AB 2375

AB2375:v98#DOCUMENT

Bill Start

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

Assembly Bill

No. 2375

An act to amend Section 23006 Sections 23006, 25509, and 25509.1 of the Business and Professions Code, relating to alcoholic beverages.

LEGISLATIVE COUNSEL'S DIGEST

AB 2375, as amended, Blanca Rubio. Alcoholic beverages: beer. beverage control.

Existing law, the Alcoholic Beverage Control Act, which is administered by the Department of Alcoholic Beverage Control, regulates the application, issuance, and suspension of alcoholic beverage licenses and generally makes a violation of the act a misdemeanor. Existing law defines “beer” for purposes of the Alcoholic Beverage Control Act as any alcoholic beverage obtained by the fermentation of any infusion or decoction of barley, malt, hops, or any other similar product, or any combination thereof in water, as specified.

This bill would revise the definition of “beer” for purposes of the act to provide that beer may be produced using other grain and to specify that fermentation occurs in drinkable water.

Existing law requires specified licensees who sold and delivered alcoholic beverages to a retailer and did not receive payment within 42 days of the date of delivery to charge 1% of the unpaid balance on the 43rd day and an additional 1% for each subsequent 30-day period.This bill would instead require the above-described licensees to charge 1% of the unpaid balance after 30 days without payment and an additional 1% for each subsequent 30-day period. The bill would make other nonsubstantive and conforming changes. By expanding the scope of an existing crime, this bill would impose a state-mandated local program.Existing law requires a payment from a licensed retailer to a licensed wholesaler for the delivery of alcoholic beverages to be made by electronic funds transfer (EFT) pursuant to certain conditions, except as specified. Among other things, existing law requires the wholesaler to initiate the EFT and requires any service fees related to the EFT to be applied in an equitable manner. Existing law also provides for the selection of the third-party payment processor used to facilitate the EFT, including requiring the use of the processor used by the parties on July 1, 2025, if the parties cannot agree on a processor, and if no processor was used as of July 1, 2025, requiring the wholesaler to select the processor.This bill would revise and recast the above-described provisions to instead apply to the sale of alcoholic beverages. The bill would define “initiate” and “equitable manner” for these purposes. The bill would require the parties to either use the third-party payment processor used by the parties on July 1, 2025, or a payment processing service offered by a financial institution that held a deposit account of the licensed retailer on that date, and, if neither apply, would require the wholesaler to select the processor. The bill would make various other clarifying and nonsubstantive changes.The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.This bill would provide that no reimbursement is required by this act for a specified reason.

Digest Key

Vote: MAJORITY Appropriation: NO Fiscal Committee: NOYES Local Program: NOYES

Bill Text

The people of the State of California do enact as follows:

SECTION 1.

Section 23006 of the Business and Professions Code is amended to read:

23006.

“Beer” means any alcoholic beverage obtained by the fermentation of any infusion or decoction of barley, malt, hops, other grain, or any other similar product, or any combination of those products in drinkable water, and includes ale, porter, brown, stout, lager beer, small beer, and strong beer. The term does not include sake, known as Japanese rice wine. Beer may be produced using the following materials as adjuncts in fermentation: honey, fruit, fruit juice, fruit concentrate, herbs, spices, and other food materials. Beer aged in an empty wooden barrel previously used to contain wine or distilled spirits shall be defined exclusively as “beer” and shall not be considered a dilution or mixture of any other alcoholic beverage.

SEC. 2.

Section 25509 of the Business and Professions Code is amended to read:

25509.

(a) A For purposes of this section, “supplier” means a distilled spirits manufacturer, a brandy manufacturer, a beer manufacturer, a winegrower, a wine blender, a distilled spirits rectifier, a wine rectifier, a distilled spirits wholesaler, or a beer and wine wholesaler who licensed under this division.

(b) A supplier who sold and delivered beer, wine, or distilled spirits to a licensed retailer and who did not receive payment for that beer, wine, or distilled spirits by the expiration of the 42nd 30th day from date of delivery shall charge the retailer 1 percent of the unpaid balance for that beer, wine, and distilled spirits on the 43rd 31st day from date of delivery and an additional 1 percent for each 30 days thereafter.

(b)

(c) A distilled spirits manufacturer, a brandy manufacturer, a beer manufacturer, a winegrower, a wine blender, distilled spirits rectifier, a wine rectifier, distilled spirits wholesaler, or beer and wine wholesaler supplier who sold and delivered beer, wine, or distilled spirits to a licensed retailer and who did not receive payment in full by the expiration of the 30th day from date of delivery or who has not received payment of the 1 percent charge at the expiration of the 30th day from the day the charge became due shall thereafter sell beer, wine, or distilled spirits to that licensed retailer by receiving payment in advance of delivery until such time as all payments are received for the beer, wine, or distilled spirits sold and delivered to the said that licensed retailer more than 30 days previously.

(c)

(d) The 42-day period and the 30-day period periods provided for in this section shall commence with the day immediately following the date of invoice and shall include all successive days including Sundays and holidays to and including the 42nd or 30th day as the case may be. day. When the 42nd 30th day from date of invoice or the expiration of each additional 30-day period falls on Saturday, Sunday, or legal holiday, the next business day shall be deemed to be the expiration day.

(d)

(e) All moneys received from a licensed retailer in payment for any beer, wine, or distilled spirits sold and delivered to them shall be first applied to the payment of the oldest balance on beer, wine, or distilled spirits. All checks received for such payments shall be deposited for collection not later than the second business day following receipt of said check. A promissory note, postdated check, or check dishonored on presentation shall not be deemed payment.

(e)

(f) In enacting the act that amends this section by adding this subdivision, this section, the Legislature finds that it is necessary and proper to remove the retailer from financial or business obligations to suppliers or wholesalers and to remove the incentivization of retailers by the use of favorable credit terms by the extension of credit beyond the terms contained in this section. The Legislature further finds that the exception established by this section to the general prohibition against tied interests shall be limited to its express terms so as not to undermine the general prohibition, and intends that this section shall be construed accordingly.

(f)This section shall become operative on January 1, 2026.

SEC. 3.

Section 25509.1 of the Business and Professions Code is amended to read:

25509.1.

(a) Commencing January 1, 2026, and except Except as provided in subdivision (b) and paragraph (3) of subdivision (c), payment from a retailer licensee licensed retailer to a wholesaler licensee licensed wholesaler for delivery the sale of beer, wine, or distilled spirits shall be made by electronic funds transfer in accordance with the following requirements:

(1) The wholesaler licensee shall initiate the electronic funds transfer by initiating the withdrawal of funds from the retailer licensee’s bank account. transfer.

(A) For purposes of this paragraph, “initiate” means presenting an invoice to the licensed retailer requiring the licensed retailer to make payment by electronic means.(B) This paragraph does not prevent a licensed retailer from authorizing the licensed wholesaler to electronically withdraw funds directly from the licensed retailer’s bank account pursuant to the terms of an electronic funds transfer agreement between the licensed retailer and the licensed wholesaler if the authorization is voluntary and can be withdrawn by the licensed retailer through a written notice provided to the licensed wholesaler at least 24 hours before a scheduled electronic withdrawal.

(2) The electronic funds transfer shall occur by the expiration of no later than the end of the 30th day from the date of delivery of the beer, wine, or distilled spirits.

(3) Any costs related to electronic payment services shall be paid by the party that incurred those costs.

(A) Any service fees related to electronic payment transactions shall be applied in an equitable manner to each subscribing licensed wholesaler and retailer and shall justifiably match the services they receive from the electronic payment service provider. licensed retailer. For purposes of this subparagraph, “equitable manner” means that the fees paid are for those services the paying party receives from the electronic payment service provider.

(B) The licensed wholesaler shall not pay, directly or indirectly, for electronic payment service fees incurred by a licensed retailer.

(C) The licensed retailer shall not pay, directly or indirectly, for electronic payment service fees incurred by a licensed wholesaler.

(b) A payment by a licensed retailer to a licensed wholesaler may be made using cash, check, or money order only in the following instances:

(1) If accepting payment following an electronic funds transfer of is denied, rejected, or failed due to insufficient funds.

(2) If the retailer licensee licensed retailer holds an interim operating permit pursuant to Section 24044.5 or a temporary permit pursuant to Section 24045.5.

(3) During temporary service interruption of the third-party payment processor.

(4) During the first 30 days following the issuance of a license to the retailer licensee. licensed retailer.

(c) (1) To maintain control of its ability to receive payment for delivery, a wholesaler licensee licensed wholesaler shall be responsible for selecting the third-party payment processor used to facilitate an electronic funds transfer pursuant to this section. The licensed wholesaler and licensed retailer may agree on the third-party payment processor. If the parties are unable to agree, the parties shall use the third-party payment processor used by the retailer as of July 1, 2025, or a payment processing service offered by a financial institution that held a deposit account of the licensed retailer as of July 1, 2025, to pay for wholesale alcohol purchases. If by the licensed retailer did not use a third-party payment processor or a financial institution that offered a payment processing service as of July 1, 2025, the retailer does not use a third-party payment processor, the parties shall use the third-party payment processor selected by the licensed wholesaler.

(2) A wholesaler licensee licensed wholesaler shall not select a third-party payment processor that does not meet the requirements of this section or that requires more than 30 days’ notice from the wholesaler licensee licensed wholesaler to terminate the processor’s agreement with the wholesaler licensee. licensed wholesaler.

(3) Notwithstanding subdivision (a), a licensed wholesaler may choose to accept credit card payments. If payment is made using a credit card, the licensed retailer shall bear the cost of the transaction, so as to mitigate the value of secondary benefits realized by the licensed retailer using the credit card.

(d) A licensed retailer shall not accept a rebate, incentive, or other thing of value from a third-party payment processor selected by a licensed wholesaler for a payment made pursuant to this section.

(e) For purposes of this section, “electronic funds transfer” or “EFT” means the electronic transfer of money from one bank account to another, either within a single financial institution or across multiple institutions, via computer-based systems.

SEC. 4. No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.