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California Legislative Update for Wineries and Other Alcohol Manufacturers

California Wineries Can Now Operate Two Off-Site Tasting Rooms, Duplicate Tasting Rooms Can Sell and Deliver Wine in Consumer-Provided Containers, and Manufacturers Can Promote Donations Related to Alcohol Sales.

California Governor Newsom recently signed a series of bills into law that loosen restrictions on wineries’ duplicate tasting rooms and allow alcohol manufacturers to promote their charitable donations related to alcohol sales. The bills below become effective January 1, 2022. The following synopses address these recent changes:

SB 19 – Wineries Can Add a Second Duplicate Tasting Room:

California Type 02 winegrowers have traditionally been limited to operating a tasting room on their primary licensed premises, as well as one “duplicate” premises where the winegrower does not conduct winemaking operations. Per SB 19’s revisions to California Business and Professions Code section 23390.5(b), a Type 02 licensee can now operate two duplicate tasting rooms located off the winery’s primary winemaking premises - three tasting rooms in total. This bill is a welcome change for wineries interested in expanding their footprints within the state.

AB 239 – Duplicate Tasting Rooms Can Sell Wine in Containers Provided by Consumers:

Currently, wineries and brandy manufacturers are permitted to exercise most of their normal privileges at duplicate tasting rooms. However, there is an exception that expressly precludes wineries and brandy manufacturers from selling or delivering wine to consumers in “containers supplied, furnished, or sold by the consumer.” See Cal. Bus. & Prof. Code § 23390(a)(3). AB 239 deletes this exception and allows duplicate tasting rooms to fill bottles provided by consumers.

AB 1267 – Alcohol Manufacturers Can Promote Donations to Nonprofit Charitable Organizations:

Like most states, California does not allow industry members to influence alcohol sales by providing premiums, gifts or free goods in connection with the sale and distribution of their products. See Cal. Bus. & Prof. Code § 25600. There is an exception that allows alcohol manufacturers to make charitable donations; however, historically, manufacturers could not advertise those donations in relation to the sale of alcohol, e.g., “buy X product and we’ll donate $$$ to charity Y.” (Those types of offers are commonplace in California, but technically noncompliant, in the view of the California ABC.)

On October 8, 2020, California ABC suspended the prohibition on advertising charitable promotions and sales as a form of Covid-19 relief. See Sixth Notice
of Regulatory Relief (permitted the promotion of donations to “a bona fide charitable organization providing relief related to the COVID-19 pandemic”). AB 1267 takes ABC’s temporary relief one step further, and amends California Business and Professions Code section § 25600 to allow winegrowers, beer manufacturers, distilled spirits manufacturers, craft distillers, brandy manufacturers, rectifiers, and wine rectifiers to “donate a portion of the purchase price of an alcoholic beverage to a nonprofit charitable organization in connection with the sale or distribution of an alcohol beverage.”

Note that several limitations apply, and unless extended by the Legislature, this new law will sunset on January 1, 2025. The above-named manufacturers are permitted to advertise their charitable donations related to alcohol sales only if the following criteria are satisfied:

(i) The donation is only related to the sale or distribution of alcohol in manufacturer-sealed containers.

(ii) Promotion or advertisement of the donation does not directly encourage or reference alcohol consumption.

(iii) The donation does not benefit a retailer, or a nonprofit charity established for the specific purpose of benefiting the employees of a retailer, and the
advertisement or promotion of the donation, cannot, directly or indirectly, advertise, promote, or reference any retail licensee. See Cal. Bus. & Prof. Code § 25600(a)(3)(A)(i)-(iii).

If you’d like more information about new California laws, contact any of the attorneys at Strike Kerr & Johns.


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