BILL ANALYSIS Ó
AB 2184
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 2184 (Hall)
As Amended August 9, 2012
Majority vote
-----------------------------------------------------------------
|ASSEMBLY: |73-0 |(May 10, 2012) |SENATE: |37-0 |(August 23, |
| | | | | |2012) |
-----------------------------------------------------------------
Original Committee Reference: G.O.
SUMMARY : 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
under specified conditions.
The Senate amendments :
1) Clarify that a fee is not charged to attend the event and a
purchase from the off-sale retail licensee is not required.
2) Provide the promotional event does not exceed four 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.
3) Clarify that 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.
4) Allow an off-sale retail licensee to advertise the
promotional event. Additionally, an authorized licensee may
advertise in advance of the event only in publications of the
authorized licensee, subject to specified conditions.
5) Provide that a wholesaler shall not directly or indirectly
underwrite, share in, or contribute to any costs related to the
promotional event, other than for except that a beer and wine
wholesaler that holds at least six distilled spirits wholesaler
licenses may directly or indirectly underwrite, share in, or
contribute to any costs related to a promotional event for which
the wholesaler employs or engages the person providing
autographs to consumers at the promotional event.
AB 2184
Page 2
6) Provide that an authorized licensee shall notify ABC in
writing of the event at least 30 days in advance and maintains
records necessary to establish compliance with this law.
7) Add a sunset date of January 1, 2016.
EXISTING LAW :
1) Establishes the Department of Alcoholic Beverage Control
(ABC) and grants it the 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 of
manufacturer, wholesaler, and retailer. The original policy
rationale for this body of law was to prohibit the vertical
integration of the alcohol industry and to protect the public
from predatory marketing practices. Generally, other than
exemptions 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.
3) Prohibits specified licensees from furnishing, giving, or
lending money or other things of value, directly or indirectly,
to a person engaged in operating, owning, or maintaining an
off-sale licensed premises.
4) Prohibits the ABC from imposing a dollar limit of less than
$5 for consumer advertising specialties furnished by a distilled
spirits supplier to a retailer or the general public. Allows
beer manufacturers to give adult consumers promotional
advertising items valued up to $5. Existing law provides that
consumer-advertising specialties furnished by a wine supplier to
a retailer or to the general public shall not exceed $1 per unit
original cost to the supplier who purchased it.
FISCAL EFFECT : According to the Senate Appropriations Committee
analysis, potentially $95,000 annually for one personnel year
(PY) in the Trade Enforcement Unit at ABC (Special fund).
COMMENTS :
Tied-House Law : Tied-House Law refers to the statutory scheme
AB 2184
Page 3
restricting any cross-ownership among the three independent
tiers of the alcohol industry: a) manufacturers; b)
distributors/wholesalers; and, c) retailers. The term
"Tied-House" refers to a practice which was common in this
country prior to prohibition, and is still occurring in England
today, where a bar or "public house" is tied to the products of
a particular manufacturer. The original rationale for
Tied-House restrictions was to promote the state's interest in
maintaining an orderly market, to prohibit the vertical
integration of the alcohol industry, to protect the public from
predatory marketing practices, and to prevent the intemperate
consumption of alcoholic beverages. In order to further these
policy goals, the Legislature has generally prohibited forms of
cross-ownership between manufacturers and retailers, and
discouraged manufacturers from providing anything of value to
distributors or retailers, be it free goods, services or
advertising.
Numerous exceptions to these restrictions have been enacted
through the years in those specific instances where the
Legislature determined that the public's interests were
protected. Generally, the business community is interested in
removing unnecessary business regulations and creating
conditions that facilitate investment and expansion
opportunities for companies that have some degree of ownership
in multiple segments of the industry.
Purpose of bill : According to the author's office, this measure
is necessary because 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
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.
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."
AB 2184
Page 4
According to the author's office, this measure is intended to
allow wine, beer and spirits producers the opportunity to
participate in promotional events which include autographs on
bottles and other items furnished by a consumer at a licensed
off-sale location.
In Support : Proponents emphasize that this measure has been
carefully crafted to include a number of well-reasoned
provisions and built-in safeguards that do not require purchase
of a product, prevent charging a fee for an autograph, and
provide a limitation on the number and duration of events.
Additionally, proponents point out that AB 2184 provides for
limitations on how such events are advertised, as well as a
requirement that the ABC be notified in advance of any such
event.
Proponents note that the alcoholic beverage industry is highly
competitive with thousands of competing brands in the wine and
spirits categories - this measure will provide brand owners and
producers the opportunity to market their product on a personal
basis and help build brand awareness and loyalty.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0004805