BILL ANALYSIS                                                                                                                                                                                                    






                                                       Bill No:  SB  
          1323
          
                 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
                       Senator Roderick D. Wright, Chair
                           2009-2010 Regular Session
                                 Staff Analysis



          SB 1323  Author:  Walters
          As Amended:  April 7, 2010
          Hearing Date:  April 13, 2010
          Consultant:  Art Terzakis


                                     SUBJECT  
                              Alcoholic Beverages

                                   DESCRIPTION
           
          SB 1323 modifies an existing provision of the Alcoholic  
          Beverage Control (ABC) Act that allows, until January 1,  
          2014, a manufacturer, winegrower, rectifier, or distiller  
          to provide their product offerings directly to consumers  
          (free of charge) during invitation-only events, as  
          specified, to additionally grant the same privilege to: (1)  
          a distilled spirits manufacturer's agent;  (2) a holder of  
          a distilled spirits importer's general license; (3) a  
          holder of a distilled spirits rectifier's general license;  
          and (4) a holder of an out-of-state distilled spirit's  
          shipper's certificate.

                                   EXISTING LAW

           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  
          distilleries), wholesaler, and retailer (both on-sale and  
          off-sale).  Tied-house law generally prohibits alcoholic  
          beverage licensees from giving away any gift, premium or  




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          free goods in connection with the sale or distribution of  
          alcoholic beverages.

          Existing law, until January 1, 2014, permits a  
          manufacturer, winegrower, rectifier, or distiller, or any  
          authorized agent of that person to provide, free of charge,  
          entertainment, food, and distilled spirits, wine, or  
          nonalcoholic beverages to consumers over 21 years of age at  
          an invitation-only event in connection with the sale or  
          distribution of wine or distilled spirits, as specified.   
          Existing law also authorizes the Department of Alcoholic  
          Beverage Control to impose a fee to cover the costs of  
          administering such events.

                                         



































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                                   BACKGROUND
           
           Purpose of SB 1323:   This measure is intended to correct a  
          minor oversight discovered since enactment of AB 2293 (De  
          Leon) Chapter 638 of 2008.  AB 2293 of 2008 was introduced  
          to allow distilled spirits manufacturers and winegrowers to  
          provide their product offerings directly to consumers, by  
          invitation only, within a controlled environment for which  
          there is a caterer's permit authorization.  The bill  
          contained significant restrictive criteria in order to  
          provide appropriate controls on promotional events.    

          The sponsor of this measure, the Distilled Spirits Council  
          of the United States (DISCUS), contends that the list of  
          licensees authorized by AB 2293 of 2008 to provide supplier  
          hosted promotion and entertainment was not inclusive of all  
          DISCUS member companies.  In fact, the sponsor claims that  
          since enactment of AB 2293, certain licensees have not been  
          able to secure a permit from the Department of ABC to hold  
          an event.  According to the sponsor, this measure is simply  
          intended to correct this shortcoming and follow through on  
          the original intent of AB 2293 of 2008. 

           Staff Comments:   As introduced on February 19, 2010, this  
          measure would have increased the standard of proof required  
          to prove a violation per Business and Professions Code  
          Section 25503 relating to consignment sales; commercial  
          bribery; signs; and advertisement.  Under the February 19th  
          version of the bill, a person would have to act "knowingly"  
          in order to be found in violation.  Several labor  
          organizations had expressed opposition to that version of  
          the bill. The author's recent amendments (April 7, 2010)  
          have deleted the word "knowingly" from Business and  
          Professions Code Section 25503, thus removing the earlier  
          opposition and keeping this existing provision of law  
          intact.  

                            PRIOR/RELATED LEGISLATION
           
           SB 1022 (Strickland) 2009-10 Session.   Would expand an  
          existing tied-house exception within the ABC 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.  (Pending in  
          this Committee)
           




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          AB 2293 (De Leon) Chapter 638, Statutes of 2008.    Added a  
          new provision to the ABC Act that allows distilled spirits  
          manufacturers and winegrowers to provide their product  
          offerings directly to consumers (free of charge) during  
          invitation-only events on premises for which a caterer's  
          permit authorization has been issued.  

           SUPPORT:   As of April 9, 2010:

          Distilled Spirits Council of the United States (sponsor)

           OPPOSE:   None on file as of April 9, 2010.

           FISCAL COMMITTEE:   Senate Appropriations Committee

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