California Legislative Update for 2009

The 2008 legislative session was awash in bills changing the Alcoholic Beverage Control Act.  The legislature expanded winery privileges, increased caps on consumer give-aways for brewers, created new tied-house exemptions, and added new labeling requirements for flavored malt beverages and wines from certain regions.  This article provides a recap of changes to the Act and some action items for you to consider.

AB 2004:  WINERIES MAY SELL WINE BY THE GLASS & IN PICNIC AREAS

This new law allows wineries to sell wine by the glass in tasting rooms at the original winery premises.  The new law does not allow the sale of wine by the glass in tasting rooms licensed under "duplicate 02s."  The new law also allows the sale of bottles of wine for consumption on the premises including picnic areas if these are part of the licensed premises.   The winery may also allow customers to take partially consumed bottles of wine from the premises upon departure.

ACTION ITEM:  A winery should ensure that the picnic area is part of the licensed premises.  If the area was not included in the premises description provided to ABC, the winery will need to expand the licensed premises to include areas where wine will be consumed.

CAUTION:  If a winery decides to sell wine by the glass or bottle for consumption at the winery, the winery should determine if this triggers the need for a health permit.  Wineries are food facilities and wine is considered "food" under the California Retail Food Code.  Under this Code, if a winery sells food or wine, it may need a health permit.  A winery is exempt from the requirements of obtaining a health permit if there is no sale of "food" including wine for consumption on the premises.  In order to obtain an exemption, a winery must follow the rules established by county Departments of Health Services. 
Bus. & Prof. Code §§ 23358, 23390; 23396.5; effective January 1, 2009.

SB 607:  CHANGES TO HOME "BREW" AND PRODUCING WINE WITHOUT A PERMIT

The bill removes the exemption of production under 200 gallons from the definition of a winegrower.  This new law does allow an adult to make wine for personal or family use so long as the amount or production does not exceed the following quantities per calendar year:  100 gallons if there is one adult in the household; or 200 gallons if there are two or more adults in the household.  The wine may not be sold.  Wine made under the home brew exception may be taken to fairs, exhibitions or competitions and provided for tasting and judging.
Bus. & Prof. Code §§ 23013; 23356.2; effective January 1, 2009.

AB 1245:  PROMOTIONAL ITEMS:  TRINKET VALUE RAISED TO $3 FOR BEER PROMOTIONS

This bill allows beer manufacturers to provide advertising specialties of up to $3 per unit original cost to consumers.   There is no change to the dollar value limits for consumer advertising specialties provided with wine brands, $1 per unit cost, and with distilled spirits brands, $5 per unit cost.
Bus. & Prof. Code § 25600; effective January 1, 2009.

AB 2293:  PROMOTIONAL EVENTS:  DISTILLED SPIRITS AND WINE PARTIES

Distilled spirits and wine suppliers may hold private events and provide free wine, distilled spirits, food and entertainment to guests. Distilled spirits and wine suppliers may host a dozen private parties each year for up to 400 guests, and even more parties for a more discrete guest list.  There are some specific rules for these events:

1) Invitation Only: Guests must be invited. Invitations must be made by email, telephone, mail or in person. Invitations cannot be made by other means. Guests must be 21 years of age or older. Each guest may bring one guest.

2) Responsible Host: The supplier hosting the event must be present. The host supplier must pay for the free alcoholic beverages, food and entertainment. In other words, a supplier cannot require a wholesaler to pay for all or part of the party.

3) Party Specifics: The total number of attendees cannot exceed 400. The event cannot exceed four hours. The event must end by 2:00 a.m. Each supplier only may host 12 events per calendar year of more than 100 guests. Each supplier only may host 24 events per calendar year of 100 people or less.

4) Venue: A catering license must be issued for the event venue. Under this new law, events at wineries or other unlicensed locations may only be held if a caterer has obtained permission to serve alcohol at the venue. If the event is held at a winery, no distilled spirits may be served. Only eight events per year may be held at any one venue.

5) Retail Licensed Premise: An event may not be held at a retail licensed premise such as a hotel, bar or restaurant.

6) Additional Freebies: The host may provide a free ride home to guests as long as it is ground transportation only to the guests' homes or hotels. Aside from food, alcoholic beverages, other beverages, entertainment and a free ride home, no other free things may be given away.

7) Fees: ABC may charge fees for issuing the catering permits; and fees for administering the new law not to exceed $200 per event.

Bus. & Prof. Code § 25600.5; effective January 1, 2009.

AB 346:  LABELING FMBs

Flavored malt beverages containing more than 0.5% of alcohol by volume from flavors containing distilled alcohol and sold through the three tier system must prominently disclose the percentage of alcohol content by volume.  The container must state "CONTAINS ALCOHOL" on the front of the container in a font a least 3 mm high and that is in contrast to the background.  A sticker may be used to add this information.
Bus. & Prof. Code § 25205; effective on all products sold by manufacturer or importer to a wholesaler or retailer on or after July 1, 2009.

AB 2397:  WINE LABELS & LODI

Any wine labeled with an appellation of origin within the "Lodi" viticultural area, must also bear the name "Lodi" on the label.  This applies to any wine bottled after January 1, 2009.
Bus. & Prof. Code § 25245; effective January 1, 2009.

AB 2426:  TIED HOUSE AND BREW PUBS

This law creates a tied-house exception.  Any person that operates an out-of-state winery and produces distilled spirits out-of-state may also hold an interest in up to 12 brew pubs within California.  The out-of-state distilled spirits production must occur on premises where the licensee also operates brew pubs. 
Bus. & Prof. Code § 25503.41; effective January 1, 2009. 

SB1560:  TIED HOUSE AND OUT-OF-STATE WHOLESALER/RETAILER

This bill corrects a tied-house problem for a business with concurrent interests in California retail licenses and out-of-state wholesaler licenses.  It creates a new exception that allows a person to have an interest in a California retail license if that person also holds an interest in an out-of-state wholesale license.  The California retail licensee must purchase all alcohol from California wholesalers and not more than 40 percent of the gross revenues of the retailer may be derived from alcoholic beverages.
Bus. & Prof. Code § 25503.22; effective immediately.

SB 1246:  BEER SIGNS AND WHOLESALERS

Now beer wholesalers may sell or rent exterior sings advertising beer to any on-sale or off-sale premises.  These signs must be sold or rented at not less than cost.  The signs may be customized for particular retailers, and if customized, the signs must be sold to the retailer rather than rented.
Bus. & Prof. Code § 25611.3; effective January 1, 2009.

SB 1211:  ON-SALE BEER AND WINE LICENSEE MAY OBTAIN CATERING PERMITS

Under this law, on-sale licensees restricted to selling beer and wine may obtain catering permits.  The catering permits will allow the licensee to sell wine and beer at catered events.
Bus. & Prof. Code § 23399; effective immediately. 

AB 1964:  NON-PROFIT EVENTS AND TEMPORARY PERMITS

This new law now allows non-profits to obtain up to three temporary off-sale licenses; each one can be issued for a period of up to 30 days.  Changes also allow non-profits to receive and store wine donations before their special event or temporary permits are issued.
Bus. & Prof. Code §§ 24045.4, 24045.6 and 25607.5; effective January 1, 2009.

AB 2090:  NON-PROFIT EDUCATIONAL EVENTS:  WINE TOURS

This new law creates permits for non-profits with 501(c) (5) or 501(c) (6) status whose members are groups of winegrape growers and professionals in the fields of enology or viticulture.  The permit allows the holder to serve tastes of wine at a class, tour or instructional event.  Tastings are limited to one-ounce pours.  The wine must be bought by the non-profit or donated to the non-profit.  The event may not be directed to a specific wine brand or trade name. A non-profit may obtain only six of these licenses per year.  The law also authorizes wineries to donate to this type of non-profit.
Bus. & Prof. Code § 24045.19; effective January 1, 2009.

SB 157:  RELAXES RULES ON DONATIONS BY IMPORTERS AND SALES UNDER WINE EVENT SALES PERMITS

This bill expands the types of organizations that can host fairs at which wineries may sell wine under a special event sales permit. The bill also allows those holding importer general licenses to give or sell wine, beer or distilled spirits to certain non-profits.
Bus. & Prof. Code §§ 23399.6; 25503.9; effective January 1, 2009. 

AB 23:  DRY CABARET SHOWS

The new law allows guests under 21 years old to attend cabaret performances so long as no alcohol is sold, served or consumed during the dry performances.  The premises must have operated as a cabaret theatre for at least 10 years with seating of at least 375 patrons.
Bus. & Prof. Code § 23039.1; effective immediately.

SB 1159:  LIMITED DRINKING ON TRUCKEE RIVER

This new law makes it a crime for people to drink alcohol in boats or bathe with open containers of alcohol on the Truckee River between Highway 89 bridge and the Alpine Meadows bridge.
Bus. & Prof. Code § 25608.10; effective January 1, 2009.

AB 2893:  INCREASING CONDITIONS WHEN TRANSFERRING LICENSES

This bill allows ABC to impose an additional condition on a transferred license.  The additional condition includes restrictions on the ability of the transferor to be at the licensed premises and appears designed to prevent transferors with multiple violations from working, consulting with or otherwise helping out at the location once the license has been transferred from the former licensee.
Bus. & Prof. Code §23801; effective January 1, 2009.

AB 3071:  WINERIES NOT PUBLIC PREMISES; RETURNING BEER; DRINKING AT SCHOOLS; REPORTING OWNERSHIP CHANGES

The bill codifies that winegrowers' premises are not "public premises."  This new law allows the return of beer any time if the beer has been recalled for health or safety issues.  The new law also allows consumption of alcoholic beverages at special events at public community colleges.  The bill also requires any change in ownership of any entity holding directly or indirectly greater than 10% interest in a license to report such changes within 30 days.
Bus. & Prof. Code §§ 23039; 23104.2; 25608; 25663; 23405.3; effective January 1, 2009.

AB 1389:  INCREASE IN LICENSE FEES

Annual license fees are increased by 11.78%.  Beginning in 2010, the Department may adjust the fees in proportion to increases in the Consumer Price Index.
Bus. & Prof. Code § 23320; effective January 1, 2009.

AB 2080: ACTS OF GOD

This bill allows a licensee to carry on a business for 180 days within 500 feet of a licensed premise that has been destroyed by fire or any act of God.
Bus. & Prof. Code § 24081; effective January 1, 2009.

AB 2266:  ON-PREMISE LICENSE LIMITS INCREASED FOR NAPA COUNTY

Despite the moratorium, this bill allows five new restaurant licenses to be issued each year for the next three years. 
Bus. & Prof. Code § 23826.10; effective January 1, 2009.