BILL ANALYSIS Ó AB 600 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 600 (Bonta) As Amended March 17, 2014 2/3 vote. Urgency ---------------------------------------------------------------------- |ASSEMBLY: | |(May 30, 2013) |SENATE: |33-0 |(June 5, 2014) | ---------------------------------------------------------------------- (vote not relevant) ------------------------------------------------------------------------ |COMMITTEE VOTE: |16-0 |(June 25, 2014) |RECOMMENDATION: |concur | |(G.O.) | | | | | ------------------------------------------------------------------------ Original Committee Reference: G.O. SUMMARY : This bill, an urgency measure, extends an existing "tied-house" exception in the Alcoholic Beverage Control Act (ABC Act) pertaining to the general prohibition against advertising arrangements between retail, wholesale and manufacturer licensees to include an outdoor stadium with a fixed seating capacity of at least 68,000 seats located in the City of Santa Clara (Levi's Stadium - new home of the San Francisco 49ers). The Senate amendments delete the Assembly version of the bill, and instead: 1)Expand an exception in current law to allow beer manufacturers, winegrowers, distilled spirits rectifiers, distilled spirits manufacturers, or distilled spirits manufacturer's agents to purchase advertising space and time from, or on behalf of, on-sale retail licensees at specified facilities located in the City of Santa Clara, as provided. 2)Add an urgency clause. EXISTING LAW : 1)Establishes the Department of Alcoholic Beverage Control (ABC) and grants it exclusive authority to administer the provisions of the ABC Act in accordance with laws enacted by the Legislature. This involves licensing individuals and businesses associated AB 600 Page 2 with the manufacture, importation and sale of alcoholic beverages in this state and the collection of license fees for this purpose. 2)Existing law, known as the "tied-house" law or "three-tier" system, separates the alcoholic beverage industry into three component parts of manufacturer (the first tier), wholesaler (the second tier), and retailer (the 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 suppliers and retailers from sharing common owners and legally restrict alcohol beverage suppliers' ability to gain control over retailers through indirect means. 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. 4)Prohibits paid advertising by winegrowers, beer manufacturers, and distilled spirits producers in cases where a retail licensee also owns a sports or entertainment venue. Over the years numerous exceptions to this prohibition have been added to the ABC Act [e.g., Sleep Train Arena (formerly known as ARCO Arena) in Sacramento, Oakland Coliseum in Oakland, Arrowhead Pond Arena in Anaheim, Kern County Arena in Bakersfield, the National Orange Show Event Center in San Bernardino, California Speedway in Fontana, Grizzly Stadium in downtown Fresno, Raley Field in West Sacramento, HP Pavilion in San Jose, the Home Depot Center in the City of Carson, and other venues]. AS PASSED BY THE ASSEMBLY , this bill established conditions for the movement of intermodal marine equipment by intermodal marine carriers. FISCAL EFFECT : According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs. COMMENTS : Background Levi's Stadium: Levi's Stadium, the new home of the San Francisco 49ers, is currently under construction in Santa Clara County and is expected to be completed by July 2014 in time for the 2014 National AB 600 Page 3 Football League season. The stadium is a $1.2 billion venture designed to host a wide range of events including professional and college football, soccer, other sporting events, concerts and civic events. The stadium will seat 68,500 fans during 49ers home games and will have the capacity to accommodate up to 75,000 for other events. Levi's Stadium will be the first stadium that will have both a green roof and solar panels. The stadium will host two college football games in 2014 - the Oregon v. Cal game on October 24, and the Fight Hunger Bowl in late December. It will also host Super Bowl L (50) in February 2016. Purpose of the bill: The author's office points out that Levi's Stadium is on target to open in late July 2014, and will be operated under the auspices of the Santa Clara Stadium Authority which will be the holder of an alcoholic beverage on-sale retail license. The author's office notes that existing ABC laws contain numerous exceptions to the general prohibition against advertising arrangements between retail, wholesale and manufacturer licensees. This measure would include Levi's Stadium on the list of exemptions in the law, thereby allowing the Santa Clara Stadium Authority to develop certain alcoholic beverage sponsorships with various manufacturers and distributors. The author's office emphasizes that this exemption would put Levi's Stadium on an even playing field with other arenas and stadiums in California. Additionally, the author's office notes that this bill contains an urgency clause because the first event scheduled in the stadium is an August 2, 2014 Major League Soccer match between the San Jose Earthquakes and the Seattle Sounders. Prior legislation: SB 324 (Wright), Chapter 164, Statutes of 2013, extended an existing "tied-house" exception pertaining to the general prohibition against advertising arrangements between retail, wholesale and manufacturer licensees to include a fully enclosed arena with a fixed seating capacity in excess of 13,000 seats (the Forum) in the City of Inglewood. AB 776 (Aghazarian), Chapter 221, Statutes of 2007, created a new "tied-house" exception by authorizing a beer manufacturer to sponsor or purchase advertising space and time from, or on behalf of, an off-sale retail licensee that is an owner or co-owner of a professional sports team (California Cougars indoor soccer team) that plays its home games, in an arena with a fixed seating capacity of 10,000 seats (Stockton Arena) located in San Joaquin County. AB 600 Page 4 AB 663 (Galgiani), Chapter 745, Statutes of 2007, extended an existing "tied-house" exception pertaining to the general prohibition against advertising arrangements between retail, wholesale and manufacturer licensees to include an outdoor professional sports facility with a fixed seating capacity of at least 4,200 (Banner Island Ballpark - home of the Stockton Ports Class A baseball team) located in San Joaquin County. AB 3046 (Chavez), Chapter 587, Statutes of 2006, extended an existing "tied-house" exception pertaining to the general prohibition against advertising arrangements between retail, wholesale, and manufacturer licensees to the HP Pavilion in Santa Clara County. AB 1442 (Horton), Chapter 617, Statutes of 2005, extended an existing "tied-house" exception pertaining to the general prohibition against advertising arrangements between retail, wholesale and manufacturer licensees to the Home Depot Center, a sports and athletic complex within the City of Carson in Los Angeles and the Nokia Theater, located within the Los Angeles Sports and Entertainment District, adjacent to STAPLES Center. SB 1647 (Perata), Chapter 275, Statutes of 2004, extended an existing "tied-house" exception pertaining to the general prohibition against advertising arrangements between retail, wholesale and manufacturer licenses to the Oakland Coliseum in Alameda County. SB 1189 (Costa), Chapter 47, Statutes of 2002, extended an existing "tied-house" exception pertaining to the general prohibition against advertising arrangements between retail, wholesale and manufacturer licenses to the Visalia Oaks Stadium in Visalia and the California Speedway in Fontana. Analysis Prepared by : Eric Johnson / G.O. / (916) 319-2531 FN: 0004119