AB 1035

This bill allows certain wineries, manufacturers and rectifiers of intoxicating

liquor, and out-of-state liquor shippers to self-distribute their products to retailers.

Under current law, alcohol beverages are generally distributed to consumers

under a three-tier distribution system: the producer sells to a wholesaler; the

wholesaler sells to a retailer; and the retailer sells to a consumer. With limited

exceptions, a retail licensee may not purchase alcohol beverages from, or possess

alcohol beverages purchased from, any person other than a wholesaler.

Also under current law, the Department of Revenue issues permits to producers

of alcohol beverages. A manufacturer's permit or rectifier's permit issued by DOR

authorizes the permittee to, respectively, manufacture or rectify intoxicating liquor

and sell it to wholesalers. Intoxicating liquor includes distilled spirits and wine. A

winery permit issued by DOR authorizes the winery to manufacture wine for sale to

wholesalers. A winery may also hold a retail license authorizing the sale of wine and

the winery may provide wine made by the winery directly to its own retail licensed

premises without the wine first passing through a wholesaler. An out-of-state

liquor shipper's permit issued by DOR allows a manufacturer or rectifier of

intoxicating liquor located outside this state, or its exclusive agent, to ship

intoxicating liquor into this state to a wholesaler or to a manufacturer, rectifier, or

winery.

This bill allows a winery, manufacturer, rectifier, and out-of-state shipper to

distribute intoxicating liquor directly to retailers as follows:

1. A winery in this state that manufactures not more than 30,000 gallons of

wine per year may distribute directly to retailers up to 24,000 gallons of its own wine.

2. A manufacturer or rectifier in this state that manufactures or rectifies not

more than 10,000 proof gallons of intoxicating liquor per year may distribute directly

to retailers up to 8,000 proof gallons of its own intoxicating liquor. A proof gallon is

a unit of measure for distilled spirits equal to one gallon containing 50 percent

alcohol by volume.

3. An out-of-state shipper that is a winery located outside of this state and that

manufactures not more than 30,000 gallons of wine per year may ship into this state

directly to retailers up to 24,000 gallons of its own wine.

4. An out-of-state shipper that is a manufacturer or rectifier located outside

of this state and that manufactures or rectifies not more than 10,000 proof gallons

of intoxicating liquor per year may ship into this state directly to retailers up to 8,000

proof gallons of its own intoxicating liquor.