BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 816
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          Date of Hearing:   April 10, 2013

                   ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
                              Hall III, Isadore, Chair
                  AB 816 (Hall) - As Introduced:  February 21, 2013
           
          SUBJECT  :   Alcoholic beverages: tied-house restrictions: on-sale  
          & off-sale retailers advertising.

           SUMMARY  :    Merges code sections within the Alcoholic Beverage  
          Control Act (Act) pertaining to direct requests from consumers  
          to non-retail alcoholic beverage purveyors seeking information  
          as to where specific brands are available on the retail market.   
          The bill consolidates the individual authorizations for  
          providing information regarding on-sale and off-sale retail  
          licensees carrying the product requested.  Specifically, this  
          bill:  

          1)  Consolidates provisions within the Act pertaining to the  
          listing of the names, addresses, telephone numbers, email  
          addresses, or Internet Web site addresses, or other electronic  
          media, of two or more unaffiliated on-sale or off-sale   
          retailers selling beer, wine, or distilled spirits produced,  
          distributed, or imported by a nonretail industry member in  
          response to a direct inquiry from a consumer received by  
          telephone, by mail, by electronic inquiry, or in person does not  
          constitute a thing of value or prohibited inducement to the  
          listed on-sale or off-sale  retailer, under specified  
          conditions.  

          2)  Deletes the definition of "nonretail industry member" which  
          is defined as a manufacturer, including, but not limited to, a  
          beer manufacturer, winegrower, or distiller of alcoholic  
          beverages, or an agent of those entities, or a wholesaler,  
          regardless of any other licenses held directly or indirectly by  
          that person.

          3)  Make technical and clarifying changes.

           EXISTING LAW  :

          1)  Establishes the Department of Alcoholic Beverage Control  
          (ABC) and grants it exclusive authority to administer the  
          provisions of the Act in accordance with laws enacted by the  
          Legislature.  This involves licensing individuals and businesses  








                                                                  AB 816
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          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)  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).  

          3)  Provides the listing of the names, addresses, telephone  
          numbers, or email addresses, or Internet Web site addresses, of  
          2 or more unaffiliated off-sale retailers selling beer, wine, or  
          distilled spirits and operating and licensed as bona fide public  
          eating places selling the beer, wine, or distilled spirits  
          produced, distributed, or imported by a nonretail industry  
          member in response to a direct inquiry from a consumer, as  
          specified, does not constitute a thing of value or prohibited  
          inducement to the listed off-sale retailer, if specified  
          conditions are met.

          4)  Includes similar provisions applicable to on-sale licensed  
          premises, except that those provisions also extend the  
          above-described exception to other forms of electronic media.

           FISCAL EFFECT :   Unknown.

           COMMENTS  :   

           Purpose of the bill  :  In 2012, AB 2349 (Nestande), Chapter 374,  
          Statutes of 2012, amended Business and Professions Code Section  
          25500.1 to permit alcohol manufacturers and distributors to list  
          two or more unaffiliated on-sale licensees of any type that  
          carries their product.  Prior to AB 2349, restaurants were only  
          allowed to be listed and bars were excluded.  The bill corrected  
          this inequity by permitting any on-sale license to be listed  
          under specified conditions.  The bill also added "other  
          electronic media" to the list of sources that beer manufacturers  
          or distributors could use to list two or more unaffiliated  
          on-sale licensees that carry their product.

          The author points out, that suppliers often list on a Facebook  
          fan page or Web site, the different restaurants where a consumer  
          may purchase their product.  Thus, given the development of new  
          social media, distributors are utilizing the various social  








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          media mediums as a marketing tool to        educate consumers  
          about additional retail locations where a product can be  
          purchased. 

          This measure is intended to clean-up existing statutes within  
          the Act on this subject by consolidating into a single statute  
          the on-sale and off-sale sections of law regarding authorizing  
          manufacturers and distributors in response to a direct inquiry  
          from a consumer to provide information relating to where their  
          product is available for purchase.

           Background  :  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 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.  
           
          Prior legislation  :  AB 2349 (Nestande), Chapter 374, Statutes of  
          2012.  Revised the direct inquiry provisions in Act to remove  
          the requirement that manufacturers and distributors can only  
          provide consumer information where they can find a specific  
          product at an on-sale establishment if that on-sale retailer  
          operates and is licensed as a restaurant.  By removing that  
          requirement, manufacturers and distributors can add bars to the  
          list they provide consumers of on-sale establishments that serve  
          their specific products.









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          SB 1096 (Wiggins), Chapter 285, Statutes of 2010.  Made various  
          technical and code maintenance changes to several provisions of  
          the Act to keep up with modern technology.

          SB 1423 (Chesbro), Chapter 205, Statutes of 2000.  Authorized  
          wineries and brandy manufacturers to advertise the name and  
          location of restaurants that sell their products.

          SB 1233 (Chesbro), Chapter 666, Statutes of 1999.  Allowed for  
          the limited dissemination of information regarding the off-sale  
          availability of alcoholic beverages.

          AB 2777 (Granlund), Chapter 980, Statutes of 2000.  Broadened an  
          existing tied-house exception relating to the purchase of  
          alcohol advertisements at specified venues to include distilled  
          spirits manufacturers, and authorizes a non-retail alcohol  
          industry member to list specified information relating to the  
          availability of alcoholic beverages at no more than two  
          restaurants in response to a direct inquiry from a consumer  
          received by telephone, mail, or the Internet.
           
          REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          California Beer and Beverage Distributors

           Opposition 
           
          None on file
           

          Analysis Prepared by  :    Eric Johnson / G. O. / (916) 319-2531