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: 9/4/15 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
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. Additionally,
this bill adds a new provision to the ABC Act that prohibits a
retail licensee from purchasing beer at the beer manufacturer's
licensed premises and then re-retailing the beer product at
their own licensed premise.
Senate Floor Amendments of 9/4/15 add a provision to prevent
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retail licensees from re-retailing beer purchased from a beer
manufacturer; add language modifying the terms for which an
administrative hearing involving the sale of alcohol to a minor
may be delayed, to include reasonable situations where the minor
is generally unavailable; and rewrite, as specified, the
requirements under which manufacturers and retailers may
participate in sponsoring promotional events for the benefit of
nonprofit organizations.
ANALYSIS:
Existing law:
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,
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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.
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.
8)Authorizes specified licensees to purchase alcoholic beverages
for resale under specified conditions.
9)Requires the Department of ABC, in any hearing on an
accusation charging a licensee with a violation of specified
provisions relating to minors, to produce the alleged minor
for examination at the hearing unless he or she is unavailable
as a witness because he or she is dead or unable to attend the
hearing because of a then-existing physical or mental illness
or infirmity, or unless the licensee has waived, in writing,
the appearance of the minor. The law also provides that when
a minor is absent because of a then-existing physical or
mental illness or infirmity, a reasonable continuance shall be
granted to allow for the appearance of the minor if the
administrative law judge finds that it is reasonably likely
that the minor can be produced within a reasonable amount of
time.
This bill:
1)Allows a licensed beer manufacturer to apply to the Department
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of ABC for a brewery event permit which will 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 and
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.
3)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).
4)Provides that all money collected as fees shall be deposited
in the ABC Fund for allocation, upon appropriation by the
Legislature.
5)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
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.
6)Authorizes a licensee to sponsor or otherwise participate in
an event conducted by, and for the benefit of, a nonprofit
organization in which retail or nonretail licensees are
involved as sponsors or participants, provided that all of the
following conditions are met:
a) Except as otherwise provided in this bill, any payment
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of money or other consideration for sponsorship or
participation in the event shall be made only to the
nonprofit organization conducting the event;
b) Except as otherwise provided in this bill, a nonretail
licensee shall not, directly or indirectly, pay money or
provide any other thing of value to a permanent retail
licensee that is also a sponsor of, or participant in, the
event;
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 the ABC Act, a retail
licensee shall not give, sell, or furnish alcoholic
beverages to the temporary licensee;
e) A nonretail or retail licensee may choose to participate
in any level of sponsorship, including at the name or
principal sponsor level. Also, permits a nonprofit
organization to choose to have one, or multiple, name or
principal sponsors;
f) A nonretail licensee may advertise or communicate
sponsorship or participation in the event. This
advertising or communication may include, but is not
limited to, initiating, sharing, reposting, or otherwise
forwarding a social media post by a permanent retail
licensee or a nonretail licensee if the advertisement or
communication does not contain the retail price of any
alcoholic beverage or otherwise promotes a retail licensee
beyond its sponsorship or participation in the event.
Also, a nonretail licensee shall not pay or reimburse a
retail licensee, directly or indirectly, for any social
media advertising services. And, a permanent retail
licensee shall not accept any payment or reimbursement,
directly or indirectly, for any advertising services
offered by a nonretail licensee;
g) A nonretail licensee shall not require, directly or
indirectly, as a condition of sponsorship or participation
in any event that its products be sold or served
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exclusively at the event. Also, a retail licensee shall
not receive, directly or indirectly, any advertising, sale,
or promotional benefit from any permanent retail licensee
in connection with the sponsorship or participation. In
addition, a permanent retail licensee shall not offer or
provide a nonretail licensee any advertising, sale, or
promotional benefit in connection with the sponsorship or
participation. Additionally, requires a licensee that
sponsors or participates in a nonprofit event to keep
detailed records for a period of at least three years.
7)Adds a new provision to the ABC Act that prohibits a retail
licensee from re-retailing any beer that is purchased from a
beer manufacturer at the beer manufacturer's licensed premises
under specified circumstances.
8)Modifies the terms for which an administrative hearing
involving the sale of alcohol to a minor may be delayed, to
include reasonable situations where the minor is generally
unavailable.
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
is intended to address four significant issues. First of all,
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
will 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 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.
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Additionally, 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.
Furthermore, the author's office points out that this bill is
intended to address a growing problem involving licensed
retailers who are purchasing beer from craft breweries at retail
prices and then re-selling those products at their own licensed
locations. Such practice violates existing price posting laws
and places the brewery license and employees in legal jeopardy.
Finally, this bill seeks to remedy a problem related to
administrative hearings involving the sale of alcoholic
beverages to minors. The author's office states that violations
by licensees involving the sale of alcoholic beverages to minors
are among the highest public safety priority of the Department
of ABC. The Department is required to produce the minor at any
hearing held on an appeal of the disciplinary action. However,
quite often, the minor is unavailable to attend the scheduled
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hearing due to changes in life circumstances, such as moving out
of state to attend college or enlisting in the military, or due
to last minute situations such as transportation problems or
forgetful scheduling by the minor. The author's office contends
that the changes incorporated in Section 25666 of the B & P Code
will guarantee fairness in the administration of justice by
allowing all witnesses to be heard.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: Yes
SUPPORT: (Verified 9/8/15)
California Craft Brewers Association (source)
Anheuser-Busch
Family Winemakers of California
OPPOSITION: (Verified 9/8/15)
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
9/8/15 14:42:02
**** END ****
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