BILL ANALYSIS                                                                                                                                                                                                    


          |SENATE RULES COMMITTEE            |                   SB 131|
          |Office of Senate Floor Analyses   |                         |
          |1020 N Street, Suite 524          |                         |
          |(916) 651-1520         Fax: (916) |                         |
          |327-4478                          |                         |
                              UNFINISHED BUSINESS

          Bill No:  SB 131
          Author:   Wiggins (D) and Yee (D)
          Amended:  9/10/09
          Vote:     27 - Urgency

           SENATE FLOOR  :  23-0 (FAIL), 9/12/09
          AYES: Alquist, Calderon, Cedillo, Corbett, Correa,  
            DeSaulnier, Ducheny, Florez, Hancock, Kehoe, Leno, Liu,  
            Lowenthal, Oropeza, Padilla, Pavley, Price, Romero,  
            Simitian, Steinberg, Wiggins, Wolk, Yee
          NO VOTE RECORDED: Aanestad, Ashburn, Benoit, Cogdill, Cox,  
            Denham, Dutton, Harman, Hollingsworth, Huff, Maldonado,  
            Negrete McLeod, Runner, Strickland, Walters, Wright,  

           ASSEMBLY FLOOR  :  73-1, 9/11/09 - See last page for vote

           SUBJECT  :    Alcoholic beverages:  tied-house restrictions:   

           SOURCE  :     Author

           DIGEST  :     Assembly Amendments  delete the prior version  
          which made various technical and code maintenance changes  
          to an existing provision of the Alcoholic Beverage Control  
          Act, and instead add provisions that create a tied house  
          exemption for an alcohol licensee to make monetary and  
          alcoholic beverage contributions to a symphony association  
          that is a nonprofit charitable corporation or association,  


                                                               SB 131

          as defined, and under specified conditions.  The amendments  
          also add Senator Yee as author and add an urgency clause.

           ANALYSIS  :    

           Existing Law

           1.Establishes the Department of Alcoholic Beverage Control  
            (ABC) and grants it exclusive authority to administer the  
            provisions of the Alcoholic Beverage Control Act (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 manufacture (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  

          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).


                                                                SB 131

           This bill:
           1.Provides a beer manufacturer, holder of a winegrower's  
            license, a California winegrower's agent, a distilled  
            spirits manufacturer, holder of a distilled spirits  
            rectifiers general license, a distilled spirit's  
            manufacturer's agent, and a licensed retailer may make  
            monetary and alcoholic beverage contributions to a  
            symphony association that is a nonprofit charitable  
            corporation or association, as defined.

          2.Provides that the symphony association has been  
            incorporated in the City and County of San Francisco by  
            and through its predecessor organizations for not less  
            than 99 years and produces not less than 175 musical  
            events open to the general public per symphony season.

          3.States that the symphony association shall hold a retail  
            on-sale license in a portion of its premises and provided  
            that, no such gift shall be used in or for the benefit of  
            the symphony association's retail on-sale license.

          4.States that the contribution shall not be conditioned  
            directly or indirectly, in any way, on the purchase,  
            sale, or distribution of any alcoholic beverage, as  

          5.Provides the contribution shall not be conditioned  
            directly or indirectly, in anyway, on the purchase, sale,  
            or distribution of any alcoholic beverage manufactured or  
            distributed by the beer manufacturer, holder of a  
            winegrower's license, California winegrower's agent,  
            distilled spirits manufacturer, holder of a distilled  
            spirits rectifiers general license, a distilled spirits  
            manufacturer's agent and licensed retailer by the  
            symphony association.

          6.States the symphony association shall serve other brands  
            of beer distributed by a competing beer wholesaler in  
            addition to the brand manufactured or marketed by the  
            beer manufacturer, other brands of wine distributed by a  
            competing wine wholesaler in addition to the brand  
            produced or marketed by a winegrower or California  


                                                                SB 131

            winegrower's agent, and other brands of distilled spirits  
            distributed by a competing distilled spirits wholesaler  
            in addition to the brand manufactured or marketed by the  
            distilled spirits manufacturer or distilled spirits  
            manufacturer's agent.

          7.Contains language (legislative findings and declarations)  
            relative to the necessity of requiring a separation  
            between manufacturing interests, wholesale interests and  
            retail interests.

          8.Contains a December 31, 2014 sunset date.


           According to the author's office, this bill provides a  
          narrow tied-house exception by allowing the San Francisco  
          Symphony (SFS) to accept monetary contributions and  
          alcoholic beverages from an alcohol licensee.

          This tied-house exception is necessary because the SFS also  
          holds an on-sale retail license for a very small portion of  
          its facility.  The possession of this retail license  
          prevents an alcohol licensee from providing charitable  
          contributions (both monetary and product) to this important  
          non-profit symphony.

          The author's office states that the SFS has a long and  
          storied history in San Francisco, but in these tough  
          economic times it has become imperative to find ways of  
          improving their profitability through charitable  
          activities.  This bill will ensure that the SFS continues  
          to set the highest possible standard for excellence in  
          musical performance at home and around the world;  
          enriching, serving, and shaping cultural life throughout  
          the spectrum of Bay Area communities while maintaining  
          financial stability.

           The SFS was founded in 1911, has a budget of $53.7 million  
          and is widely considered to be among the country's most  
          artistically adventurous and financially stable arts  
          institutions.  Nearly 600,000 people hear 230 concerts and  


                                                                SB 131

          presentations of the SFS each year.  Nearly 60,000 people  
          hear the SFS at no cost each season.

          More than 11,000 individual donors from throughout the  
          region join businesses and foundations in supporting the  
          SFS.  Throughout its history, the SFS has presented more  
          than 200 world premiers, commissioned more than 100 new  
          works, and received 12 awards from the American Society of  
          Composers, Authors, and Publishers for adventurous  
          programming and/or commitment to American music.  Thousands  
          of free tickets to the SFS events are provided to a wide  
          variety of groups each season.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No    
          Local:  No

           SUPPORT  :   (Verified  9/10/09)

          San Francisco Symphony

           ASSEMBLY FLOOR  : 
          AYES:  Adams, Ammiano, Anderson, Arambula, Beall, Bill  
            Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,  
            Bradford, Brownley, Buchanan, Caballero, Charles  
            Calderon, Carter, Chesbro, Conway, Cook, Coto, Davis, De  
            La Torre, De Leon, Emmerson, Eng, Evans, Feuer, Fletcher,  
            Fong, Fuentes, Fuller, Furutani, Galgiani, Garrick,  
            Gilmore, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill,  
            Huber, Huffman, Jeffries, Jones, Knight, Krekorian, Lieu,  
            Logue, Bonnie Lowenthal, Ma, Mendoza, Miller, Nava,  
            Nestande, Niello, John A. Perez, V. Manuel Perez,  
            Portantino, Ruskin, Salas, Silva, Skinner, Smyth,  
            Solorio, Audra Strickland, Swanson, Torlakson, Torres,  
            Torrico, Tran, Villines, Bass
          NOES:  Gaines
          NO VOTE RECORDED:  DeVore, Monning, Nielsen, Saldana,  
            Yamada, Vacancy

          TSM:do  10/12/09   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE


                                                                SB 131

                                ****  END  ****