Amended in Assembly May 4, 2015

Amended in Assembly April 29, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 527

Introduced by Assembly Member Dodd

February 23, 2015

An act to add Section 25503.40 to the Business and Professions Code, relating to alcoholic beverages.

LEGISLATIVE COUNSEL’S DIGEST

AB 527, as amended, Dodd. Alcoholic beverage control: tied-house restrictions: advertising.

Existing law generally restricts certain alcoholic beverage licensees, including manufacturers and winegrowers, from paying, crediting, or compensating a retailer for advertising in connection with the advertising and sale of alcoholic beverages. Existing law expressly authorizes a beer manufacturer, holder of a winegrower’s license, winegrower’s agent, holder of an importer’s general license, distilled spirits manufacturer, holder of a distilled spirits begin delete rectifiers end delete begin insert rectifier’s end insert general license, or a distilled spirits manufacturer’s agent to sponsor events promoted by or purchase advertising space and time from, or on behalf of, a live entertainment marketing company that is a wholly owned subsidiary of a live entertainment company that has its principal place of business in the County of Los Angeles, as provided.

This bill would expressly authorize a beer manufacturer, as described, holder of a winegrower’s license, winegrower’s agent, holder of an importer’s general begin delete license, end delete begin insert license that does not also hold a wholesaler or retail license as an additional license, end insert distilled spirits manufacturer, holder of a distilled spirits begin delete rectifiers end delete begin insert rectifier’s end insert general license, or a distilled spirits manufacturer’s agent to sponsor events promoted by or purchase advertising space and time from, or on behalf of, a live entertainment marketing company that is a wholly owned subsidiary of a live entertainment company that begin insert is not publicly traded and end insert has its principal place of business in the County of Napa, under specified conditions. The bill would also make a beer manufacturer, holder of a winegrower’s license, winegrower’s agent, holder of an importer’s general license, distilled spirits manufacturer, holder of a distilled spirits begin delete rectifiers end delete begin insert rectifier’s end insert general license, or a distilled spirits manufacturer’s agent who, through coercion or other illegal means, induces the holder of a wholesaler’s license to fulfill those contractual obligations entered into pursuant to these provisions guilty of a misdemeanor. The bill would additionally make an on-sale retail licensee, as described, who solicits or coerces a holder of a wholesaler’s license to solicit a beer manufacturer, holder of a winegrower’s license, winegrower’s agent, holder of an importer’s general license, distilled spirits manufacturer, holder of a distilled spirits begin delete rectifiers end delete begin insert rectifier’s end insert general license, or a distilled spirits manufacturer’s agent to purchase advertising time or space pursuant to these provisions guilty of a misdemeanor.

By creating a new crime, this bill would impose a state-mandated local program.

This bill would make legislative findings and declarations as to the necessity of a special statute for the County of Napa.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert The Legislature finds and declares both of the
following: end insert

begin insert

(a) The earthquake that struck Napa on August 24, 2014, was
a catastrophic event that resulted in economic hardship in the
County of Napa.

end insert begin insert

(b) It is in the best interests of the citizens of the County of Napa
that the exception, established by this law, to the tied-house
provisions of the Alcoholic Beverage Control Act be provided for
the benefit of the County of Napa.

end insert

begin delete SECTION 1. end delete
begin insert SEC. 2. end insert   

Section 25503.40 is added to the Business and
Professions Code, to read:

25503.40.  

(a) Notwithstanding any other law, a beer
manufacturer, holder of a winegrower’s license, winegrower’s
agent, holder of an importer’s general begin delete license, end delete begin insert license that does
not also hold a wholesaler or retail license as an additional license, end insert
distilled spirits manufacturer, holder of a distilled spirits begin delete rectifiers end delete
begin insert rectifier’s end insert general license, or a distilled spirits manufacturer’s agent
may sponsor events promoted by, and may purchase advertising
space and time from, or on behalf of, a live entertainment
marketing company subject to all of the following conditions:

(1) (A) The live entertainment marketing company is a wholly
owned subsidiary of a live entertainment company that begin insert is not
publicly traded and end insert has its principal place of business in the County
of Napa, that may also own interests, directly or indirectly, in retail
begin delete licenses. end delete begin insert licenses or winegrower licenses. end insert

(B) The venue of the event is located within the County of Napa,
expected attendance of the event is at least 5,000 people per day,
and no more than three of these events are held in the County of
Napa each year.

(2) The sponsorship and the advertising space or time is
purchased only in connection with the promotion of live artistic,
musical, sports, food, beverage, culinary, lifestyle, or other cultural
entertainment events at entertainment facilities, parks, fairgrounds,
auditoriums, arenas, or other areas or venues that are designed for,
or set up to be, lawfully used for live artistic, musical, sports, food,
beverage, culinary, lifestyle, or other cultural entertainment events.

(3) (A) Any on-sale licensee operating at a venue where live
artistic, musical, sports, food, beverage, culinary, lifestyle, or other
cultural entertainment events are performed pursuant to a
sponsorship described in this section or where advertising is
purchased as described in this section shall serve other brands of
beer, distilled spirits, and wine begin insert distributed by a competing
wholesaler end insert in addition to any brand manufactured or distributed
by the sponsoring or advertising beer manufacturer, holder of a
winegrower’s license, winegrower’s agent, holder of an importer’s
general license, distilled spirits manufacturer, holder of a distilled
spirits begin delete rectifiers end delete begin insert rectifier’s end insert general license, or a distilled spirits
manufacturer’s agent.

(B) Any on-sale retail licensee owned by the live entertainment
company described in paragraph (1) shall serve other brands of
beer, distilled spirits, and wine begin insert distributed by a competing
wholesaler end insert in addition to any brand manufactured or distributed
by the sponsoring or advertising beer manufacturer, holder of a
winegrower’s license, winegrower’s agent, holder of an importer’s
general license, distilled spirits manufacturer, holder of a distilled
spirits begin delete rectifiers end delete begin insert rectifier’s end insert general license, or a distilled spirits
manufacturer’s agent.

(4) (A) Advertising space or time purchased pursuant to this
section shall not be placed in any on-sale licensed premises where
the on-sale retail licensee is owned directly or indirectly by the
live entertainment company, or any of its subsidiaries, described
in paragraph (1).

(B) Sponsorship provided pursuant to this section shall not be
allowed if the event or activity is held at or in any on-sale licensed
premises where the on-sale retail licensee is owned by the live
entertainment company, or any of its subsidiaries, described in
paragraph (1).

(5) An agreement for the sponsorship of, or for the purchase of
advertising space and time during, a live artistic, musical, sports,
food, beverage, culinary, lifestyle, or other cultural entertainment
event shall not be conditioned directly or indirectly, in any way,
on the purchase, sale, or distribution of any alcoholic beverage
manufactured or distributed by the advertising or sponsoring beer
manufacturer, holder of a winegrower’s license, winegrower’s
agent, holder of an importer’s general license, distilled spirits
manufacturer, holder of a distilled spirits begin delete rectifiers end delete begin insert rectifier’s end insert
general license, or a distilled spirits manufacturer’s agent by the
live entertainment company described in paragraph (1) or by any
on-sale retail licensee that is owned begin insert directly or indirectly end insert by the
live entertainment company.

(b) Any sponsorship of events or purchase of advertising space
or time conducted pursuant to subdivision (a) shall be conducted
pursuant to a written contract entered into by the beer manufacturer,
holder of a winegrower’s license, winegrower’s agent, holder of
an importer’s general license, distilled spirits manufacturer, holder
of a distilled spirits begin delete rectifiers end delete begin insert rectifier’s end insert general license, or a
distilled spirits manufacturer’s agent and the live entertainment
marketing company.

(c) Any beer manufacturer, holder of a winegrower’s license,
winegrower’s agent, holder of an importer’s general license,
distilled spirits manufacturer, holder of a distilled spirits begin delete rectifiers end delete
begin insert rectifier’s end insert general license, or a distilled spirits manufacturer’s agent
who, through coercion or other illegal means, induces, directly or
indirectly, a holder of a wholesaler’s license to fulfill those
contractual obligations entered into pursuant to subdivision (a)
shall be guilty of a misdemeanor and shall be punished by
imprisonment in the county jail not exceeding six months, or by
a fine in an amount equal to the entire value of the advertising
space or time involved in the contract, whichever is greater, plus
ten thousand dollars ($10,000), or by both imprisonment and fine.
The person shall also be subject to license begin insert suspension or end insert revocation
pursuant to Section 24200.

(d) Any on-sale retail licensee who, directly or indirectly, solicits
or coerces a holder of a wholesaler’s license to solicit a beer
manufacturer, holder of a winegrower’s license, winegrower’s
agent, holder of an importer’s general license, distilled spirits
manufacturer, holder of a distilled spirits begin delete rectifiers end delete begin insert rectifier’s end insert
general license, or a distilled spirits manufacturer’s agent to
purchase advertising time or space pursuant to subdivision (a) shall
be guilty of a misdemeanor and shall be punished by imprisonment
in the county jail not exceeding six months, or by a fine in an
amount equal to the entire value of the advertising space or time
involved in the contract, whichever is greater, plus ten thousand
dollars ($10,000), or by both imprisonment and fine. The person
shall also be subject to license begin insert suspension or end insert revocation pursuant
to Section 24200.

(e) For purposes of this section, “beer manufacturer” includes
a holder of a beer manufacturer’s license, a holder of an out-of-state
beer manufacturer’s certificate, or a holder of a beer and wine
importer’s general begin delete license. end delete begin insert license that does not also hold a
wholesaler or retail license as an additional license. end insert

(f) Nothing in this section shall authorize the purchasing of
advertising space or time directly from, or on behalf of, any on-sale
retail licensee.

(g) Nothing in this section shall authorize a beer manufacturer,
holder of a winegrower’s license, winegrower’s agent, holder of
an importer’s general license, distilled spirits manufacturer, holder
of a distilled spirits begin delete rectifiers end delete begin insert rectifier’s end insert general license, or a
distilled spirits manufacturer’s agent to furnish, give, or lend
anything of value to an on-sale retail licensee described in
subdivision (a) except as expressly authorized by this section or
any other provision of this division.

(h) The Legislature finds and declares both of the following:

(1) It is necessary and proper to require a separation between
manufacturing interests, wholesale interests, and retail interests in
the production and distribution of alcoholic beverages in order to
prevent suppliers from dominating local markets through vertical
integration and to prevent excessive sales of alcoholic beverages
produced by overly aggressive marketing techniques.

(2) Any exception established by the Legislature to the general
prohibition against tied interests shall be limited to the express
terms of the exception so as not to undermine the general
prohibition.

begin delete SEC. 2. end delete
begin insert SEC. 3. end insert   

The Legislature finds and declares that a special law
is necessary and that a general law cannot be made applicable
within the meaning of Section 16 of Article IV of the California
Constitution because of the unique conditions located in the County
of Napa.

begin delete SEC. 3. end delete
begin insert SEC. 4. end insert   

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.