BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
AB 1116 (Hall) - Alcoholic Beverages
Amended: May 1, 2013 Policy Vote: GO 10-0
Urgency: No Mandate: No
Hearing Date: August 30, 2013
Consultant: Maureen Ortiz
SUSPENSE FILE.
Bill Summary: AB 1116 expands an existing provision of law that
permits certain alcoholic beverage producers to hold private,
free-of-charge, invitational-only promotional events and extends
the sunset from January 1, 2014 to January 1, 2018.
Fiscal Impact: (As proposed to be amended)
The ABC indicates $166,000 for promulgating regulations and
$173,000 in additional enforcement costs with respect to the
expansion of the existing authorization, partially offset by
fee revenue (Special Fund)
Background: The "tied-house" law separates the alcoholic
beverage industry into three component tiers of manufacturer,
wholesaler and retailer. The original rationale for this policy
as 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.
Existing law, AB 2293 De Leon (Chapter 638, Statutes of 2008),
allows a manufacturer of distilled spirits, winegrower,
rectifier, or distiller, or its authorized agent to provide free
of charge, entertainment, food, and distilled spirits, wine or
nonalcoholic beverages to consumers who are at least 21 years of
age at an invitation-only event with the following conditions:
a) No authorized event may be held on premises for which a
permanent retail license has been issued,
AB 1116 (Hall)
Page 1
b) The number of guests may not exceed 400 people,
c) The number of events are limited to 12 in a calendar year
when there are more than 100 people attending, and up to 24
events when attendance is less than 100 people,
d) The event is limited to a four-hour duration, and events may
not be held at the same location more than eight times in a
calendar year, and,
e) Requires a caterer's permit ($100) but also authorizes the
ABC to charge $200 per event for administration and enforcement
costs.
Events are not permitted to be held at restaurants, bars,
hotels, liquor stores or other venues that have a permanent
liquor license. This authorization will sunset January 1, 2014.
Existing law also provides for numerous other authorizations
that allow alcohol manufacturers to share their product with
consumers free of charge including the following:
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: (1) no more than a quarter ounce of distilled spirits is
offered in one tasting; (2) no more than one ounce of wine is
offered in one tasting; and, (3) 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.
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.
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
ABC.
Authorizes distilled spirits manufacturers to conduct tastings
and provide distilled spirits without charge for events
AB 1116 (Hall)
Page 2
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.
Proposed Law: AB 1116 contains the following provisions:
a) Extends the repeal date of the invitation-only events from
January 1, 2014 to January 1, 2018,
b) Expands the permissible venues to include the premises of a
licensed hotel, provided that the area is restricted to a
section that is not open to the general public,
c) Increases the number of individuals that can attend such
events from 400 to 600,
d) Defines hotel as any hotel, motel, resort, bed and
breakfast inn, or other similar transient lodging establishment,
but does not include any residential hotel.
Staff Comments: Any licensee authorized to conduct an
invitation-only event must provide the ABC with the name of the
company authorized to conduct the event, the number of people
who will attend, the start and end times of the event, and the
location where the event will be held. According to the ABC,
since the enactment of AB 2293, only 21 events have been held
under this special privilege and no enforcement problems have
been noted.