BILL ANALYSIS
SB 1022
Page 1
Date of Hearing: August 4, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 1022 (Strickland) - As Amended: March 15, 2010
Policy Committee: Governmental
Organization Vote: 21 - 0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill expands an existing tied-house exception within the
Alcoholic Beverage Control Act (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.
FISCAL EFFECT
Negligible non-reimbursable costs for prosecution and/or
incarceration, offset by fine revenue, for misdemeanor
violations of provisions associated with the tied-house
exception.
COMMENTS
1)Rationale . Existing law allows wineries, breweries, distilled
spirits manufacturers, and importers to donate their
product(s) to certain nonprofit organizations (e.g., fraternal
orders, social organizations, civic leagues, veterans'
organizations, religious groups, horticultural organizations)
for the purpose of assisting in fund-raising efforts. This
measure would grant licensed "rectifiers" the same privilege.
According to the author, this bill came about because 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
SB 1022
Page 2
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 measure is simply
intended to allow licensed rectifiers to support charities in
the same manner as the State's wineries, breweries, and
distilled spirits manufacturers and importers.
2)Rectification . Rectification is any process or procedure
whereby distilled spirits are cut, blended, mixed or infused
with any ingredient which reacts with the distilled spirits
and changes the character and nature or standards of identity
of the distilled spirits. In the case of Limoncello, it is
traditionally produced by infusing lemons (and often sugar) in
vodka.
3)Tied-House Law . Under tied-house law, alcoholic beverages are
required to be distributed through a "three-tier" system of
licensed manufacturers, wholesalers, and retailers. The
rationale for these laws is to prevent corrupt sales
practices, the formation of vertical monopolies, and dominance
by a single producer in the market place.
Tied-house restrictions avoid undue influence, unfair trade
practices, and cross-ownership within the three-tier system.
The tied-house system has been credited with eliminating
commercial bribery and predatory marketing practices.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081