RFI_25-0166_LSR_Demo_info.pdf

Demo 1: Application - Original License

Background Materials:

1. License application specific rules – Forms Required per transaction – find on website https://www.abc.ca.gov/licensing/license-forms/new-license-application/

2. License Type Matrix

See 1. License Type Matrix

3. Entity Types and Rules – Forms Required for applicant types https://www.abc.ca.gov/licensing/license-forms/new-license-application/

4. Tied House – 3 tiered system – Overview

See 2. Non-Retail Licensing Guide 10-19

Workflow Stages for the Demo:

1. User Account Creation

2. Application for Original License

a) Core Original Application Data

i) Applicant & Entity Information o Applicant name and contact info o Entity type (individual, corporation, LLC, LP, Trust, partnership) o Ownership percentages o Required corporate/LLC/LP/Trust documentation (questionnaires, articles, agreements, updates)

ii) Premises Information o Business address o Licensing history o Zoning information o Diagrams and Planned Operation (ABC-253, ABC-257, ABC-258, or ABC-

259) o Proximity details to residences and consideration points, i.e. schools, churches, etc.

o Undue Concentration-Over concentration and/or high crime (Public Convenience or Necessity)

iii) License Information o License type being applied for (can include secondaries) o Generate new license number o Search for existing entity or existing address

iv) Forms to Model in the Demo

You can find these here: https://www.abc.ca.gov/licensing/license-forms/ o ABC-217 – Application Questionnaire (Notarized document) o ABC-253 – Diagram of the premises o ABC-247- 61. 4 residences o ABC-251- Consideration points o ABC-255- Zoning Affidavit o ABC-257- Licensed Premises Diagram o ABC-258- Planned Operation Retail o ABC-259- Planned Operation Non-Retail o ABC-208A-Individual Personal Affidavit (Notarized document) o ABC-208B-Individual Personal Financial Affidavit (Notarized document) o ABC-211sig- Application Signature Sheet Sign On (Notarized document) o ABC-140- Tied House Restrictions o ABC-243, 256, or 256LLC-Entity documents based on applicant type o ABC-246-Interim Operating Permit (for protested applications)

b) Applicant Upload / Enter Required Forms & Documents o Diagrams, zoning affidavits, entity paperwork.

o Recorded Notice and Escrow

c) System Field Validations & Rule Checks o License Types – See License Type Matrix o Valid USPS Address o Moratorium City o Ownership Percentage Validation – Ownership percentage = 100% o Required fields per form type o Assignment to district office based on table provided by ABC

d) Payment o Echeck – no service fee o Credit card – service charge

3. ABC Staff Review

a) Application time frames:

o Standard applications: 55–65 days o Protested applications: 95+ days

b) ABC Staff Initial Compliance Review

See 3.ABC-279 (11-24)_Temp Application Checklist

c) ABC Investigation Phase

i) System should display investigation checklists

See 4.ABC-279A (12-08) Investigation Checklist

See 5.ABC-229 Licensing Investigation Status Report

ii) Background Check Submission – happens out of the system o Fingerprints via Live Scan (state and federal fees) o Review DOJ/FBI fingerprint clearance o Prior ABC Disciplinary History

iii) Compliance Review o Review that application meets ABC Act requirements, restrictions, and conditions example:

• Zoning compliance ABC-255 Zoning Affidavit Applicant completes zoning affidavit, with information from the city or county planning department certifying whether the zoning allows the intended use and whether a conditional use permit (CUP) is required. Staff contact the planning departments to confirm, especially when a CUP is involved.

• Proximity Rule 61.4 of the California Code of Regulations and Section 23789 of the Business and Professions Code - 2026 California Alcoholic Beverage Control Act

• 500 foot mailing notification Section 23985.5 of the Business and Professions Code - 2026 California Alcoholic Beverage Control Act

• Overconcentration and high crime Section 23958.4 of the Business and Professions Code - 2026 California Alcoholic Beverage Control Act o System generated conditions Conditions – Restrictions on a license meant to protect the health and safety of the general public. Conditions may relate to employment of certain persons or the conduct of the business. For example, limits on hours of alcoholic beverage sales, type of entertainment allowed or required security or lighting.

See 5.Sample Conditions Letter o System generated letters and forms Letter/Form Description 205 Contact Letter

See 6.205 contact letter

Generated and completed by licensing staff when a license application is filed. Contains information on the intended operation of the premises and is sent to affected parties (i.e.

nearby residents, consideration points, local law enforcement, etc).

220 Face

See 7.220 face

Report of licensing investigation face page that is generated and completed by licensing staff.

Contains information related to the proposed licensed premises (i.e. applicant information, license types, address and location, etc).

239 Form

See 8.239 form

Additional License/Permit Application.

Generated by licensing staff and completed by applicant/licensee and staff for an additional license needed for premises operation (i.e. secondary licenses, permits, etc).

P-22 Letter

See 9.P-22 letter

A notice to produce required information to complete a license application or face denial of said application. Generated and completed by licensing staff for a pending license application.

4. Protests

a) https://www.abc.ca.gov/information-regarding-alcoholic-beverage-license-applications-and-protests/

b) Issue License Interim Operating Permit o ABC-275 interim operating permit generation https://www.abc.ca.gov/wp-content/uploads/forms/ABC-275.pdf

5. Issue/Deny License o Printable License

Features to highlight in Demo:

• Online Submission.

• Staff should also be able to manually enter applications received on paper.

• Application Status changes

Application Status:

o NEW – App is first created o VOIDED – app voided with the Void Application process or Change Status process o PENDING – after Enter Application is completed o WITHDRAWN – Staff must do this process o DENIED – only a specific unit can change do this status o ISSUED – after Issue License process is completed

• Applicant dashboard showing pending tasks (fingerprints pending, zoning verification, escrow docs missing).

• ABC staff dashboard and task lists

• Conditional branching depending on license type

• Integration mockups (e.g., zoning, planning)

• Mapping functionality to aid staff in field checks

• Messaging system between user and ABC staff

• Updates to application by applicant or ABC staff

• Accounting functionality – daily reconciliation, refunds

• Record Tracking & Audit Logging o Change history, document versions

Demo 1 - Attachment Listing

A License Type Matrix B Non-Retail Licensing Guide C Application Checklist (ABC-279) D Investigation Checklist (ABC-279-A) E Petition for Condition License F Contact Letter G Report of Application for License (ABC-220) H Additional License/Permit Application (ABC-239) I Notice to Produce or Denial of Application (P-22)

Demo 1 - Attachment A

License Type Description Classification Multiples Allowed

01 Beer Manufacturer Branch Yes 02 Winegrower Branch Yes 03 Brandy Manufacturer Secondary Yes 06 Still Secondary Yes, but it counts as additional primary licenses 09 Beer and Wine Importer Secondary No 11 Brandy Importer Secondary No 12 Distilled Spirits Importer Secondary No

14 Public Warehouse Secondary Yes 23 Small Beer Manufacturer Branch Yes

47 On-Sale General - Eating Place

Secondary Yes

48 On-Sale General - Public Premises

Secondary Yes

49 On-Sale General - Seasonal Secondary Yes

53 On-Sale General Train Secondary Yes 55 On-Sale General Airplane Secondary Yes

56 On-Sale General Vessel 1000 Tons

Secondary Yes

57 Special On-Sale General Secondary Yes 58 Caterer's Permit Secondary No 66 Controlled Access Cabinet

Permits Secondary No

68 Portable Bar License Secondary Yes 71 Special On-Sale General for a For-Profit Theater within the City and County of San Francisco

Secondary Yes

72 Special On-Sale General for a For-Profit Theater within the county of Napa

Secondary Yes

75 Brewpub-Restaurant Secondary Yes 77 Event Permit Secondary No 78 On-Sale General for Wine, Food and Art Cultural Museum, and Educational Center

Secondary Yes

79 Certified Farmers' Market Permit

Branch Yes

Demo 1 - Attachment A

License Type Description Classification Multiples Allowed

81 Wine Sales Event Permit Branch No

83 General On-Sale License to Caterer

Secondary No

84 Certified Farmer's Market Beer Sales Permit

Branch Yes

87 Special On-Sale General License for Specified Census Tracts in the City/County of San Francisco

Secondary

88 Special On-Sale General License for a For-Profit Cemetery with Specified Characteristics

Secondary

90 On-Sale General - Music Venue

Secondary

99 On-Sale General for Special Use

Secondary

Demo 1 - Attachment B

Rev. 10/19 P a g e | 1

NON-RETAIL LICENSING GUIDE

1. GENERAL INFORMATION

Applications for non-retail licenses are in most respects processed similarly to those for retail licenses.

After a license has issued, the applicant must put it into use within 30 days as is the case with retail licenses (Section 24040). This does not necessarily mean that sales must be made within 30 days. For example, beer manufacturers and winegrowers may not necessarily have a product satisfactory for sale until several weeks or months after their production starts. Wholesale licenses, however, require bona fide sales to retailers with the penalty of possible revocation for failure to make sales at least every 45 days (Section 23779).

Section 23800 permits the Department to impose conditions on non-retail as well as retail licenses. With respect to non-retail licenses, the Department may only restrict the exercise of retail privileges of those licenses.

Non-retail licenses may be transferred inter-county. The restrictions in Section 24070 apply only to transfers of retail licenses (See Section 24077 regarding transfer of any license).

Posting of the premises is not required for Type 06, 09, 11, 12, 14, 15 and 16 licenses as their privileges do not include the sale of alcoholic beverages.

In considering the need for a license and the type necessary, there are three statutes of a general nature in the ABC Act that should be kept in mind:

(1) Section 23300. This statute states the following: "No person shall exercise the privilege or perform any act which a licensee may exercise or perform under the authority of a license unless the person is authorized to do so by a license issued pursuant to this division." (Emphasis added.) Several activities other than the sales of alcoholic beverages may create a need for licensing.

(2) Section 23355. In essence, this section states that a license authorizes the person to whom issued to exercise the rights and privileges specified in the Act and no others at the premises for which issued during the year for which issued. This section does not say a licensee may do anything not prohibited by the Act. To the contrary, it says if a privilege is not specifically provided for in the Act for a particular type of license, the holder of that license is not permitted to exercise it.

Holders of non-retail licenses are generally permitted to hold other non-retail licenses at the same premises provided there are no tied-house or other restrictions involved.

Rev. 10/19 P a g e | 2

As a general rule, the holder of a non-retail license need not exercise all the privileges of a license. He/she may exercise only some of the privileges. For example, the holder of a beer and wine importer's general license may act as a sales representative and not exercise the importation privilege. However, the Act may require the holder of a particular type of license to perform a certain kind of activity. For example, to qualify for a new winegrower license, the applicant must have facilities and equipment for conversion of fruit into wine and engage in the production of wine. Certain winegrower licenses issued before 1965 are exempt from this provision, but the licensees holding them must operate bonded wine cellars if they do not make wine. These so-called "grandfathered" licenses are transferable.

(3) Section 23025. This statute defines “Sell;” “Sale;” “To Sell” but includes other activities that may require a license. For instance, "sale" not only includes transfer of title of alcoholic beverages from one person to another, but also includes the delivery of alcoholic beverages pursuant to an order placed for the purchase of such beverages, and soliciting or receiving an order for such beverages. Many licensees engage in soliciting sales without ever directly engaging in transferring title to alcoholic beverages but still must be properly licensed.

2. Tied-House Laws

“Tied-House” refers to a system of laws establishing separation between the three basic levels of the alcoholic beverage industry: manufacturing, importing/wholesaling and retailing. There are three statutes that impose limits on cross-ownership and financial relationships between non-retail and retail licensees. These are Sections 25500, 25501 and 25502. In addition, there are statutes that either prohibit or otherwise limit certain activities between licensees as well as create numerous exceptions to these broad prohibitions.

3. Brokers

The Department issues only one true broker’s license (i.e., Type 16 “Wine Broker”) but there are a number of other kinds of non-retail licenses that allow broker-type activities. For instance, the distilled spirits manufacturer's agent license (Type 05) and a distilled spirits importer's general (Type 13) or beer and wine importer's general licenses (Type 10) permit the licensees to engage in broker activities.

4. Zoning

Per Section 23790 of the ABC Act, the Department cannot issue a retail license if it would violate a valid zoning ordinance. The statute does not apply to non-retail licenses.

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5. California Department of Tax and Fee Administration Registration Requirements

The California Department of Tax and Fee Administration (cdtfa.ca.gov) requires applicants for most types of non-retail licenses to register with their Special Taxes & Fees Division, Registration & Licensing Section (“Excise Tax Unit”). No security deposit (or “surety bond”) will be necessary. After the ABC license application is filed, the Excise Tax Unit will send a registration packet to the applicant. If the applicant fails to properly register with the California Department of Tax and Fee Administration, it will affect issuance of the ABC license.

6. Alcohol and Tobacco Tax and Trade Bureau (www.ttb.gov)

The Alcohol and Tobacco Tax and Trade Bureau (TTB), a unit of the U.S. Treasury Department, has its own requirements for many kinds of non-retail operations. Many non-retail applicants must have a basic permit issued by TTB. Sometimes, additional federal permits are also required. TTB regulations often require permit holders to have certain equipment and facilities.

The Department will not withhold license issuance of the ABC license for failure to obtain a federal basic permit. It is not necessary for an applicant to provide the Department with copies of the federal paperwork. It remains the applicant's responsibility to fully comply with all federal requirements.

Applicants for Winegrower and Wine Blender licenses (Types 02 and 22) must hold either a Bonded Winery (“BW”) permit or Bonded Wine Cellar (“BWC”) permit issued by TTB. The issuance of either of these two license types will be withheld until TTB issues the appropriate permit. There is one exception for the BW permit for Type 02 applicants who intend to manufacture only sake (“Japanese rice wine”).

Under federal law, sake manufacturers are treated in a manner similar to beer manufacturers. They are required to file only a Brewer’s Notice with TTB. Sake manufacturers are not issued BW permits.

Rev. 10/19 P a g e | 4

7. SPECIFIC LICENSE TYPES: Definitions, Privileges and Limitations

BEER MANUFACTURER - TYPE 01 (over 60,000 barrels per year)

Introduction

A beer manufacturer license is a type required by makers of beer in this State. See “General Information” for a discussion of non-retail licenses and related topics.

Definitions and Functions

“Beer manufacturer” means any person that has facilities and equipment for the purposes of, and is engaged in, the commercial manufacture of beer (Section 23012).

Beer is defined as “... any alcoholic beverage obtained by the fermentation of any infusion or decoction of barley, malt, hops, or other similar product, or any combination thereof in water....”

(Section 23006). Beer sold in this state must be properly labeled with a statement of alcoholic strength if the contents exceed 5.7 percent alcohol by volume (Section 25200(b)(1)(D)).

Privileges and Limitations

A beer manufacturer license is not limited in number. There is no limitation on the amount of beer produced by a beer manufacturer who may also sell beer packaged for him/her by other beer manufacturers (Section 23356). A beer manufacturer may sell beer to any beer licensee (Section 23357) and may sell such beer from trucks operated by him to licensees authorized to sell beer without a prior order (Section 23388). A beer manufacturer may sell tax-paid beer to certain non-licensed individuals located upon military reservations, national parks or veterans’ homes (Section 23384). A beer manufacturer may also sell its own brand(s) of beer to consumers for consumption on or off the premises without the need for any additional license. A Type 20 license is required if the manufacturer sells other beer manufacturers’ brands of beer to consumers for consumption off the manufacturer’s premises (Section 23357). Without any additional license, a beer manufacturer may sell beer and wine, regardless of source, to consumers for consumption at a bona fide public eating place within the manufacturer’s licensed premises or on property contiguous to the premises (Section 23357).

Notwithstanding any other provision of this division, a licensed beer manufacturer that produces more than 60,000 barrels of beer a year may manufacture cider or perry at the licensed premises of production and may sell cider or perry to any licensee authorized to sell wine (Section 23357(c)) without holding any other license.

A beer manufacturer may export their product in accordance with Rule 54 without holding any other license but must hold a beer and wine importer license (Type 09) to import.

Returns and exchanges of beer from retailers are restrictive (Section 23104.2).

A beer manufacturer may conduct courses of instruction on the subject of beer for licensees and their employees and may furnish beer for use with the instructional course (Section 25503.5).

Rev. 10/19 P a g e | 5

A beer manufacturer may instruct consumers at an on-sale retail premises authorized to sell its product with the permission of the retail on-sale licensee. The instruction of consumers may include the furnishing of not more eight (8) ounces of beer per individual in one day. Tastes of beer must be served in an individual glass or cup (Section 25503.55).

A beer manufacturer, or its designated representative, may conduct instructional tasting events for consumers at off-sale licensed premises if the off-sale licensee also holds a Type 86 license.

The instruction of consumers may include the furnishing of not more than eight (8) ounces of beer to any individual in one day (Sections 23396.6 and 25503.56).

A beer manufacturer, or any director, partner, officer, agent or representative of that person, may conduct and advertise beer promotional lectures (“Beer Maker Dinners”) at on-sale retail licensed premises under specified conditions (Section 25503.45).

A beer manufacturer may serve, for consumption on the premises, beer produced by the licensed beer manufacturer to attendees at a meeting of a bona fide beer manufacturer trade association or brewers’ guild held on the premises of a licensed beer manufacturer (Section 25503.3).

A beer manufacturer may give samples to licensees authorized to sell their product in accordance with Section 23386 and Rule 52(a).

Hours of delivery of beer to retailers are restricted to 3 a.m. until 8 p.m. Monday through Saturday. Incoming shipments to the licensed premises or transportation of beer to other supplier-type licensees are not restricted and may be made at any time. Sales at the manufacturer’s premises may also be made at any time (Section 25633).

Sales records and records of all expenditures incurred in the sale and distribution of beer by the beer manufacturer must be maintained at the licensed premises (Section 25752).

Tied-House

As a general rule, no tied-house restrictions exist that prohibit a beer manufacturer from having an interest in other supplier-type licenses.

A beer manufacturer is generally prohibited from holding any ownership, directly or indirectly, in an on-sale license (Section 25500) or an off-sale license (Section 25502). A beer manufacturer may hold no interest in any business dealing in furnishing equipment, other than signs for interior use, to on-sale licensees (Section 25501).

A beer manufacturer may hold an interest in on-sale licenses under the exceptions provided for in Sections 25503.11, 25503.16, 5503.17, 25503.18, 25503.19, 25503.20, 25503.29 and 25503.37.

Subject to the provisions of Sections 25503.10 and 25503.21, this licensee may lease real property to retail licensees.

Rev. 10/19 P a g e | 6

Section 23357 allows licensed beer manufacturers to hold off-sale beer and wine licenses provided that beer and wine sold at or from the off-sale premises which are not produced and bottled by, or produced and packaged for, the beer manufacturer shall be purchased by the beer manufacturer only from a licensed wholesaler. If a licensed beer manufacturer also holds a beer and wine wholesaler license then the beer manufacturer may only sell wine, not beer, to consumers under its off-sale beer and wine license.

A licensed beer manufacturer may hold ownership interest in up to six on-sale licenses under specified conditions (Section 25503.28). The six on-sale licenses included in this statute include branch offices (duplicates) issued under Section 23389 that exercise retail privileges.

The applicant for a beer manufacturer license must complete Form ABC-140, Certification Re Chapter 15 Tied-House Restrictions. The applicant must disclose all potential tied-house interests held, directly or indirectly, by shareholders, directors, officers, LLC members and managers, limited and general partners, or a sole proprietor, regardless of the percentage of interest held by any of those persons. Failure to fully disclose said interests is grounds for denial of the application.

Premises

Storage of tax-paid beer may be made anywhere in the State (Section 23106) without holding an additional license. Transfer of title (sale) of beer stored away from the licensed premises is only authorized at certain regulated warehouses as specified in Section 23383 although sales may be made directly from trucks (Section 23388). Except as provided in Section 23383, the delivery of beer must occur from the licensed premises of production or from a licensed branch office. Beer cannot be delivered from a licensed public warehouse unless the beer manufacturer holds a branch office license at the public warehouse.

“Common dining areas”, where a number of on-sale retail licensees share a large eating area in a shopping mall or similar location to permit their customers to consume food and alcoholic beverages, cannot be shared by licensed beer manufacturers or duplicate licensed beer manufacturers (Section 23784).

Alternating Proprietorships

Federal Alcohol and Tobacco Tax and Trade Bureau (www.ttb.gov) regulations permit a beer manufacturer to use the facilities and equipment of another beer manufacturer (“host brewery”) to produce beer. This is commonly referred to as an “alternating proprietorship (AP).” The AP uses the facilities and equipment of the host brewery to make its own beer. Typically, the host brewery assists the AP in producing its beer and the AP usually stores its beer on the premises of the host brewery, but the beer may be transferred to another bonded premises. The AP must apply for its own Type 01 or Type 23 license and a brewer’s notice from the Alcohol and Tobacco Tax and Trade Bureau (TTB). The privileges of a Type 01 or Type 23 license are the same when operating as an alternating proprietor. The TTB has determined that establishing a physical separation and dedicated premises for each alternating proprietor is not required for every AP application.

Demo 1 - Attachment B http://www.ttb.gov/

Rev. 10/19 P a g e | 7

Joint Tasting Rooms

A “joint tasting room” is a place where two or more licensed beer manufacturers share space while conducting beer tasting and retail sales activities. Often, participating beer manufacturers retain an agent to perform the activities that beer manufacturers may themselves perform under a duplicate beer manufacturer license. One person may act as the agent for all of the participating beer manufacturers licensed within the joint tasting room. The agreement with the agent should be evaluated to insure the beer manufacturers retain oversight and control of the licensed premises and all licensed activities.

It is not necessary to establish distinct separations among the tasting areas but each beer manufacturer must maintain separate and detailed records of all retail sales made by each licensee from the joint tasting room. Only beer that is produced by or for each beer manufacturer may be sold at retail from the joint tasting room. Each participating beer manufacturer must sign a Petition for Conditional License agreeing to specified conditions, including but not limited to, responsibility for any violation of the ABC Act occurring in the joint tasting room.

Beer Labeling and Brand Registration

Section 25200 requires all beer sold in this state to have a label affixed to the package or container. The label must meet the requirements of federal malt beverage labeling regulations contained in parts 7 and 16 of Title 27 of the Code of Federal Regulations, regardless of whether the label is subject to approval by the federal Alcohol and Tobacco Tax and Trade Bureau or any successor agency. Prior to the first sale of a brand of beer in this state, the manufacturer of that beer shall register the brand with the Department. The manufacturer must register their brand(s) of beer on Form ABC-412 and submit the form to the Price Posting Unit.

Section 25200 outlines beer labeling and brand registration requirements. More information about beer labeling requirements is in Rule 130, California Code of Regulations, Title 4, Division 1.

Price Posting

A beer manufacturer must file prices for beer sold and distributed to customers in California, except for beer sold to consumers (Section 25000). To file price schedules, this licensee must complete Form ABC-701 and submit the form to the Price Posting Unit. If this licensee sells beer to wholesalers, territorial limits must be designated within which those wholesalers may distribute his/her products (Section 25000.5). Beer manufacturers who manufacture beer under contract (“custom brew”) for a wholesaler need not execute a territorial agreement with that wholesaler. If this licensee produces draught beer for sale in California, the brand names thereof must be filed with the Department prior to marketing the product(s) in California (Section 25203). The California Department of Resources Recycling and Recovery (“CalRecycle”) has specific requirements concerning malt beverage container labeling as mandated by the Beverage Container Recycling and Litter Reduction Act. Applicants should be referred to CalRecycle for additional information: http://www.calrecycle.ca.gov/bevcontainer/

Demo 1 - Attachment B http://www.calrecycle.ca.gov/bevcontainer/ http://www.calrecycle.ca.gov/bevcontainer/

Rev. 10/19 P a g e | 8

Custom Brew

This is very similar to custom crush contracts for wine. With custom brewing, individuals will contract with a beer manufacturer to have beer made for them. The beer manufacturer will brew the beer, then bottle and label the finished product. The beer manufacturer will obtain label approval from the Alcohol and Tobacco Tax and Trade Bureau and register the brand(s) of beer with the Department on behalf of the person for whom the beer was made. Persons who enter into custom brew contracts with beer manufacturers will generally apply for either a beer and wine importer’s general (Type 10) license or a beer and wine wholesaler (Type 17) license, depending who their primary customers will be. This licensee may enter into custom brew contracts with retail licensees only under the following circumstances: (1) the retailer owns the label (brand); (2) the retailer incurs all costs related to the manufacturing of the beer (brewing, bottling, labeling, shipping, etc.); and, (3) the beer is sold solely to the retailer for sale at the retailer’s licensed premises. A licensed beer manufacturer cannot sell beer at its licensed premises that is custom brewed for a retailer.

Other Requirements

It is the responsibility of the district office to inform applicants for this license type of the price posting, beer brand registration and territorial agreement requirements. The applicant shall be given Form ABC-579 which sets forth these requirements and provides other useful information.

The licensing representative shall check the ABC-579 box and provide their name and the date the form was provided to the applicant on Form ABC-257-NR (Reverse) to show that this information was provided to the applicant.

The California Department of Tax and Fee Administration requires an applicant for this type of license to register with the Special Taxes & Fees Division, Registration & Licensing Section (“Excise Tax Unit”). No security deposit (or “surety bond”) will be necessary. After the ABC license application is filed, the Excise Tax Unit will send a registration packet to the applicant. If the applicant fails to properly register with the California Department of Tax and Fee Administration, it will affect issuance of the ABC license.

The Alcohol and Tobacco Tax and Trade Bureau (www.ttb.gov) requires beer manufacturers to file a Brewer’s Notice. TTB has instituted a paperless system for filing applications for their permits. Copies of TTB paperwork need not be filed with ABC. Issuance of the Type 01 will not be withheld if the applicant fails to file a Brewer’s Notice with TTB.

Duplicate Licenses for Branch Office Operations

Pursuant to Section 23389, the department may issue to a beer manufacturer a duplicate of its original license for a location or locations other than its licensed premises of production or manufacture. Posting of the branch office premises is required.

A licensed beer manufacturer may exercise all of the privileges under its manufacturer’s license at branch offices licensed by the Department, except for production or manufacture; sales to consumers for consumption on or off the branch office premises except as provided in subdivision (c) of 23389 (explained below); and the sale of beer and wine to consumers for consumption on the branch office premises where a bona fide eating place is owned and operated

Demo 1 - Attachment B

Rev. 10/19 P a g e | 9 by or for the beer manufacturer, except as provided for in subdivision (c).

Per Section 23389(c), a beer manufacturer shall not sell any alcoholic beverages to consumers for consumption on or off the licensed premises, or provide authorized tastings to consumers, at more than six branch office locations, regardless of how many beer manufacturer licenses are held by the beer manufacturer either alone or under common ownership with any other licensed beer manufacturer, and no more than two of the six branch locations may be bona fide public eating places owned and operated by and for the beer manufacturer.

A branch office location where consumer tastings or sales for on or off premises consumption are authorized shall not sell or serve any alcoholic beverages other than beer that is produced and bottled by, or produced and packaged for, the beer manufacturer.

A branch office location where the sale of beer and wine to consumers for consumption on the premises of a bona fide public eating place is authorized is permitted to sell and serve only the following alcoholic beverages:

• Beer and wine that is produced and bottled by, or produced and packaged for, the beer manufacturer.

• Beer and wine that is purchased by the beer manufacturer from a licensed wholesaler that is not owned, either alone or under common ownership, by the beer manufacturer.

An applicant for a duplicate beer manufacturer license shall complete Form ABC-239. If the applicant intends to exercise retail privileges, then they must check the appropriate box on Form ABC-239 and the application will be processed as a normal original application. If the applicant does not intend to exercise retail privileges, then the applicant must sign Form ABC-172 (Attachment No. 1) and the license shall issue forthwith.

Rev. 10/19 P a g e | 10

WINEGROWER - TYPE 02

Introduction

The following pertains to new winegrower licenses issued after September 17, 1965. Any differences in regard to winegrower licenses issued before that date will be summarized under “Grandfather Privileges.” See “General Information” for a discussion of non-retail licenses and related topics.

Definitions and Functions

A winegrower must have facilities and equipment for the conversion of grapes, berries or other fruit into wine and must engage in the production of wine (Section 23013). Wine must be made from the fermentation of agricultural products to which may be added brandy which is distilled from the same agricultural product from which the wine is made. Thus, neutral grain or other distilled spirits cannot be used to fortify wine, only brandy of a specific type. No more than 15% added flavoring or blending material may be added (Section 23007).

Privileges and Limitations

A winegrower may exercise the privileges listed in Section 23356. The licensee may conduct winetastings under prescribed conditions (Section 23356.1; Rule 53). In addition to those privileges, a winegrower may sell both wine and brandy that was produced and packaged by or for him to any person holding a license authorizing the sale of wine or brandy. The winegrower may also sell these products to consumers for consumption off the licensed premises., The winegrower may sell wine produced and packaged by or for him to consumers for consumption on the premises. A winegrower must produce not less than 50% of the wine sold to consumers on any and all of its premises. The winegrower may also operate a bona fide public eating place on the licensed premises or on premises owned by the winegrower that are contiguous to the licensed premises and sell all beers, wines and brandies, regardless of source, in that eating place for consumption on the premises without holding an on-sale license (Section 23358).

The wine and brandy that the winegrower may sell to consumers for consumption off the premises is generally limited to wine or brandy that is produced or bottled by or is produced and packaged for, the winegrower, and which is sold under a brand name owned by such licensee (Section 23358.2). However, a winegrower who sold domestic wine under a brand name or trade name not owned by such licensee prior to July 1, 1970, may continue to sell such wine (Section 23356.1(b)).

A winegrower license authorizes the holder to manufacture grape brandy for fortification purposes (Section 23359). A Still (Type 06) license must be held by the winegrower who produces brandy for such purposes (Section 23367). If a winegrower manufactures brandy for other than fortification purposes, he/she must also hold a brandy manufacturer (Type 03) license.

Under federal standards of identity, “brandy” encompasses a large array of various types of brandy including grappa, pomace, and lees brandy. While a winegrower may sell brandy under its Type 02 license, it is not permitted to bottle brandy.

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Winegrower licenses are not limited in number. When a winegrower license is applied for, the fee taken should be based on a reasonable estimate of production (Sections 23955 and 23320).

When a winegrower fails to carry on business actively for one year, such winegrower license may only be transferred to a person who qualifies as a winegrower under present laws (Section 24070.5).

A winegrower may sell for export in accordance with Rule 54. A licensee who wants to export wine to another state should check the regulations of the state into which shipment will be made.

The regulations of the individual states vary greatly. Many require the shipper to hold an importer license or an out-of-state manufacturer’s license in their state before a shipment may be made into it.

Winegrowers may sell to federal areas and veterans’ homes in accordance with Section 23384. A winegrower may give samples to licensees authorized to sell their product in accordance with Section 23386 and Rule 52(a). Winetasting cannot be conducted on that portion of a winegrower’s premises licensed with an off-sale beer and wine or an off-sale general license.

There must be a physical separation between the retail premises and the winegrower’s premises although they may be joined by a door.

A winegrower may conduct courses of instruction on the subject of wine for licensees and their employees and may furnish wine for use with the instructional course (Section 25503.5).

A winegrower, or its designated representative, may instruct consumers at an on-sale retail premises authorized to sell its product with the permission of the retail on-sale licensee. The instruction of consumers may include the furnishing of not more than three tastings per individual in one day. A single taste of wine may not exceed one ounce (Section 25503.57).

A winegrower, or its designated representative, may conduct instructional tasting events for consumers at off-sale licensed premises if the off-sale licensee also holds a Type 86 license. The instruction of consumers may include the furnishing of not more than three tastings per individual in one day. A single taste of wine may not exceed one ounce (Sections 23396.6 and 25503.56).

There are certain restrictions as to wine bottle shape and labeling (Sections 25235 to 25246).

The hours of delivery and sale at wholesale by winegrowers are similar to those for beer and wine wholesalers. Deliveries may be made from 3 a.m. until 8 p.m. Monday through Saturday.

Sales may be made from the platform at the winery at any time (Section 25633).

It is not necessary that a winegrower keep records of sales of wine. However, various production records are required to be kept (Section 25238). They must do so for brandy (Section 25752).

Rule 17 requires recordkeeping of sales invoices.

Returns and exchanges of wine must be handled in accordance with Section 23104.1.

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A winegrower may deliver its tax-paid wine from a storage facility holding a public warehouse license to any California licensee authorized to purchase wine without the necessity of a duplicate winegrower license at the public warehouse (Section 24041).

Tied-House

A winegrower is generally prohibited from holding any ownership, directly or indirectly, in an on-sale license (Section 25500) or an off-sale license (Section 25502).

A licensed winegrower may hold both off-sale beer and wine and off-sale general licenses (Section 23362).

A winegrower may have interests in on-sale licenses under conditions specified in Section

25503.15. Additionally, a winegrower may hold an interest in on-sale licenses under the exceptions provided for in Sections 25503.11, 25503.16, 25503.17, 25503.18, 25503.19, 25503.20, 25503.29, 25503.30 and 25503.37.

Subject to the restrictions of Sections 25503.10 and 25503.21, this licensee may lease real property to retail licensees.

There are no tied-house prohibitions against a winegrower holding wholesaler, rectifier, manufacturer or other supplier-type licenses. A licensed winegrower may hold an off-sale general and a distilled spirits wholesaler license at the same time (Section 25507). However, the winegrower may not hold a beer and wine wholesaler or importer license if the winegrower holds an off-sale general license (Section 25502).

The applicant for a winegrower license must complete Form ABC-140, Certification Re Chapter 15 Tied-House Restrictions. The applicant must disclose all potential tied-house interests held, directly or indirectly, by shareholders, directors, officers, LLC members and managers, limited and general partners, or a sole proprietor, regardless of the percentage of interest held by any of those persons. Failure to fully disclose said interests is grounds for denial of the application.

Premises

Importations of wine must come to rest at the winegrower premises or the premises of a public warehouse licensee for the account of a winery that holds an importer license (Section 23661).

Deliveries of wine sold by a winegrower may be made either from its licensed premises (Section 23355) or the premises of a licensed public warehouse (Section 24041).

Tax-paid wine may be stored any place in the State without the need for a private warehouse permit. If a winery stores brandy off the licensed premises, it must be stored on the premises of a licensed public warehouse or a premises where a private warehouse permit is in effect (Sections 23035 and 23106).

“Common dining areas”, where a number of on-sale retail licensees share a large eating area in a shopping mall or similar location to permit their customers to consume food and alcoholic beverages, cannot be shared by licensed winegrowers or duplicate licensed winegrowers (Section 23784).

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Alternating Proprietorships

Federal Alcohol and Tobacco Tax and Trade Bureau (www.ttb.gov) regulations permit a winegrower to use the facilities and equipment of another winegrower (“host winery”) to produce wine. This is commonly referred to as an “alternating proprietorship (AP).” The AP uses the facilities and equipment of the host winery to make its own wine. Typically, the host winery assists the AP in producing its wine and the AP usually stores its wine on the premises of the host winery, but the wine may be transferred to another bonded premises. The AP must apply for its own Type 02 license from the ABC and a bonded winery permit from the Alcohol and Tobacco Tax and Trade Bureau (TTB). The privileges of a Type 02 license are the same when operating as an alternating proprietor. The TTB has determined that establishing a physical separation and dedicated premises for each alternating proprietor is not required for every AP application.

Joint Tasting Rooms

A “joint tasting room” is a place where two or more licensed winegrowers share space while conducting wine tasting and retail sales activities. Often, participating winegrowers retain an agent to perform the activities that winegrowers may themselves perform under a duplicate winegrower license. One person may act as the agent for all of the participating winegrowers licensed within the joint tasting room. The agreement with the agent should be evaluated to insure the winegrowers retain oversight and control of the licensed premises and all licensed activities.

It is not necessary to establish distinct separations among the tasting areas but each winegrower must maintain separate and detailed records of all retail sales made by each winegrower from the joint tasting room. Only wine that is produced by or for each winegrower may be sold at retail from the joint tasting room. Each participating winegrower must sign a Petition for Conditional License agreeing to specified conditions, including but not limited to, responsibility for any violation of the ABC Act occurring in the joint tasting room.

Custom Crush

The term “custom crush” refers to an agreement entered into between a winegrower and those individuals who have contracted with the winegrower to produce wine for them. Unlike an alternating proprietorship, a person who has a winegrower custom crush wine for him/her does not obtain a Type 02 license. Persons who enter into custom crush contracts with winegrowers will generally either apply for a beer and wine importer’s general (Type 10) license or a beer and wine wholesaler (Type 17) license, depending on who their primary customers will be. Persons who have wine custom crushed for them often refer to themselves as “wineries” or “virtual wineries”; however, they do not have the same license privileges as a winegrower. This licensee may enter into custom crush contracts with retail licensees only under the following circumstances: (1) the retailer owns the label (brand); (2) the retailer incurs all costs related to the manufacturing of the wine (fermenting, bottling, labeling, shipping, etc.); and, (3) the wine is sold solely to the retailer for sale at the retailer’s licensed premises. A licensed winegrower cannot sell wine at its licensed premises that is custom crushed for a retailer.

Demo 1 - Attachment B

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Other Requirements

A winegrower must be issued a Bonded Winery (“BW”) permit by the Alcohol and Tobacco Tax and Trade Bureau (www.ttb.gov) to produce and blend wine (Section 23770). Because TTB has adopted a “paperless” system for the issuance of permits, the Department no longer requires an applicant for a Type 02 license to submit copies of federal paperwork when applying for this license. However, the Department cannot issue the Type 02 license until the TTB has issued the BW permit. There is one exception to this requirement: Sake producers must apply for a winegrower license. However, TTB treats sake manufacturers like breweries and requires the sake manufacturer to file a Brewer’s Notice with TTB. Therefore, TTB will not issue a BW permit to a sake manufacturer.

The California Department of Tax and Fee Administration requires an applicant for this type of license to register with the Special Taxes & Fees Division, Registration & Licensing Section (“Excise Tax Unit”). No security deposit (or “surety bond”) will be necessary. After the ABC license application is filed, the Excise Tax Unit will send a registration packet to the applicant. If the applicant fails to properly register with the California Department of Tax and Fee Administration, it will affect issuance of the ABC license.

Grandfather Privileges

Before September 17, 1965, winegrower licenses were issued both to persons who operated wineries and to those who operated bonded wine cellars. Winegrowers were permitted to have an unlimited number of duplicate licenses for premises at which they sold wine to consumers. With the changes in the law effective at that time, Section 23356.7 was passed which permitted the holders of winegrower and duplicate winegrower licenses to continue to operate as they had previously and made such licenses transferable with “grandfathered” privileges. An Attorney General’s Opinion, dated May 11, 1967, interprets the section to mean that a winegrower holding one or more duplicate winegrower licenses before September 17, 1965, cannot obtain additional duplicate licenses where sales to consumers will be made (Sections 23390 and 23390.5). The opinion also holds that a winegrower who produced more than 50% of the wine sold to consumers on his/her licensed premises before that date must continue to do so (Section 23358).

Duplicate Licenses for Branch Office Operations

Pursuant to Section 23390, the Department may issue to a winegrower a duplicate of its original license for a location or locations other than its licensed premises of production or manufacture.

Posting of the branch office premises is required.

A licensed winegrower may exercise all of the privileges under its manufacturer’s license at branch offices or warehouses licensed by the Department, except for production or manufacture, the sale of wine or brandy, manufactured by someone else, to consumers for consumption on the premises in a bona fide eating place, and the sale or delivery of wine in containers supplied by the consumer.

Demo 1 - Attachment B

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No licensed winegrower shall sell wine or brandy to consumers or engage in winetasting activities at more than one licensed branch premises (Section 23390.5). A licensed winegrower may exercise these privileges at one licensed branch premises per active master license.

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BRANDY MANUFACTURER - TYPE 03

Introduction

The following pertains to brandy manufacturer licenses, and to duplicate brandy manufacturer licenses issued after September 17, 1965. The differences in regard to duplicate licenses issued before that date will be included in the discussion of duplicate licenses. See “General Information” for a discussion of non-retail licenses and related topics.

Definitions and Functions

A brandy manufacturer license authorizes the holder to manufacture only brandy and not other distilled spirits (Section 23014). Brandy is made by the distillation of wine or fermented fruit.

TTB regulations define “brandy.”

Privileges and Limitations

A brandy manufacturer may exercise the privileges listed in Section 23356. In addition to those privileges, the licensee may sell both brandy and wine to any person having a license authorizing the sale of brandy and wine (Section 23360). A brandy manufacturer may also sell these products to consumers for consumption off the licensed premises; provided that the manufacturer is permitted to sell only wine or brandy which is produced or bottled by the manufacturer; or wine or brandy which is produced for, or is produced and packaged for, the manufacturer and is sold under a brand…