The California Craft Brewers Association (CCBA) is “getting very aggressive” on legislative initiatives in 2022, Chris Walker, the trade group’s lobbyist, said Monday at its members conference in San Diego.
Walker was joined by Lori Ajax, CCBA executive director, and Bob Pease, president and CEO of the Brewers Association (BA), on a conference panel updating members on the association’s legislative agenda, which includes four bill initiatives.
Direct-to-Consumer Shipping
A top priority for CCBA this year is protecting California’s direct-to-consumer shipping laws. As part of their efforts, the association is pushing to pass Senate Bill 1198 (S.B.1198), sponsored by California state Sen. Mike McGuire (D-North Coast).
California allows DTC shipping within the state, but does not allow other states to ship directly to California residents. Walker said this leaves the privileges vulnerable to being taken away “in a heartbeat,” as “the current allowance in California violates the Constitution.”
“We’re really going hard on DTC,” Walker said. “At the end of the day, it’s a violation of the Interstate Commerce Clause, because it doesn’t allow out of state breweries that same privilege. So we need to harmonize it and protect it.”
S.B.1198 would allow any U.S. beer manufacturer to obtain a “beer direct shipper permit” to sell and ship beer directly to California residents. Existing state law already has similar allowances for out-of-state winegrowers, according to the legislation.
Distributors oppose the bill, and have proposed several conditions that Walker said would take privileges away from the craft brewing industry, such as limiting which brands or how much volume can be shipped, as well as prohibiting the shipment of SKUs that are available in California retail locations.
“It’s a pretty reasonable request to protect what we already have,” Walker said. “It’s astounding that they’re taking this position.”
California’s Senate Governmental Organization (GO) Committee will hear DTC legislation on April 26, according to Ajax.
The BA supports the CCBA’s DTC efforts, and is tangentially working to pass a federal companion bill, the USPS Shipping Equity Act (H.R.3287, S.1163), sponsored by Rep. Jackie Speier (D-CA). The bill would allow the United States Postal Service to ship beer, wine and spirits in states where DTC shipping is allowed.
“It’s all about just getting USPS the ability to compete with FedEx and UPS or other common carriers,” Pease said. “But our friends in the National Beer Wholesaler’s Association (NBWA) are pulling out all the stops to oppose.”
Duplicate Licenses
Assembly Bill 2307 (A.B.2307), sponsored by Assemblymember Marc Berman (D-Menlo Park), would double the amount of duplicate retail licenses a brewery could have from six to 12. The bill would also allow for an unlimited number of bona fide locations within that limit – locations with full kitchen facilities designated as a “bona fide public eating place,” according to the California Department of Alcoholic Beverage Control – increasing the existing cap of two bona fide locations.
“This is always a starting point,” Walker said, clarifying that the limitations numbers could change as negotiations continue. “Not everybody is getting into distribution. … There needs to be what I call RTG: ‘room to grow.’”
Self-Distribution to Retail
Assembly Bill 2301 (A.B.2301), introduced by Assemblymember Jim Wood (D-Santa Rosa), would “allow for manufacturers to self-distribute to their own retail,” according to Walker.
The bill addresses the “changing business models” that breweries are undergoing as they address distribution consolidation, and would “make room” for breweries to choose what direction is best for their company.
According to Pease, the BA has “never worked more closely with the CCBA” than they have this year.
“And primarily that’s around the DTC legislation, but also trying to educate state and federal policymakers on the perils of distributor consolidation, which I know many of you know all too well,” Pease said.
Single Premise Licenses
Assembly Bill 1734 (A.B.1734), sponsored by Assemblymember Steve Bennett (D-Ventura), would allow beer, wine and spirit manufacturers who hold more than one type of manufacturing license for a single premise, to “maintain a designated area upon that premises where retail sales authorized under any of those manufacturer’s licenses may occur,” according to the bill.
Walker said there are “a lot of complications” with existing legislation – which prohibits a licensee from having any alcoholic beverages on site other than what the premise is authorized to sell under its license – and this exception would “clean up” existing license structure.
Pease: $42 Billion in RRF Funding Likely Headed to House Floor This Week
Efforts to replenish the Restaurant Revitalization Fund (RRF) have “died four times,” but “new life” has been breathed into legislation, according to Pease.
A relief package – the RRF Reauthorization Act (RRFA) – was brought to the Ways and Means Committee Tuesday afternoon and is expected to go to the House floor Thursday, Pease said. The bill (House Bill 3807 and Senate Bill 2091) includes $42 billion in aid for bars and restaurants (including taprooms and brewpubs). Authored by Rep. Earl Blumenauer (D-OR), the bill originally asked for $60 billion in additional funding, adding to the $28.6 billion that funded the RRF in 2020.
“The linchpin for RRFA seems to be getting 10 Republican Senators to co-sponsor the bill,” Pease said. “It’s certainly not dead, which we thought it was five or six days ago. Somebody once told me about Washington, ‘nothing happens in Washington, D.C., until it happens.’ And then it happens really fast.”
The BA is also “working cooperatively” with large industry members such as Molson Coors and Constellation Brands, as well as the NBWA, to oppose tax equivalency and market access efforts from the Distilled Spirits Council (DISCUS).
Pease also updated attendees on D.C. efforts following the Treasury’s report on competition within beer, wine and spirits that was released in February.
“If this administration had been in charge or power six years ago, I don’t think ABI purchases SABMiller, it’s that big of a swing,” Pease said. “It’s a totally different environment.”
The BA “was heartened” to see that its comments were used heavily in the report, but Pease said the question now is “what’s next?” This week, he will meet with the Alcohol and Tobacco Tax and Trade Bureau (TTB), the Treasury and the Federal Trade Commission (FTC) to discuss what the federal government can do to noted industry issues in the report.
Recommendations that the BA will be giving that the federal government “can do immediately” include:
- “Focus trade practice enforcement on conduct by large market participants,” with the aim to tackle practices that could have the largest competitive impact on the industry;
- Have the TTB, Department of Justice and/or the FTC collaborate in “bringing trade practice cases against large companies;
- “Take a particularly hard look” at category management practices;
- Further scrutinize acquisitions “at the supplier level or the distributors.”