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The part in bold is why the California ABC is likely concerned. Alcoholic beverages are taxed in most States based on the alcohol content. If, as the quote indicates, rectification can lead to a further fermentation that increases the alcohol content, then the place is selling alcohol on which insufficient tax has been paid. Now the law is likely written so that artisan production of infused liquors that are "properly" taxed either can't be done or has an overhead so high for compliance costs borne by the artisan that it can't be done economically, but that's a problem that needs to be fixed by the legislature, not the ABC.
