Happy New Year from the California legislature!
The new year is bringing us another round of significant legislative and regulatory changes affecting the manufacture, sale, distribution, and consumption of alcoholic beverages in California. While the 2026 updates are (with a few significant exceptions) less sweeping than those enacted in 2024 or 2025, there remains a meaningful set of developments that industry participants should understand and be alert to.
With that in mind, we hope our new law summaries below prove useful.
1) AB 1246 – Craft Distillers Direct-to-Consumer Shipping
This is one of the most significant changes affecting how distilled spirits are sold and delivered in California. Under AB 1246, effective January 1, 2026, out-of-state craft distillers may now sell and ship spirits directly to consumers, an activity previously limited to in-state craft distillers. A “craft distiller” is defined as a distiller that produces no more than 150,000 gallons of distilled spirits per fiscal year (July 1 through June 30), excluding any brandy the distiller manufactures, or has manufactured on its behalf under a brandy manufacturer license.
To engage in direct-to-consumer shipping, qualifying producers must obtain a Type 94 permit. As the statute reads, it appears that current Type 74 licensees may no longer ship spirits under a Type 74 license but must instead secure a Type 94 permit for this activity. This is something we are clarifying with the ABC.
Among the added reporting and shipping requirements listed in BPC section 23504.5, shipments made under a Type 94 permit may not exceed 2.25 liters per consumer per day. By contrast, Type 74 licensees may sell up to 4.5 liters per consumer per day, but that higher limit applies only to sales made from the licensed premises. Thus, the new Type 94 permit effectively opens craft spirits to internet sales and marketing.
This change creates new opportunities for smaller producers to reach consumers outside traditional three-tier channels, brings spirits distribution closer in line with long-standing wine and beer direct-to-consumer models and sets an example to encourage other states to enact similar privileges in their states for California distillers. Open markets benefit everyone.
2) AB 2991 – Electronic Funds Transfers Required Between Wholesale and Retail Licensees
This one has been a long time coming and the repercussions will soon be felt. We first covered this back on November 20, 2024 (here), and issued a follow up post on September 4, 2025 (here), and it is worth reviewing the summary of the requirements and our concerns about who is affected, and how. Starting January 1, 2026, “retailer licensees” must pay “wholesaler licensees” by electronic funds transfer for “delivery” of beer, wine, or distilled spirits. The bill amends BPC section 25509 and creates a new section 25509.1.
“Electronic funds transfer” or “EFT” means the electronic transfer of money from one bank account to another, either within a single financial institution or across multiple institutions, via computer-based systems. The bill enables (and requires, unless the affected retailers make a succession of elections not later than July 1, 2025 – a deadline that passed 6 months ago) “wholesalers” to select the third-party payment processor used to make an electronic funds transfer.
Payment may be made using cash, check, or money order only in these instances:
(1) If accepting payment following an electronic funds transfer of insufficient funds.
(2) If the retailer holds an interim operating permit or a temporary permit.
(3) During temporary service interruption of the third-party payment processor.
(4) During the first 30 days following the issuance of a license to the retailer licensee.
Several issues arise from this bill, some of which are: whether the timing and penalties associated with the new EFT requirements start on the date of “delivery” or date of “invoice” (see BPC 25509 subsections (a) and (b) vs subsection (c)), who is considered a retailer and who is considered a wholesaler (for example, virtual wineries [9/17/20 license types] are considered wholesalers); mandatory wholesaler access to retailer bank accounts is called for by the new statute; and what is considered a “delivery” of beer, wine, or distilled spirits should be clarified.
We expect that there will be substantial questions and concerns from the retail on and off-premises industry (and perhaps from many smaller wholesalers) before the kinks are worked out of this requirement. We stand ready to assist our clients in understanding how this mechanism works.
3) AB 720 – Winegrowers’ Estate Tasting Event Permit and CRV labeling extension
This bill introduces two key changes affecting California’s wine industry, both effective January 1, 2026.
Estate Tasting Event Permit (Type 93)
First, the bill establishes a new Estate Tasting Event Permit (Type 93). This permit allows licensed winegrowers to exercise their existing tasting room privileges, including on- and off-sale of their own wine, at qualifying special events held on land they “own or control” outside their bonded winery premises. Eligible locations include both adjacent properties and non-adjacent vineyards. The full provision is codified at BPC section 23399.03. So far, so good.
However, the principal question that has not been resolved yet is what is required to “control” a vineyard or other property where the permit would be used. Is a grape purchase agreement identifying specific vineyards (and using control language) enough? Should current grape purchase agreements (for vineyard owned by others) be modified to ensure that the requisite level of control exists for the purpose of using the statute to conduct vineyard specific tasting events (which, frankly, are relatively informal and common in most areas of appellation in the state). We have a significant practice in drafting grape purchase agreements and we are encouraging our clients with significant long term agreements with adjacent (or non-adjacent) vineyards owned by others (such as family trusts and so forth) to look closely at their intended marketing practices and adjust them to the new reality where either there are no agreements or the status of “control” is unclear or not stated.
To utilize Type 93, winegrowers must apply to the California Department of Alcoholic Beverage Control for the permit and obtain an event authorization from ABC for each event, subject to a $100 fee per event. No more than 36 event authorizations may be issued per licensee per calendar year. Note that while the permit offers greater flexibility for pop-up tastings and direct-to-consumer engagement in vineyard and estate settings, all events remain subject to applicable local land-use and zoning approvals.
It looks like the historical practice of trekking out from the tasting room into the vineyard with a group of friends, a picnic basket and some bottles of wine on a pretty summer day just got a lot more complicated.
CRV Labeling Changes
Second, the bill makes several adjustments to California’s redemption value (CRV) labeling requirements:
Extends the deadline for wine and distilled spirit containers to include CRV indicia from July 1, 2025, to July 1, 2026.
Extends the exemption for containers filled and labeled before the original deadline, allowing containers filled before July 1, 2025, to remain exempt from CRV labeling requirements.
Provides additional flexibility in how CRV compliance marks may be applied, including permitting smaller QR codes or etching the redemption value message directly on the container, subject to statutory size and format parameters
4) New License Types & Expanded Local Alcohol Businesses
Several smaller bills signed in 2025 expanded on license privileges and added to license quotas:
AB 233 – Permits beer manufacturers and beer wholesalers to sell beer from trailers, expanding prior authority that was limited to wagons and trucks. This change is codified in BPC section 23388 and, as far as we can determine, was initiated by someone who realized that most beer is no longer sold from horse-drawn beer wagons. Welcome to 1935.
AB 828 – Authorizes the ABC to issue up to 12 new original neighborhood-restricted special on-sale general licenses per year, beginning January 1, 2026, to bona fide public eating places located in specified census tracts in Los Angeles County, until a total of 40 new licenses have been issued. A neighborhood-restricted special on-sale general license may exercise all the privileges, and is subject to all the restrictions, applicable to an on-sale general license for a bona fide eating place. This change is codified in BPC section 23826.24.
SB 395 – Creates up to 20 additional Type 47 licenses within designated hospitality zones in San Francisco, notwithstanding the population-based limits on the issuance of on-sale general licenses. This provision is codified in BPC section 23826.22. The concept of encouraging hospitality zones (where music, parties and mingling with others) is an important element in bringing life back to downtown areas of San Francisco and we encourage its expansion to other metropolitan areas throughout the state. We would say Viva Las Vegas, but gambling is still prohibited.
AB 445 & AB 1008 – Similar to SB 395, these bills further expand license availability in rural counties by authorizing additional Type 47 licenses in Colusa County and San Luis Obispo County. Again, this encourages rural entertainment venues.
Collectively, these license expansions are intended to spur economic growth, particularly for small restaurateurs and brewers, though some advocates caution that increased availability should be paired with appropriate community safeguards (such as mandatory ID checks, use of security guards and a prohibition on bikini’s during evening hours).
5) Not Enacted Yet, But On the Horizon
While not yet law, these proposals have generated significant attention and could meaningfully affect California’s alcohol regulatory landscape if enacted:
I. Extending Hours of Sale (AB 342)
AB 342 is a high-profile proposal that would represent a significant departure from California’s long-standing 2:00 a.m. cutoff for alcohol sales. Under the bill, beginning in 2026, local governments could elect to establish designated “hospitality zones” in which bars and restaurants would be permitted to serve alcohol until 4:00 a.m. on weekends and holidays, provided the licensee obtains an additional extended-hours license and satisfies specified public safety requirements.
Supporters contend that the measure would help cities foster more vibrant nightlife economies and better accommodate large-scale events, including the 2026 World Cup and the 2028 Olympic Games. Opponents, however, caution that extended service hours could increase alcohol-related risks, including impaired driving and public disorder.
At present, the Intuit Dome, the home of the Los Angeles Clippers, is the only venue in California authorized to serve alcohol until 4:00 a.m.
II. Drink Safety and Consumer Protections at Events
In addition to proposals affecting licensing and hours of service, lawmakers are considering measures aimed at improving drink safety at large events and venues. One such proposal would require vendors operating under catering authorizations or daily on-sale licenses at large outdoor events to offer drink lids and drug-testing devices at their premises and make them available to customers.
Note that current law requires holders of a Type 48 (bars and nightclubs that do not sell food) license must be able to provide drug testing devices to customers (as we wrote about here). These proposals would expand which license types are subject to those requirements.
These provisions are intended to deter drink spiking and enhance consumer safety at festivals and similar gatherings, with several components currently proposed to sunset on January 1, 2029.
Conclusion
We expect 2026 to be the year the alcoholic beverage industry turns away from the negative headlines and into more positive ones. Humans have enjoyed alcoholic beverages for at least 10,000 years, and there is little reason to expect that enjoyment to change anytime soon. We are especially heartened by the new government health guidelines that stopped the demonization of consumption and instead shifted the focus to moderation and social engagement. Despite ongoing regulatory complexity driven by competing legislative interests and shifting consumer preferences, there are still plenty of opportunities for smart, creative, and well-positioned businesses to prosper, and many of the new regulations (especially off-site tastings and craft distillers DTC privileges) offer mechanisms that can be effectively used to drive sales during 2026.
We believe this is the year to step forward and evolve with the times. In our view the businesses most likely to succeed in the current marketplace are those that can separate themselves from the pack by building authentic brands and stories, diversifying product offerings and price points, embracing disciplined compliance and marketing as a competitive advantage, leveraging data and technology to improve operations and customer engagement, and finding innovative routes to market that align with tied-house and evolving distribution rules. We are here to help our clients understand both the opportunities and the challenges they will encounter as the market, and the year, moves forward.
Copyright 2026
This blog is dedicated to occasional (and hopefully interesting) reports of state and national alcoholic beverage regulatory developments that we encounter in our practice. Booze Rules (and any comments below) are intended for informational use only and are not to be construed as legal advice. If you need legal advice please consult with your counsel.