BILL ANALYSIS                                                                                                                                                                                                    

                                                                    AB 1322

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          1322 (Daly and Wilk)

          As Amended  June 30, 2016

          Majority vote

          |ASSEMBLY:  | 74-0 |(May 7, 2015)  |SENATE: |28-7  |(August 15,      |
          |           |      |               |        |      |2016)            |
          |           |      |               |        |      |                 |
          |           |      |               |        |      |                 |

          Original Committee Reference:  G.O.

          SUMMARY:  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.

          The Senate amendments:

          1)Make 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.
          2)Make technical changes

          3)Add co-author.


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          EXISTING LAW: 

          1)Establishes 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)Provides that no license or permit shall be required for the  
            serving of alcoholic beverages 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)Provides that ABC must deny an application for a license if  
            issuance would create a law enforcement problem, or if  
            issuance would result in, or add to, an undue concentration of  
            licenses in the area where the license is desired.  For liquor  
            stores and other specified retail license, however, the ABC is  
            authorized to issue a license if the respective local  
            government determines that public convenience or necessity  
            would be served by granting the license.

          5)Caps the number of new on and off-sale general licenses issued  
            by the ABC at one for every 2,500 inhabitants of the county  
            where the establishment is located (2,000:1 for on sale  
            licenses).  If no licenses are available from the state due to  
            the population restrictions, those people interested in  
            obtaining a liquor license may purchase one from an existing  
            licensee, for whatever price the market bears.  In 1994, the  
            Legislature approved a three-year moratorium on the issuance  
            of new off-sale beer and wine licenses, which at the time was  
            not bound by any population to license restriction.  In 1997,  
            this moratorium was made permanent.


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          6)Establishes the Barbering and Cosmetology Act, which provides  
            for the licensure and regulation of barbers and  
            cosmetologists, including the practice of skin care by  
            licensed estheticians, by the Board in the Department of  
            Consumer Affairs.  (Business and Professions Code (BPC)  
            Section 7316)

          7)Establishes the specified requirements that applicants for a  
            cosmetology, esthetician, barbering, manicurist and  
            electrologist license must meet in order to sit for the  
            licensure examination.  (BPC Sections 7321, 7321.5, 7324,  
            7326, 7330)

          AS PASSED BY THE ASSEMBLY, this bill allowed beauty salons and  
          barbershops to serve up to 12 ounces of beer or six ounces of  
          wine as part of their beauty services without a license or  
          permit, provided there is no extra charge or fee for the beer or  
          wine, the salon or barber shop is in good standing with the  
          California Board of Barbering and Cosmetology, and the beer or  
          wine is only provided during normal business hours and in no  
          case later than 10 p.m.

          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee, pursuant to Senate Rule 28.8, negligible state costs.

          COMMENTS:  This bill, as amended is consistent with Assembly  

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


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          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.  
           Specifically, SB 1546 (Beverly), Chapter 1354, Statutes of  
          1986, provides that no license or permit shall be required for  
          the serving of complimentary alcoholic beverages in limousines.   
          A few years later, AB 2416 (Governmental Organization  
          Committee), Chapter 639, Statutes of 1998, was enacted which  
          granted hot air balloon ride services the same privilege.

          In California, 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.

          According to the State Board of Barbering and Cosmetology  
          (CBBC), within the Department of Consumer Affairs, there are a  
          total of 41,830 beauty salon and barbershop location permits  
          issued in the State.  The CBBC "location license" does not  
          differentiate between a beauty salon or barbershop.  The  
          following services are not under the jurisdiction of the CBBC:   
          body-piercing, braiding, ear candling, laser services, massage,  
          permanent make-up, medical services, threading and reflexology.

          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,  


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          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.

          In support:  Drybar Holdings LLC (known as "Drybar"), the  
          sponsor of this bill, notes that it is a fast-growing beauty  
          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 this bill 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.  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.  This bill 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 states 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.)

          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 this  
          bill 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  


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          Prior legislation: AB 2416 (Governmental Organization  
          Committee), Chapter 639, Statutes of 1998.  Provided that no  
          license or permit is 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 no license or permit is required for, the serving of  
          alcoholic beverages in a limousine regulated by the Public  
          Utilities Commission provided there is no extra charge for the  
          alcoholic beverages.  

          AB 1252 (N. Waters), Chapter 753, Statutes of 1977.  Permitted  
          the Director of ABC to authorize the conversion of any on-sale  
          general license for "seasonal business" to an on-sale general  
          license, as specified.

          Analysis Prepared by:                                             
                          Eric Johnson / G.O. / (916) 319-2531  FN: