BILL ANALYSIS Ó
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THIRD READING
Bill No: AB 573
Author: Chesbro (D)
Amended: 6/15/12 in Senate
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMM. : 13-0, 6/26/12
AYES: Wright, Anderson, Berryhill, Calderon, Cannella,
Corbett, De León, Evans, Hernandez, Padilla, Walters,
Wyland, Yee
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : Not relevant
SUBJECT : Alcoholic beverages: tied-house restrictions
SOURCE : Family Winemakers of California
DIGEST : This bill corrects inconsistencies in existing
provisions of the Alcoholic Beverage Control (ABC) Act in
order to allow all licensed manufacturers and wholesalers
the same opportunity to inspect, clean and replace their
tapping equipment.
ANALYSIS : Existing law establishes the Department of 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
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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
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
(1) promote the state's interest in an orderly market; (2)
prohibit the vertical integration and dominance by a single
producer in the marketplace; (3) prohibit commercial
bribery and protect the public from predatory marketing
practices; and (4) 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.
Existing law also provides that no licensee shall, directly
or indirectly, give any premium, gift, free goods, or other
thing of value in connection with the sale, distribution,
or sale and distribution of alcoholic beverages, and no
retailer shall, directly or indirectly, receive any
premium, gift, free goods or other thing of value from a
supplier of alcoholic beverages, except as authorized by
the Department of ABC.
Existing law exempts from specified tied-house restrictions
the occasional inspection and cleaning by beer
manufacturers and wholesalers of beer taps and tapping
equipment, as provided. Existing law also permits a beer
manufacturer or beer wholesaler to furnish, give, rent,
lend, or sell, any equipment, fixtures, or supplies, other
than alcoholic beverages, to a retailer whose equipment,
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fixtures, or supplies were lost or damaged as a result of a
natural disaster, as provided.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/7/12)
Family Winemakers of California (source)
Wine Institute
ARGUMENTS IN SUPPORT : The author's office notes that
this bill would not expand any existing privileges within
the ABC Act but rather it is "code cleanup." Specifically,
existing law, Business and Professions Code (BPC) Section
25510, permits a manufacturer to furnish to a licensed
wholesaler, and a licensed wholesaler or manufacturer to
furnish to an on-sale licensee specified maintenance on any
licensed beverage tapping equipment. However, language in
BPC Sections 25504.5 and 25511 limits access to this
cleaning service to "beer" manufacturers and their
wholesalers. The author's office states that this bill
simply strikes the reference to "beer" in Sections 25504.5
and 25511 so that those provisions are consistent with
Section 25510.
Writing in support, the Wine Institute points out that when
it consulted with ABC staff regarding the inconsistencies
in these statutes, the ABC suggested that the changes
incorporated in this bill provide uniformity and clarity.
Also writing in support, the Family Winemakers of
California indicates that wine casks have recently emerged
as a most cost effective way to supply licensed on-sale
premises that sell wine by glass and that this bill allows
wineries to supply and service such equipment.
DLW:m 9/13/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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