BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
                              Senator Isadore Hall, III
                                        Chair
                                2015 - 2016  Regular 

          Bill No:           AB 1322          Hearing Date:     6/28/2016
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          |Author:    |Daly                                                 |
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          |Version:   |6/20/2016    Amended                                 |
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          |Urgency:   |No                     |Fiscal:      |Yes             |
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          |Consultant:|Arthur Terzakis                                      |
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          SUBJECT: Alcoholic beverages: licenses: beauty salons and barber  
          shops


          DIGEST:    This bill allows beauty salons and barber shops to  
          serve their clients limited quantities of beer or wine at no  
          extra charge without obtaining a license or permit from the  
          Department of Alcoholic Beverage Control (ABC) if specified  
          requirements are satisfied. 
            
          ANALYSIS:
          
          Existing law:
          
          1)Establishes the Department of ABC and grants it exclusive  
            authority to administer the provisions of the ABC Act in  
            accordance with laws enacted by the Legislature.  

          2)Makes it unlawful for any person other than a licensee of the  
            ABC to sell, manufacture, or import alcoholic beverages in  
            this state.

          3)Allows the serving of alcoholic beverages without a license or  
            permit in a "limousine" or as part of a "hot air balloon ride"  
            service, provided there is no extra charge or fee for the  
            alcoholic beverages. 

          4)Establishes the Barbering and Cosmetology Act, which provides  
            for the licensure and regulation of barbers and  







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            cosmetologists, including the practice of skin care by  
            licensed estheticians, by the State Board of Barbering and  
            Cosmetology (CBBC) within the Department of Consumer Affairs.   
            (Chapter 10 of Division 3 of the Business and Professions  
            Code)

          This bill:

          1)Specifies that an ABC license or permit is not required for  
            the serving of beer or wine as part of a beauty salon service  
            or barber shop service provided the following requirements are  
            met:

             a)   There is no extra charge or fee for the beer or wine;



             b)   The license of the establishment providing the beauty  
               salon service or barber shop service is in good standing  
               with the CBBC; 



             c)   No more than 12 ounces of beer or six ounces of wine by  
               the glass are offered to a client; and,



             d)   The beer or wine is provided only during business hours  
               and in no case later than 10 p.m.



          2)Makes it explicit that nothing in this bill shall be construed  
            to preempt the authority of a city or city and county to  
            restrict or limit the consumption of alcoholic beverages  
            within its jurisdiction.



          Background



          In October of 1985, the Attorney General issued opinion No.  








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          85-701 which held that the operator of a commercial enterprise  
          who offers and provides complimentary alcoholic beverages to  
          guests, customers, or passengers while charging for the services  
          rendered is deemed to have "sold" the alcoholic beverage,  
          thereby necessitating an alcoholic beverage license.  At the  
          time, this opinion affected a large number of California  
          businesses (e.g., limousine and bus services, and  
          bed-and-breakfast inns) which had made a practice of offering  
          complimentary champagne and other alcoholic beverages to  
          passengers and guests as part of their service.  The Legislature  
          has responded to a number of concerns raised by various business  
          entities over the years relative to this matter by enacting  
          narrowly crafted legislation to address the problem.  (See  
          prior/related legislation listed below.)

          Existing law grants the Department of ABC the authority to issue  
          numerous types of licenses but none are authorized specifically  
          for a "beauty salon or barber" service.  Currently, it is  
          unlawful for any corporation, club, or organization to sell,  
          give, serve, dispense, keep, or allow to be consumed on its  
          premises any alcoholic beverage unless licensed or permitted by  
          law.  This prohibition includes the serving of free alcohol with  
          the purchase of another good or service.  It is also unlawful  
          for any person to keep or consume an alcoholic beverage on any  
          premises open to the public other than as specifically permitted  
          by law.  

          Purpose of the bill:  According to the author's office, many  
          beauty salons and barber shops throughout California offer  
          complimentary alcoholic beverages to their customers.  However,  
          because these establishments often lack ABC licenses, they may  
          be in violation of state and local alcohol licensing  
          requirements.  This bill is intended to grant beauty salons and  
          barber shops the opportunity to serve beer or wine to their  
          clients aged 21 or over without an ABC license or permit,  
          provided there is no extra fee charged for the beverage.


          Beauty salons and barber shops.  According to the CBBC, there  
          are approximately 42,000 beauty salon and barber shop location  
          permits issued throughout the State, however, the CBBC location  
          license does not differentiate between a beauty salon and barber  
          shop.  The following services are not under the jurisdiction of  
          the CBBC:  body-piercing, braiding, ear candling, laser  
          services, massage, permanent make-up, medical services,  








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          threading and reflexology. 


          Staff comments.  Relaxing with a glass of wine while getting  
          those tootsies pampered at the salon may appear to be a simple  
          act of hospitality but the salon is very likely running afoul of  
          alcoholic beverage licensing laws relating to possession,  
          serving, or sale of alcoholic beverages.  Over the years, other  
          businesses (e.g., art galleries, painting classes, spas, and bed  
          and breakfasts) desiring to offer complimentary drinks with a  
          service have struggled with the decision to either obtain a  
          proper alcoholic beverage license or cease to provide free  
          drinks to their customers. 


          The privilege to provide alcoholic beverages in a retail  
          establishment is a highly coveted and sought after authorization  
          many businesses desire.  This bill would essentially grant  
          beauty salons and barber shops the privilege of serving  
          alcoholic beverages to their clients without having to go  
          through the standard ABC licensing process which requires  
          applicants to undergo fingerprinting and a thorough background  
          investigation.  In addition, the existing ABC licensing process  
          provides the opportunity for residents and local governing  
          bodies to voice their concerns to the Department of ABC as it  
          pertains to the issuance of a license.  


          This bill grants beauty salons and barber shops the opportunity  
          to serve alcohol (twelve ounces of beer or six ounces of wine)  
          without an ABC license or permit, provided:  (1) there is no  
          extra fee charged for the alcoholic beverage; (2) the  
          establishment's existing salon/barbering license is in good  
          standing with the CBBC; and, (3) the beer or wine is served  
          during normal business hours. 


          As currently drafted, it is unclear how alcohol limitations  
          related to underage drinking and excess use would be enforced.    



          Prior/Related Legislation
          
          SB 346 (Harman, 2011) would have authorized the serving of  








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          alcoholic beverages without a license or permit as part of a  
          "gondola ride" (boat) service. (Held in Assembly Appropriations  
          Committee at request of the author)


          AB 2416 (Governmental Organization Committee, Chapter 639,  
          Statutes of 1998) provided that a license or permit is not  
          required for the serving of alcoholic beverages as part of a hot  
          air balloon ride service, provided there is no extra charge or  
          fee for the alcoholic beverages.


          SB 1546 (Beverly, Chapter 1354, Statutes of 1986) provided that  
          a license or permit is not required for the serving of alcoholic  
          beverages in a limousine provided there is no extra charge or  
          fee for the alcoholic beverages.


          FISCAL EFFECT:                 Appropriation:  No    Fiscal  
          Com.:             Yes          Local:          No


            SUPPORT:  

          Drybar  (sponsor)
          18|8 Fine Men's Hair Salon of Playa Vista

          OPPOSITION:

          Alcohol Justice
          Asian American Drug Abuse Program, Inc.
          California Alcohol Policy Alliance
          California Council on Alcohol Problems
          Los Angeles Drug and Alcohol Policy Alliance
          Partnership for a Positive Pomona
          Paso por Paso
          Pueblo y Salud
          San Rafael Alcohol and Drug Coalition
          The Wall Las Memorias Project
          United Coalition East Prevention Project
          Youth for Justice
          And, numerous individuals throughout the state

          ARGUMENTS IN SUPPORT:  Drybar Holdings LLC (known as "Drybar"),  
          the sponsor of this bill, notes that it is a fast-growing beauty  








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          business in California, providing customers with expert services  
          in "blow outs" of hair (that is, washing and blow-dry styling by  
          a professional stylist).  Eighteen Drybar locations, employing  
          800 individuals, are currently located throughout the state.  


          Drybar contends that AB 1322 seeks to address an issue that has  
          arisen relative to beauty salons that choose to provide a  
          complimentary glass of wine or champagne to clients while they  
          visit the business establishment for services.  The Department  
          of ABC has informed Drybar that each of its locations would need  
          to be licensed to sell alcoholic beverages even though the wine  
          or champagne provided to clients is complimentary.


          Drybar states that AB 1322 will exempt beauty salons and barber  
          shops, in good standing with the CBBC, from needing to be  
          licensed by the ABC in order to offer complimentary beer, wine  
          or champagne.  Drybar argues that a similar exemption exists for  
          other types of businesses that serve complimentary alcoholic  
          beverages to their clients (e.g., limousine services, hot air  
          balloon rides, etc.) 


          ARGUMENTS IN OPPOSITION:   Opponents are concerned about the  
          unintended consequences of allowing alcohol consumption at  
          beauty/barbering establishments.  For instance, opponents  
          question whether the ABC is capable of monitoring the thousands  
          of licenses that have been issued under the CBBC.  Opponents  
          also point out that AB 1322 makes no mention of age requirements  
          or proper "responsible beverage service" training of persons  
          pouring the alcohol.  Furthermore, opponents believe that the  
          alcohol industry may begin marketing and distributing their  
          products through beauty/barbering establishments as another  
          means of public tastings.