BILL ANALYSIS                                                                                                                                                                                                    

                                                                  SB 1022
                                                                  Page  1

          Date of Hearing:   August 4, 2010

                                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


          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  


           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  

           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)