BILL ANALYSIS                                                                                                                                                                                                    


          |SENATE RULES COMMITTEE            |                   SB 806|
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          Bill No:  SB 806
          Author:   Wiggins (D), et al
          Amended:  1/4/10
          Vote:     21

           SENATE GOVERNMENTAL ORG. COMMITTEE  :  9-0, 1/12/10
          AYES:  Wright, Calderon, Denham, Florez, Negrete McLeod,  
            Oropeza, Padilla, Price, Wyland

           SUBJECT  :    Alcoholic beverages:  tied-house restrictions

           SOURCE  :     Author

           DIGEST  :    This bill makes various technical and code  
          maintenance changes to an existing provision of the  
          Alcoholic Beverage Control Act that permits wineries and  
          brandy manufacturers to respond to consumer inquiries as to  
          where, and at which restaurants, their products may be  

           ANALYSIS  :    Existing law establishes the Department of  
          Alcoholic Beverage Control (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. 

          Existing law, known as the "tied-house" law, separates the  


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          alcoholic beverage industry into three component parts, or  
          tiers, of manufacturer (including breweries, wineries and  
          distilleries), wholesaler, and retailer (both on-sale and  

          Tied-house refers to a practice in this country prior to  
          Prohibition, and still occurring in England today, where a  
          bar or public house, from whence comes the "house" of  
          tied-house, is tied to the products of a particular  
          manufacturer, either because the manufacturer owns the  
          house, or the house is contractually obligated to carry  
          only a particular manufacturer's products.   

          The original policy rationale for this body of law was to  
          (1) promote the state's interest in an orderly market, (2)  
          prohibit the vertical integration and dominance by a single  
          producer in the marketplace, (3) prohibit commercial  
          bribery and protect the public from predatory marketing  
          practices, and (4) discourage and/or prevent the  
          intemperate use of alcoholic beverages.   Generally, other  
          than exceptions granted by the Legislature, the holder of  
          one type of license is not permitted to do business as  
          another type of licensee within the "three-tier" system.  

          An existing tied-house provision (Section 25500.1 of the  
          Business and Professions Code) provides that the listing of  
          the names, addresses, telephone numbers or e-mail  
          addresses, or both, or Web site addresses, of two or more  
          unaffiliated on-sale retailers selling wine or brandy, or  
          both, and operating and licensed as bona fide public eating  
          places selling the wine or brandy produced, distributed or  
          imported by a nonretail industry member in response to a  
          direct inquiry from a consumer received by telephone, by  
          mail, by electronic Internet inquiry or in person does not  
          constitute a thing of value or prohibited inducement to the  
          listed on-sale retailer, if specified conditions are met.

          According to the author's office, the complex restrictions  
          of the ABC Act's tied-house laws make it difficult for wine  
          and brandy manufacturers to utilize simple, modern ways of  
          responding to consumer inquiries.  Due to the fact that  
          existing provisions are so specific, e-mail and responses  


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          over the Internet are allowable but, "texting," for  
          example, over a cellular phone network, is not.  

          Under existing law (Section 25500.1 of the Business and  
          Professions Code), a response to a direct inquiry from a  
          consumer received by telephone, by mail, by electronic  
          Internet inquiry or in person does not constitute a thing  
          of value or prohibited inducement to the listed on-sale  
          retailer.  This bill is simply intended to modify the  
          current restrictions to include, "electronic inquiry,"  
          instead of just "electronic Internet inquiry."

          This bill is identical to SB 131 (Wiggins) of 2009 which  
          passed the Senate Floor with a vote of 35-0 on May 6, 2009,  
          but was amended late in the session for purposes of  
          creating a tied-house exception to allow the San Francisco  
          Symphony to accept both monetary and alcoholic beverage  
          contributions in support of its performing arts program. 
          Prior/Related Legislation

           SB 1423 (Chesbro), Chapter 205, Statutes of 2000,  
          authorized wineries and brandy manufacturers to advertise  
          the name and location of restaurants that sell their  

          SB 1233 (Chesbro), Chapter 666, Statutes of 1999, allowed  
          for the limited dissemination of information regarding the  
          off-sale availability of alcoholic beverages.

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

           SUPPORT  :   (Verified  1/12/10)

          Family Winemakers of California 

          TSM:mw  1/13/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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