BILL ANALYSIS
AB 813
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 813 (John A. Perez)
As Amended September 10, 2009
2/3 vote. Urgency
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|ASSEMBLY: | |(May 28, 2009) |SENATE: |31-3 |(October 14, |
| | | | | |2009) |
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(vote not relevant)
Original Committee Reference: G.O.
SUMMARY : Delete the prior version of the bill that made changes
to the Gambling Control Act. Assembly member John A. Perez now
authors AB 813. The bill creates a new tied-house exception to
the Alcoholic Beverage Control Act (ABC Act) that authorizes the
owner of a venue (Club Nokia) in Los Angeles to engage in a
sponsorship agreement with an a beer manufacturer, holder of
winegrower's license, California winegrower's agent, distilled
spirits manufacturer, holder of a distilled spirits rectifiers
general license, or a distilled spirits manufacturer's agent for
the privilege of placing advertising in the on-sale licensee's
premises. The bill contains an urgency clause.
The Senate amendments delete the prior version of the bill, and
instead:
1)Authorize a beer manufacturer, holder of a winegrower's license,
a California winegrower's agent, a holder of a distilled spirits
rectifiers general license, distilled spirits manufacturer, or a
distilled spirits manufacturer's agent (these entities will
hereafter be referred to as "alcoholic beverage suppliers") to
purchase indoor advertising, at Club Nokia in Los Angeles,
subject to the following conditions:
a) The indoor advertising is purchased exclusively at the
Club Nokia venue;
b) The purchase of indoor advertising is conducted pursuant
to a written agreement entered into by the alcoholic beverage
supplier and the owner of the Club Nokia venue;
c) The agreement shall not be conditioned directly or
indirectly, in any way, on the purchase, sale, or
distribution of any alcoholic beverage manufactured or
AB 813
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distributed by the advertising alcoholic beverage supplier by
any on-sale retail licensee;
d) The on-sale retail licensee operating at Club Nokia must
serve other brands of beer, wine, or distilled spirits
distributed by competing beer, wine or distilled spirits
wholesalers in addition to the brands manufactured or
marketed by the advertising beer, wine or distilled spirits
manufacturer, or a holder of a distilled spirits rectifiers
general license; and,
e) No more than 15% of the retail licensee's purchases of
distilled spirits and wine for sale on its licensed premises
shall be manufactured, produced, or distributed by the holder
of a winegrower's license, California winegrower's agent,
distilled spirits manufacturer, holder of a distilled spirits
rectifiers general license, or a distilled spirits
manufacturer's agent that has purchased indoor advertising
space.
1)Require the Department of Alcoholic Beverage Control (ABC) to
prepare, as part of its annual legislative report, a listing of
the number of certifications made pursuant to this bill or the
absence of any certifications. Where there have been no
certifications for two consecutive years, that information shall
be included in the report.
2)Make it a misdemeanor (punishable by imprisonment or by a fine)
for an alcoholic beverage supplier to coerce or induce, directly
or indirectly, a licensed wholesaler to fulfill the contractual
obligations entered into pursuant to the above provisions. The
wholesaler (licensee) would also be subject to license
revocation.
3)Make it a misdemeanor (punishable by imprisonment or by a fine)
for the on-sale retail licensee to solicit or coerce, directly
or indirectly, an alcoholic beverage supplier to purchase indoor
advertising. The on-sale licensee would also be subject to
license revocation.
4)Contain "boiler plate" language (legislative findings and
declarations) relative to the necessity of requiring a
separation among manufacturing interests, wholesale interests
and retail interests.
5)Add an urgency clause, allowing this bill to take effect
immediately upon enactment.
AB 813
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EXISTING LAW :
1)Establishes the ABC and grants it exclusive authority to
administer the provisions of the ABC Act in accordance with laws
enacted by the Legislature. This involves licensing individuals
and businesses associated with the manufacture,
importation and sale of alcoholic beverages in this state and
the collection of license fees or occupation taxes for this
purpose.
2)States that the "Tied-house" Law or "three-tier" system
separates the alcoholic beverage industry into three component
parts of manufacturer (first tier), wholesaler (second tier),
and retailer (third tier). The original policy rationale for
this body of law was to prohibit the vertical integration of the
alcohol industry and to protect the public from predatory
marketing practices.
3)Prohibits, in general, an alcohol manufacturer, wholesaler, or
any officer, director, or agent of any such person from owning,
directly, or indirectly, any interest in any on-sale license, or
from providing anything of value to retailers, be it free goods,
services, or advertising (Tied-House Law).
4)Allows an alcohol manufacturer, winegrower's agent, holder of an
importer's general license, distilled spirits manufacturer's
agent, distilled spirits rectifiers general license to sponsor
events promoted by, and may purchase advertising space and time
from, or on behalf of, a live entertainment marketing company,
as specified.
5)Defines an "On-Sale" license as authorizing the sale of all
types of alcoholic beverages namely, beer, wine and distilled
spirits, for consumption on the premises (such as at a
restaurant or bar).
AS PASSED BY THE ASSEMBLY , this bill amended the Gambling Control
Act to require the Department of Justice (DOJ) to examine
documents requested in a routine audit at a gambling establishment
between the normal business hours of 8 A.M. to 6 P.M. within a
five-day workweek schedule.
FISCAL EFFECT : According to the Senate Appropriations Committee,
pursuant to Senate Rule 28.8, negligible state costs.
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COMMENTS : This bill was substantially amended in the Senate and
the Assembly-approved provisions of this bill were deleted. This
bill, as amended in the Senate is inconsistent with the Assembly
actions.
Background . As noted above, the ABC Act prohibits an alcoholic
beverage manufacturer, importer or wholesaler (alcoholic beverage
supplier), or any officer, director or agent of an alcoholic
beverage supplier, from giving any money or other thing of value,
directly or indirectly, to any on-sale retail licensee.
Historically, this prohibition has not applied where the owner of
a venue is not the alcoholic beverage licensee.
The position of ABC on this issue has recently changed as a result
of Business and Professions Code Section 25503(h) and a holding in
Schieffelin & Somerset. ABC's position is that an alcoholic
beverage supplier cannot pay anyone, even an unrelated third
party, for the privilege of placing an advertisement in on-sale
retail premises, even if that payment does not amount to a payment
or thing of value paid to or received by the alcoholic beverage
licensee.
According to the author's office, the position of ABC has
prohibited the Anschutz Entertainment Group (AEG) from engaging in
a sponsorship agreement with Club Nokia at LA Live in Los Angeles.
AEG, a wholly owned subsidiary of the Anschutz Company, controls a
collection of companies worldwide, including sports franchises and
facilities such as the Staples Center in Los Angeles and the Home
Depot Center in Carson, California. Club Nokia is a fully
enclosed venue, which accommodates over 2,000 guests with
box office sales and attendance by the public on a ticketed basis.
Club Nokia is located in Los Angeles County within the area
subject to the Los Angeles Sports and Entertainment District
Specific Plan adopted by the City of Los Angeles pursuant to an
ordinance approved on September 6, 2001.
AEG and its subsidiaries constructed Club Nokia and are
responsible for the booking and presentation of events at the
venue. AEG has contracted out the food and beverage operation to
Wolfgang Puck who is the alcoholic beverage licensee at the venue
(Club Nokia).
This bill creates a new tied-house exception in the ABC Act
applicable to AEG, the venue owner, and not the on-sale retail
licensee (Wolfgang Puck), thus enabling AEG to enter into a
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contractual agreement with an alcoholic beverage supplier
interested in purchasing indoor advertising space at Club Nokia.
This bill, among other things, requires the on-sale licensee to
serve other brands of beer, wine, and distilled spirits
distributed by a competing beer, wine or distilled spirits
wholesaler in addition to the brands manufactured or marketed by
the advertising beer, wine or distilled spirits manufacturer.
This bill states that no more than 15% of the retail licensee's
purchases of distilled spirits and wine for sale on its licensed
premises shall be manufactured, produced, or distributed by the
holder of a winegrower's license, California winegrower's agent,
distilled spirits manufacturer, holder of a distilled spirits
rectifiers general license, or a distilled spirits manufacturer's
agent that has purchased indoor advertising space.
ABC will be required to include in its annual report to the
Legislature a listing of the number of certifications made
pursuant to this new body of law or the absence of any
certifications. If no certifications have been made for two
consecutive years, ABC must also make a notation of this in its
annual report to the Legislature.
In opposition : Family Winemakers of California opposes AB 813.
It argues that, "Our opposition is based on the inclusion of a 15%
limitation on alcoholic beverage purchases except for beer.
Traditional tied-house advertising exemptions do not include a
limitation, nor do they exclude specific beverages from statutory
requirements." Advertising exemptions often contain provisions
that balance the competitive forces in the marketplace, such as
requiring the on sale retailer to offer competing brands. The 15%
limitation of purchases by the retailer during the period of the
advertising partnership between a supplier and AEG goes well
beyond the traditional requirement to offer competing brands of
beer, wine or spirits.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0003185