Thanks you all for the continued input!
Tim Schmidlin - You mentioned the club brewing at a brewery. Yes, this is what I had in mind. We have a brewery in town that is very homebrewer friendly. If the club could set up a nano within the brewery as a separate entity, then we could put one or more beers on tap at the brewery and/or a local pub, who also is very supportive of the club. This would be the so called "commercial" face of the club which would allow us to serve and donate beer to charity events, and recruit new members of course. Granted, the beer served at the events would have to be brewed at the nano. Might be a big headache and cost prohibative to do this, but I feel it's worth exploring anyway.
Denny Conn - Your club seemed to have done something similar. I would like to hear more detail about this if you can post about it.
By the way, here's how the California law is written (it's definitely up for interpretation):
Note: I removed a couple of paragraphs that dealt with wine making.
Code 23356.2 states:
No license or permit shall be required for the brewing
of beer for personal or family use, and not for sale, by a person over the age of 21
years. The aggregate amount of beer with respect to any household shall not exceed
(a) 200 gallons per calendar year if there are two or more adults in such household,
or (b) 100 gallons per calendar year if there is only one adult in such household.
Any beer brewed pursuant to this section may be removed from the premises where
brewed for use in competition at organized affairs, exhibitions or competitions, including
homemakers’ contests, tastings, or judgings.
Maybe the best solution would be talk to festival organizers and have them add "Homebrew Competition" to the beer fest title. Then people attending could vote for their favorite homebrewed beer. Wouldn't this make it a "Competition at an organized affair"?