Relates to a license to operate a beverage center

BILL NUMBER:S8249

Title of bill

An act to amend the alcoholic beverage control law, in relation to a license to operate a beverage center

Purpose

This bill would resolve a long standing issue with respect to beer wholesalers who operate primarily as retailers.

Summary of provisions

Section 1 of the bill would amend Alcoholic Beverage Control (ABC) Law

§ 3 to add a definition for a "beverage center." Such establishments would be eligible for off-premises retail beer licenses even though they do not meet the criteria for either a grocery store or drug store.

Section 2 of the bill would amend ABC Law § 53 to sunset a privilege granted to beer wholesalers that have been licensed since 1960. The amendment would eliminate the privilege of selling beer at retail, but allow wholesalers who wish to continue retail operations to exchange their wholesale license for a retail "beverage center" license. Wholesalers would be given until at least December 31, 2011 to decide whether to retain the wholesale license or become retailers.

Section 3 of the bill would amend ABC Law § 54 to add "beverage centers" to the types of establishments that can obtain an off-premises retail beer license. Only beer wholesalers with a retail sales privilege who are exchanging a wholesale license for a retail license would be eligible for such a license.

Section 4 of the bill would make this bill effective immediately.

Existing law

There is currently no definition of a "beverage center."

Statement in support

In 1960, ABC Law § 53 was amended to eliminate the retail sales privilege granted to beer wholesalers. Only wholesale licenses that were in effect at the time, and have subsequently been renewed or transferred, retained that privilege. These wholesalers are generally referred to as "C" licensees, referring to the license code used by the State Liquor Authority (Authority). In contrast, those beer wholesalers without the retail

privilege are referred to as "CO" licensees, again referring to the license code used by the Authority. Over time, a number of these "C" licensees have ceased, or have greatly reduced their wholesale activities and have primarily become retail operations. However, since they continue to operate under the wholesale license, they are governed by the statutes and regulations governing wholesalers, not retailers. As a result, two significant problems have arisen.

First, these wholesalers, given the retail nature of their business, seek to expand the categories of goods they can sell to consumers. Under current law, such wholesalers are limited to certain items which can be sold on the licensed premises. Products which might normally be associated with beverage sales cannot be sold at their establishments.

Second, while they are limited with respect to the items that they can sell, these wholesalers are not subject to meeting the requirement of being either a grocery or drug store in order to obtain an off-premises retail beer license. Therefore, while a grocery store must maintain a specified inventory of products, not including beer, to be considered a bona fide grocery store, a "C" licensee can operate, if it so chooses, a beer-only retail operation.

This proposal would address both issues. "C" licensees who wish to continue as retailers would be able to exchange their wholesale license for a retail license, without being subject to either the inventory requirements for grocery stores, or the limitation on the types of products it can offer for sale under the laws governing wholesalers. Beer wholesalers will be able to retain their retail privileges until at least December 31, 2011.

Budget implications

None.

Effective date

This act would take effect immediately.