BILL ANALYSIS Ó
AB 527
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CONCURRENCE IN SENATE AMENDMENTS
AB
527 (Dodd)
As Amended September 4, 2015
Majority vote
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|ASSEMBLY: | 76-0 | (May 26, |SENATE: |40-0 | (September 10, |
| | |2015) | | |2015) |
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Original Committee Reference: G.O.
SUMMARY: Creates, until January 1, 2019, a new tied-house
exception in the Alcoholic Beverage Control Act (Act) that
authorizes certain alcoholic beverage licensees to sponsor a
limited number of events promoted by or to purchase advertising
space and time from, or on behalf of, a live entertainment
marketing company that conducts live artistic, musical, sports,
food, beverage, culinary, or other cultural entertainment events
at venues located solely in the County of Napa, under specified
conditions.
The Senate amendments:
1)Add clarity relative to the type of alcohol licensees that can
sponsor events promoted by, and may purchase advertising space
and time from, or on behalf of, a live entertainment marketing
company in the County of Napa, as specified.
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2)Add language requiring the live entertainment company
promoting the event to affirmatively represent and warrant in
writing to any retail licensee operating as the retail
licensee for such an event that it has fulfilled the
requirements and restrictions proscribed by law.
3)Add a January 1, 2019, sunset date to the bill.
4)Make technical and clarifying amendments.
EXISTING LAW:
1)Establishes the Department of Alcoholic Beverage Control (ABC)
and grants it exclusive authority to administer the provisions
of the 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)Existing law, known as the "tied-house" law or "three-tier"
system, separates the alcoholic beverage industry into three
component parts of manufacturer (the first tier), wholesaler
(the second tier), and retailer (the third tier). 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.
3)Tied-house laws generally prohibit suppliers and retailers
from sharing common owners and legally restrict alcohol
beverage suppliers' ability to gain control over retailers
through indirect means. 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
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within the "three-tier" system.
4)The Act prohibits an alcoholic beverage supplier from paying
money, or giving or furnishing anything of value, for the
privilege of placing or painting a sign or advertisement, or
window display, on or in premises selling alcoholic beverages
at retail.
5)Prohibits paid advertising by winegrowers, beer manufacturers
and distilled spirits producers in cases where a retail
licensee also owns a sports or entertainment venue. Over the
years numerous exceptions to this prohibition have been added
to the ABC Act (e.g., Sleep Train 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).
6)Provides a tied-house exception allowing certain alcohol
manufacturers and distributors to sponsor events or purchase
advertising space from a live entertainment company that has
its principal place of business in the County of Los Angeles,
as defined.
7)Defines an "On-sale" license as authorizing the sale of all
types of alcoholic beverages namely, beer, wine and distilled
spirits, for consumption on the premises (such as at a
restaurant or bar).
FISCAL EFFECT: According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS: This bill, as amended in the Senate is consistent
with Assembly actions.
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Purpose of this bill: Existing tied-house laws prohibit an
alcoholic beverage supplier, or any officer, director or agent
of an alcoholic beverage supplier, from providing anything of
value to an on-sale retailer licensee, be it free goods, money,
services or advertising. Over the years, numerous exceptions to
this prohibition have been added to the Act encompassing various
venues throughout the state.
According to the author's office, Latitude 38 Entertainment,
headquartered in Napa County, produces the annual BottleRock
festival and budgets approximately $2 million for costs
associated with renting the Napa County fairgrounds, hiring Napa
County based employees and contractors, City of Napa fees,
security, parking rentals and other added expenses. More than
95,000 festival attendees spend an estimated $14 million on
tourism, including hotel accommodations, food, and beverage and
retail purchases. In addition, the festival generates
approximately $35 million of economic activity in the City and
County of Napa.
This bill creates a stand-alone tied-house exception applicable
to Latitude 38 Entertainment Company (or any other such live
entertainment marketing company based in Napa County) which
promotes and produces the BottleRock Napa Valley Festival - a
three-day event held in late May that features a diverse mix of
live music, culinary offerings, libations and other amenities.
This bill is necessary due to the fact that Latitude 38
Entertainment's ownership group includes a wine producer. This
bill will enable alcoholic beverage suppliers to purchase
advertising space and time at the festival from Latitude 38
Entertainment, as well as other live entertainment marketing
companies in Napa County who fall under the same circumstances.
This bill subjects Latitude 38 Entertainment to certain
requirements, as specified, and also requires that other brands
of beer, wine, or distilled spirits distributed by a competing
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wholesaler be served at the venue in addition to any brand
manufactured or distributed by the sponsoring or advertising
alcoholic beverage supplier. Furthermore, this bill makes it
explicit that no more than three such events may be held in Napa
County each year.
Proponents contend that this bill will provide Napa County based
companies the ability to receive advertising and sponsorship
monies directly from alcoholic beverage manufacturers to the
benefit of the region and the State of California.
Additionally, proponents claim this bill will help facilitate
sponsorship agreements between vintners and sponsors of certain
community events, which in turn will help promote travel and
tourism throughout the Napa region.
Related Legislation: SB 462 (Wolk) of the current legislative
session. Extends an existing tied-house exception in the ABC
Act pertaining to the general prohibition against advertising
arrangements between retail, wholesale and manufacturer
licensees to include a specified entertainment complex, known as
the Green Music Center, located on the campus of Sonoma State
University. Additionally, this bill adds a new section of law
to the Act that allows alcoholic beverage licensees, as
specified, to make monetary or alcoholic beverage contributions
to the Green Music Center under certain conditions. (Enrolled
and presented to the Governor on 9/3/15)
AB 1320 (Maienschein) of the current legislative session.
Creates a new tied-house exception in the Act that authorizes
certain alcoholic beverage licensees to sponsor a limited number
of events promoted by or to purchase advertising space and time
from, or on behalf of, a live entertainment marketing company
that conducts live artistic, musical, sports, or cultural
entertainment events solely at the San Diego County Fairgrounds
in Del Mar, under specified conditions. (Pending on the Senate
Floor)
Prior legislation: SB 600 (Bonta), Chapter 139, Statutes of
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2014. Extended a tied-house exception in the ABC Act pertaining
to the general prohibition against advertising arrangements
between retail, wholesale and manufacturer licensees to include
an outdoor stadium (Levi's Stadium) with a fixed seating
capacity of at least 68,000 seats located in the City of Santa
Clara.
SB 324 (Wright), Chapter 164, Statutes of 2013. Provided a
tied-house exception to the 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.
AB 813 (John A. Pérez), Chapter 647, Statutes of 2009. Created
a tied-house exception by allowing the owner of a venue (Club
Nokia) in Los Angeles to engage in a sponsorship agreement with
an alcoholic beverage supplier for the privilege of placing
advertising in the on-sale licensee's premises.
SB 520 (Governmental Organization Committee), Chapter 349,
Statutes of 2007. Provided a tied-house exception allowing
certain alcohol manufacturers and distributors to sponsor events
or purchase advertising space from a live entertainment company
that has its principal place of business in the County of Los
Angeles.
AB 776 (Aghazarian) Chapter 221, Statutes of 2007. Created a
tied-house exception by authorizing a beer manufacturer to
sponsor or purchase advertising space and time from, or on
behalf of, an off-sale retail licensee that is an owner or
co-owner of a professional sports team (California Cougars
indoor soccer team) that plays its home games, in an arena with
a fixed seating capacity of 10,000 seats (Stockton Arena)
located in San Joaquin County.
AB 663 (Galgiani) Chapter 745, Statutes of 2007. Extended a
tied-house exception pertaining to the general prohibition
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against advertising arrangements between retail, wholesale and
manufacturer licensees to include an outdoor professional sports
facility with a fixed seating capacity of at least 4,200 (Banner
Island Ballpark) located in San Joaquin County.
AB 3046 (Chavez) Chapter 587, Statutes of 2006. Extended a
tied-house exception pertaining to the general prohibition
against advertising arrangements between retail, wholesale and
manufacturer licensees to the HP Pavilion in Santa Clara County.
AB 1442 (Horton) Chapter 617, Statutes of 2005. Extended a
tied-house exception pertaining to the general prohibition
against advertising arrangements between retail, wholesale and
manufacturer licensees to the Home Depot Center, a sports and
athletic complex within the City of Carson in Los Angeles and
the Nokia Theater, located within the Los Angeles Sports and
Entertainment District, adjacent to Staples Center.
AB 3085 (Governmental Organization Committee), Chapter 437,
Statutes of 2004. Provided the Los Angeles County Fair with an
exemption from tied-house laws so that so that alcohol
manufacturers may purchase advertising from, or on behalf of,
the on-sale licensees at this venue.
SB 1647 (Perata) Chapter 275, Statutes of 2004. Extended a
tied-house exception pertaining to the general prohibition
against advertising arrangements between retail, wholesale and
manufacturer licenses to the Oakland Coliseum in Alameda County.
SB 1189 (Costa) Chapter 47, Statutes of 2002. Extended a
tied-house exception pertaining to the general prohibition
against advertising arrangements between retail, wholesale and
manufacturer licenses to the Visalia Oaks Stadium in Visalia and
the California Speedway in Fontana.
Analysis Prepared by:
AB 527
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Eric Johnson / G.O. / (916) 319-2531 FN:
0002349