BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                  SB 1096|
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                                    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  
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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.  

          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.







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          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

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