Assembly Standing Committee on Governmental Organization

Good afternoon. We welcome to the Governmental Organization Committee. We're waiting for authors and for other Members to arrive and we'll. As soon as we have an author, we'll go ahead and get started. Thank you.

Good afternoon. Thank you for being here to. For the Assembly Governmental Organization Committee. It is not called to order. Good afternoon. For each Bill heard today there will be an opportunity for two witnesses in support and two witnesses in opposition to each provide two a two minute testimony. We've called the absent Members. We. They're rushing over here. We have multiple committees going on and. Do we actually. Madam Secretary, can you call the roll. On the quorum? .

[Roll Call]

Thank you. A quorum is present. And again welcome to the Governmental Organization Committee. And I want to welcome all of our new Members for this year. Assembly Member Gabriel is absent today. And we have three measures on consent. A.B. 77. AAR. Curry. A.B. 233. Gibson. A.B. 720. Rogers. I need a motion for the consent file. Second.

Motion by Mr. Gipson and a second by Mr. Fong. Thank you. Okay. Madam Secretary, can you please call the roll for the measures on consent?

[Roll Call]

The consent calendar passes and we'll hold the roll open for additional Members. Next we have adoption of the Committee rules. You have those in front of you. Is there a motion on the Committee rules moved by Mr. Gibson? Second by Ms. Soria. Okay. Madam Secretary, can you please call the Roll on the adoption of the Committee rules?

[Roll Call]

Thank you. The Committee rules are adopted and we will hold the roll open for additional Members. Next, we have item number three on our agenda. AB344. Valencia. Mr. Valencia.

Thank you, Madam Chair. Buenas tardes, Committee Members. AB344 updates and clarifies the definition of successor beer manufacturer to reflect present day business entities regardless of their license status or whether the entity has brewed beer. This update will uphold fair and competitive business practices.

California's existing alcohol regulations have historically been interpreted to guarantee that beer wholesalers receive fair market compensation in the event a brewery they have partnered with is sold to another entity. However, a recent court ruling has created a loophole that could jeopardize the fair market value protections wholesalers have relied upon for decades. With me to provide testimony is Kevin Luckey, the Executive Director for the California Beer and Manufacturer. Excuse me, Family Beer Distributors.

Thank you, Assembly Member. Good afternoon. My name is Kevin Luckey and I'm here today on behalf of the California Family Beer Distributors to express our strong support for Assembly Bill 344. California's beer wholesalers play a vital role in ensuring consumers have access to a wide variety of products while maintaining a fair and competitive marketplace.

In 2007, the Legislature enacted our state's brand transfer law to protect wholesalers by ensuring they receive fair market value for their distribution rights when a brewery they partner with is sold and the new owner chooses not to continue the partnership. Unfortunately, a recent court decision in Harp Distributing versus Main Street Capital has created a potential loophole.

The court ruled that the statute applied only to beer manufacturers allowing non brewing entities that acquire a brewery to avoid compensating the existing wholesaler for their distribution rights. This undermines long standing business practices, disrupts market stability and threatens investments wholesalers have made in building brands and expanding consumer access. AB344 provides a clear and necessary fix.

It reaffirms the original intent of California's alcohol laws, ensuring that when a brewery is sold, wholesalers are fairly compensated just as they have been for decades. This is not only a matter of fairness, but also critical to maintaining a strong and balanced marketplace as recognized by most other states where similar protections.

On behalf of California's family owned beer distributors, I urge you to support AB344 to protect industry integrity, prevent unfair business practices and preserve the investments wholesalers have made in our communities. Thank you for your time.

Thank you. Any other others in support?

Dennis Loper, for the California Beer and Beverage Distributors. In support.

Thank you. Any other Members of the audience in support? Okay. Is there anyone in opposition? Seeing none. Any. Seeing none. Any questions from the Committee.

Madam Chair? Chris Walker, California Craft Brewers. Can I do a neutral and explain why? Very important section of law not just to distributors, but to beer manufacturers as well. So any changes that are done to this code section have to be balanced.

And we are in negotiations and discussions, and we have commitments from the sponsor, and based upon those commitments, we will be neutral. But this is a very, very critical section of law for the California Craft brewers. So thank you.

Thank you very much. And I have full confidence in our author and sponsors that this conversation will continue. Thank you. Okay, Anyone else? Okay, Questions from the Committee?

Okay. I have a motion by Assembly Member Gipson. A second by Assembly Member Nguyen. Any other questions? Comments? Secretary, can you call the roll, please?

[Roll Call]

Your bill has 14 votes. It will get out, but we'll leave the roll open for absent Members. Thank you. Okay. We're waiting for Mr. Flora.

Yeah. There's additional Members. If you can call the roll on the items that are still pending.

On the consent calendar. [Roll Call] On the committee rules. [Roll Call] Opening the roll for AB 344, Valencia. [Roll Call]

Welcome, Mr. Flora. Thank you.

Labor is a long way away.

Well. And we have a whole bunch of people that are in multiple committees, so we understand.

No, I appreciate you, Chair. Thank you. Chair and Members. I'm here to present. Thank you. I accept the Committee's amendments and appreciate all your support and your time on that and respectfully ask for an aye vote.

Thank you, any Members and support. Any Members of the public and support.

Thank you, Madam Chair and Members. Matt Sutton with the California Restaurant Association. We are in Strong support of the Bill. We have alcohol service training mandates in the restaurant and that's how we manage a tight ship inside the restaurant when it comes to alcohol service.

Mr Flores' Bill deals with entry and technology is being used at a greater clip when it comes to these verification processes. And this would simply say that if we go through the good faith effort of doing so, then we've met our obligation. We support the Bill and thank you.

Thank you. Any other Members of the public in support? Okay. Anyone in opposition? Seeing none. Any questions from the Committee? I think we got. Thank you. Okay. Seeing no other comments. The motion is support with amendments and you have agreed to accept the suggested Committee amendments as stated in the analysis. And we got a verification.

We were going to do the Bill for you, but we wouldn't take the amendments on your behalf. So thank you. Appreciate that. With that, Madam Secretary, can you call the roll?

[Roll Call]

We have 14 votes. The Bill is out. But we'll leave the roll open for additional Members. Thank you. Thank.

Opening the roll for AB 509 Flora for Assemblymember Demaio.

Opening the role on the consent calendar down. [Roll Call] Opening the roll on the Committee Rules, in alphabetical order this time. [Roll Call] Opening the roll for file item number three, AB 344 Valencia. [Roll Call]

Opening the roll for AB 509 Flora. [Roll Call]

Opening the roll on the consent calendar. [Roll Call] Opening the roll on the Committee rules. [Roll Call] AB 344 Valencia. [Roll Call] AB 509 Flora. [Roll Call]

Okay. And with that, we'll go ahead and close the committee at 2:07 pm. Thank you.

Perfect timing.

Perfect timing. We were just.

Just to approve Mr. Valencia's Bill.

Yeah. There you go. Thank you. Have a good afternoon, and we'll see you next time.