BILL ANALYSIS Ó
AB 780
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Date of Hearing: April 22, 2015
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Adam Gray, Chair
AB 780
Williams - As Amended April 8, 2015
SUBJECT: Alcoholic beverages: tied-house restrictions:
on-sale retailers advertising
SUMMARY: Broadens the exception in the Alcoholic Beverage
Control Act (Act) by removing the requirement that the listing
be in response to a direct inquiry , as specified. The bill
would also permit the listing of contact information for
off-sale retailers and would make conforming changes to reflect
this inclusion. Specifically, this bill:
1) Provides the listing of the names, addresses, telephone
numbers, email addresses, or Internet web site addresses, or
other electronic media, of two or more unaffiliated on-sale or
off-sale retailers selling beer, wine, or distilled spirits
produced, distributed, or imported by a non-retail industry
member does not constitute a thing of value or prohibited
inducement to the listed on-sale or off-sale retailer, provided
all of the following conditions are met:
a) The listing is the only reference to the on-sale or
off-sale retailers in the direct communication.
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b) The listing does not refer only to one on-sale or off-sale
retailer or only to on-sale or off-sale retail establishments
controlled directly or indirectly by the same retailer.
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, separates the
alcoholic beverage industry into three component parts, or
tiers: manufacturer (including breweries, wineries and
distilleries), wholesaler, and retailer (both on-sale and
off-sale).
3)Prohibits a manufacturer, winegrower, manufacturer's agent,
California winegrower's agent, rectifier, distiller, bottler,
importer, or wholesaler from furnishing or lending money or
other thing of value to a person engaged in operating, owning,
or maintaining an on-sale licensed premise.
4)Provides that the listing of the names, addresses, telephone
numbers, email addresses, Internet Web site addresses, or
other electronic media, of 2 or more unaffiliated on-sale
retailers selling beer, wine, or distilled spirits, as
specified, in response to a direct inquiry from a consumer, as
specified, does not constitute a thing of value or prohibited
inducement, if specified conditions are met. The Act includes
among those conditions the requirement that the listing not
refer to only one on-sale retailer or only to on-sale retail
establishments controlled by the same retailer.
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FISCAL EFFECT: Unknown
COMMENTS:
Purpose of the bill : The author's office notes that current ABC
law prohibits a supplier (manufacturer and distributor) from
giving or lending money or anything of value to anyone who
operates, owns or maintains any off-sale licensed premise.
However, these licensed entities may list or publish, in
response to a direct inquiry from a consumer, the name, address,
telephone numbers, e-mail, or web address of two or more
retailers who sell their products so long as the retailer
operates and is licensed as a bona fide public eating-place
(restaurant).
The author's office states, this bill "will provide small
distillers, brewers and wineries with an additional tool to
promote their start-up businesses. Social media has forever
changed basic communication, and by not allowing small
businesses to participate in this integral form of free
communication, the Tied-House laws have disadvantaged them from
connecting with customers and distributors.
The author's office states, "Social media is a free form of
advertisement to the public; therefore, it should not be defined
as a gift of advertisement. For many millennials, social media
is the equivalent of personal speech and is ingrained in today's
society. Current law needs to provide flexibility for the small
manufacturers, who do not always have the start-up money to
spend on advertising. With the societal shift towards craft
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breweries, and small wineries, manufacturers should be allowed
to use social media as a communication tool."
AB 780 will provide greater flexibility and protect the ability
of specified alcohol interests to engage in social media
communications with consumers, while preserving the original
intent of the Tied-house law of prohibiting gifts of
advertisement from alcoholic beverage producers, distributors or
importers.
Background : Existing law, known as the "Tied-house" law,
separates the alcoholic beverage industry into three component
parts, or tiers, of manufacturer (including breweries, wineries
and distilleries), wholesaler, and retailer (both on-sale and
off-sale).
Tied-house refers to a practice in this country prior to
Prohibition and still occurring in England today where a bar or
public house, from whence comes the "house" of tied house, is
tied to the products of a particular manufacturer, either
because the manufacturer owns the house, or the house is
contractually obligated to carry only a particular
manufacturer's products.
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 marketplace; (c) prohibit commercial bribery and protect the
public from predatory marketing practices; and, (d) discourage
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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.
Existing law provides that no licensee shall, directly or
indirectly, give any premium, gift, free goods, or other thing
of value in connection with the sale, distribution, or sale and
distribution of alcoholic beverages, and no retailer shall,
directly or indirectly, receive any premium, gift, free goods or
other thing of value from a supplier of alcoholic beverages,
except as authorized by ABC.
In Support : Writing in support, the California Craft Brewers
Association states, "Craft beer enthusiasts are extremely
interested in learning about new beer releases and product
availability in their cities. The use of social media
communications between beer manufacturers and their customers
has become a primary means of communication in recent years to
provide this information. However, a substantial amount of
confusion exists within the industry about form and content of
social media communications when it comes to compliance with
California's alcohol beverage laws and regulations. AB 780
seeks to reduce this confusion and increase industry compliance
by making minor modifications to state law."
Related legislation : AB 973 (Gray) of the 2015-16 Legislative
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Session. Merges two similar tied-house exceptions (one
pertaining to "on-sale" retailers the other to "off-sale"
retailers) within the Alcoholic Beverage Control (ABC) Act,
which authorizes the dissemination of information regarding the
retail availability of products by alcoholic beverage producers,
distributors or importers in response to direct requests from
consumers. (Pending in Assembly Appropriations Committee)
Prior legislation : AB 2349 (Nestande), Chapter 374, Statutes of
2012. Revised the direct inquiry provisions in the Act to
remove the requirement that manufacturers and distributors can
only provide consumer information on where they can find a
specific product at an on-sale establishment if that on-sale
retailer operates and is licensed as a restaurant. By removing
that requirement, manufacturers and distributors can add bars to
the list they provide consumers of on-sale establishments that
serve their specific products.
SB 1423 (Chesbro) Chapter 205, Statutes of 2000. Authorized
wineries and brandy manufacturers to advertise the name and
location of restaurants that sell their products.
SB 1233 (Chesbro) Chapter 666, Statutes of 1999. Allowed for
the limited dissemination of information regarding the off-sale
availability of alcoholic beverages.
AB 2777 (Granlund), Chapter 980, Statutes of 2000. Among other
things, broadened an existing tied-house exception relating to
the purchase of alcoholic beverage advertisements at specified
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venues to include distilled spirits manufacturers. Also,
authorized a non-retail alcohol industry member to list
specified information relating to the availability of alcoholic
beverages at no more than two restaurants in response to a
direct inquiry from a consumer received by telephone, mail, or
the Internet.
REGISTERED SUPPORT / OPPOSITION:
Support
California Craft Brewers Association
Family Winemakers of California
Opposition
None on file
Analysis Prepared by:Eric Johnson / G.O. / (916) 319-2531
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