BILL ANALYSIS Ó
AB 776
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB
776 (Cooper)
As Amended September 4, 2015
Majority vote
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|ASSEMBLY: | 76-0 | (May 26, |SENATE: | 39-1 | (September 10, |
| | |2015) | | |2015) |
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Original Committee Reference: G.O.
SUMMARY: Allows a licensed beer manufacturer to apply to the
Department of Alcoholic Beverage Control (ABC) for a brewery
event permit that 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 (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. Specifically, this bill:
1)Allows a licensed beer manufacturer to apply to ABC for a
brewery event permit that will allow the sale of beer produced
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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 $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, the licensee must
obtain consent for the sale of beer from 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 $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 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
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following conditions are met:
a) Except as otherwise provided in this bill, any payment
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 Act;
d) Except as otherwise provided by the 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. In
addition, a nonretail licensee shall not pay or reimburse a
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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
exclusively at the event. In addition, 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 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 ABC may adopt any regulations necessary for the
administration of this bill.
The Senate amendments:
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1)Authorize licensed alcoholic beverage manufacturers and
retailers to sponsor or otherwise participate in an event
conducted by, and for the benefit of, a nonprofit organization
that has acquired a specified alcoholic beverages license,
subject to specified conditions, including that a nonretail or
retail licensee may choose to participate in any level of
sponsorship, as specified.
2)Specify the Act does not prohibit purchasing advertising in a
publication published by a nonretail licensee, as defined, and
would include Internet Web sites and social media feeds as
types of publications for these purposes.
3)Prohibit a retail licensee from purchasing beer from any beer
manufacturer for the purpose of selling or offering to sell
that beer under specified circumstances, including where the
beer container contains the statement or is marked "Not
Packaged for Resale".
4)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
5)Make relating technical and clarifying changes.
EXISTING LAW:
1)Establishes 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
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premises, as specified.
3)Authorizes a licensed winegrower to apply to ABC for a wine
sales event permit that allows the sale of bottled wine
produced by that winegrower at specified events approved by
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 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
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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 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.
FISCAL EFFECT: According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS: This bill was substantially amended in the Senate and
is inconsistent with Assembly actions.
Purpose of this bill: According to the author's office, this
bill is intended to address four significant issues. First, it
provides for the creation of a brewery event permit intended to
allow brewery owners to apply to 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,
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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.
Additionally, this bill addresses concerns with current law that
led to the cancellation of a major food and wine festival in
Sacramento. Specifically, the 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 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.
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Lastly, 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 ABC. ABC 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 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 Business and Professions Code Section
25666will guarantee fairness in the administration of justice by
allowing all witnesses to be heard.
Analysis Prepared by:
Eric Johnson / G.O. / (916) 319-2531 FN:
0002313