BILL ANALYSIS Ó AB 252 Page 1 ASSEMBLY THIRD READING AB 252 (Charles Calderon) As Introduced February 3, 2011 Majority vote GOVERNMENTAL ORGANIZATION 17-0 APPROPRIATIONS 15-0 ----------------------------------------------------------------- |Ayes:|Hall, Nestande, Atkins, |Ayes:|Fuentes, Harkey, | | |Block, Blumenfield, | |Blumenfield, Bradford, | | |Chesbro, Cook, Galgiani, | |Charles Calderon, Campos, | | |Garrick, Gatto, Hill, | |Davis, Donnelly, Gatto, | | |Jeffries, Ma, Perea, V. | |Hall, Hill, Lara, | | |Manuel Pérez, Silva, | |Mitchell, Nielsen, Norby, | | |Torres | |Solorio, Wagner | | | | | | ----------------------------------------------------------------- SUMMARY : Provides for an additional authorization under the Alcoholic Beverage Control Act (ABC Act) by allowing a distilled spirits manufacturer's agent to provide their product free of charge to consumers during invitation-only events, as defined. Specifically, this bill modifies an existing provision of the 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 a distilled spirits manufacturer's agent. EXISTING LAW : 1) 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. 2) 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 free goods in connection with the sale or distribution of alcoholic beverages. AB 252 Page 2 3) Permits until January 1, 2014, 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. 4) Authorizes ABC to impose a fee to cover the costs of administering such events. FISCAL EFFECT : According to the Assembly Appropriations Committee, there are currently 16 licensees who would be able to take advantage of this expansion. Costs associated with including them in this tied-house exception would likely be minor and absorbable within existing resources. COMMENTS : According to the author, this bill is intended to correct a minor oversight discovered since the enactment of AB 2293 (De León), Chapter 638, Statutes of 2008. The bill allowed distilled spirits manufacturers and winegrowers to provide their product offerings free of charge to consumers, at an invitation-only event, where a caterer's permit has been authorized by ABC. The bill contained restrictive criteria in order to provide appropriate controls relating to these promotional events. According to the bill's sponsor, the Distilled Spirits Council of the United States (DISCUS), the list of licensees authorized by AB 2293 (De León) to provide supplier hosted promotion and entertainment events did not include all its member companies. For example, the holder of a distilled spirits manufacturer's agent license has not been able to secure a license from ABC to participate in these promotional events. DISCUS states, this bill will correct this omission and will codify the original intent of AB 2293 (De León). According to ABC, since the enactment of AB 2293 (De León) in 2009, only five event authorizations have been granted. ABC has not identified any enforcement problems and no disciplinary action has been taken relating to these events. The sponsor states, the low number of invitation-only events is directly AB 252 Page 3 related to the criteria in AB 2293 (De León) that clearly defines how these private parties must be operated by the licensee. Prior legislation : SB 1323 (Walters) of 2010 would have modified an existing provision of the 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 who does not also hold a distilled spirits wholesaler's license; 3) a holder of a distilled spirits rectifier's general license; and, 4) a holder of an out-of-state distilled spirits shipper's certificate. (SB 1323 (Walters) was held in Assembly Appropriations Committee.) AB 2293 (De Leon), Chapter 638, Statutes of 2008. Authorized 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 at an invitation-only event in connection with the sale or distribution of wine or distilled spirits. Several conditions were placed on these events including the limitation of 400 attendees per event, a prohibition of persons under age 21, and a maximum duration of four hours. The authorization will sunset on January 1, 2014. Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531 FN: 0000297