BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 2184 (Hall) - Alcoholic Beverages: tied-house restrictions
Amended: June 20, 2012 Policy Vote: GO 13-0
Urgency: No Mandate: No
Hearing Date: August 6, 2012
Consultant: Maureen Ortiz
This bill does not meet the criteria for referral to the
Suspense File.
Bill Summary: AB 2184 creates a new tied-house exemption in the
Alcoholic Beverage Control Act that authorizes wine, beer and
spirits producers to participate in promotional events held at
an off-sale retail licensed location for the purpose of
providing autographs to consumers. The authorization sunsets
January 1, 2016.
Fiscal Impact: Potentially $95,000 annually for one PY in the
Trade Enforcement Unit at the Department of Alcoholic Beverage
Control (Special).
According to the ABC, there are currently 7,825 authorized
licensees that will be allowed to hold up to two events per
calendar year at 28,555 off-sale retail licensed premises
statewide. Investigations involve monitoring the events,
reviewing records, conducting interviews and other duties.
Background: 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).
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 Alcoholic Beverage
Control.
AB 2184 (Hall)
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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.
Proposed Law: AB 2184 does the following:
1)Permits, until January 1, 2016, the appearance of a person
employed or engaged by an "authorized licensee," as defined,
at a promotional event held at the premises of an off-sale
retail licensee for the purpose of providing autographs only
under the following conditions:
a) A fee is not charged to attend the event and a purchase
from the off-sale retail licensee is not required.
b) The promotional event does not exceed 4 hours in
duration and there are no more than two such events per
calendar year involving the same authorized licensee at a
single premise of an off-sale licensee.
c) Autographing may only be provided on consumer
advertising specialties given by the authorized licensee to
a consumer or on any item provided by the consumer.
d) The off-sale retail licensee may advertise the
promotional event, but only in publications of the
authorized licensee, subject to specified conditions.
e) A wholesaler may not directly or indirectly underwrite,
share in, or contribute to any costs related to the
promotional event, other than for a promotional event for
which the wholesaler employs or engages the person
providing autographs to consumers at the event.
f) The authorized licensee must notify the ABC in writing
of the event at least 30 days in advance and maintain
records necessary to establish compliance with this law.
2)Defines "authorized licensee" to mean a manufacturer,
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winegrower, manufacturer's agent, California winegrower's
agent, rectifier, importer, brandy manufacturer, brandy
importer, or wholesaler.
Staff Comments: It has become more and more common for
individuals in the entertainment industry in particular to
acquire an ownership interest in a brand of distilled spirits or
to create a new spirits line and then arrange to have those
brands distributed in the normal and lawful distribution system
established by ABC laws. Additionally, those individuals will
often promote the product at the retail point of sale through
personal appearances which may include bottle signing events in
licensed premises which carry the product. Examples of
"celebrities" who have garnered an ownership interest in
distilled spirits include: Dan Ackroyd, Crystal Head Vodka;
Sean "P. Ditty" Combs, Ciroc Vodka (primary owner Diageo); Sammy
Hagar, Cabo Wabo Tequila (primary owner Gruppo Campari); Donald
Trump, Trump Vodka; Willie Nelson, Old Whiskey River, Heaven
Hill Distilleries; Danny DeVito, Danny DeVito's Limoncello; and,
Jay-Z, Armadale Vodka.
The Department of ABC has taken the position that the appearance
of any public personality, with an ownership interest in an
alcoholic beverage product, at a licensed retail premises to
autograph bottles of his or her product, constitutes a "thing of
value" in violation of current tied-house provisions of the ABC
Act - the department considers the autographed bottle a
"premium."