EFFECTIVE JANUARY 1, 2024, CA WINERIES AND DISTILLERIES WILL HAVE REPORTING AND PAYMENT OBLIGATIONS TO CALRECYCLE UNDER THE BOTTLE BILL

With the passage of  Senate Bill No. 1013, beginning on January 1, 2024, wine and spirits will be included in California’s state container deposit system established by the California Beverage Container Recycling and Litter Reduction Act (known as the “Bottle Bill”).  As such, wineries and distilleries will now be required to comply with the Bottle Bill’s CA Redemption Value (CRV) payment and reporting obligations beginning January 1, 2024, and CRV labeling requirements for all wine and spirits sold after July 1, 2025.  Beer and certain other non-alcoholic beverages were already previously covered by the Bottle Bill.

Importantly, because all wines and spirits sold in California after July 1, 2025 must be labeled with some type of approved CRV statement, producers should start including this information on their bottles and/or labels as soon as possible for all products to be offered for sale on or after January 1, 2025.

Below we have included a brief summary of the rules applicable to wines and spirits under Bottle Bill, the new registration and payment obligations, and labeling changes required to comply with the new laws

TYPES OF BEVERAGES:

The Bottle Bill applies to beer, malt beverages, wine, spirits, wine and spirit coolers (regardless of ABV), and certain other non-alcoholic beverages intended for sale in California. Section 14504 and 14560.

CA REDEMPTION VALUES (CRV): Section 14560

  1. For bottles smaller than 750 mL (less than 24 fluid ounces), the CRV is 5 cents/bottle.
  2. For bottles 750 mL or larger (24 fluid ounces or more), the CRV is 10 cents/bottle.
  3. For boxes, bladders, pouches, or similar containers (regardless of size), the CRV is 25 cents/container.

REGISTRATION & PAYMENT OBLIGATIONS BEGINNING JANUARY 1, 2024:

  1. All wineries and distilleries should register with CalRecycle as soon as possible to prepare for payment and reporting requirements beginning 1/1/2024 (information regarding registration can be found here).
  • All producers and importers of wine and distilled spirits should register as a Beverage Manufacturer. Brand owners that contract with producers for the manufacture of wine or distilled spirits are not considered Beverage Manufacturers.
  • Any wineries and distilleries that sell wine or spirits in California Direct to Consumer or Direct to a Retailer (for wine) should also register as a Distributor.

2. Report and pay the applicable CRV to CalReycle.

  • The winery or distillery may pass on this cost to consumers (as the consumers can return the bottles to a recycling center for the redemption). Section 14560
  • The processing fee is variable depending on container material (size does not matter) and changes each calendar year, but is currently 0.452 cents/glass bottle.  The Wine Institute has noted that the hope is for the processing fee to be reduced to zero.

3. Report and pay the applicable Processing Fee.

  • The processing fee is paid on all containers a winery or distillery sells, whether to wholesalers, retailers, or consumers.  Section 14575(g)
  • The processing fee is variable, but is currently 0.426 cents/glass bottle or for new containers, 0.574 cents/container.  The Wine Institute has noted that the hope is for the processing fee to be reduced to zero.

LABELING OBLIGATIONS FOR ALL WINES AND SPIRITS SOLD AFTER JULY 1, 2025:

  1. All wines and distilled spirits sold in California after July 1, 2025, must be labeled with: “CA Redemption Value,” “California Redemption Value,” “CA Cash Refund,” “California Cash Refund,” or “CA CRV”.
  2. The CRV statement must be clearly, prominently, and indelibly marked and can be added on the actual label or by sticker (not on aluminum cans), stamp, embossment, or other similar method. Labeling size and location requirements are set forth below: CCR 2200(b).
  • For glass and plastic, the CRV statement must be on the container body label or secondary label with:
    • a text height of 3/16”, or
    • a minimum text height of 1/8” and in a contrasting color to the background and nearby text.
  • For aluminum, the CRV statement must be on the top lid:
    • for tops greater than 2 inches in diameter, the CRV statement must be 3/16” in height; and
    • for tops 2 inches or less in diameter, the CRV statement must be 1/8” in height.
  • Requirements for box, bladder, and pouch containers to be determined.

3. Currently, there is no exemption for wines or spirits labeled before July 1, 2025.  While the Wine Institute is working on legislation to create an exemption for wines labeled before January 1, 2024, wineries and distilleries should start including the required labeling on all applicable containers as soon as possible.

4. Senate Bill No. 1013 also revised Section 14561(d) of the Bottle Bill to allow for CRV labeling by the inclusion of a scan code or quick response (QR) code on the container. This new language is currently under review by CalRecycle.

EXCEPTION FOR TASTING ROOM SALES:

If any wines or spirits are sold for on-site consumption in a tasting room, then those products are exempt from the Bottle Bill’s requirements. Any products sold for offsite consumption are subject to the requirements of the Bottle Bill. Section 14510.

For more information regarding Bottle Bill compliance, please contact Bahaneh Hobel at [email protected] or Theresa Barton Cray at [email protected].

ABC Launches New Online Portal for Mandatory Alcohol Beverage Server Training

The California Department of Alcoholic Beverage Control (ABC) has launched a new Responsible Beverage Service (RBS) portal to provide mandatory alcohol beverage service training and certification.

Under the Responsible Beverage Services Training Act, starting on July 1, 2022, all California licensees with on-premise consumption privileges (including bars, restaurants, and wineries, breweries, and distilleries with tasting rooms) must require all alcohol beverage servers and managers to attend responsible beverage service training. All servers and managers in licensees’ employment as of July 1, 2022, must attend this training and pass an online RBS exam by August 30, 2022. If any servers or managers were hired after July 1, 2022, then they must attend training and pass the RBS exam within 60 days after their hire date.

The ABC designed the RBS portal to be a one-stop shop for servers, managers, licensees, and RBS trainers and provides customized access based on user roles. Servers and managers can use the RBS portal to register as servers with the ABC, search for approved training providers, and, after completing training, take an alcohol server certification exam on the RBS portal. Licensees can soon use the RBS portal to confirm server certification and maintain online records. In addition, prospective RBS trainers who will provide training to servers on safe and responsible beverage service can submit their applications using the RBS portal.

The purpose of the mandatory training is to provide licensees, servers, and managers with tools and knowledge to promote responsible consumption and community safety and to reduce underage drinking, including by educating trainees on alcohol beverage control laws and on the impact of alcohol on the body.

All licensees with on-sale privileges should become familiar with the RBS portal and begin preparing their servers and managers to meet the training and certification deadlines above. Although the RBS training does not become mandatory until July 1, 2022, servers may use the RBS portal to search for RBS training providers and take the online certification exam now. There is no harm in fulfilling RBS training and certification requirements before July 1, 2022, so servers may want to register and complete their requirements on the RBS portal sooner rather than later. The RBS portal is available here. For any specific questions, please reach out to Bahaneh Hobel (Head of Alcohol Beverage Law) or Michael Mercurio (Law Clerk).

CA ABC Loosens Regulations for Alcohol Beverage Retailers and Delivery

The California Department of Alcoholic Beverage Control issued a notice on March 19, 2020 temporarily loosening certain regulations during the current state of affairs.  While primarily focused on retailers, there are some potentially helpful provisions that impact alcohol beverage producers, too.

A few things to keep in mind.  First, local regulations and restrictions may also govern and restrict the ability of licensees to engage in these activities.  Second, this move by the ABC is temporary.  ABC plans to notify the industry 10 days before these guidelines terminate.

Below is a summary of ABC’s March 19 notice.

3/21/2020 Update:  CA ABC has issued a FAQ for it’s 3/19/2020 Notice of Regulatory Relief

For a full list Coronavirus-related links and resources compiled by DPF attorneys, please click here.  

ON-PREMISE RETAILERS SELLING ALCOHOL “TO GO”

ALCOHOL IN MANUFACTURER PRE-PACKAGED CONTAINERS:  If you hold an on-premise retail license that allows you to sell beer and wine or beer wine and spirits, you can sell that beer and wine to go for off-premise consumption in the original container/bottle (barring any condition on your license).  That was true prior to the ABC notice, and still holds.  However, if you hold an on-premise retail license that allows you to sell beer, wine and spirits, you can now sell all those beverages (beer, wine and spirits) in the original container/bottle.

ALCOHOL IN RETAILER PACKAGED CONTAINER:  Under ABC’s new notice, if you operate a restaurant / “bona fide eating place”, you can now package whatever alcohol your license allows you to sell (beer and wine only for a Type 41; beer, wine, and premixed cocktails/drinks if you are a Type 47) in a container with a “secure lid or cap” so long as that cap does not have a sipping hole or opening for a straw, or could otherwise be consumed without removing the lid/cap.  However, that container must be sold in conjunction with a meal prepared for pick-up or delivery.

Retailers that want engage in this type of activity must have a prominent posting (either on the premise, online, or in any way possible to alert consumers or the person transporting the beverage) that states, “Alcoholic beverages that are packaged by this establishment are open containers and may not be transported in a motor vehicle except in the vehicle’s trunk; or, if there is no trunk, the container may be kept in some other area of the vehicle that is not normally occupied by the driver or passengers (which does not include a utility compartment or glove compartment (Vehicle Code section 23225)).  Further, such beverages may not be consumed in public or in any other area where open containers are prohibited by law.”  UPDATE 3/24/2020:  ABC has created a PDF of that notice so that retailers can easily print and post.

TAKE OUT WINDOWS:  Some licensees have conditions on their license that prohibit the sale / delivery of alcohol to persons in cars or to consumers outside of the licensed premises through a take-out window or slide-out tray.  Those prohibitions are temporarily lifted.

DELIVERY TO CONSUMERS:  Even before the emergency notice, most business that hold a license that permits them to sell alcohol to consumers for off-premise consumption can also deliver those beverages to the consumer, so long as the sales transaction (other than the delivery) takes place at the licensed premise.  In other words, the order must be received at the licensed premise, and payment is processed there.  You can’t just show up at someone’s door and swipe a credit card there.

The temporary notice now allows for the following:

  • If you are allowed to sell to consumers for off-premise consumption, you can accept payment, including cash, at the point of delivery.
  • Although  the CA ABC Act is silent as to whether Craft Distillers have the right to make deliveries away from the premises, the notice now allows Type 74 craft distillers can also deliver to consumers, but must limit sales to 2.25 liters per consumer per day.
  • These delivery privileges are not limited to delivery to a consumer’s residence, but also allow for curbside delivery to consumers immediately outside the licensed premises.

HOURS OF OPERATION:  State law prohibits the retail sale of alcohol between 2:00am and 6:00am.  Some licensees have even more restrictive hours through conditions placed on their license.  However, those license conditions are now lifted for off-premise sales, though the 2am-6am state law is still in place.

RETURNS:  Generally, there are restrictions on the ability of producers and wholesalers from accepting returns from retailers.  Those restrictions are temporarily lifted.  It doesn’t mean that wholesalers and producers are required to accept all returns from retailers, just that they can if they choose to.  However, producers/wholesalers cannot condition the acceptance of a return on a requirement to purchase in the future.  This is consistent with TTB latest guidance on returns as well.

RETAILER-TO-RETAILER SALES:  Under California law, retailers cannot purchase alcohol from other retailers.  Under the temporary guidance, an off-premise retailer (grocery store, bottle shop, etc.) can now buy inventory from on-premise retailers (such as bars and restaurants).

EXTENSION OF CREDIT:  Normally, California law imposes a maximum 30 day credit on the purchase of alcohol by a retailer from a wholesaler or producer.  That 30 day limit is temporarily lifted.  Note, however, once the temporary guidance is revoked, the extended credit term will also terminate (i.e., the retailer will have to pay the amount due at that time).

For a list of Coronavirus related resources, please see our Resources Page.  

If you have any questions regarding alcohol beverage licensing, please contact John Trinidad or Bahaneh Hobel.

TTB Allows Returns of Products Purchased for Events Cancelled due to CORONAVIRUS

Today, TTB announced that it would permit returns of alcoholic beverages that were originally purchased for events that have been canceled due to Coronavirus. As TTB stated:  Given the unexpected and widespread nature of the concerns involving COVID-19, TTB will not consider returns of alcohol beverage products purchased to sell during such cancelled events to violate federal consignment sales rules provided the products were not initially purchased or sold with the privilege of return.”

Federal regulations typically prohibit consignment sales, which they interpret broadly to include the sale or purchase of alcohol beverage products with the privilege of return. (27 CFR 11.21).Typically, returns for ordinary and usual commercial reasons are not permitted, but returns because a product is overstocked or slow-moving does not constitute a return for ordinary and commercial reasons and are prohibited. (27 CFR 11.45.)

Acknowledging that wholesalers and retailers likely had already purchased product for various events such as festivals, concerts and sporting events that have seen widespread cancellations in recent days, TTB has taken the position that returns resulting from these cancellations would be permitted.

Local officials and event organizers have begun announcing cancellations of widely-attended events, such as parades, festivals, fairs, concerts, and sporting events based on concerns about COVID-19. These announcements may be made after wholesalers and retailers purchased large quantities of products to sell during.

Note that returns of alcoholic beverages to retailers would still be considered consignment sales under California law and we are working with California ABC to understand their position on such returns given the mass cancellations of events and gatherings.

For more information about how to address the return of alcoholic beverage products, please contact Bahaneh Hobel.

For a list of Coronavirus related resources, please see our Resources Page.  

ABC Provides Guidance on Passport Events

On March 4, 2016, the California Department of Alcoholic Beverage Control (“ABC”) published an Industry Advisory providing guidance to licensees, marketing companies and winegrower associations participating in “passport” marketing events.

Most passport events have the same format – consumers purchase an identifiable event glass, wrist band, passport or punch card from a marketing company or winegrower association organizing the event, which provides the consumers access to various experiences and tastings at the premises of participating manufacturer licensees (beer, wine or spirits).  The experiences and tastings are then provided to the consumers by the participating manufacturer licensees at their licensed premises to the extent such experiences and tastings are permitted under their existing licenses.  So, for example, tastings by wineries, breweries and distilleries as part of such passport events are permissible, since such licensees have the right to conduct such tastings under their licenses (subject to restrictions set forth in the ABC Act).  However, Type 17/20 licensees would not be able to provide tastings as part of any such passport event, since such licensees are not permitted to conduct consumer tastings.

While these events have been occurring for many years throughout California, ABC district offices throughout the state were dealing with licensing for these events in different and inconsistent ways (i.e., if a license was required at all, if one license could cover the whole event at all locations, if a separate license was required at each location, etc.).  As such, ABC provided the Passport Event Guidelines which set forth the conditions under which these events can be held without a license.

In order for a marketing agency or a winegrower association to organize a Passport Event without obtaining its own ABC license(s) for the event, the Passport Event has to satisfy all of the following requirements:

  • The marketing organization or winegrower association is only marketing the event which is actually put on by the participating manufacturers.
  • The organization sells only access to the experiences or activities that the manufacturer licensee may lawfully provide free of charge to consumers (such as tastings).
  • The manufacturer licensees involved are doing no more than providing tastes of wine, beer, or distilled spirits to participating consumers under the authority of their license (which allows such manufacturer licensee to give or sell such tastes).
  • There is no commingling of funds or sharing of revenue between the marketing organization and manufacturer licensee (i.e., all proceeds for the sale of the passport go to the organization, and revenue from sales of alcoholic beverages to consumers separate and apart from the tastes given during the marketing event are not shared with the marketing organization).

Events that fall outside of these parameters will require a license for the marketing company (if a license is even possible under the ABC Act), or the nonprofit winegrower association.  Thus, for example, Passport Events that include a gala dinner or tasting event where wines from multiple wineries are being poured at one location will require a temporary daily license held by the event organizer.  Or, where the tickets being sold by the organization include alcohol (in excess of the “tastings” permitted at a licensed manufacturer’s premises under the ABC Act), a temporary daily license will be required.  Note that because not all organizations are eligible for temporary daily licenses under the ABC Act (as such licenses are typically limited to nonprofit or other charitable organizations), event organizers should contact counsel or the ABC while organizing their event to determine if a license, if required, is even available to the event organizer.

For more information on licensing and other questions related to passport or other events at licensed premises, please contact Bahaneh Hobel, Partner in DP&F’s alcohol beverage law group, or Katy Barfield, Associate in DP&F’s alcohol beverage law group.