BILL ANALYSIS Ó
SB 1531
Page 1
SENATE THIRD READING
SB 1531 (Wolk)
As Amended August 20, 2012
Majority vote
SENATE VOTE : 39-0
GOVERNMENTAL ORGANIZATION 15-0 APPROPRIATIONS 17-0
-----------------------------------------------------------------
|Ayes:|Hall, Nestande, Atkins, |Ayes:|Fuentes, Harkey, |
| |Block, Chesbro, Cook, | |Blumenfield, Bradford, |
| |Galgiani, Garrick, Gatto, | |Charles Calderon, Campos, |
| |Hill, Jeffries, Ma, | |Davis, Donnelly, Gatto, |
| |Perea, Silva, Bradford | |Hall, Hill, Lara, |
| | | |Mitchell, Nielsen, Norby, |
| | | |Solorio, Wagner |
|-----+--------------------------+-----+--------------------------|
| | | | |
-----------------------------------------------------------------
SUMMARY : Provides a narrow tied-house exception that allows the
Napa Valley Opera House (NVOH) to accept wine and monetary
donations from wineries located within the Counties of Napa,
Sonoma, Lake, and Mendocino. This exemption sunsets on January
1, 2018. Specifically, this bill :
1)Provides that a holder of a winegrower's license whose
licensed premises of production are located within the
Counties of Lake, Mendocino, Napa, or Sonoma may donate wine
and make monetary contributions to an opera house, if all of
the following conditions are met:
a) The opera house is a nonprofit charitable corporation or
association exempt from payment of income taxes under the
provisions of the Internal Revenue Code of the United
States, as defined.
b) The opera house has been incorporated in the City and
County of Napa and produces not less than 150 events open
to the general public per year.
c) The opera house holds a permanent retail on-sale
license.
d) Clarify that the donation or monetary contribution shall
SB 1531
Page 2
not be conditioned directly or indirectly, in any way, on
the purchase, sale, or distribution of any alcoholic
beverage manufactured or distributed by the holder of a
winegrower's license by the opera house.
e) Except as provided, donated wine or a monetary
contribution shall not be used or sold by the permanent
retail licensee.
f) Donated wine may only be used or sold in connection with
fundraising activities held on or off the permanent
licensed premises. Fundraising activities held on the
licensed premises during which donated wine is used or sold
shall not take place in conjunction with any performance at
the opera house or while the permanent retail licensee is
exercising its license privileges and shall only be
conducted pursuant to a temporary license issued by the
Department of Alcoholic Beverage Control.
2)Provides that an opera house may acknowledge and thank a
donating winegrower in the opera house's event programs, on
the opera house's Internet Web site, and on stage at the
permanent licensed premises during an event.
3)Contains a "sunset date" of January 1, 2018.
4)Contains language (legislative findings and declarations)
relative to the necessity of requiring a separation between
manufacturing interests, wholesale interests and retail
interests.
EXISTING LAW :
1)Establishes the Department of Alcoholic Beverage Control (ABC)
and grants it exclusive authority to administer the provisions
of the Alcoholic Beverage Control Act (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 collection of license fees or occupation taxes for this
purpose.
2)States that the "Tied-house" Law or "three-tier" system
separates the alcoholic beverage industry into three component
parts of manufacturer (first tier), wholesaler (second tier),
SB 1531
Page 3
and retailer (third tier). 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.
3)Prohibits, in general, an alcohol manufacturer, wholesaler, or
any officer, director, or agent of any such person from
owning, directly, or indirectly, any interest in any on-sale
license, or from providing anything of value to retailers, be
it free goods, services, or advertising.
4)Allows wineries, breweries, distilled spirits manufacturers,
and importers to donate their product(s) to certain nonprofit
organizations (e.g., fraternal orders, social organizations,
civic leagues, veterans' organizations, religious groups,
horticultural organizations) for the purpose of assisting in
fundraising efforts.
5)Provides a tied-house exemption for an alcohol licensee to
make monetary and alcoholic beverage contributions to a
symphony association (San Francisco Symphony) that is a
nonprofit charitable corporation or association, under
specified conditions. The symphony association shall hold a
retail on-sale license in a portion of its premises and no
such gift shall be used in or for the benefit of the symphony
association's retail on-sale license, as specified.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, there are no significant costs associated with this
legislation.
COMMENTS :
Purpose of the bill : According to the author, this bill
provides a narrow tied-house exception by allowing the NVOH to
accept monetary contributions and alcoholic beverages from an
alcohol licensee, specifically wineries in Napa, Sonoma, Lake
and Mendocino counties.
This tied-house exception is necessary because the NVOH also
holds an on-sale retail license for a portion of its facility.
The possession of this retail license prevents an alcohol
licensee from providing charitable contributions (both monetary
and product) to this non-profit opera house.
SB 1531
Page 4
In this case, NVOH has a limited Type 64 special on-sale general
theater license for its entire facility. This allows them to
serve alcoholic beverages to ticketholders two hours prior to,
during, and one hour after a theater performance. This
exception will not allow them to sell donated wine during that
time, however, it will allow them to sell or serve wine in
connection with fundraising activities as long as those
activities do not take place during a performance.
Background : Under existing provisions of the ABC Act, alcoholic
beverage manufacturers are prohibited, in general, from owning,
directly, or indirectly, any interest in any on-sale license, or
from providing anything of value to retailers, be it free goods,
services, or advertising (tied-house law). This prohibition
exists as part of California's long standing three-tier policy
of alcoholic beverage laws that will not allow a particular
entity (manufacturer) to give something of value to a member of
another tier (retailer).
Various exceptions to this restriction have been enacted through
the years in specific instances where the Legislature determined
that the public's interests were protected. However, the
Legislature traditionally does not grant exemptions that favors
the products of the entity seeking the exemption, or exemptions
that unfairly compromise the role of the distributors.
In support : Writing in support, the Napa Valley Opera House
states, "the NVOH is in the heart of the Wine country and it's a
natural fit for wineries to want to support our programming.
Often the wineries are not in the position to offer financial
support, and they choose to donate wine to the NVOH. This bill
would allow the NVOH to sell the donated wine it receives from
our local wineries." Tied-house laws restrict the NVOH from
selling the donated wine. The NVOH presents a wide variety of
performing arts programming, as well as supporting schools and
the local non-profit community by making their theater available
for fundraising events and activities.
Prior legislation : SB 131 (Wiggins), Chapter 638, Statutes of
2009, granted a tied-house exemption for an alcohol licensee to
make monetary and alcoholic beverage contributions to a symphony
association (San Francisco Symphony) that is a nonprofit
charitable corporation or association, as defined, and under
specified conditions.
SB 1531
Page 5
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0004900