an important market access opportunity for small brewers to build their brands and be a competitive force in the marketplace. In addition, consumers will benefit from the direct interaction with brewers.

According to the author, this bill simply allows tastings where brewers are already selling their products at CFMs. In recent years, craft brewing in California has experienced exponential growth. This bill seeks to foster a relationship between local brewers and those purchasing their products. AB 774 would greatly help local brewers educate consumers and build their brands at CFMs.

Currently, ABC allows beer manufacturers (Types 01 and 23) to apply for a CFM beer sales permit, which has been designated as a Type 84. The permit allows for sale of sealed beer containers to consumers at certified farmers’ markets. Permits may only be issued to breweries for CFMs held in the county where their manufacturing facility is located or the adjacent county. Unfortunately, unlike other products at the market, current law does not permit a brewery to offer tastings.

In 2014, the Legislature overwhelmingly approved and the Governor signed AB 2488 (Levine, Chapter 98, Statutes of 2014), which provided wineries or cider makers the ability to offer tastings to help educate consumers about the product prior to purchase. Since the enactment of the bill, sale of wine has increased at CFMs.

Similar to the effect of AB 2844 on wineries, AB 774 would greatly help local brewers.

In addition, under existing law, beer manufacturers can donate beer to a non-profit to be sold at a fundraising event for consumption on-site. However, they cannot donate beer to a non-profit for the purposes of being auctioned for consumption off-site. Craft brewers receive frequent requests from local and statewide non-profits for beer donations in the form of “beer baskets” to be sold at a fundraising auction. Craft brewers cannot satisfy those requests without putting the non-profit and their own license at risk.

The same non-profits can receive wine donations from wineries to be auctioned but cannot receive beer for the same purpose. AB 774 seeks to provide some clarity and uniformity in the ABC Act for beer donations.

Background: According to industry sources, California currently has more craft breweries (approximately 440) than any other state in the country. In fact, California has more than twice as many craft breweries as Colorado - the state with the next highest number. An average of one in every five craft beers produced in the United States comes from California. In 2012, the California craft brewery industry had an annual impact of $4.7 billion on the state's economy and supported well over 45,000 jobs. Additionally, the state's craft brewery industry generated over $850 million in federal, state, and local revenues in 2012.

CFMs are governed by California 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. According to the California Farm Bureau Federation, more than 800 certified farmers’ markets are held in California each year. ABC issued 52-Type 79 (wine tastings at CFMs) licenses in 2014 and so far 31- Type 84 (sell beer at CFMs) licenses in 2015.

CFMs require products sold within their event boundaries to be 100% grown and produced on the property owned by the farmer or manufacturer. Products that cannot meet this criterion must be sold in an area adjacent to the farmers' market called a 'community event' area. While most craft brewers cannot meet the CFM criteria there may be the rare instance where one does in fact grow all the ingredients (i.e., grain and hops) on their own property.

Arguments in support: Proponents emphasize, "Beer, like many other products, is sold through sampling. Consumers want to understand the beer, decide if they like it and determine if it is a good value. The years have demonstrated that beer sales at farmers' markets would grow if tastings were allowed."

The California Craft Brewers Association writes this bill would enhance the protections of the Tied-house laws by allowing local craft brewers to provide educational tastings of their products at farmers markets. This ability will support buy-local programs and help to sustain horizontal competition in the marketplace; a key objective of tied-house laws. This measure will also allow non-profits to receive beer donations from breweries to assist them in their fundraising activities including auctions.

Arguments in opposition: The California Council on Alcohol Problems writes, "We are uncomfortable with the idea of alcoholic beverages being consumed at farmers’ markets, and we don’t believe ABC has the resources to properly regulate such wine tastings events all over the state. As is typical with these statutorily created, expanded venues for alcohol marketing and distribution, what begins as a modest new avenue to market alcohol for one segment of the industry expands into other segments, while the modest limitations originally included are slowly eroded over time. Such is the case with wine tastings events at farmers’ markets -- authorized in statute just last year -- with this subsequent legislation to now include beer consumption."

Prior legislation: AB 2488 (Levine), Chapter 98, Statutes of 2014. Expanded 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 (CFMs) to also grant the licensed winegrower the privilege of conducting limited wine tastings for consumers at CFMs under certain circumstances.

AB 2004 (Chesbro), Chapter 806, Statutes of 2014. Authorized a licensed beer manufacturer to apply to ABC for a certified farmers' market beer sales permit, which allows the licensee to sell packaged beer at a farmers' market, including any specified area, under certain conditions. The bill also allowed a beer manufacturer to sell beer and wine on their own premises during private events.

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 AB 2488 (Levine) continued 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.

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 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

California Craft Brewers Association

Opposition

Alcohol Justice

California Council on Alcohol Problems

Analysis Prepared by: Eric Johnson / G.O. / (916) 319-2531