BILL ANALYSIS                                                                                                                                                                                                    Ó






                                                       Bill No:  AB  
          816
          
                 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
                       Senator Roderick D. Wright, Chair
                           2013-2014 Regular Session
                                 Staff Analysis



          AB 816  Author:  Hall
          As Introduced:  February 21, 2013
          Hearing Date:  June 11, 2013
          Consultant:  Art Terzakis


                                     SUBJECT  
           Alcoholic Beverages: tied-house restrictions: advertising

                                   DESCRIPTION
           
          AB 816 merges two similar tied-house exceptions (one  
          pertaining to "on-sale" retailers the other to "off-sale"  
          retailers) within the Alcoholic Beverage Control (ABC) Act  
          which authorize the dissemination of information regarding  
          the retail availability of products by alcoholic beverage  
          producers, distributors or importers in response to direct  
          requests from consumers.  

                                   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 or occupation taxes for this purpose. 

          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  




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          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.  

          Existing law provides that no licensee shall, directly or  
          indirectly, give any premium, gift, free goods, or other  
          thing of value in connection with the sale, distribution,  
          or sale and distribution of alcoholic beverages, and no  
          retailer shall, directly or indirectly, receive any  
          premium, gift, free goods or other thing of value from a  
          supplier of alcoholic beverages, except as authorized by  
          the Department of ABC.  For purposes of these provisions,  
          the listing of the names, addresses, telephone numbers or  
          email addresses, or both, 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.  Existing law also provides nearly identical  
          provisions applicable to "on-sale" licensed premises,  
          except that those provisions also extend the  
          above-described tied-house exception to other forms of  
          "electronic media." 

          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  




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          authorizes the sale of all types of alcoholic beverages for  
          consumption off the premises in original, sealed  
          containers.  

                                    BACKGROUND
           
           Purpose of AB 816:   According to the author's office,  
          suppliers often list on a Facebook fan page or Web site,  
          the different restaurants where a consumer may purchase  
          their products.  Thus, given the development of new social  
          media, distributors are utilizing the various social media  
          mediums as a marketing tool to inform consumers about  
          additional retail locations where a product can be  
          purchased.  This measure is simply intended to clean-up  
          existing ABC statutes by consolidating into a single  
          statute the "on-sale" and "off-sale" provisions of law  
          which authorize manufacturers and distributors, in response  
          to a direct inquiry from a consumer, to provide information  
          relative to where their product is available for purchase.

                            PRIOR/RELATED LEGISLATION
           
           AB 2349 (Nestande), Chapter 374, Statutes of 2012.   Made  
          several modifications to existing tied-house restrictions  
          of the ABC Act to allow suppliers of wine, beer or spirits  
          to respond to consumer questions about where products are  
          available at on-sale retail establishments.  

           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.   Among  
          other things, broadened an existing tied-house exception  
          relating to the purchase of alcoholic beverage  
          advertisements at specified venues to include distilled  
          spirits manufacturers.  Also, authorized 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  




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          Internet.

           SUPPORT:   As of June 7, 2013:

          California Beer and Beverage Distributors

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

           FISCAL COMMITTEE:   Senate Appropriations Committee

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