BILL ANALYSIS Ó
AB 1320
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB
1320 (Maienschein)
As Amended September 4, 2015
2/3 vote. Urgency
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|ASSEMBLY: |76-0 |(May 26, 2015) |SENATE: | 40-0 |(September 9, |
| | | | | |2015) |
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Original Committee Reference: G.O.
SUMMARY: Creates 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, or cultural
entertainment events solely at the San Diego County Fairgrounds
in the City of Del Mar, under specified conditions.
Specifically, this bill:
1)Provides an authorized licensee may sponsor events promoted
by, and may purchase advertising space and time from, or on
behalf of, a live entertainment marketing company in
connection with events organized and conducted by the live
entertainment marketing company on the premises of a permanent
retail licensee located at the San Diego County Fairgrounds,
located in the City of Del Mar in the County of San Diego,
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subject to all of the following conditions:
a) The live entertainment marketing company operates and
promotes live artistic, musical, sports, or cultural
entertainment events only.
b) The events will take place over a period of no more than
four consecutive days during which approximately 100 acts
will perform before approximately 20,000 or more patrons.
c) The live entertainment marketing company is a Delaware
limited liability company that is under common ownership,
management, or control by a private equity firm that may
also have common ownership, management, or control of a
licensed California winery, provided the winery represents
not more than 25% of the assets under common ownership,
management, or control by the private equity firm or its
subsidiaries, and the live entertainment marketing company
exercises no control over the operations of the winery.
d) Any authorized licensee sponsoring an event or
purchasing advertising space or time, pursuant to this
section, shall obtain written verification of compliance
with this subdivision prior to such sponsorship or the
purchase of advertising space or time.
e) Any on-sale licensee operating at the San Diego County
Fairgrounds shall serve other brands of beer, distilled
spirits, and wine distributed by a competing wholesaler or
manufacturer in addition to any brand manufactured,
distributed, or owned by the authorized licensee sponsoring
an event or purchasing advertising space or time, as
defined.
f) An agreement shall not be conditioned directly or
indirectly, on the purchase, sale, or distribution of any
alcoholic beverage manufactured or distributed by any
authorized licensee sponsoring or purchasing advertising
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space or time, as defined.
2)Provides any sponsorship of events or purchase of advertising
space or time shall be conducted pursuant to a written
contract entered into by the authorized licensee and the live
entertainment marketing company.
3)Defines "authorized licensee" to mean the following licensees:
beer manufacturer, out-of-state beer manufacturer's
certificate, winegrower, winegrower's agent, importer,
rectifier, distilled spirits manufacturer, distilled spirits
rectifier general, distilled spirits manufacturer's agent.
4)States that except for a licensee that holds only a beer and
wine importer general license or a distilled spirits importer
general license, "importer" does not include the holder of any
importer license that does not also hold at least one other
license specified as an authorized licensee.
5)States that an authorized licensee who, through coercion or
other illegal means, induces the holder of a wholesaler's
license to fulfill contractual obligations entered into
pursuant to this bill guilty of a misdemeanor.
The Senate amendments:
1)Clarify where a live entertainment marketing company can hold
an event in San Diego County while taking place over a period
of no more than four consecutive days.
2)State that any authorized licensee sponsoring an event or
purchasing advertising space or time, shall obtain written
verification of compliance with this subdivision prior to such
sponsorship or the purchase of advertising space or time.
3)Add definitions pertaining to the implementation of the bill.
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4)Add clarifying and technical amendments.
5)Add an urgency clause, to take effect immediately.
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 for
this purpose.
2)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.
3)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.
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4)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 (formerly known as
ARCO 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,
Levi's Stadium in the City of Santa Clara, and other venues].
5)Provides a narrow tied-house exception that expressly
authorizes, under specified conditions, a beer manufacturer,
holder of a winegrower's license, California winegrower's
agent, distilled spirits manufacturer, holder of a distilled
spirits rectifiers general license, or a distilled spirits
manufacturer's agent to purchase advertising space or time
from a fully enclosed venue (ClubNokia) with box office sales
and attendance by the public on a ticket basis only, with a
patronage capacity in excess of 2,000, but not more than
3,000, located in Los Angeles County within the area subject
to the Los Angeles Sports and Entertainment District Specific
Plan adopted by the City on September 6, 2001, where the owner
of the venue is not the on-sale retail licensee. (Business
and Professions Code Section 25503.42)
AS PASSED BY THE ASSEMBLY, this bill created a specific
tied-house exception to allow specific alcohol licensees to
sponsor events or purchase advertising space and time from, or
on behalf of, a live entertainment marketing company for live
artistic, musical, sports, or cultural entertainment events
conducted at the San Diego County Fairgrounds in Del Mar.
FISCAL EFFECT: According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
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COMMENTS: This bill as amended in the Senate is consistent with
Assembly actions.
Purpose of the bill: As noted above, 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
ABC Act encompassing various venues throughout the state.
This bill creates a stand-alone tied-house exception applicable
to Horsepower Entertainment Company, which is holding the KAABOO
festival - a three-day event to be held in September 2015 at the
San Diego Fairgrounds in Del Mar that will combine a diverse mix
of music, culinary offerings, libations, art exhibitions,
comedy, dancing and other amenities. Due to the fact that
Horsepower Entertainment's ownership includes an interest in a
Napa winery (Jamieson Ranch Vineyards) it cannot sponsor the
festival on the grounds of the San Diego County Fair which has
an on-sale licensee (caterer) on its premises.
This bill will enable Horsepower Entertainment to enter into a
contractual agreement with an alcoholic beverage supplier
interested in purchasing advertising at the festival. This bill
subjects Horsepower Entertainment to certain requirements, as
specified, and also requires the on-sale licensee operating at
the venue where the live events are performed to serve other
brands of beer, wine, or distilled spirits distributed by a
competing wholesaler in addition to any brand manufactured or
distributed by the owning, sponsoring, or advertising alcoholic
beverage supplier.
According to the author's office, "the KAABOO festival is an
entertainment experience with world-class music, dancing,
incredible cuisine, craft libations, inspiring contemporary art,
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and more. In contrast to typical festivals, KAABOO will offer
local and regional delicacies, a contemporary art fair, salon
and golf simulator in addition to the more than 100 music acts.
KAABOO has committed to donate $1 for every ticket sold to San
Diego area charitable partners."
Additionally, the author's office indicates that the festival is
expected to have a significant economic impact on the Del Mar
region - local restaurants, lodging and other businesses are
expected to benefit from the increased tourism that will be
generated.
Related/Prior 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 ABC Act that allows alcoholic beverage
licensees, as specified, to make monetary or alcoholic beverage
contributions to the Green Music Center under certain
conditions.
AB 527 (Dodd) of the current legislative session, creates a new
tied-house exception that authorizes alcoholic beverage
suppliers to sponsor events or purchase advertising space and
time from, or on behalf of, a live entertainment marketing
company that is a wholly owned subsidiary of a non-publicly
traded live entertainment company that has its principal place
of business in Napa County, subject to specified restrictions.
(Pending on the Senate Floor)
AB 600 (Bonta), Chapter 139, Statutes of 2014, extended 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 an
outdoor stadium with a fixed seating capacity of at least 68,000
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seats located in the City of Santa Clara (Levi's Stadium - new
home of the San Francisco 49ers).
SB 324 (Wright), Chapter 164, Statutes of 2013, extended an
existing tied-house exception pertaining to the general
prohibition against advertising arrangements between retail,
wholesale and manufacturer licensees to include a fully enclosed
arena with a fixed seating capacity in excess of 13,000 seats
(the Forum) in the City of Inglewood.
AB 813 (John A. Pérez), Chapter 647, Statutes of 2009, created a
new tied-house exception that authorized 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, subject to
specified conditions.
AB 776 (Aghazarian), Chapter 221, Statutes of 2007, created a
new 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 an
existing tied-house exception pertaining to the general
prohibition 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 - home of the Stockton Ports
Class A baseball team) located in San Joaquin County.
AB 3046 (Chávez), Chapter 587, Statutes of 2006, extended an
existing tied-house exception pertaining to the general
prohibition against advertising arrangements between retail,
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wholesale and manufacturer licensees to the HP Pavilion in Santa
Clara County.
Analysis Prepared by:
Eric Johnson / G.O. / (916) 319-2531 FN:
0002307