Amended in Senate September 4, 2015

Amended in Assembly May 4, 2015

Amended in Assembly April 29, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 527


Introduced by Assembly Member Dodd

February 23, 2015


An act to addbegin insert and repealend insert Section 25503.40begin delete toend deletebegin insert ofend insert 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 rectifier’s 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 expresslybegin delete authorizeend deletebegin insert authorize, until January 1, 2019,end insert a beer manufacturer, as described, holder of a winegrower’s license, winegrower’s agent, holder ofbegin delete anend deletebegin insert anyend insert importer’sbegin delete generalend delete license that does not also hold a wholesaler or retail license as an additional license,begin insert as specified,end insert distilled spirits manufacturer, holder ofbegin delete a distilled spiritsend deletebegin insert anyend insert rectifier’sbegin delete generalend delete 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 is not publicly traded and 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 ofbegin delete anend deletebegin insert anyend insert importer’sbegin delete generalend delete license, distilled spirits manufacturer, holder ofbegin delete a distilled spiritsend deletebegin insert anyend insert rectifier’sbegin delete generalend delete 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 ofbegin delete anend deletebegin insert anyend insert importer’sbegin delete generalend delete license, distilled spirits manufacturer, holder ofbegin delete a distilled spiritsend deletebegin insert anyend insert rectifier’sbegin delete generalend delete 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:

P2    1

SECTION 1.  

The Legislature finds and declares both of the
2following:

P3    1(a) The earthquake that struck Napa on August 24, 2014, was
2a catastrophic event that resulted in economic hardship in the
3County of Napa.

4(b) It is in the best interests of the citizens of the County of Napa
5that the exception, established by this law, to the tied-house
6provisions of the Alcoholic Beverage Control Act be provided for
7the benefit of the County of Napa.

8

SEC. 2.  

Section 25503.40 is added to the Business and
9Professions Code
, to read:

10

25503.40.  

(a) Notwithstanding any other law, a beer
11manufacturer, holder of a winegrower’s license, winegrower’s
12agent, holder ofbegin delete anend deletebegin insert anyend insert importer’sbegin delete generalend delete license that does not
13also hold a wholesaler or retail license as an additional license,
14begin insert unless the holder of the importer’s license holds one of the other
15authorized licenses specified in this section,end insert
distilled spirits
16manufacturer, holder ofbegin delete a distilled spiritsend deletebegin insert anyend insert rectifier’sbegin delete generalend delete
17 license, or a distilled spirits manufacturer’s agent may sponsor
18events promoted by, and may purchase advertising space and time
19from, or on behalf of, a live entertainment marketing company
20subject to all of the following conditions:

21(1) (A) The live entertainment marketing company is a wholly
22owned subsidiary of a live entertainment company that is not
23publicly traded and has its principal place of business in the County
24of Napa, that may also own interests, directly or indirectly, in retail
25licenses or winegrower licenses.

26(B) The venue of the event is located within the County of Napa,
27expected attendance of the event is at least 5,000 people per day,
28and no more than three of these events are held in the County of
29Napa each year.begin insert The live entertainment company promoting the
30event shall affirmatively represent and warrant in writing to any
31retail licensee operating as the retail licensee for such an event
32that the live entertainment company promoting the event, including
33the subject event, has not exceeded the permissible limit of three
34events in the County of Napa for the year in which the event is
35being held and the expected attendance for the event is in excess
36of 5,000 people per day. Any retail licensee operating as the retail
37licensee for an event in the County of Napa for an event with
38expected attendance of more than 5,000 people per day shall
39provide the written representation and warranty of the live
40entertainment company to the department and affirmatively state
P4    1when obtaining the authorization for the event from the department
2that the event is being held pursuant to the conditions of this section
3and that the live entertainment company promoting the event,
4including the subject event, has not exceeded the permissible limit
5of three events in the County of Napa for the year in which the
6event is being held and the expected attendance for the event is in
7excess of 5,000 people per day.end insert

8(2) The sponsorship and the advertising space or time is
9purchased only in connection with the promotion of live artistic,
10musical, sports, food, beverage, culinary, lifestyle, or other cultural
11entertainment events at entertainment facilities, parks, fairgrounds,
12auditoriums, arenas, or other areas or venues that are designed for,
13or set up to be,begin insert andend insert lawfullybegin insert permitted to beend insert used for live artistic,
14musical, sports, food, beverage, culinary, lifestyle, or other cultural
15 entertainment events.

16(3) (A) Any on-sale licensee operating at a venue where live
17artistic, musical, sports, food, beverage, culinary, lifestyle, or other
18cultural entertainment events are performed pursuant to a
19sponsorship described in this section or where advertising is
20purchased as described in this section shall serve other brands of
21beer, distilled spirits, and wine distributed by a competing
22wholesaler in addition to any brand manufactured or distributed
23by the sponsoring or advertising beer manufacturer, holder of a
24winegrower’s license, winegrower’s agent, holder ofbegin delete anend deletebegin insert anyend insert
25 importer’sbegin delete generalend delete license, distilled spirits manufacturer, holder
26ofbegin delete a distilled spiritsend deletebegin insert anyend insert rectifier’sbegin delete generalend delete license, or a distilled
27spirits manufacturer’s agent.

28(B) Any on-sale retail licensee owned by the live entertainment
29company described in paragraph (1) shall serve other brands of
30beer, distilled spirits, and wine distributed by a competing
31 wholesaler in addition to any brand manufactured or distributed
32by the sponsoring or advertising beer manufacturer, holder of a
33winegrower’s license, winegrower’s agent, holder ofbegin delete anend deletebegin insert anyend insert
34 importer’sbegin delete generalend delete license, distilled spirits manufacturer, holder
35ofbegin delete a distilled spiritsend deletebegin insert anyend insert rectifier’sbegin delete generalend delete license, or a distilled
36spirits manufacturer’s agent.

37(4) (A) Advertising space or time purchased pursuant to this
38section shall not be placed in any on-sale licensed premises where
39the on-sale retail licensee is owned directly or indirectly by the
P5    1live entertainment company, or any of its subsidiaries, described
2in paragraph (1).

3(B) Sponsorship provided pursuant to this section shall not be
4allowed if the event or activity is held at or in any on-sale licensed
5premises where the on-sale retail licensee is owned by the live
6entertainment company, or any of its subsidiaries, described in
7paragraph (1).

8(5) An agreement for the sponsorship of, or for the purchase of
9advertising space and time during, a live artistic, musical, sports,
10food, beverage, culinary, lifestyle, or other cultural entertainment
11event shall not be conditioned directly or indirectly, in any way,
12on the purchase, sale, or distribution of any alcoholic beverage
13manufactured or distributed by the advertising or sponsoring beer
14manufacturer, holder of a winegrower’s license, winegrower’s
15agent, holder ofbegin delete anend deletebegin insert anyend insert importer’sbegin delete generalend delete license, distilled spirits
16manufacturer, holder ofbegin delete a distilled spiritsend deletebegin insert anyend insert rectifier’sbegin delete generalend delete
17 license, or a distilled spirits manufacturer’s agent by the live
18entertainment company described in paragraph (1) or by any
19on-sale retail licensee that is owned directly or indirectly by the
20live entertainment company.

21(b) Any sponsorship of events or purchase of advertising space
22or time conducted pursuant to subdivision (a) shall be conducted
23pursuant to a written contract entered into by the beer manufacturer,
24holder of a winegrower’s license, winegrower’s agent, holder of
25begin delete anend deletebegin insert anyend insert importer’sbegin delete generalend delete license, distilled spirits manufacturer,
26holder ofbegin delete a distilled spiritsend deletebegin insert anyend insert rectifier’sbegin delete generalend delete license, or a
27distilled spirits manufacturer’s agent and the live entertainment
28marketing company.

29(c) Any beer manufacturer, holder of a winegrower’s license,
30winegrower’s agent, holder ofbegin delete anend deletebegin insert anyend insert importer’sbegin delete generalend delete license,
31distilled spirits manufacturer, holder ofbegin delete a distilled spiritsend deletebegin insert anyend insert
32 rectifier’sbegin delete generalend delete license, or a distilled spirits manufacturer’s agent
33who, through coercion or other illegal means, induces, directly or
34indirectly, a holder of a wholesaler’s license to fulfill those
35contractual obligations entered into pursuant to subdivision (a)
36shall be guilty of a misdemeanor and shall be punished by
37imprisonment in the county jail not exceeding six months, or by
38a fine in an amount equal to the entire value of the advertising
39space or time involved in the contract, whichever is greater, plus
40ten thousand dollars ($10,000), or by both imprisonment and fine.
P6    1The person shall also be subject to license suspension or revocation
2pursuant to Section 24200.

3(d) Any on-sale retail licensee who, directly or indirectly, solicits
4or coerces a holder of a wholesaler’s license to solicit a beer
5manufacturer, holder of a winegrower’s license, winegrower’s
6agent, holder ofbegin delete anend deletebegin insert anyend insert importer’sbegin delete generalend delete license, distilled spirits
7manufacturer, holder ofbegin delete a distilled spiritsend deletebegin insert anyend insert rectifier’sbegin delete generalend delete
8 license, or a distilled spirits manufacturer’s agent to purchase
9advertising time or space pursuant to subdivision (a) shall be guilty
10of a misdemeanor and shall be punished by imprisonment in the
11county jail not exceeding six months, or by a fine in an amount
12equal to the entire value of the advertising space or time involved
13in the contract, whichever is greater, plus ten thousand dollars
14($10,000), or by both imprisonment and fine. The person shall also
15be subject to license suspension or revocation pursuant to Section
1624200.

17(e) For purposes of this section, “beer manufacturer” includes
18a holder of a beer manufacturer’s license, a holder of an out-of-state
19beer manufacturer’s certificate, or a holder of a beer and wine
20importer’sbegin delete generalend delete license that does not also hold a wholesaler or
21retail license as an additional license.

22(f) Nothing in this section shall authorize the purchasing of
23advertising space or time directly from, or on behalf of, any on-sale
24retail licensee.

25(g) Nothing in this section shall authorize a beer manufacturer,
26holder of a winegrower’s license, winegrower’s agent, holder of
27begin delete anend deletebegin insert anyend insert importer’sbegin delete generalend delete license, distilled spirits manufacturer,
28holder ofbegin delete a distilled spiritsend deletebegin insert anyend insert rectifier’sbegin delete generalend delete license, or a
29distilled spirits manufacturer’s agent to furnish, give, or lend
30anything of value to an on-sale retail licensee described in
31subdivision (a) except as expressly authorized by this section or
32any other provision of this division.

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

34(1) It is necessary and proper to require a separation between
35manufacturing interests, wholesale interests, and retail interests in
36the production and distribution of alcoholic beverages in order to
37prevent suppliers from dominating local markets through vertical
38integration and to prevent excessive sales of alcoholic beverages
39produced by overly aggressive marketing techniques.

P7    1(2) Any exception established by the Legislature to the general
2prohibition against tied interests shall be limited to the express
3terms of the exception so as not to undermine the general
4prohibition.

begin insert

5(i) This section shall remain in effect only until January 1, 2019,
6and as of that date is repealed unless a later enacted statute, that
7is chaptered before January 1, 2019, deletes or extends that date.

end insert
8

SEC. 3.  

The Legislature finds and declares that a special law
9is necessary and that a general law cannot be made applicable
10within the meaning of Section 16 of Article IV of the California
11Constitution because of the unique conditions located in the County
12of Napa.

13

SEC. 4.  

No reimbursement is required by this act pursuant to
14Section 6 of Article XIII B of the California Constitution because
15the only costs that may be incurred by a local agency or school
16district will be incurred because this act creates a new crime or
17infraction, eliminates a crime or infraction, or changes the penalty
18for a crime or infraction, within the meaning of Section 17556 of
19the Government Code, or changes the definition of a crime within
20the meaning of Section 6 of Article XIII B of the California
21Constitution.



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