BILL ANALYSIS Ó
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CONSENT
Bill No: AB 1424
Author: Assembly Governmental Organization Committee
Amended: 8/22/14 in Senate
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 11-0, 6/11/13
AYES: Wright, Nielsen, Berryhill, Calderon, Cannella, Correa,
De León, Galgiani, Hernandez, Lieu, Padilla
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 70-0, 5/16/13 (Consent) - See last page for
vote
SUBJECT : Alcoholic beverages: instruction: tastings:
tied-house restrictions:
advertising
SOURCE : Author
DIGEST : This bill permits winegrowers and beer manufacturers
to describe the composition of their products, in addition to
other characteristics already permitted, when engaging in
tastings or instructional events for their licensees or
employees; and authorizes winegrowers, beer manufacturers and
distilled spirits producers to purchase advertising space and
time from, or on behalf of, a major tenant of an outdoor
stadium, as specified.
Senate Floor Amendments of 8/22/14 address a drafting error to
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AB 1424
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an existing tied-house exception in the Alcoholic and Beverage
Control Act (ABC Act) relative to the general prohibition
against advertising arrangements between retail, wholesale and
manufacturer licensees that is applicable to Levi's Stadium in
the County of Santa Clara; and address a chaptering-out issue
between this bill and AB 520 (Chesbro).
ANALYSIS :
Existing law:
1.Permits a winegrower, beer manufacturer, or a beer and wine
wholesaler to instruct licensees and their employees on the
subject of wine or beer, including, but not limited to, the
history, nature, values, and characteristics of those
beverages, as provided.
2.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.
3.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.
4.Permits a licensed winegrower, manufacturer, importer, or
wholesaler to provide samples of the alcoholic beverages which
are authorized to be sold by the licensee in accordance with
rules prescribed by the Department of Alcoholic Beverage
Control (ABC). A retail licensee, however, is not authorized
to provide any free samples of alcoholic beverages. Moreover,
ABC regulations provide that samples of alcoholic beverages
may only be given away to licensees or employees of licensees
who are in a position to purchase the product or who are in
need of additional information about the product, as
specified.
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5.Separates the alcoholic beverage industry into three component
parts of manufacturer, wholesaler, and retailer. This is
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.
6.Prohibits paid advertising by winegrowers, beer manufacturers
and distilled spirits producers in cases where an on-sale
retail licensee also owns a sports or entertainment venue.
This bill:
1.Permits winegrowers and beer manufacturers to describe the
"composition" of their products, in addition to other
characteristics already permitted, when engaging in tastings
or instructional events for their licensees or employees.
2.Authorizes winegrowers, beer manufacturers and distilled
spirits producers to purchase advertising space and time from,
or on behalf of, a major tenant of the outdoor stadium (Levi's
Stadium) provided the major tenant does not hold a retail
license, and the advertising may include the placement of
advertising in an on-sale licensed premises operated at the
outdoor stadium.
3.Adds double-jointing language with AB 520 (Chesbro).
Background
Over the years numerous exceptions to this tied-house
prohibition have been added to the ABC Act [e.g., Sleep Train
Arena (formerly known as ARCO Arena) in Sacramento, Oakland
Coliseum in Oakland, Arrowhead Pond Arena in Anaheim, Kern
County Arena in Bakersfield, the National Orange Show Event
Center in San Bernardino, California Speedway in Fontana,
Grizzly Stadium in downtown Fresno, Raley Field in West
Sacramento, HP Pavilion in San Jose, the Home Depot Center in
the City of Carson, and other venues].
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AB 600 (Bonta, Chapter 139, Statutes of 2014) included Levi's
Stadium (new home of the 49ers football team) on the list of
exemptions in the law, thereby allowing the Santa Clara Stadium
Authority to develop certain alcoholic beverage sponsorship
agreement(s) with suppliers.
Existing law requires that the on-sale licensee be the owner,
assignee of the owner's advertising rights, or the major tenant
of the owner.
ABC has been advised that the City of Santa Clara is the owner
of the Stadium and that the 49ers are the major tenant. Thus,
it is the 49ers, who are not going to be the on-sale licensee,
that will be the party that will be entering into the
sponsorship agreement(s) with suppliers. The statute as
currently written does not allow them to do what they want and
simply adding the 49ers stadium as a permitted venue does not
solve the problem. This bill clarifies the current exception to
resolve the issue.
Comments
The other provision of this bill relates to instructional
tastings. According to the author's office, craft brewers are
producing award-winning beers that are recognized and purchased
in national and international markets. These brewers have also
installed tasting rooms to accommodate consumers and to
facilitate tourism and economic growth in their respective local
communities. In addition, craft breweries have taken advantage
of expanded opportunities for on-site beer tastings at
restaurants and bars. During such tasting events, consumers
usually inquire as to the actual "composition" of the beers -
they are also curious about specific ingredients due to various
gastronomic interests or food allergies. The author's office
claims that existing law does not explicitly permit a response
to questions relating to "composition" of the beer. This bill
affirmatively provides that authority.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
ASSEMBLY FLOOR : 70-0, 5/16/13
AYES: Achadjian, Alejo, Ammiano, Atkins, Bigelow, Bloom,
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Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown, Ian
Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,
Dahle, Daly, Dickinson, Donnelly, Fong, Fox, Frazier, Garcia,
Gatto, Gomez, Gordon, Gorell, Gray, Hagman, Hall, Harkey,
Roger Hernández, Jones, Jones-Sawyer, Levine, Linder, Logue,
Lowenthal, Maienschein, Mansoor, Medina, Mitchell, Mullin,
Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea,
V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner,
Ting, Torres, Wagner, Waldron, Weber, Wieckowski, Wilk,
Williams, Yamada, John A. Pérez
NO VOTE RECORDED: Allen, Buchanan, Eggman, Beth Gaines, Grove,
Holden, Melendez, Morrell, Stone, Vacancy
MW:nl 8/27/14 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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