Beer festivals conducted under temporary retail licenses; inapplicability of a sales tax exemption to beer festivals. (FE)

Also under current law, with limited exceptions, a person may ship beer into this state only to a wholesaler and only if the person holds an out-of-state shipper’s permit issued by the Division of Alcohol Beverages (division) in the Department of Revenue. One exception allows an out-of-state brewer that manufactures 300,000 barrels or less of beer per year, that holds an out-of-state shipper’s permit, and that meets certain other requirements to ship beer directly to a retail licensee. Current law also generally prohibits a person holding a retail license from purchasing or possessing beer from anyone other than a wholesaler, subject to limited exceptions including beer distributed by in-state and out-of-state brewers that are authorized to self-distribute.

This bill creates an exception allowing an out-of-state brewer, without holding an out-of-state shipper’s permit, to sell and ship or deliver beer to a person who holds a temporary Class “B” license and operates a festival (festival sponsor), for consumption at the festival. This authority is limited to 155 gallons of beer for each festival. The bill defines a “festival” as an event 1) for which an admission fee is charged and no additional consideration is received for service of beer at the event; 2) that is no longer than two consecutive days; and 3) at which beer manufactured by at least 25 different brewers or brewpubs is served. At least 15 days before the festival, the festival sponsor must provide notice to the division of the date and location of the festival and identifying all brewers and brewpubs participating in the festival. The bill allows a festival sponsor to purchase and possess beer to be provided by an out-of-state brewer under this exception only if the festival sponsor provides this notice.

Current law generally imposes an occupational tax usually paid by alcohol beverage producers. The bill includes an occupational tax exemption for beer provided to a festival sponsor for consumption at the festival.

Finally, current law generally imposes a sales tax on the sale of certain property and services, including admissions to an event, but contains an exception for occasional sales made by nonprofit neighborhood associations, churches, civic groups, garden clubs, social clubs, and similar organizations. The bill provides that the exemption for occasional sales does not apply to sales of property or services, including admissions, at a beer festival.

Because this bill relates to an exemption from state or local taxes, it may be referred to the Joint Survey Committee on Tax Exemptions for a report to be printed as an appendix to the bill.