BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                    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."



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           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.


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          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  

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            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.


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           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)

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          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

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