BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 1116| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 1116 Author: Hall (D) Amended: 9/3/13 in Senate Vote: 21 SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 10-0, 6/25/13 AYES: Wright, Nielsen, Berryhill, Calderon, Cannella, De León, Galgiani, Hernandez, Lieu, Padilla NO VOTE RECORDED: Correa SENATE APPROPRIATIONS COMMITTEE : 7-0, 8/30/13 AYES: De León, Walters, Gaines, Hill, Lara, Padilla, Steinberg ASSEMBLY FLOOR : 78-0, 5/29/13 - See last page for vote SUBJECT : Alcoholic beverages: licensees SOURCE : Author DIGEST : This bill expands an existing provision of law that permits certain alcoholic beverage producers to hold private, free-of-charge, invitational-only promotional events, with entertainment, food and beverages, for a limited number of consumers over 21 years of age and subject to specified conditions, to also allow such events to be held on the premises of a licensed "hotel," as defined; and extends the sunset from January 1, 2014 to January 1, 2018." CONTINUED AB 1116 Page 2 ANALYSIS : Existing law: 1.Establishes the Department of Alcoholic Beverage Control (ABC) and grants it exclusive authority to administer the provisions of the Alcoholic Beverage Control Act (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. 2.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). This is known as the "tied-house" law. 3.Permits until January 1, 2014, a manufacturer of distilled spirits, distilled spirits manufacturer's agent, winegrower, rectifier, or distiller, or its authorized licensed agent 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, subject to specified conditions. Provides that no authorized event shall be conducted on premises for which a permanent retail license has been issued and makes it explicit that the total number of consumers and their guests allowed at any such event shall not exceed 400 people. ABC also is granted the authority to impose a fee to cover the costs of administering such events. 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 not more than 24 events in a calendar year where the consumers and guests in attendance is 100 people or fewer. Provides for a four-hour duration limitation on any such event and prohibits holding any event at the same location more than eight times in a calendar year. Specifies that all alcoholic beverages served at any such event must be purchased from the holder of the caterer's permit. CONTINUED AB 1116 Page 3 4.Permits a licensed distilled spirits manufacturer to conduct tastings of distilled spirits produced or bottled by, or produced or bottled for, the licensee, on or off the licensee's premises. Tastings conducted by the licensee off the licensee's premises must be for an event sponsored by a nonprofit organization, as defined, and only if persons attending the event are affiliated with the sponsor. Makes it explicit that no distilled spirits shall be sold or solicited for sale in that portion of the premises where the distilled tasting is being conducted. 5.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 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. 6.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 authorizes the sale of all types of alcoholic beverages for consumption off the premises in original, sealed containers. This bill expands an existing provision of law that permits certain alcoholic beverage producers to hold private, free-of-charge, invitational-only promotional events, with entertainment, food and beverages, for a limited number of consumers over 21 years of age and subject to specified conditions, to also allow such events to be held on the premises of a licensed "hotel." Specifically, this bill: 1.Extends the ability of licensed distilled spirits manufacturers and winegrowers to hold private, invitation-only events for brand promotion, under specified conditions, to include the premises of a licensed hotel, but only in areas that are not open to the public. 2.Defines "hotel" to mean any hotel, motel, resort, bed and breakfast inn, or other similar transient lodging CONTINUED AB 1116 Page 4 establishment but it does not include any residential hotel, as defined in law. 3.Clarifies that neither a retail licensee conducting the event nor the licensed hotel can be provided anything of value other than fair market value payments. 4.Increases, from 400 to 600, the total number of consumers and their guests allowed at any such event. 5.Limits the ability to conduct an event at a hotel by requiring a licensee to not utilize the same hotel or hotel chain more than two times per calendar year. 6.Prohibits the advertisement of any retail licensee, with the specified exception of identification of the event's location. 7.Prohibits any other alcohol promotion "in conjunction with," the hosted event. 8.Requires the retail licensee to sell other alcoholic beverages in addition to those of the licensee conducting the event. 9.Requires the licensee or authorized unlicensed agent, at least 30 days prior to the event, to apply and provide specified information to ABC for a permit authorizing the event. Clarifies that a caterer's information, if required, must also be provided. 10.Clarifies that all alcoholic beverages provided at any such event must be purchased from the holder of the caterer's permit or the licensed hotel, as applicable. 11.Clarifies that the original $200 fee, required by existing law, will be paid by the authorized licensee. 12.Specifies that all licensees involved in hosted events, as specified, are responsible for compliance with this bill and provisions in connection with these events. 13.Extends the current sunset on this body of law by four years, from January 1, 2014 to January 1, 2018. 14.Makes technical changes. CONTINUED AB 1116 Page 5 Background This bill expands the privileges provided under AB 2293 (De León, Chapter 638, Statutes of 2008) to specified alcoholic beverage producers. AB 2293 authorized licensed distilled spirits manufacturers and winegrowers to entertain consumers at private parties and events by invitation-only where potential buyers could consume alcoholic beverages and food free of charge. AB 2293 contained restrictive criteria in order to provide appropriate controls relating to the promotional events. Specifically, AB 2293 limited the number of guests to 400 and stipulated that such events could only be held on premises for which a caterer's permit has been issued. Events are also authorized to be held on the premises of a licensed winegrower, provided distilled spirits, other than brandy, are not served. Such events are not allowed to be held at restaurants, bars, hotels, liquor stores or other venues that have a permanent liquor license. The original sunset provision in AB 2293 was intended as an assessment period for conduct of such events. The author's office points out that alcoholic beverage producers have held 21 such promotional events since 2009 - this figure may not represent all of the events that have been held in light of the fact that such events are authorized pursuant to a caterer's permit and ABC issues several thousand catering permits each year but does not necessarily track those permits to determine how many may have been used for these invitation-only promotional events. The author's office notes that the low number of invitation-only events that have been held is directly related to the narrow criteria placed in AB 2293 of 2008. The author's office claims that because the existing restrictions were so narrow, the original tied-house exception has been largely unsuccessful. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes According to the Senate Appropriations Committee, 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). SUPPORT : (Verified 8/29/13) CONTINUED AB 1116 Page 6 California Hotel and Lodging Association Diageo Distilled Spirits Council of the United States Family Winemakers of California ARGUMENTS IN SUPPORT : This bill proposes to expand the permissible venues to include the premises of a licensed hotel and increase the number of individuals that can attend such events from 400 to 600. The author's office emphasizes that this bill will enable alcoholic beverage producers to host such events at a broader range of venues that are safe for consumers with easier access to taxis, other transportation, parking and overnight lodging. ASSEMBLY FLOOR : 78-0, 5/29/13 AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom, Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hernández, Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein, Mansoor, Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, John A. Pérez NO VOTE RECORDED: Holden, Vacancy MW:ej 9/1/13 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED