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
AB 816 (Hall) continued
Page 2
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
AB 816 (Hall) continued
Page 3
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
AB 816 (Hall) continued
Page 4
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
**********