BILL ANALYSIS Ó
AB 1116
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1116 (Hall)
As Amended September 6, 2013
Majority vote
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|ASSEMBLY: |78-0 |(May 29, 2013) |SENATE: |38-0 |(September 10, |
| | | | | |2013) |
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Original Committee Reference: G.O.
SUMMARY : 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.
The Senate amendments :
1)Strike the term "licensed hotel" as well as language stating
that such events must be held in areas open to the public and
instead clarifies 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.
2)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.
3)Limit 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.
4)Prohibit the advertisement of any retail licensee, with the
specified exception of identification of the event's location.
Prohibit any other alcohol promotion" in conjunction with
"the hosted event. A retail licensee shall conspicuously
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offer for sale alcoholic beverages other than the products
produced, distributed, bottled, or otherwise offered for sale
by the licensee conducting the event.
5)Require the licensee or authorized unlicensed agent, at least
30 days prior to the event, to apply and provide specified
information to the Department of Alcoholic Beverage Control
(ABC) for a permit authorizing the event. Clarifies that the
original $200 fee, required by existing law, will be paid by
the authorized licensee.
6)Clarify that a caterer's information, if required, must also
be provided. 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.
7)Specify that all licensees involved in hosted events, as
specified, are responsible for compliance with this bill and
provisions in connection with these events.
8)Include an "out-of-state distilled spirits shipper's
certificate holder" within the group of licensees that can
host such events.
9)Make technical changes.
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.
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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
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
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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
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.
AS PASSED BY THE ASSEMBLY , this bill expanded 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.
FISCAL EFFECT : 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).
COMMENTS : This bill as amended in the Senate is consistent with
Assembly actions.
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 León), 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
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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
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 1, 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
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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.
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.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0002699