BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 776|
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THIRD READING
Bill No: AB 776
Author: Cooper (D)
Amended: 8/17/15 in Senate
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE: 13-0, 7/14/15
AYES: Hall, Berryhill, Block, Gaines, Galgiani, Glazer,
Hernandez, Hill, Hueso, Lara, McGuire, Runner, Vidak
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 76-0, 5/26/15 (Consent) - See last page for
vote
SUBJECT: Alcoholic beverage control: licenses and tied-house
restrictions
SOURCE: California Craft Brewers Association
DIGEST: This bill enables a licensed beer manufacturer to
apply to the Department of Alcoholic Beverage Control (ABC) for
a brewery event permit which grants the licensee the privilege
of selling beer it produces for consumption on property
contiguous and adjacent to its licensed premises for special
events (up to four such events in a calendar year). This bill
also authorizes licensed alcoholic beverage manufacturers and
retailers to participate together in sponsoring and promoting
events conducted by, and for the benefit of, nonprofit
organizations, subject to certain conditions.
ANALYSIS:
Existing law:
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1)Establishes the Department of ABC and grants it exclusive
authority to regulate the licensing, enforcement, and
administration of the alcoholic beverage control laws.
2)Authorizes a beer manufacturer to sell or serve all beer,
wines, and brandy, regardless of source, to guests during
private events held on the licensed beer manufacturer's
premises, as specified.
3)Authorizes a licensed winegrower to apply to the Department of
ABC for a wine sales event permit that allows the sale of
bottled wine produced by that winegrower at specified events
approved by the Department of ABC. The law prohibits a wine
sales event permit from being used more than two times a month
at a particular location and requires the winegrower to pay a
fee of $50 for the permit.
4)Separates the alcoholic beverage industry into three component
parts, or tiers (referred to as the "tied-house" law or
"three-tier" system), of manufacturer (including breweries,
wineries and distilleries), wholesaler, and retailer (both
on-sale and off-sale). The original policy rationale for this
body of law was to: (a) promote the state's interest in an
orderly market; (b) prohibit the vertical integration and
dominance by a single producer in the market place; (c)
prohibit commercial bribery and to protect the public from
predatory marketing practices; and, (d) discourage and/or
prevent the intemperate use of alcoholic beverages.
Generally, other than exceptions 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.
5)Prohibits, in general, an alcohol manufacturer, wholesaler, or
any officer, director, or agent of any such person from
owning, directly, or indirectly, any interest in any on-sale
license, or from providing anything of value to retailers, be
it free goods, services, or advertising.
6)Specifies that the ABC Act does not prohibit holders of retail
on-sale or off-sale licenses from purchasing advertising in
any publication by specified alcoholic beverage licensees.
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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). An "off-sale" license authorizes the sale
of all types of alcoholic beverages for consumption off the
premises in original, sealed containers.
This bill:
1)Allows a licensed beer manufacturer to apply to the Department
of ABC for a brewery event permit which would allow the sale
of beer produced by the licensee for consumption on property
contiguous and adjacent to the licensed premises owned or
under the control of the licensee.
2)Limits the number of events authorized by a brewery event
permit to no more than four in any calendar year.
3)Stipulates that the fee for a brewery event permit issued
during the 2016 calendar year shall be one hundred ten dollars
($110), and for a permit issued during the years thereafter,
the annual fee shall be calculated, as specified. The permit
may be renewed annually at the same time as the licensee's
license and shall be transferable as a part of the license.
4)Specifies that for each brewery event, consent for the sale of
beer must be obtained by the licensee from the Department of
ABC in the form of an event authorization issued by the
Department. Also, provides that an event authorization shall
be subject to approval by the appropriate local law
enforcement agency and limits the fee for each event
authorization to no more than twenty-five dollars ($25).
5)Provides that all money collected as fees shall be deposited
in the ABC Fund for allocation, upon appropriation by the
Legislature.
6)Makes it explicit that at all approved events, the licensee
may exercise only those privileges authorized by the
licensee's license and requires the licensee to comply with
all provisions of the ABC Act pertaining to the conduct of
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on-sale premises. Any violation of those provisions may be
grounds for suspension or revocation of the licensee's license
or permit, or both, as though the violation occurred on the
licensed premises.
7)Authorizes a licensee to sponsor or otherwise participate in
an event conducted by, and for the benefit of, a nonprofit
organization that has obtained a temporary daily on-sale or
off-sale license from the Department of ABC, in which retail
or nonretail licensees are involved as sponsors or
participants, provided that all of the following conditions
are met:
a) Sponsorship or participation must be pursuant to a
written agreement;
b) Except as otherwise provided, any payment for
sponsorship or participation shall be as moneys paid only
to the nonprofit organization holding the temporary
license;
c) A nonretail licensee may donate alcoholic beverages to a
nonprofit only as otherwise authorized by the ABC Act;
d) Except as otherwise provided by this bill, a retail
licensee shall not give, sell, or furnish alcoholic
beverages to the temporary licensee;
e) All sponsorship agreements for the event shall be on
identical terms and sponsorship or participation
opportunities shall be made available to any retail and
nonretail licensee wishing to sponsor or participate.
Also, permits the temporary daily licensee to establish
different levels of sponsorship, as specified.
Additionally, provides that any advertising or promotion of
the event by the temporary daily licensee must identify all
sponsors;
f) A nonretail licensee may communicate sponsorship, or
participation, and share, repost, or otherwise forward a
social media post by a retail licensee or nonretail
licensee if the communication, sharing, reposting, or
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forwarding of the social media post does not contain the
retail price of any alcoholic beverage. Also, a nonretail
licensee shall not pay or reimburse a retail licensee,
directly or indirectly, for any social media advertising
services. And, a retail licensee shall not accept any
payment or reimbursement, directly or indirectly, for any
social media advertising services offered by a nonretail
licensee;
g) The temporary retail licensee must conspicuously offer
for sale alcoholic beverages other than the products
produced, distributed, bottled, or otherwise offered for
sale by any of the sponsors of the event. Also, the
temporary retail licensee must serve other brands of
alcoholic beverages distributed by a competing wholesaler
in addition to the brands manufactured or marketed by the
nonretail licensee sponsoring or participating in the
event. Additionally, requires a licensee that sponsors or
participates in a nonprofit event to keep detailed records
for a period of at least three years.
8)Specifies that the ABC Act does not prohibit purchasing
advertising in a publication published by a nonretail
licensee, as defined, and includes Internet Web sites and
social media feeds as types of publications for these
purposes.
9)Specifies that the Department of ABC may adopt any regulations
necessary for the administration of this bill.
Background
Purpose of AB 776. According to the author's office, this bill
does two things. First, it provides for the creation of a
brewery event permit intended to allow brewery owners to apply
to the Department of ABC for a temporary expansion of their
permitted brewery premises for special events. The temporary
permit for premises expansion would be limited to only the
property that is immediately adjacent to, or contiguous to, the
existing brewery premises. This bill will enable breweries to
hold special anniversary celebrations, new release parties, or
other special events where the expected crowd could not be
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accommodated in the public areas of the brewery. The author's
office points out that current law authorizes wineries to apply
for a similar temporary permit for special events - this bill
simply extends that privilege to breweries.
Secondly, this bill addresses concerns with current law that led
to the cancellation of a major food and wine festival in
Sacramento. Specifically, the ABC Act prohibits the involvement
of alcoholic beverage manufacturers in events that benefit any
permanent retail licensee or otherwise provide anything of value
to a retail license. In 2014, the Sacramento Convention and
Visitors Bureau, a nonprofit organization, held its annual
"Grape Escape" food and wine event. A number of wineries and
breweries donated alcoholic beverages and participated in the
event. However, a large chain retailer sponsored the event as
the name sponsor and the event was branded the "Save Mart Grape
Escape." As a result, the involvement of manufacturers and
their promotion of the event by various methods, including
social media, violated the law.
The author's office states that this bill will allow licensed
alcoholic beverage manufacturers and retailers to participate
together in sponsoring and promoting nonprofit fundraising
events. By restructuring several sections of the ABC Act
pertaining to non-profit events, suppliers and retailers will be
able to sponsor and participate in such events and promote their
products in a socially responsible manner. The author's office
emphasizes that in addition to allowing suppliers and retailers
to participate together, these new provisions also allow for
communication of sponsorship or participation in these events
through social media.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: No
SUPPORT: (Verified 8/18/15)
California Craft Brewers Association (source)
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OPPOSITION: (Verified 8/18/15)
None received
ASSEMBLY FLOOR: 76-0, 5/26/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bonilla,
Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau,
Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd,
Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia,
Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray,
Grove, Hadley, Roger Hernández, Holden, Irwin, Jones,
Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,
Maienschein, Mayes, McCarty, Medina, Melendez, Mullin,
Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,
Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
Wilk, Williams, Wood, Atkins
NO VOTE RECORDED: Bloom, Chávez, Harper, Mathis
Prepared by:Arthur Terzakis / G.O. / (916) 651-1530
8/20/15 16:41:06
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