Existing law, the Alcoholic Beverage Control Act, which is administered by the Department of Alcoholic Beverage Control, authorizes a licensed beer manufacturer that produces more than 60,000 barrels of beer a year to manufacture cider or perry at the licensed production premises and to sell cider or perry to any licensee authorized to sell wine.

This bill would remove the barrel production requirement that a licensed beer manufacturer must meet in order to exercise the manufacturing and sales privileges described above.

Existing law, the Alcoholic Beverage Control Act, which is administered by the Department of Alcoholic Beverage Control, authorizes a licensed beer manufacturer that produces more than 60,000 barrels of beer a year to manufacture cider or perry at the licensed production premises and to sell cider or perry to any licensee authorized to sell wine.

This bill would remove the barrel production requirement that a licensed beer manufacturer must meet in order to exercise the manufacturing and sales privileges described above.

Existing law, the Alcoholic Beverage Control Act, which is administered by the Department of Alcoholic Beverage Control, authorizes a licensed beer manufacturer that produces more than 60,000 barrels of beer a year to manufacture cider or perry at the licensed production premises and to sell cider or perry to any licensee authorized to sell wine.

This bill would remove the barrel production requirement that a licensed beer manufacturer must meet in order to exercise the manufacturing and sales privileges described above.

Date of Hearing: June 28, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

SBPCA Bill Id:SB 788

Author:(Ashby) – As Introduced Ver:February 17, 2023

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

SUMMARY:

This bill repeals the requirement that a licensed beer manufacturer produce more than 60,000 barrels of beer a year to be authorized to manufacture cider or perry and sell the beverages to a licensee authorized to sell wine.

FISCAL EFFECT:

Minor and absorbable costs to the Department of Alcoholic Beverage Control.

This committee sees a wide array of bills that propose to modify the scope of alcohol laws. Generally, modest license exceptions such as that proposed by this bill do not generate major new enforcement workload for ABC, but taken together, these proposals could lead to significant new costs and future budget requests.

COMMENTS:

1. Purpose. According to the author:

Cider and perry are considered a form of wine, and even though the process for manufacturing is identical to beer, all beer manufacturers were initially required to also obtain a winegrower’s license to manufacture cider or perry. Recognizing this inefficiency, California passed a law allowing for large beer manufacturers to produce cider or perry with only a beer license. However…small breweries are still required to also obtain a winegrower’s license – hindering their business opportunities.

This bill is supported by the California Craft Brewers Association and regional brewers guilds.

1. Cider and Perry. Cider is a fermented alcoholic beverage made from fruit juice, the most common and traditional being apple juice. Perry, also known as pear cider, is an alcoholic beverage made from pressed pears specifically grown for such use. Since both beverages are fermented from fruit and regarded as wine by federal and state law, prior to 2014, a brewery had to obtain a winegrowers license prior to making cider or perry.

AB 779 (Bocanegra), Chapter 379, Statutes of 2013, allowed beer manufacturers producing more than 60,000 barrels of beer annually (Type 01 licenses) to produce cider or perry on their licensed premises and sell the beverages to a licensee authorized to sell wine, without first obtaining a winegrower’s license. According to the Assembly Governmental Organization Committee’s analysis of this bill, AB 779 specified a minimum production requirement because, at the time, Type 01 licensees were interested in producing cider and perry. This bill repeals the minimum production requirement, thus allowing licensed small beer manufacturers (Type 23 licenses) to also produce and sell cider and perry.

1. Related Legislation. AB 416 (Muratsuchi) allows an on-sale licensee authorized to sell wine to also sell shochu. AB 416 is pending on the Senate Floor.

SB 277 (Dodd) authorizes a retail package off-sale beer and wine licensee to also sell low alcohol-by-volume spirits in containers no larger than 16 ounces. SB 277 is pending in the Assembly Governmental Organization Committee.

Analysis Prepared by: Irene Ho / APPR. / (916) 319-2081

Date of Hearing: June 14, 2023

ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION

Miguel Santiago, Chair

SBPCA Bill Id:SB 788

Author:(Ashby) – As Introduced Ver:February 17, 2023

SENATE VOTE: 36-0

SUBJECT: Beer manufacturers: cider and perry

SUMMARY: This bill authorizes beer manufacturers that produce 60,000 or less barrels of beer per year to manufacture cider or perry at the licensed premises and to sell cider or perry to any licensee authorized to sell wine. Beer manufacturers that produce more than 60,000 barrels of beer per year already have this privilege. Specifically, this bill:

1) Permits small beer manufacturers to produce cider or perry on the licensed premises and to sell it to any licensee who is allowed to sell wine.

2) Defines “cider” and “perry” to mean fruit wines which are derived wholly (except for sugar, water, or added alcohol) from apples or pears.

EXISTING LAW:

1) Establishes the Department of Alcoholic Beverage Control (ABC) and grants it exclusive authority to administer the provisions of the Alcoholic Beverage Control Act (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 and the collection of license fees for this purpose.

2) Provides, under the Act, for the issuance of various alcoholic beverage licenses, including the imposition of fees, conditions, and restrictions in connection with the issuance of those licenses.

3) Separates the alcoholic beverage industry into three separate component parts, or tiers, of the manufacturer (including, breweries, and distilleries), wholesaler/distributor, and retailer. This is referred to as the “tied-house” law or “three-tier” system.

4) Authorizes a licensed beer manufacturer that produces more than 60,000 barrels of beer a year to manufacture cider or perry at the licensed premises and to sell cider or perry to any licensee authorized to sell wine, as specified.

5) Creates the beer manufacturer’s license, which, among other things, allows a licensee to manufacture, produce, package, and ship unlimited amounts of beer to consumers in California.

6) Creates the small beer manufacturer’s license, which is identical to the beer manufacturer’s license except that a small beer manufacturer is prohibited from producing more than 60,000 barrels and has smaller licensing fees. Like the beer manufacturer’s license, the small beer manufacturer’s license allows the licensee to ship unlimited amounts of beer to consumers in California.

FISCAL EFFECT: This bill is keyed fiscal by Legislative Counsel.

COMMENTS:

Purpose of the bill. According to the author’s office, “cider and perry are considered a form of wine, and even though the process for manufacturing is identical to beer, all beer manufacturers were initially required to also obtain a winegrower’s license to manufacture cider or perry. Recognizing this inefficiency, California passed a law allowing for large beer manufacturers to produce cider or perry with only a beer license. However, while the law has changed for large beer manufacturers to produce cider and perry with only their beer license, small breweries are still required to also obtain a winegrower’s license – hindering their business opportunities.

SB 788 "seeks to address this discrepancy by creating parity in the production of beer, cider, and perry across both large and small manufacturers, and ensuring that small businesses throughout the state are treated equally with large manufacturers," according to the author's office.

Background.

Beer Manufacturers Licenses. Beer manufacturers licenses (Type 01) and small beer manufacturers licenses (Type 23) are the two primary types of licenses for beer manufacturers established by California law. The holder of a Type 23 license is not permitted to produce more than 60,000 barrels of beer annually. Small brewers pay a much lower annual license fee ($435) than Type 01 licensees ($2,140). A brewpub-restaurant (Type 75) license, authorized under the Act, has a limited brewing privilege and may sometimes be referred to as “brewpub.” However, the Type 75 is an on-sale retail license with significant differences/limitations in license privileges from those of a true “beer manufacturer” (either Type 01 or Type 23).

Currently, the state has 1,147 licenses for Small Beer Manufacturers (Type 23). On the other hand, there are only 84 licenses for Beer Manufacturers (Type 01) in the entire state.

Prior to 2014, a brewery that wanted to make beer as well as cider or perry had to get a winegrowers license, also known as a Type 02 license. Because perry and cider are both fermented from fruit and are regarded as wine by state and federal law, obtaining a winegrower's license was necessary.

In 2013, Governor Brown approved AB 779 (Bocanegra, Chapter 379) that recognized that particular beer manufacturers had the ability, expertise, and workforce to produce more than one type of alcoholic beverage at the same manufacturing site. The bill allowed Type 01 licensees, or beer manufacturers who produce more than 60,000 barrels of beer annually, to produce cider or perry on their licensed premises without first needing to obtain a winegrower's license. It appears that a 60,000 barrel minimum production requirement was added because at the time, larger manufacturers were interested in producing cider and perry.

Cider. Cider is a fermented alcoholic beverage made from fruit juice, the most common and traditional being apple juice. The typical alcohol range for cider is 1.2% ABV to 8.5% ABV or more for traditional English ciders. In the US, hard cider is the term used to describe fermented cider. Berry, tropical, and mixed flavors of hard cider are common variations. Cider is often stronger than beer, and is frequently over 6% ABV. While many consumers may think of cider like beer, in reality, cider is more like wine. Like wine, cider is made from raw fruit picked at peak ripeness and juiciness and then fermented. The skin of the apples also plays an important role in the flavor profiles of ciders, and they should have adequate levels of natural acids and tannins. Cider is now produced commercially in all 50 states and the District of Columbia. Cider represents less than 1% of the total alcoholic beverage market share.

Perry. Perry, also known as pear cider, is an alcoholic beverage made from pressed pears that are specifically grown for this use. Traditional perry making is broadly similar to traditional cider making, in that the fruit is picked, crushed, and pressed to extract the juice, which is then fermented using the wild yeasts found on the fruit's skin.

The principal differences between perry and cider are that pears must be left for a critical period to mature after picking, and the pomace must be left to stand after initial crushing to lose tannins, a process analogous to wine maceration. After initial fermentation, the drink undergoes a secondary malolactic fermentation while maturing. Perry pears often have higher levels of sugar than cider apples, including unfermentable sugars such as sorbitol, which can give the finished drink a residual sweetness. They also have different tannin content to cider apples, with a predominance of astringent over bitter flavors.

In support. The bill's supporters state that by removing the 60,000 barrel threshold, SB 788 "creates uniformity in current law for both smaller and larger licensed beer manufacturers, allowing small manufacturers to also produce cider and perry with their beer license. In 2020, cider sales still grew 9%, with regional cider brands seeing sales rise as much as 33% over previous years. There are more than 1,000 craft breweries across California that are disadvantaged in the growing cider market by having to jump through multiple licensing requirements at the state level.”

Related legislation. AB 416 (Muratsuchi) of 2023. Would allow any on-sale licensee that is currently authorized to sell wine, to also sell shochu, an imported Japanese alcoholic beverage that contains no more than 24% of alcohol by volume (ABV) and is derived from agricultural products. (Pending in the Senate Governmental Organization Committee)

SB 277 (Dodd) of 2023. Would authorize a retail package off-sale beer and wine license, also known as a Type 20 License, to sell low ABV spirits beverages, as defined, in containers no larger than 16 ounces. (Pending in the Assembly Governmental Organization Committee)

Prior legislation. AB 779 (Bocanegra), Chapter 379, Statutes of 2013. Authorized beer manufacturers producing more than 60,000 barrels of beer per year the privilege of also manufacturing cider or perry at their licensed premises and to sell the product to any licensee authorized to sell wine.

AB 1649 (Chesbro), Chapter 129, Statutes of 2010. Allowed licensed winegrowers to produce spirts of wine, a byproduct of wine fermentation, without having to additionally obtain a distilled spirits manufacturer’s licenses.

SB 1710 (Polanco), Chapter 204, Statutes of 1998. Authorized any on-sale licensee authorized to sell wine to also sell soju, an imported Korean alcoholic beverage that contains not more than 24 percent ABV and is derived from agricultural products.

REGISTERED SUPPORT / OPPOSITION:

Support

California Craft Brewers Association (source)

Bay Area Brewers Guild

Central Coast Brewers Guild

Los Angeles County Brewers Guild

Orange County Brewers Guild

Sacramento Area Brewers Guild

San Diego Brewers Guild

Opposition

None on file

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

 CONSENT  

Bill No: SB 788

Author: Ashby (D), et al.

Introduced: 2/17/23

Vote: 21

SENATE GOVERNMENTAL ORG. COMMITTEE: 14-0, 3/28/23

AYES: Dodd, Wilk, Alvarado-Gil, Ashby, Bradford, Glazer, Jones, Nguyen, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto

NO VOTE RECORDED: Archuleta

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

SUBJECT: Beer manufacturers: cider and perry

SOURCE: California Craft Brewers Association

DIGEST: This bill authorizes beer manufacturers that produce 60,000 or less barrels of beer per year to manufacture cider or perry at the licensed premises and to sell cider or perry to any licensee authorized to sell wine. Beer manufacturers that produce more than 60,000 barrels of beer per year already have this privilege.

ANALYSIS:

Existing law:

1. Establishes the Department of Alcoholic Beverage Control (ABC) and grants it exclusive authority to administer the provisions of the ABC Act in accordance with laws enacted by the Legislature. This involves licensing individuals and businesses associated with the manufacture, importation, and sale of alcoholic beverages and the collection of license fees for this purpose.
2. Provides, under the ABC Act, for the issuance of various alcoholic beverage licenses, including the imposition of fees, conditions, and restrictions in connection with the issuance of those licenses.
3. Separates the alcoholic beverage industry into three separate component parts, or tiers, of the manufacturer (including, breweries, and distilleries), wholesaler/distributor, and retailer. This is referred to as the “tied-house” law or “three-tier” system.
4. Authorizes a licensed beer manufacturer that produces more than 60,000 barrels of beer a year to manufacture cider or perry at the licensed premises and to sell cider or perry to any licensee authorized to sell wine, as specified
5. Creates the beer manufacturer’s license, which, among other things, allows a licensee to manufacture, produce, package, and ship unlimited amounts of beer to consumers in California.
6. Creates the small beer manufacturer’s license, which is identical to the beer manufacturer’s license except that a small beer manufacturer is prohibited from producing more than 60,000 barrels and has smaller licensing fees. Like the beer manufacturer’s license, the small beer manufacturer’s license allows the licensee to ship unlimited amounts of beer to consumers in California.

This bill:

1. Authorizes small beer manufacturers to manufacture cider or perry at the licensed premises and to sell cider or perry to any licensee authorized to sell wine.
2. Defines “cider” and “perry” to mean fruit wines which are derived wholly (except for sugar, water, or added alcohol) from apples or pears.

Background

Purpose of the bill. According to the author’s office, “cider and perry are considered a form of wine, and even though the process for manufacturing is identical to beer, all beer manufacturers were initially required to also obtain a winegrower’s license to manufacture cider or perry. Recognizing this inefficiency, California passed a law allowing for large beer manufacturers to produce cider or perry with only a beer license. However, while the law has changed for large beer manufacturers to produce cider and perry with only their beer license, small breweries are still required to also obtain a winegrower’s license – hindering their business opportunities. SB 788 seeks to address this discrepancy by creating parity in the production of beer, cider, and perry across both large and small manufacturers, and ensuring that small businesses across the state are treated the same as large manufacturers.”

Beer Manufacturers Licenses. California law establishes two main types of beer manufacturer’s licenses; a beer manufacturers license (Type 01) and a small beer manufacturers license (Type 23). While both of these licenses authorize the licensee to manufacture beer, the holder of a Type 23 license is prohibited from manufacturing more than 60,000 barrels of beer. In return, small beer manufacturers pay substantially smaller licensing fees compared to a Type 01 licensee.

Prior to 2014, any beer manufacturers seeking to also manufacture cider and/or perry were required to obtain a winegrowers license, or Type 02 license. Obtaining a winegrower’s license was required because both cider and perry are considered wine under state and federal law because they’re fermented from fruit.

Agreeing that some beer manufacturers had the capacity, technology, and workforce to produce more than one type of alcoholic beverage at the same manufacturing site, the Governor signed AB 779 (Bocanegra, Chapter 379, Statutes of 2013). The bill allows beer manufacturers producing more than 60,000 barrels of beer per year, in other words Type 01 licensees, the ability to also manufacture cider or perry at their licensed premises without the need of obtaining an additional winegrower’s license. It appears that the 60,000 barrel minimum production requirement was included because it was those larger manufacturers that were interested in manufacturing cider and perry.

Cider. Cider is a fermented alcoholic beverage made from fruit juice, most commonly and traditionally apple juice. Cider generally varies in alcohol content from 2% ABV to 8.5% or more in traditional English ciders. In some regions, such as Germany and the United States, cider may be called "apple wine." Cider is often stronger than beer, and is frequently over 6% alcohol by volume – common eating apples are generally unsuitable for cider making, being low in tannins; specific apple cultivars bred especially for cider making are preferred.

Perry. Perry or pear cider is an alcoholic drink, made from pressed pears, especially grown for this purpose. Traditional perry making is broadly similar to traditional cider making, in that the fruit is picked, crushed, and pressed to extract the juice, which is then fermented using the wild yeasts found on the fruit's skin. The principal differences between perry and cider are that pears must be left for a critical period to mature after picking, and the pomace must be left to stand after initial crushing to lose tannins, a process analogous to wine maceration. After initial fermentation, the drink undergoes a secondary malolactic fermentation while maturing. Perry pears often have higher levels of sugar than cider apples, including unfermentable sugars such as sorbitol, which can give the finished drink a residual sweetness. They also have different tannin content to cider apples, with a predominance of astringent over bitter flavors.

Related/Prior Legislation

AB 779 (Bocanegra, Chapter 379, Statutes of 2013) authorized beer manufacturers producing more than 60,000 barrels of beer per year the privilege of also manufacturing cider or perry at their licensed premises and to sell the product to any licensee authorized to sell wine.

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

SUPPORT: (Verified 4/12/23)

California Craft Brewers Association (source)

Bay Area Brewers Guild

Central Coast Brewers Guild

Los Angeles County Brewers Guild

Orange County Brewers Guild

Sacramento Area Brewers Guild

San Diego Brewers Guild

OPPOSITION: (Verified 4/12/23)

None received

ARGUMENTS IN SUPPORT: According to the supporters of the bill, “SB 788 creates uniformity in current law for both smaller and larger licensed beer manufacturers by removing the 60,000 barrel threshold to allow small manufacturers to also produce cider and perry with their beer license.”

Prepared by: Felipe Lopez / G.O. / (916) 651-1530

4/12/23 14:04:28

**** END ****

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Bill Dodd

Chair

2023 - 2024 Regular

Bill No: 788 Hearing Date: 3/28/2023

SUBJECT: Beer manufacturers: cider and perry

DIGEST: This bill authorizes beer manufacturers that produce 60,000 or less barrels of beer per year to manufacture cider or perry at the licensed premises and to sell cider or perry to any licensee authorized to sell wine. Beer manufacturers that produce more than 60,000 barrels of beer per year already have this privilege.

ANALYSIS:

Existing law:

1. Establishes the Department of Alcoholic Beverage Control (ABC) and grants it exclusive authority to administer the provisions of the ABC Act in accordance with laws enacted by the Legislature. This involves licensing individuals and businesses associated with the manufacture, importation, and sale of alcoholic beverages and the collection of license fees for this purpose.
2. Provides, under the ABC Act, for the issuance of various alcoholic beverage licenses, including the imposition of fees, conditions, and restrictions in connection with the issuance of those licenses.
3. Separates the alcoholic beverage industry into three separate component parts, or tiers, of the manufacturer (including, breweries, and distilleries), wholesaler/distributor, and retailer. This is referred to as the “tied-house” law or “three-tier” system.
4. Authorizes a licensed beer manufacturer that produces more than 60,000 barrels of beer a year to manufacture cider or perry at the licensed premises and to sell cider or perry to any licensee authorized to sell wine, as specified
5. Creates the beer manufacturer’s license, which, among other things, allows a licensee to manufacture, produce, package, and ship unlimited amounts of beer to consumers in California.
6. Creates the small beer manufacturer’s license, which is identical to the beer manufacturer’s license except that a small beer manufacturer is prohibited from producing more than 60,000 barrels and has smaller licensing fees. Like the beer manufacturer’s license, the small beer manufacturer’s license allows the licensee to ship unlimited amounts of beer to consumers in California.

This bill:

1. Authorizes small beer manufacturers to manufacture cider or perry at the licensed premises and to sell cider or perry to any licensee authorized to sell wine.
2. Defines “cider” and “perry” to mean fruit wines which are derived wholly (except for sugar, water, or added alcohol) from apples or pears.

Background

Purpose of the Bill. According to the author’s office, “cider and perry are considered a form of wine, and even though the process for manufacturing is identical to beer, all beer manufacturers were initially required to also obtain a winegrower’s license to manufacture cider or perry. Recognizing this inefficiency, California passed a law allowing for large beer manufacturers to produce cider or perry with only a beer license. However, while the law has changed for large beer manufacturers to produce cider and perry with only their beer license, small breweries are still required to also obtain a winegrower’s license – hindering their business opportunities. SB 788 seeks to address this discrepancy by creating parity in the production of beer, cider, and perry across both large and small manufacturers, and ensuring that small businesses across the state are treated the same as large manufacturers.”

Beer Manufacturers Licenses. California law establishes two main types of beer manufacturer’s licenses; a beer manufacturers license (Type 01) and a small beer manufacturers license (Type 23). While both of these licenses authorize the licensee to manufacture beer, the holder of a Type 23 license is prohibited from manufacturing more than 60,000 barrels of beer. In return, small beer manufacturers pay substantially smaller licensing fees compared to a Type 01 licensee.

Prior to 2014, any beer manufacturers seeking to also manufacture cider and/or perry were required to obtain a winegrowers license, or Type 02 license. Obtaining a winegrower’s license was required because both cider and perry are considered wine under state and federal law because they’re fermented from fruit.

Agreeing that some beer manufacturers had the capacity, technology, and workforce to produce more than one type of alcoholic beverage at the same manufacturing site, the Governor signed AB 779 (Bocanegra, Chapter 379, Statutes of 2013). The bill allows beer manufacturers producing more than 60,000 barrels of beer per year, in other words Type 01 licensees, the ability to also manufacture cider or perry at their licensed premises without the need of obtaining an additional winegrower’s license. It appears that the 60,000 barrel minimum production requirement was included because it was those larger manufacturers that were interested in manufacturing cider and perry.

Cider. Cider is a fermented alcoholic beverage made from fruit juice, most commonly and traditionally apple juice. Cider generally varies in alcohol content from 2% ABV to 8.5% or more in traditional English ciders. In some regions, such as Germany and the United States, cider may be called "apple wine." Cider is often stronger than beer, and is frequently over 6% alcohol by volume – common eating apples are generally unsuitable for cider making, being low in tannins; specific apple cultivars bred especially for cider making are preferred.

Perry. Perry or pear cider is an alcoholic drink, made from pressed pears, especially grown for this purpose. Traditional perry making is broadly similar to traditional cider making, in that the fruit is picked, crushed, and pressed to extract the juice, which is then fermented using the wild yeasts found on the fruit's skin. The principal differences between perry and cider are that pears must be left for a critical period to mature after picking, and the pomace must be left to stand after initial crushing to lose tannins, a process analogous to wine maceration. After initial fermentation, the drink undergoes a secondary malolactic fermentation while maturing. Perry pears often have higher levels of sugar than cider apples, including unfermentable sugars such as sorbitol, which can give the finished drink a residual sweetness. They also have different tannin content to cider apples, with a predominance of astringent over bitter flavors.

Prior/Related Legislation

AB 779 (Bocanegra, Chapter 379, Statutes of 2013) authorizes beer manufacturers producing more than 60,000 barrels of beer per year the privilege of also manufacturing cider or perry at their licensed premises and to sell the product to any licensee authorized to sell wine.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT:

None received

OPPOSITION:

None received