BILL NUMBER: AB 345 INTRODUCED BILL TEXT INTRODUCED BY Assembly Members Saldana and Beall FEBRUARY 14, 2007 An act to add Article 4 (commencing with Section 25685) to Chapter 16 of Division 9 of the Business and Professions Code, and to amend Section 32230 of the Revenue and Taxation Code, relating to alcoholic beverages, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST AB 345, as introduced, Saldana. The Underage Drinking Prevention Act of 2007. The Alcoholic Beverage Control Act, administered by the Department of Alcoholic Beverage Control, regulates the sale and distribution of alcoholic beverages and the granting of licenses for the manufacture, distribution, and sale of alcoholic beverages within the state. The act also establishes various annual fees for different categories of licenses of the department. This bill would establish the Underage Drinking Prevention Act of 2007, and would impose a surcharge in varying amounts on the existing fees paid by specified licensees, and make a continuous appropriation of these amounts to the Department of Alcoholic Beverage Control and the State Department of Alcohol and Drug Programs, for specified purposes, including the prevention of underage drinking of, and access to, alcoholic beverages by minors. This bill would require the State Department of Alcohol and Drug Programs to report to the Legislature, on or before January 1, 2008, and every January 1 thereafter, on the impact of alcohol marketing on youth and on specified topics regarding alcoholic beverages with special appeal to minors, as provided. This bill would result in a change in state taxes for the purpose of increasing state revenues within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of 2/3 of the membership of each house of the Legislature. This bill would declare that it is to take effect immediately as an urgency statute. Vote: 2/3. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Article 4 (commencing with Section 25685) is added to Chapter 16 of Division 9 of the Business and Professions Code, to read: Article 4. The Underage Drinking Prevention Act of 2007 25685. This article shall be known and may be cited as the Underage Drinking Prevention Act of 2007. 25686. The Legislature finds and declares all of the following: (a) Problems associated with alcohol consumption by those under the minimum drinking age of 21 years constitute a public health and safety emergency in California and the nation. The prevention of underage alcohol consumption is, therefore, an urgent priority for the people of California. (b) The earlier a young person begins to consume alcoholic beverages, the more likely it is that he or she will experience alcohol problems throughout his or her life. Research has shown that, compared with persons who wait until 21 years of age or older to begin drinking, those who start to drink before 15 years of age are at a far greater risk of alcohol problems later in life, including alcohol-related motor vehicle crashes, assault, and other types of injuries. Recent increases in alcohol consumption and binge drinking among underage girls, including girls under the age of 15 years, emphasize the need for new initiatives to prevent youth alcohol problems. (c) The sale, transfer, or furnishing of alcoholic beverages to minors and the public possession of alcohol by minors is illegal in California. Enforcement of laws designed to prevent access and consumption of alcoholic beverages by minors is an urgent priority for the state. (d) California and its governmental subdivisions have initiated numerous programs and public awareness campaigns to prevent alcohol problems in minors and to alert citizens to the dangers associated with underage drinking. These efforts, which are augmented by programs conducted by nongovernmental organizations and individuals, are not sufficiently addressing the public health emergency associated with underage drinking. (e) Research has established that exposure to alcohol advertising influences young people's beliefs and intentions regarding alcoholic beverages and that increased exposure to alcohol advertising results in increased underage alcohol consumption. (f) Research has also established that some alcohol advertisements have images, themes, slogans, and other content that are highly attractive to young people and encourage them to consume alcoholic beverages. (g) Alcoholic beverage products that research shows are highly attractive to young people, including girls under the age of 15 years, are advertised and sold in California. These products, sometimes referred to as flavored alcoholic beverages or "alcopops," have added flavorings and sweeteners. "Alcopops" have a relatively low alcohol content that makes them similar in taste to fruit drinks, sodas, and other nonalcoholic beverages popular with young people. Marketing of these products includes traditional forms of advertising, product placement, labeling, and nontraditional marketing techniques such as text messaging and Internet promotions, including advertising on Web sites popular with youth. (h) New alcohol products, in addition to alcopops, that have potential appeal to young people are being introduced into the market each year. These include gelatin-based products, food-based alcohol products, alcohol mists, and beverages that contain alcohol, caffeine, and other additives that may facilitate underage binge drinking. Product labeling and packaging in some cases make it difficult to determine whether these products contain alcohol and, if they do, their alcohol content. (i) Educators, parents, community leaders, and the public are not familiar with the types and extent of risks to the health and safety of California's young people associated with alcopops and other new alcohol products with potential appeal to young people. (j) Underage drinking cost Californians an estimated $7.3 billion dollars in 2005. (k) In 2005, underage drinkers consumed 12.4 percent of all alcohol sold in California, totaling $2.3 billion dollars in sales. These sales provided profits of approximately $1.1 billion dollars to the alcohol industry. (l) The alcohol industry paid $__ dollars in taxes and licensing fees in 2005, a small fraction of the revenue and profits received from alcohol sales derived from underage drinkers. 25688. In addition to fees otherwise provided for in this division, the following amounts shall be paid to the department by holders of the following types of licenses: (a) Beer manufacturer (Type 1)........ $5,000 (b) Distilled spirits manufacturer $5,000 (Type 4).......................... (c) Beer and wine wholesaler (Type $2,500 17)............................... (d) Distilled spirits wholesaler $2,500 (Type 18)......................... (e) Retail package off-sale beer and $100 wine (Type 20).................... (f) Retail package off-sale general $100 license (Type 21)................. (g) On-sale beer (Type 40 & Type 61).. $100 (h) On-sale beer and wine eating $100 place (Type 41)................... (i) On-sale beer & wine (Type 42)..... $100 (j) On-sale general license (Type 47, $100 48, 57, 70, 75, 78)............... Payment of those amounts shall be made upon issuance or transfer of these types of licenses, and shall be made by the holders of these types of licenses at the time specified in this division for payment of annual renewal fees therefor. All money collected from the fees provided for in this section shall be deposited in the Youth Alcohol Problem Prevention Fund. 25690. The Youth Alcohol Problem Prevention Fund is hereby established in the State Treasury. The department and the State Board of Equalization shall deduct the costs of administering this article before transmitting the money collected as fees pursuant to Section 25690 and subdivision (b) of Section 32230 of the Revenue and Taxation Code to the State Treasury to the credit of the Youth Alcohol Problem Prevention Fund. Notwithstanding any other provision of law, all moneys in the fund are hereby continuously appropriated, without regard to fiscal year, to the department and the State Department of Alcohol and Drug Programs in the following manner: (a) The department shall receive 20 percent of the annual amount in the fund to enhance the enforcement of laws prohibiting furnishing alcohol to minors. At least 50 percent of the funds received pursuant to this subdivision shall be distributed to local law enforcement agencies. (b) The State Department of Alcohol and Drug Programs shall receive 30 percent of the annual amount in the fund to: (1) Conduct research on the impact of alcohol marketing on underage drinking. (2) Conduct a statewide media campaign to alert the public to the risks of underage drinking and address the impact of alcohol marketing on youth. (3) Assess and enhance youth alcohol recovery programs in the state. (c) (1) Fifty percent of the annual amount shall be distributed among counties to reimburse the costs of publicly funded emergency and trauma services and youth alcohol treatment, recovery, and prevention programs. (2) Funds shall be distributed pursuant to this subdivision in accordance with the standard allocation methodology agreed to by the State Department of Alcohol and Drug Programs and the County Alcohol and Drug Program Administrators Association of California, and described in the February 1997 Allocation Report to the Legislature. 25692. (a) On or before January 1, 2008, and on every January 1 thereafter, the State Department of Alcohol and Drug Programs shall report to the Legislature on the research conducted by the State Department of Alcohol and Drug Programs regarding alcohol and minors. The report shall include, but is not limited to, the following: (1) The impact of alcohol marketing on youth. (2) The types and brands of alcoholic beverages with special appeal to youth and the level of youth consumption of those beverages by type. (3) Adult awareness of alcoholic beverages with special appeal to youth. (4) The labeling and packaging of alcoholic beverages with special appeal to youth. (b) The funds made available to the State Department of Alcohol and Drug Programs pursuant to subdivision (b) of Section 25690 shall be used for costs associated with the research and report required by this section. SEC. 2. Section 32230 of the Revenue and Taxation Code is amended to read: 32230. (a) All surtaxes, interest, and penalties imposed and required to be paid under this chapter shall be made in remittances to the State Board of Equalization and shall be deposited in the General Fund. (b) (1) For calendar years beginning on and after January 1, 2007, the State Board of Equalization shall calculate, on a quarterly basis, the total amount of all surtaxes, interest, and penalties collected as a result of the reclassification of any alcoholic beverage from beer, as defined in Section 23006 of the Business and Professions Code, to a distilled spirit, as defined in Section 23005 of the Business and Professions Code. (2) Notwithstanding any other provision of law, all surtaxes, interest, and penalties calculated by the State Board of Equalization pursuant to this subdivision shall be transferred to the Youth Alcohol Problem Prevention Fund created by Section 25690 of the Business and Professions Code. SEC. 3. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are: In order to insure the safety, health, and well-being of California's youth against the negative impacts of alcohol use, it is necessary that this act take effect immediately.