BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 324
                                                                  Page  1

          Date of Hearing:   July 3, 2013

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                 SB 324 (Wright) - As Introduced:  February 19, 2013 

          Policy Committee:                             Governmental  
          Organization Vote:                            15 - 0 

          Urgency:     Yes                  State Mandated Local Program:  
          Yes    Reimbursable:              No

           SUMMARY  

          This bill provides a tied-house exception to the Alcoholic  
          Beverage Control Act (ABC Act) pertaining to the general  
          prohibition against advertising arrangements between retail,  
          wholesale and manufacturer licensees and the Los Angeles Forum  
          in the City of Inglewood.

           FISCAL EFFECT  

          Negligible non-reimbursable costs for prosecution and/or  
          incarceration, offset by fine revenue, for misdemeanor  
          violations of provisions associated with the tied-house  
          exception. 

           COMMENTS  

           1)Purpose  . This bill grants a tied-house exception for the  
            operators of the Los Angeles Forum in the City of Inglewood.  
            This exemption is narrowly crafted and similar to those  
            granted to the Oakland Coliseum, Sleep Train Arena in  
            Sacramento and the Staples Center in Los Angeles. This  
            exception will allow the Madison Square Garden Company, owners  
            of the Forum, to develop certain alcoholic beverage  
            sponsorships with various manufacturers and distributors.  

           2)Tied-House law  refers to the statutory scheme restricting any  
            cross-ownership among the three independent tiers of the  
            alcohol industry: a) manufacturers, b) distributors/  
            wholesalers, and c) retailers. The term tied-house refers to a  
            practice common in this country prior to prohibition, and  
            still occurring in England today, where a bar or public house  








                                                                  SB 324
                                                                  Page  2

            was tied to the products of a particular manufacturer. The  
            original rationale for tied-house restrictions was to promote  
            the state's interest in maintaining an orderly market, to  
            prohibit the vertical integration of the alcohol industry, to  
            protect the public from predatory marketing practices, and to  
            prevent the intemperate consumption of alcoholic beverages. In  
            order to further these policy goals, the Legislature has  
            generally prohibited forms of cross ownership between  
            manufacturers and retailers, and discouraged manufacturers  
            from providing anything of value to distributors or retailers,  
            be it free goods, services or advertising. 

           Analysis Prepared by  :    Julie Salley-Gray / APPR. / (916)  
          319-2081