BILL ANALYSIS Ó
AB 1116
Page 1
ASSEMBLY THIRD READING
AB 1116 (Hall)
As Amended May 1, 2013
Majority vote
GOVERNMENTAL ORGANIZATION 17-0 APPROPRIATIONS 17-0
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|Ayes:|Hall, Nestande, Bigelow, |Ayes:|Gatto, Harkey, Bigelow, |
| |Chesbro, Cooley, Gray, | |Bocanegra, Bradford, Ian |
| |Hagman, | |Calderon, Campos, |
| |Roger Hernández, Jones, | |Donnelly, Eggman, Gomez, |
| |Jones-Sawyer, Levine, | |Hall, Ammiano, Linder, |
| |Medina, Perea, V. Manuel | |Pan, Quirk, Wagner, Weber |
| |Pérez, Salas, Torres, | | |
| |Waldron | | |
| | | | |
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SUMMARY : Expands current law provisions that allow specified
licenses to provide, free of charge, entertainment, food, and
distilled spirits, wine, or nonalcoholic beverages to a limited
number of consumers over 21 years of age at an invitation-only
event, by allowing those events to be held on the premises of a
hotel. Specifically, this bill :
1)Adds the premises of a licensed hotel, as a location where an
invitation-only event can be held by a manufacturer of
distilled spirits, distilled spirits manufacturer's agent,
winegrower, rectifier, or distiller, or its authorized
unlicensed agent. At the event, the licensee may continue to
provide, free of charge, entertainment, food, and distilled
spirits, wine, or nonalcoholic beverages to consumers in
connection with the sale or distribution of wine or distilled
spirits.
2)Defines hotel as any hotel, motel, resort, bed and breakfast
inn, or other similar transient lodging establishment, but it
does not include any residential hotel as defined in Section
50519 of the Health and Safety Code.
3)Increases from 400 to 600 the total number of consumers and
their guests allowed at any event.
4)Provides in addition to any other information required by the
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Department of Alcoholic Beverage Control (ABC), the licensee
authorized to conduct an event pursuant to this bill shall
provide the department with the following information:
a) The name of the company authorized to conduct the event.
b) The number of people planned to be in attendance.
c) The start and end times for the event.
d) The location of the event.
5)Extends the current January 1, 2014, sunset date to January 1,
2018.
EXISTING LAW :
1) Establishes ABC and grants it exclusive authority to
administer the provisions of the Alcoholic Beverage Control 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.
2) Separates the alcoholic beverage industry into three
component parts of manufacturer, wholesaler, and retailer, known
as the "tied-house" law. 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. 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.
3) Permits, until January 1, 2014, a manufacturer, winegrower,
rectifier, or distiller, distilled spirits manufacturer's agent
or any authorized agent of that person to provide, free of
charge, entertainment, food, and distilled spirits, wine, or
nonalcoholic beverages to consumers over 21 years of age at an
invitation-only event in connection with the sale or
distribution of wine or distilled spirits, as specified. No
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authorized event shall be conducted on premises for which a
permanent retail license has been issued. Authorizes ABC to
impose a fee to cover the costs of administering such events.
Provides that the total number of consumers and their guests
allowed at any such event shall not exceed 400 people.
4) Limits the number of events that can be conducted in a
calendar year to 12 events where the consumers and guests in
attendance "exceed 100 people" and 24 events in a calendar year
where the consumers and guests in attendance are "100 people or
fewer." Place a four-hour duration limitation on any such event
and prohibit holding any such event at the same location more
than eight times in a calendar year. Provides invitations to the
event shall not be sent by the authorized person or their
authorized unlicensed agent inviting all of the employees of a
retail licensee or a chain of retail licensees under common
ownership to an authorized event. Provides that all alcoholic
beverages shall be purchased from the holder of a caterer's
permit
5) Authorizes ABC 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.
6) Permits an on-sale retail licensee of wine or distilled
spirits to conduct "instructional" consumer tastings on the
licensed retail premise provided the following conditions are
met: a) no more than a quarter ounce of distilled spirits is
offered in one tasting; b) no more than one ounce of wine is
offered in one tasting; and, c) no more than three tastings are
offered to an individual in one day. An instruction may include
the history, nature, values and characteristics of the product
being offered, and the methods of presenting and serving the
product.
7) Authorizes beer manufacturers and wholesalers to offer beer
samples (not to exceed eight ounces per person, per day) to
individuals of legal drinking age at on-sale retail licensed
premises under specified conditions.
8) Authorizes licensed winegrowers to conduct wine tastings
featuring their products either on or off the winegrower's
premises, as provided for in rules and regulations adopted by
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ABC.
9) Authorizes distilled spirits manufacturers to conduct
tastings and provide distilled spirits without charge for events
sponsored by nonprofit organizations. Only persons affiliated
with the nonprofit organization, including up to three guests,
may attend. No distilled spirits may be sold or solicited for
sale at the tasting, and the organization must obtain a permit
from ABC prior to the event.
FISCAL EFFECT : According to the Assembly Appropriations
Committee: If the expansion of this tied house exception to
20,000 new venues across the state results in 100 additional
events a year being held and violations were discovered at five
of those authorized events, costs to ABC could exceed $150,000
(ABC Fund), assuming average investigation costs of $25,000 per
case, plus staffing for increased administrative workload.
Negligible non-reimbursable costs for prosecution and/or
incarceration, offset by fine revenue, for misdemeanor
violations of these provisions of the Alcoholic Beverage and
Control Act.
COMMENTS :
Purpose of the bill : According to the author, this bill is a
follow-up measure to expand privileges since the enactment of AB
2293 (De Leon), Chapter 638, Statutes of 2008. The bill allowed
specific ABC alcohol licenses (distilled spirits manufacturer,
winegrower, etc.) to entertain consumers at private parties and
events by invitation-only where potential buyers can sample
their alcohol product, where a caterer's permit has been
authorized by ABC. The bill contained restrictive criteria in
order to provide appropriate controls relating to the
promotional events.
According to the proponents of this bill, the existing program
has required manufacturers and winegrowers to host these events
at unlicensed ABC locations.
These venues are difficult to find, often in remote, unsafe
and/or cost-prohibitive locations. By narrowly expanding the
permissible venues to hotels; manufacturers and winegrowers will
be able to host these special events at locations that are safe
with better access to taxis and alternative transportation, as
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well as dining and overnight accommodations.
This bill proposes to do the following: 1) allow these
invitation-only events to be held at a hotel, but only in areas
that are not open to the general public; 2) increase the number
from 400 to 600 persons that can attend these events; 3) extend
the sunset date for the bill's provisions until January 2018;
and 4) revises requirements for providing ABC with relevant
information to ensure proper oversight of these invitation-only
events, as detailed.
Proponents point out, when these events are held; the host must
assume all invitees will attend so that the supplier is not in
violation of the law. Past experiences have shown that far
fewer actually attend. This means a supplier should only invite
400 consumers to the private party to ensure that they stay
within the confines of current law.
The author states, the prohibitions and requirements of the law
have limited opportunities and result in the program being
underutilized. The changes proposed in this bill are necessary
to meet the original intent of the law, which was to allow
suppliers the ability to responsibly showcase products to
consumers over 21 years of age.
The author further states, entertainment and promotion is a
common, time-honored and non-controversial practice to kick off
a brand launch. Current law creates difficult barriers to
hosting these events. Once an unlicensed location is found,
suppliers are then forced to bring in all the tables, chairs,
staging, audio visual, lighting, etc. Often these venues are in
remote and difficult to find areas. This bill keeps the venues
permissible narrow, while easing the logistics of conducting an
event. All of the other requirements and restrictive criteria
for these events will remain unchanged under the bill.
According to ABC, since the enactment of AB 2293, only 21 events
have been held under this special privilege. ABC has not
identified any enforcement problems and no disciplinary action
has been taken relating to these events. Proponents of this
bill contend that the low number of invitation-only events is
directly related to the very narrow criteria placed in AB 2293
that clearly define how these private events must be operated by
the licensee.
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In support : The Family Winemakers of California writes, this
bill offers a narrow expansion to current law to hotels under
specific conditions in recognition of the need to host events
where people congregate, have access to parking, and lodging if
needed. This bill recognizes the competitive nature of the wine
business as the number of licensees grows and consolidation of
brands continue. Presenting your brands before a variety of
audiences, including consumers, is a vital marketing tool,
especially for small winegrowers in California.
Prior legislation : AB 2184 (Hall), Chapter 480, Statutes of
2012. Permits, until January 1, 2016, the appearance of a
person employed or engaged by an "authorized licensee," as
defined, at a promotional event held at the premises of an
off-sale retail licensee for the purpose of providing autographs
under specified conditions.
AB 252 (Charles Calderon), Chapter 153, Statutes of 2012.
Modified an existing provision of the ABC Act that allows, until
January 1, 2014, a manufacturer, winegrower, rectifier, or
distiller to provide their product offerings directly to
consumers (free of charge) during invitation-only events, as
specified, to additionally grant the same privilege to a
distilled spirits manufacturer's agent.
SB 1022 (Strickland), Chapter 281, Statutes of 2010. Expands an
existing tied-house exception to enable licensed distilled
spirits "rectifiers" to donate or sell their products to
specified nonprofit entities for the purpose of assisting in
fund-raising efforts.
AB 605 (Portantino), Chapter 230, Statutes of 2010. Added
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.
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SB 131 (Wolk), Chapter 638, Statutes of 2009. Authorized until
December 31, 2014, monetary contributions and contributions of
alcoholic beverages by specified alcoholic beverage licensees to
the San Francisco Symphony Association under specified
circumstances.
AB 2293 (De Leon), Chapter 638, Statutes of 2008. Adds a new
provision to the Alcoholic Beverage Control Act (ABC Act) that
permits a manufacturer of distilled spirits, winegrower,
rectifier, or distiller, or its authorized agent to provide
their product, as well as entertainment and food to consumers
over 21 years of age during invitation-only events (free of
charge), as specified. The events must occur on premises for
which a caterer's permit authorization has been issued. The
bill sunsets on January 1, 2014.
SB 1548 (Murray), Chapter 670, Statutes of 2006. Permits a beer
manufacturer, a licensed beer and wine importer general, or a
licensed beer and wine wholesaler to instruct consumers
regarding beer and allows for the furnishing of a tasting at a
retail on-sale licensee authorized to sell beer, under specified
conditions.
AB 2285 (Valerie Brown), Chapter 248, Statutes of 1998. Allows
on-sale retail licensees to offer limited tastings of wine or
distilled spirits at the licensed establishment.
SB 993 (Burton) Chapter 544, Statutes of 1997. Among other
things, authorized a licensed distilled spirits manufacturer to
conduct tastings of distilled spirits on the licensed premises
under specified conditions.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0000917