Corrective Bill on Beer, Wine Licenses Offered

Legislation that would have had a detrimental impact on the business of a number of wineries, breweries and wine merchants would be corrected by an emergency bill submitted to the Legislature.

Assemblyman Rusty Areias (D-Salinas) introduced the legislation Friday to correct language in a prior bill that would have required beer manufacturers, wineries and wine merchants to choose between having a wholesale license and a retail license.

In the legislation, Areias said the original bill could have caused “severe financial hardship for small manufacturers and wholesalers who depend on off-premises consumer sales for a substantial portion of their revenue. In addition, many small brewers, winegrowers and wholesalers would be forced to divest themselves of essential elements of their current business operations.”

Kurt Evans, an aide to Areias, said the original bill was never intended to harm the three classes of businesses it would have hurt and that the language accidentally wiped out provisions never intended to be touched.

John Hinman, a San Francisco attorney who represented wine merchant Draper & Esquin in the matter, said the original intent was to prohibit a person from holding a beer and wine wholesale license and a retail license for the purpose of selling beer off the premises, so-called cross-licensing.

He said it was essentially a beer bill but because licenses to market beer and wine are issued as one, some large businesses would have been hurt. For example, both Draper & Esquin and Kermit Lynch are wine wholesalers that have wine shops in the San Francisco Bay Area. Under the original bill, they would have had to drop either the retail or wholesale license.

Others that could have been hurt, Evans said, were wineries that had tasting rooms not adjacent to their wineries (such as Heitz Cellar in the Napa Valley and B. R. Cohn in Sonoma Valley) and those that sold wine by mail, such as Rodney Strong Vineyards, which sells 300,000 cases of wine each year through a telemarketing program and ships wine to buyers.

“We are very satisfied that Assemblyman Areias has addressed this inadvertent loss of a right to do business and has submitted corrective legislation,” Hinman said.

Evans said the original bill was supported by the Beer & Wine Wholesalers Assn., had no opposition and was signed by Gov. George Deukmejian. It was only after the state Alcohol Beverage Control Board began looking into its responsibilities regarding enforcing the new law that “everybody discovered there are are lot of unintended problems here.”

Evans said the ABC has said it would not enforce the law until the beginning of the new fiscal year, July 1, when many such licenses must be renewed, and “we hope to have the new bill signed by then.”

He said he anticipated no opposition.