BILL ANALYSIS                                                                                                                                                                                                    Ó






                                                       Bill No:  AB  
          636
          
                 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
                       Senator Roderick D. Wright, Chair
                           2013-2014 Regular Session
                                 Staff Analysis


          AB 636  Author:  Hall
          As Introduced:  February 20, 2013
          Hearing Date:  June 11, 2013
          Consultant:  Art Terzakis

                                     SUBJECT  
                              Alcoholic Beverages

                                   DESCRIPTION
           
          AB 636 permits, under specified conditions and until  
          January 1, 2016, the appearance of a person for the purpose  
          of providing autographs at an instructional event for  
          consumers that a winegrower, California winegrower's agent,  
          importer, or other specified parties conduct, or  
          participate in, that is held at a retailer's premises  
          featuring wines produced by or for the winegrower or,  
          imported by the wine importer.

                                   EXISTING LAW

           Existing law establishes the Department of 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 with the manufacture, importation and sale of  
          alcoholic beverages in this state and the collection of  
          license fees. 

          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).  

          Tied-house refers to a practice in this country prior to  
          Prohibition and still occurring in England today where a  




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          bar or public house, from whence comes the "house" of tied  
          house, is tied to the products of a particular  
          manufacturer, either because the manufacturer owns the  
          house, or the house is contractually obligated to carry  
          only a particular manufacturer's products.   

          The original policy rationale for this body of law was to:  
          (a) promote the state's interest in an orderly market; (b)  
          prohibit the vertical integration and dominance by a single  
          producer in the marketplace; (c) prohibit commercial  
          bribery and protect the public from predatory marketing  
          practices; and, (d) discourage and/or prevent the  
          intemperate use of alcoholic beverages.  Generally, other  
          than exceptions 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.  
          Existing law permits, until January 1, 2016, the appearance  
          of a person employed or engaged by an authorized licensee  
          at a promotional event held at the premises of an off-sale  
          retail licensee for the purposes of providing autographs to  
          consumers at the event, subject to 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 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) an authorized licensee may  
          advertise in advance of the event only in publications of  
          the authorized licensee, subject to specified conditions;  
          (e) a wholesaler does not directly or indirectly  
          underwrite, share in, or contribute to any costs related to  
          the event; and, (f) the authorized licensee notifies ABC in  
          writing of the event at least 30 days in advance and  
          maintains records necessary to establish compliance with  
          this law.

          Existing law generally prohibits a winegrower, a California  
          winegrower's agent, importer, or other specified parties  
          from providing a licensee alcoholic beverages as a free  
          good as a part of any sale or transaction involving  
          alcoholic beverages or furnishing anything of value to a  
          licensee for specified purposes. Existing law excepts from  
          this prohibition a winegrower, California winegrower's  




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          agent, importer, or other specified parties when conducting  
          or participating in an instructional event for consumers  
          held at a retailer's premises featuring wines produced by  
          or for the winegrower or imported by the importer, subject  
          to specified conditions. 

          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.  

          The ABC Act provides that a violation of any of its  
          provisions for which another penalty or punishment is not  
          specifically provided is a misdemeanor.

                                    BACKGROUND
           
           Purpose of AB 636:   Current law (Business & Professions  
          Code Section 25502.2) permits wineries and other suppliers  
          of wine, beer, and spirits to autograph bottles for  
          consumers at a promotional event held at an off-sale  
          retailer (e.g., specialty wine shop, BevMo or Costco).   
          However, a supplier or their representative may not sign  
          autographs of items at any other venue.  This measure would  
          amend current law to include autographs at an on-sale  
          restaurant where a winery is conducting a "winemaker  
          dinner."

          The author's office notes that this measure is a modest  
          extension of AB 2184 (Hall) which was enacted last year.   
          AB 636 simply provides an opportunity for a consumer to  
          obtain an autograph on a bottle at an additional type of  
          event, namely an instructional "winemaker dinner" -  
          conducted at bona fide eating venue which holds an on-sale  
          license.  The author's office emphasizes that existing law  
          contains built-in safeguards, as referenced above.  Wine  
          producers are expected to use this new marketing tool to  
          build brand awareness and loyalty.
                                         
                           PRIOR/RELATED LEGISLATION
           
           AB 2184 (Hall), Chapter 480, Statutes of 2012.   Created a  
          new tied-house exception in the ABC Act that authorizes,  




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          until January 1, 2016, wine, beer and spirits producers to  
          participate in promotional events held at an off-sale  
          retail licensed location for the purpose of providing  
          autographs on bottles or other items to consumers.  

           SB 1101 (Wolk), Chapter 177, Statutes of 2010.   Clarified  
          that winemakers who participate in instructional events or  
          "meet the winemaker dinners," held at a retailer's licensed  
          premises for consumers, may offer minimal samples (no more  
          than three one-ounce tastes) of wine from "bottles."   
           
          AB 605 (Portantino), Chapter 230, Statutes of 2010.   Added  
          new provisions to the ABC Act authorizing the department to  
          issue to the holder of an "off-sale" retail license an  
          "instructional tasting license" for the purpose of  
          furnishing tastings of alcoholic beverages to consumers,  
          subject to certain limitations.

           AB 2134 (Chesbro), Chapter 149, Statutes of 2010.   Created  
          a new tied-house exception in the ABC Act that allows  
          licensed brewers to conduct and participate in events  
          called "Beer Maker Dinners" for consumers held at an  
          on-sale retail licensed premise.   

          AB 2293 (De Leon), Chapter 638, Statutes of 2008.   Added a  
          new provision to the ABC Act allowing distilled spirits  
          manufacturers and winegrowers to provide their product  
          offerings directly to consumers (free of charge) during  
          invitation-only events on premises for which a caterer's  
          permit authorization has been issued.

           SB 1548 (Murray), Chapter 670, Statutes of 2006.    
          Authorized beer manufacturers and wholesalers to offer beer  
          samples (not to exceed 8 ounces per person, per day) to  
          individuals of legal drinking age at on-sale retail  
          licensed premises under specified conditions.  

           AB 2868 (Floyd), Chapter 471, Statutes of 1992.   Authorized  
          a winegrower, California winegrower's agent, importer, or  
          their specified representatives, to participate in an  
          instructional event for consumers held at a retailer's  
          premises featuring wines produced by or for the winegrower  
          or imported by the importer, under specified conditions. 

           SUPPORT:   As of June 7, 2013:





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          Wine Institute
          Family Winemakers of California

           OPPOSE:   None on file as of June 7, 2013.

           FISCAL COMMITTEE:   Senate Appropriations Committee

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