BILL ANALYSIS Ó
Bill No: AB
1320
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2011-2012 Regular Session
Staff Analysis
AB 1320 Author: Allen
As Amended: June 11, 2012
Hearing Date: June 26, 2012
Consultant: Art Terzakis
SUBJECT
Alcoholic Beverages
DESCRIPTION
AB 1320 adds a new Section to the Alcoholic Beverage
Control (ABC) Act which authorizes the Department of ABC to
issue a maximum of 15 new original on-sale general
licenses, over a 3-year period , for bona fide public eating
places in the County of Marin . Specifically, this measure:
1. Authorizes the Department of ABC, to issue 5 new
original on-sale general licenses per year, until
01/01/2016, for bona fide public eating places having a
seating capacity for 50 or more diners in a county of the
18th class. Also, provides that no more than a total of
15 such licenses shall be issued relative to this
measure.
2. Requires the Department of ABC to follow existing
"drawing for priority" procedures with respect to the
issuance of these new licenses as set forth in Section
23961 of the ABC Act.
3. Provides that a person who currently holds a valid
on-sale general license for seasonal business is not
prohibited from applying for an original on-sale general
license pursuant to this measure.
4. Makes it explicit that a license issued pursuant to
this measure shall not be transferred from one county to
another nor shall it be transferred to any premise not
qualifying under these provisions.
AB 1320 (Allen) continued
Page 2
EXISTING LAW
The enactment of the 21st Amendment to the U.S.
Constitution in 1933 repealed the 18th Amendment and ended
the era of Prohibition. Accordingly, states were granted
the authority to establish alcoholic beverage laws and
administrative structures to regulate the sale and
distribution of alcoholic beverages.
Existing law establishes the Department of Alcoholic
Beverage Control and grants it exclusive authority to
administer the provisions of the Alcoholic Beverage Control
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.
The ABC must deny an application for a license if issuance
would create a law enforcement problem, or if issuance
would result in, or add to, an undue concentration of
licenses in the area where the license is desired. For
liquor stores and other specified retail license, however,
the ABC is authorized to issue a license if the respective
local government determines that public convenience or
necessity would be served by granting the license.
Existing law caps the number of new on and off-sale general
licenses issued by the ABC at one for every 2,500
inhabitants of the county where the establishment is
located (2,000:1 for on sale licenses). If no licenses are
available from the state due to the population
restrictions, those people interested in obtaining a liquor
license may purchase one from an existing licensee, for
whatever price the market bears. In 1994, the Legislature
approved a 3-year moratorium on the issuance of new
off-sale beer and wine licenses, which at the time was not
bound by any population to license restriction. In 1997
this moratorium was made permanent.
Existing law defines "bona fide public eating place" to
mean a place which is regularly and in a bona fide manner
used and kept open for the serving of meals to guests for
compensation and which has suitable kitchen facilities
connected therewith, containing conveniences for cooking an
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assortment of foods which may be required for ordinary
meals, the kitchen of which must be kept in a sanitary
condition with the proper amount of refrigeration for
keeping of food on said premises and must comply with all
the regulations of the local Department of Health.
Existing law defines an "on-sale" license as authorizing
the sale of all types of alcoholic beverages: namely, beer,
wine and distilled spirits, for consumption on the premises
(such as at a restaurant or bar). An "off-sale" license
authorizes the sale of all types of alcoholic beverages for
consumption off the premises in original, sealed
containers.
Existing law (Government Code Section 28020) provides for
58 counties and 58 "classes" of counties - one county to
each class based on their 1970 Census populations.
BACKGROUND
Purpose of AB 1320: Under current law, the number of
liquor licenses issued in a given county is tied to the
population of that county which creates a problem for
restaurants and hotels that would like to cater to the
large number of visitors in the area but are unable to
because they do not have a license to serve alcohol. This
measure is expected to lead to an increase in full service
restaurants in Marin County.
Staff Comments: As noted above, existing law provides for
a limitation on the number of new on-sale general licenses
that may be issued in a given year by the Department of ABC
based on the population growth of the county in which the
licensed premises are located (one license for every 2,000
residents). Thus, if a county grows by 10,000 people in a
given year the Department of ABC will sell five new
licenses in that county. A drawing is held by ABC if there
are more buyers than licenses available. The cost of an
original on-sale general eating place license (type 47) is
$13,800. Individuals seeking to open a full-service
restaurant with a bar or cocktail menu who fail to obtain a
liquor license through this process typically must locate
an existing licensed owner willing to sell his/her license.
Usually, that's done by contacting a liquor license
broker. The cost of obtaining a license on the secondary
market is driven by supply and demand and potential sellers
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may ask for upwards of $150,000. Some of these potential
sellers view their license as tickets to a richer
retirement.
ABC's records from 2011 indicate that Marin County's
population was 254,692 and there were 136 on-sale general
licenses in existence within the county. Based on those
statistics, no new on-sale general licenses were made
available in 2011. However, ABC records indicate that one
new on-sale general license was made available and issued
through the priority drawing process in 2008 and another in
2009. According to ABC, currently there are approximately
13,560 Type 47 licenses statewide. Licenses are selling on
the open market in Marin County for $75,000 to $100,000.
PRIOR/RELATED LEGISLATION
AB 2560 (Allen) 2011-12 Session. Identical to AB 1320
(Allen) of 2011-12. (Held in Assembly policy committee at
author's request.)
AB 2266 (Evans) Chapter 130, Statutes of 2008. Authorized
the Department of ABC, commencing 01/01/2009, to issue 5
additional new original on-sale licenses, per year for a
period of three years , for bona fide public eating places
having a seating capacity for 50 or more diners in Napa
County. (According to ABC staff, the department has issued
14 of the 15 new licenses in Napa County as authorized by
AB 2266 of 2008 - one license is still pending due to the
fact that the establishment is under construction.)
SB 762 (Cox) Chapter 193, Statutes of 2007. Authorized the
Department of ABC to issue 10 new original on-sale general
licenses for bona fide public eating places in the County
of Mono.
Chapter 753, Statutes of 1978. Permitted the Director of
ABC to authorize the conversion of any on-sale general
license for "seasonal business" to an on-sale general
license, as specified.
SB 1092 (Berryhill) Chapter 571, Statutes of 1975.
Authorized the Department of ABC to issue five additional
new original on-sale general licenses for bona fide public
eating places (seating for 100 or more diners) in any
county where the inhabitants number less than 5,000 but
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more than 3,000 (Mono County) according to the 1970 federal
census and where the major economy of that county is
dependent upon the year-round use of that county's
recreational facilities.
Chapter 407, Statutes of 1975. Authorized the Department
of ABC to issue three additional original off-sale general
licenses in a county of the 58th class (Alpine County).
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SUPPORT: As of June 22, 2012:
Courtyard by Marriott (Novato Marin/Sonoma)
Marin County Council of Chambers
Marin Economic Forum
OPPOSE: None on file as of June 22, 2012.
FISCAL COMMITTEE: Senate Appropriations Committee