California Legislative Roundup 2014

A new year brings new California laws regulating the alcoholic beverage industry and in our first Booze Rules post of 2014, we’re highlighting some of the biggest changes. AB 1116: Supplier Entertainment of Consumers Events

An issue near and dear to many of our clients engaging in consumer tasting events, Assemblymember Hall’s AB 1116 extends and slightly opens up B&P Code § 25600.5, which provides a mechanism for suppliers to entertain consumers off their premises and without charge.  Previously, these events were restricted to in-state licensees (distilled spirits manufacturers, winegrowers, rectifier, distillers or their authorized agents) and could only be conducted at premises not licensed for retail sale with the supplier purchasing the alcohol for the event from a licensed caterer.  Under the new law:

- Events may now be conducted by out-of-state distilled spirits shipper’s certificate holders. Note that wholesalers, beer manufacturers, out-of-state wineries and beer manufacturers are still excluded from hosting these events.

- Suppliers may now hold events on licensed hotel premises, except for lobby areas and areas designated as a club, nightclub, or other similar entertainment and alcohol may be purchased directly from the hotel, rather than using a caterer.   This is in addition to venues without a permanent retail license.

- The total number of consumers and their guests allowed at an event may be up to 600 people, instead of the previous limitation of 400 people.  Event hosts are still restricted to 12 events per calendar year with an attendance of more than 100 people and 24 events per calendar year with attendance of under 100 people.

This opens up areas like hotel restaurants and cafes (and permits hotels to cater these events), as long as the hotel keeps other areas open to the public not attending the event.  This is a welcome development for qualified suppliers who were struggling to find venues for their events.

We expect the ABC to issue a trade advisory outlining the changes to this section in the near future. In the meantime, for guidance about the other requirements for conducting these types of events, please see the ABC’s previous trade advisory here.

AB 636: More Bottlesignings!

AB 636 from Assemblymember Hall amends B&P Code § 25503.4, the winemaker’s dinner law, allowing you to add even more signed bottles to your collections.  According to the law that went into effect last year (B&P Code § 25502.2), suppliers and their agents may sign bottles at promotional events at off-sale retailers, but the same privilege was not explicitly extended to on-sale locations in the ABC Act (despite winemakers so commonly signing bottles at winemaker’s dinners that many believe the practice was implicitly authorized by the ABC).  With AB 636, winegrowers, wine importers and their agents may now also sign bottles at on-sale locations such as a restaurant where a winemaker hosts a winemaker’s dinner (B&P Code § 25503.4).  Note that beer and spirits suppliers are not included in this section—the privilege for on-premises bottlesignings is only held by wineries and importers.  This will continue to expose the on premise venues that allow celebrities to autograph bottles of cognac, tequila, vodka and other spirits products to regulatory discipline.

AB 933: Distillers Can Charge for Tastings

AB 933, sponsored by Assemblymembers Skinner and Hall, amends B&P Code § 23363.1 (distilled spirits tastings) and adds § 23363.3 (brandy manufacturer’s tastings).  These sections create a limited privilege that enables distilled spirits manufacturers and brandy manufacturers, respectively, to charge consumers for up to six ¼ ounce tastes of the manufacturer’s own products on its licensed premises. Using the tastes at the distillery in cocktails is expressly prohibited. This will create difficulty for distillers who market their products for use in cocktails.

AB 647: Regulating Beer Growlers

AB 647, sponsored by Assemblymember Chesbro, amends the container labeling requirements for beer containers provided by the consumer to be filled for off-premise consumption (aka “growlers”) by beer manufacturers (also referred to here as breweries), who are more clearly defined by this bill as those who use their facilities and equipment to manufacture beer for commercial purposes.  The new law allows consumers to re-use growlers they previously purchased and had filled by one brewery, at different brewery, though each brewery can decide for themselves whether or not to adopt this practice.  If the brewery does adopt the practice, it must affix a new label to the growler containing all the mandatory information (brand and type, manufacturer and bottler), and completely obscuring all information related to the first beer that had filled the container (brand/name of manufacturer, etc.).

AB 779: Cider Rules

Assemblymember Bocanegra sponsored AB 779, which permits a beer manufacturer who produces more than 60,000 barrels of beer per year to manufacture cider or perry (pear cider), and sell to any licensee authorized to sell wine.  This is interesting, because California regulates cider the same way as wine, as cider is fermented from fruit.  California law also limits the alcohol manufacturer to one category of beverage per manufacturing site, meaning before this bill, cider could only be made by winegrower licensees.  Now large beer manufacturers with the facilities to make cider can do so, although note that the privilege does not go the other way—cider manufacturers do not now have the privilege to make beer.

Also on the Horizon…

Proposed Rulemaking: ABC Rule 106(d)

This isn’t a legislative update, but we wanted to mention that the ABC has proposed amending Rule 106(d), which currently permits suppliers to furnish alcoholic beverage lists to retailers, up to $25 per unit cost to the supplier.  If adopted, the proposed rule will raise the limit to $50 per unit.  Comments closed on December 30, 2013, so an update should be coming out soon.

AB 520: Streamlining the Consumer On-Sale Tasting Law

The Wine Institute and Assemblymember Chesbro are sponsoring a bill to update B&P Code § 25503.5 and add § 25503.57 to permit a supplier or its representative and the on-sale retailer to independently advertise a tasting event, and permits a wine and spirits wholesaler to conduct consumer tastings on behalf of the supplier without prior ABC approval.  These changes provide more flexibility for who may conduct tastings and enables industry members to advertise more easily to consumers without potentially violating the tied house laws.

We’ll be delving into some of these topics in more detail in future postings, so stay tuned for more Booze Rules in 2014!

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  2. The TTB Crusade Against Small Producers and the “Consignment Sale” Business Model
  3. TTB Protocols, Procedures, and Investigations
  4. Wine in a 250 ML can – the Mystery of the TTB packaging Regulations and Solving the Problem by Amending the Regulations
  5. The Passing of John Manfreda of the TTB: a Tragedy for his family and a Tragedy for the Industry he so Faithfully Served for so Long.
  6. Pride in a Job Well-done, or Blood Money? The Cost of Learning the Truth from the TTB about the Benefits to Investigators from Making Cases Against Industry Members
  7. How ADA Website Compliance Works – The Steps You Can Take to Protect Yourself, Your Website and Your Social Media from Liability
  8. Supplier and Distributor Promotional “Banks,” Third Party Promotion Companies and Inconsistent TTB Enforcement, Oh My!
  9. “A Wrong Without a Remedy – Not in My America” – The TTB Death Penalty for Not Reporting Deaths
  10. Is a 1935 Alcohol Beverage Federal Trade Practice Law Stifling Innovation?
  11. Decoding the BCC’s Guidance on Commercial Cannabis Activity.
  12. Prop 65 - Escaping a "Notice of Violation"
  13. TTB Consignment Sales Investigations - What is Behind the Curtain of the TTB Press Releases?
  14. Heads Up! The ABC Is Stepping Up Enforcement Against Licensees Located Near Universities
  15. Coming Soon: New Mandatory Training Requirements for over One Million “Alcohol Servers” In California – September 1, 2021 will be here quickly
  16. 2019 Legislative Changes for California Alcohol Producers – a Blessing or a Curse?
  17. A Picture (On Instagram) Is Worth A Thousand Words
  18. Playing by the Rules: California Cannabis Final Regulations Takeaways
  19. Hinman & Carmichael LLP Names Erin Kelleher Partner and Welcomes Gillian Garrett and Tsion “Sunshine” Lencho to the Firm
  20. Congress Makes History and Changes the CBD Game for Good
  21. Pernicious Practices (stuff we see that will get folks in trouble!) Today’s Rant – Bill & Hold
  22. CBD: An Exciting New Fall Schedule… or Not?
  23. MISSISSIPPI RISING - A VICTORY FOR LEGAL RETAILER TO CONSUMER SALES, AND PASSAGE OF TITLE UNDER THE UNIFORM COMMERCIAL CODE
  24. California ABC's Cannabis Advisory - Not Just for Stoners
  25. NEW CALIFORNIA WARNINGS FOR ALCOHOLIC BEVERAGES AND CANNABIS PRODUCTS TAKE EFFECT AUGUST 30, 2018, NOW INCLUDING ADDENDUM REGARDING 2014 CONSENT AGREEMENT PARTIES AND PARTICIPANTS
  26. National Conference of State Liquor Administrators – The Alcohol Industry gathers in Hawaii to figure out how to enforce the US “Highly Archaic Regulatory Scheme.”
  27. Founder John Hinman Honored with the Raphael House Community Impact Award
  28. ROUTE TO MARKET AND MARKETING RESTRICTIONS - NAVIGATING REGULATORY SYSTEM CONSTRAINTS
  29. Alcohol and Cannabis Ventures: Top 5 Legal Considerations
  30. ATF and TTB: Is Another Divorce on the Horizon? What’s Going on with the Agency?
  31. STRIKE 3 - YOU REALLY ARE OUT! THE ABC'S STRICT APPLICATION OF PENALTIES FOR SALES TO MINORS
  32. TTB Temporarily Fixes Problem with Fulfillment Warehouse Tax Credits - an “Alternate Procedure” for Paying Taxes & Reporting
  33. CUSTOMERS WHO HAVE HAD ONE TOO MANY - THE FREE TRANSPORTATION DILEMMA
  34. The Renaissance of Federal Unfair Trade Practices - Current Issues and Strategies
  35. ‘Twas the week before New Year’s and the ABC is out in Force – Alerts for the Last Week of 2017, including the Limits on Free Rides
  36. Big Bottles, Caviar and a CA Wine Strong Silent Auction for the Holidays!
  37. The FDA and the Wine and Spirits Industry – Surprise inspections anyone?
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  39. NORTHERN CALIFORNIA WILDFIRES: REGULATORY AGENCY DISASTER RELIEF RESOURCES AT A GLANCE
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  41. The License Piggyback Dilemma – If it Sounds Too Good to be True, it Probably is
  42. A timely message from our Florida colleagues on the tied house laws, the three-tier system and the need for reform
  43. ABC Declaratory Rulings – A Modest Proposal Whose Time has Come
  44. More on FDA Inspections - Breweries, Distilleries and Questions
  45. WHY THE FDA IS INSPECTING WINERIES
  46. Senate Bill 378—The Proposed Demise of Due Process for Alcohol Licensees
  47. ABC Enforcement - Trends and Predictions
  48. The Corruption Chronicles – Volume One: A New Hope
  49. New Alcohol Delivery Oversight on the Horizon
  50. Michigan: Canary in the DtC Coal Mine?
  51. California ABC and Federal Credit Laws – Active Enforcement and Lots of Questions!
  52. Big Bottles For The Holidays - The Highest Calling Of The Winemaker's Art
  53. FINAL COMMENTS TO TTB NOTICE 160 DUE ON WEDNESDAY DECEMBER 7TH – WE ARE ASKING THE TTB TO EXTEND THE COMMENT PERIOD AGAIN TO ALLOW FOR INDUSTRY NEGOTIATION AND ALIGNMENT OF INTERESTS
  54. SONOMA COUNTY WINERY USE PERMITS, EVENT RESTICTIONS AND DTC
  55. New TTB Labeling Requirement Regulations: Out-of-State Bottling Is Not Created Equal and Consumers Right to Know Where the Grapes in their Wine Come from is Compromised
  56. Isn't A Written Agreement With A Distributor Worthless In A Franchise State?
  57. Crowd Funding for Alcohol Producers and Retailers – Down the Rabbit Hole with the Tied House laws
  58. Everything you ever wanted to know about the BPA Warning Statement but were afraid to ask
  59. AB 2082 - A Hunting License for Police and a Lethal Weapon for Politicians that Deprives Licensees of Currently Available Due Process Rights
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  62. The Arsenic in Wine Class Action Dismissal – what it means
  63. Counterfeit or Artisanal Mexican Spirits? Pick your Poison, or your lime wedge
  64. Warning - CA ABC enforcement teams are on the prowl this weekend!
  65. RELIEF AT LAST! ILLINOIS MOVES TO FIX THE SALES TAX LAWSUITS AGAINST OUT-OF-STATE SELLERS BUT PROPOSES TO PENALIZE WINERIES AND RETAILERS THAT SHIP WITHOUT PERMITS
  66. The TTB Speaks on Category Management or, be Careful What you Ask for Because you might Get it!
  67. Hinman & Carmichael LLP Announces the Addition of Jeremy Siegel to its team of top beverage law lawyers
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  70. 2016 LEGISLATIVE UPDATES: Part II
  71. 2016 LEGISLATIVE UPDATES: Part I
  72. Hinman & Carmichael LLP is Hiring!
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  79. AB 780 - Social Media and the ABC: The California Legislative “Fix” that Fails
  80. Illinois Finally Offers Certainty and Relief for Victims of Sales Tax Lawsuits, but Prompt Action is Required in Pending Cases
  81. A Modest Proposal – Adopt the federal rule on Tied-House liability in California
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  83. Appellate Court Ruling Strikes Blow Against State’s Arbitrary Beer Label Ban
  84. Illinois Attorney General's Office Announces Intention to Dismiss False Claims Act Against Liquor Retailers
  85. Commercial Speech And Alcoholic Beverages - Part III
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  87. Craft Beverages: Social Media Marketing the Effective and Compliant Way
  88. Commercial Speech And Alcoholic Beverages - Part I
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  94. BOOZE RULES OF SOCIAL MEDIA: The Retailer Right to Pay Exception
  95. LIONS AND TIGERS AND TWEETS, OH MY!
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  98. DC Weighs in Strongly on Third Party Marketer Delivery Services
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  100. Hard Cider Legislative Update