BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1022|
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THIRD READING
Bill No: SB 1022
Author: Strickland (R)
Amended: 3/15/10
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE : 9-0, 4/13/10
AYES: Wright, Calderon, Denham, Florez, Negrete McLeod,
Oropeza, Padilla, Price, Yee
NO VOTE RECORDED: Harman, Wyland
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Alcoholic beverages: licensees: donations
SOURCE : Author
DIGEST : This bill expands an existing tied-house
exception within the Alcoholic Beverage Control Act to
enable licensed distilled spirits rectifiers to donate or
sell their products to specified nonprofit entities for the
purpose of assisting in fund-raising efforts.
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.
Existing law, known as the "tied-house" law, separates the
alcoholic beverage industry into three component parts, or
tiers, of manufacturer (including breweries, wineries and
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distilleries), wholesaler, and retailer (both on-sale and
off-sale).
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:
(a) promote the state's interest in an orderly market; (b)
prohibit the vertical integration and dominance by a single
producer in the marketplace; (c) prohibit commercial
bribery and protect the public from predatory marketing
practices; and, (d) 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.
Tied-house law generally prohibits any alcoholic beverage
manufacturer, winegrower, agent, importer or wholesaler
from holding any interest in the business of a retailer of
alcoholic beverages or to give any thing of value to a
licensed retailer of alcoholic beverages. Licensees are
also prohibited from giving away any gift, premium or free
goods in connection with the sale or distribution of
alcoholic beverages.
The ABC Act provides that nothing in that body of law
prohibits a wine grower or a beer and wine wholesaler from
giving or selling wine, a beer manufacturer from giving or
selling beer, a distilled spirits manufacturer or its agent
from giving or selling distilled spirits, or a licensed
importer from giving or selling beer, wine, or spirits to
certain nonprofit organizations, as specified, at prices
other than those contained in schedules filed with the
Department of ABC.
The ABC Act defines "rectifier" to mean every person who
colors, flavors, or otherwise processes distilled spirits
by distillation, blending, percolating, or other processes.
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This bill provides for an exemption to allow rectifiers to
give or sell beer to certain nonprofit organizations.
Comments
According to the author's office, current law does not
allow holders of a "rectifiers" license to give or sell
rectified distilled spirits to nonprofit organizations to
assist them in fund-raising efforts. However, current law
permits licensed "importers" to perform this function.
As an example, the author's office points to a local
rectifier, Ventura Limoncello Company, which cannot donate
a gift basket containing a bottle of Ventura Limoncello,
produced in the County of Ventura, to a local charity for
its silent auction. Yet, the importer of Il Convento
Limoncello, produced in Italy, can be donated (by the
importer) to any charitable event.
According to the author's office, this bill is intended to
allow licensed rectifiers to support charities in the same
manner as the State's wineries, breweries, and distilled
spirits manufacturers and importers.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 4/26/10)
Boys & Girls Club of Ventura
Ventura Limoncello Company, LLC
Napa Valley Limoncella Company
TSM:nl 4/26/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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