BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 1096| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ CONSENT Bill No: SB 1096 Author: Wiggins (D) Amended: As introduced Vote: 21 SENATE GOVERNMENTAL ORG. COMMITTEE : 9-0, 3/23/10 AYES: Wright, Harman, Florez, Negrete McLeod, Oropeza, Padilla, Price, Wyland, Yee NO VOTE RECORDED: Calderon, Denham SUBJECT : Alcoholic beverages: tied-house restrictions SOURCE : Author DIGEST : This bill makes various technical and code maintenance changes to several provisions of the Alcoholic Beverage Control Act to keep up with modern technology. 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 alcoholic beverage industry into three component parts, or tiers, of manufacturer (including breweries, wineries and CONTINUED SB 1096 Page 2 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. An existing tied-house provision (Business & Professions Code Section 25500.1) 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. Comment 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. The author's office notes that current law references electronic Internet inquiries which could be narrowly construed to prohibit other types of electronic communications - such as texting. SB 1096 Page 3 This bill is intended to modify the current restrictions to include, "electronic inquiry," instead of just "electronic Internet inquiry." Prior/Related Legislation SB 131 (Wiggins) 2009-10 Session, a similar measure, 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. SB 806 (Wiggins) 2009-10 Session a similar measure which passed the Senate Floor 31-0, on 1/19/10 (in Assembly Governmental Organization Committee). FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 3/23/10) Family Winemakers of California TSM:do 3/23/10 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****