BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 1531| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ UNFINISHED BUSINESS Bill No: SB 1531 Author: Wolk (D) Amended: 8/20/12 Vote: 21 SENATE FLOOR : Not relevant ASSEMBLY FLOOR : Not available SUBJECT : Alcoholic beverages: tied-house restrictions SOURCE : Author DIGEST : This bill 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. Assembly Amendments delete the Senate version of this bill which related to the determination of the number of retail alcohol licenses and replace it with the above language. ANALYSIS : 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 CONTINUED SB 1531 Page 2 (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 manufacture (first tier), wholesaler (second tier), 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 fund-raising 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. This bill: 1. Provides that a holder of a winegrower's license whose licensed premises of production are located within the CONTINUED SB 1531 Page 3 County of Napa may donate wine to an opera house, if all 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 retail on-sale license. D. The donation or monetary donation shall 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. The on-sale retail licensee may sell the donated wine and shall sell or serve other brands of wine in addition to brands produced or marketed by the donating winegrower. F. The 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 during an event. 2. Contains language (legislative findings and declarations) relative to the necessity of requiring a separation between manufacturing interests, wholesale interests and retail interests. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes SUPPORT : (Verified 8/22/12) Napa Valley Opera House Napa Valley Vintners CONTINUED SB 1531 Page 4 OPPOSITION : (Verified 8/22/12) California Beer & Beverage Distributors ARGUMENTS IN SUPPORT : According to the author's office, this bill provides a narrow Tied-house exception by allowing the Napa Valley Opera House (NVOH) to accept wine donated by local wineries located within the County of Napa, under specified conditions. While the NVOH maintains a license to sell alcoholic beverages, it is prohibited from selling donated wine under the ABC Act. Like many other non-profit organizations, NVOH has experienced an economic downturn in recent years and is pursuing an avenue to raise funds and support the long-term viability of arts in the Napa community. 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. ARGUMENTS IN OPPOSITION : Writing in opposition of this bill, the California Beer & Beverage Distributors state this exception is contrary to California's Tied-house laws. This bill establishes an exception unlike any other in the ABC Act, and would lead to questionable retailer purchasing decisions. DLW:dm 8/22/12 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED SB 1531 Page 5 CONTINUED