BILL ANALYSIS Ó
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THIRD READING
Bill No: AB 1116
Author: Hall (D)
Amended: 9/6/13 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 "hotel," as defined; and extends the sunset from January 1,
2014 to January 1, 2018.
Senate Floor Amendments of 9/6/13 include an "out-of-state
distilled spirits shipper's certificate holder" within the group
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of licensees that can host specified events; strike the term
"licensed hotel" as well as language stating that specified
events must be held in areas open to the public and instead
clarify that such events must be conducted on the premises of a
hotel holding an on-sale beer or wine license or an on-sale
general license and that no event shall be held in the lobby
area of a hotel or any portion of a hotel that is identified,
promoted, or otherwise designated by the hotel as a club,
nightclub, or other similar entertainment venue; and require a
hotel where such a promotional event is being held to maintain,
during all times while exercising its license privileges, other
areas within the licensed premises for the public not attending
the authorized event.
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
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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.
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 existing law permitting 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
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of age and subject to specified conditions, to also allow such
events to be held on the premises of a "hotel," and to include
out-of-state distilled spirits shipper's certificate holders in
the authorization. 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 hotel holding an on-sale beer and
wine on-sale general license, but not in the lobby area of a
hotel or in any portion of the hotel identified, promoted, or
designated by the hotel as a club, nightclub, or other similar
entertainment venue.
2.Defines "hotel" to mean 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 law.
3.Requires a hotel, where the authorized event is being held, to
maintain, at all times while exercising its license
privileges, other areas within the licensed premises for the
public not attending the authorized event.
4.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.
5.Increases, from 400 to 600, the total number of consumers and
their guests allowed at any such event.
6.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.
7.Prohibits the advertisement of any retail licensee, with the
specified exception of identification of the event's location.
8.Prohibits any other alcohol promotion "in conjunction with,"
the hosted event.
9.Requires the retail licensee to sell other alcoholic beverages
in addition to those of the licensee conducting the event.
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10.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.
11.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.
12.Clarifies that the original $200 fee, required by existing
law, will be paid by the authorized licensee.
13.Specifies that all licensees involved in hosted events, as
specified, are responsible for compliance with this bill and
provisions in connection with these events.
14.Extends the current sunset on this body of law by four years,
from January 1, 2014 to January 1, 2018.
15.Makes technical changes.
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
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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 9/9/13)
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 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,
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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 9/9/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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