BILL ANALYSIS Ó
AB 1558
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Date of Hearing: April 6, 2016
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Adam Gray, Chair
AB 1558
(Mathis) - As Amended March 16, 2016
SUBJECT: Alcoholic beverages: licenses
SUMMARY: Adds a new Section to the Alcoholic Beverage Control
(ABC) Act which authorizes the Department of Alcoholic Beverage
Control (ABC) to issue no more than a total of 5 new original
on-sale general licenses, over a 2-year period, for bona fide
public eating places, public premises, or both in the County of
Inyo. Specifically, this bill:
1) Provides in the County of Inyo, ABC may issue no more than a
total of five additional new original on-sale general licenses
for bona fide public eating places, public premises, or both
from January 1, 2017, to December 31, 2019, inclusive. To
qualify for a license, the premises upon which a bona fide
public eating-place is operated shall have a seating capacity
for 50 or more diners.
2) Requires ABC to follow existing "drawing for priority"
procedures with respect to the issuance of these new licenses as
set forth in ABC Act.
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3) Provides that a person who currently holds a valid on-sale
general license for seasonal business is not prohibited from
applying for an original on-sale general license pursuant to
this measure.
4) Makes it explicit that a license issued pursuant to this
measure shall not be transferred from one county to another nor
shall it be transferred to any premise not qualifying under
these provisions.
EXISTING LAW:
1) The enactment of the 21st Amendment to the U.S. Constitution
in 1933 repealed the 18th Amendment and ended the era of
Prohibition. Accordingly, states were granted the authority to
establish alcoholic beverage laws and administrative structures
to regulate the sale and distribution of alcoholic beverages.
2) Establishes ABC and grants it exclusive authority to
administer the provisions of the Alcoholic Beverage Control 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.
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3) 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.
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 3-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.
4) Defines "bona fide public eating place" to mean a place
which is regularly and in a bona fide manner used and kept open
for the serving of meals to guests for compensation and which
has suitable kitchen facilities connected therewith, containing
conveniences for cooking an assortment of foods which may be
required for ordinary meals, the kitchen of which must be kept
in a sanitary condition with the proper amount of refrigeration
for keeping of food on said premises and must comply with all
the regulations of the local Department of Health.
5) Defines an "on-sale" license as authorizing the sale of all
types of alcoholic beverages: namely, beer, wine and distilled
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
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premises in original, sealed containers.
6) Provides for 58 counties and 58 "classes" of counties - one
county to each class based on their 1970 Census populations.
FISCAL EFFECT: Unknown
COMMENTS:
Background : As noted above, existing law provides for a
limitation on the number of new on-sale general licenses that
may be issued in a given year by ABC based on the population
growth of the county in which the licensed premises are located
(one license for every 2,000 residents). Thus, if a county
grows by 10,000 people in a given year ABC will sell five new
licenses in that county. ABC holds a drawing if there are more
buyers than licenses available. The cost of an original on-sale
general eating-place license (Type 47) is $13,800. Individuals
seeking to open a full-service restaurant with a bar or cocktail
menu who fail to obtain a liquor license through this process
typically must locate an existing licensed owner willing to sell
his or her license. Usually, that is done by contacting a
liquor license broker. The cost of obtaining a license on the
secondary market is driven by supply and demand and potential
sellers may ask for upwards of $150,000. According to ABC,
currently there are approximately 13,360 Type 47 licenses
statewide.
ABC's records from 2015 indicate that Inyo's population was
18,574, which translates into 17 on-sale general licenses within
the county. In 2015, ABC issued additional liquor licenses to
counties with satisfactory population growth verified by the
Department of Finance (DOF). Inyo County was not eligible for
additional liquor licenses based on the set criteria. However,
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ABC records indicate that one new on-sale general license was
made available and issued through the priority drawing process
in 2013.
Purpose of the bill : Under current law, the number of liquor
licenses issued in a given county is tied to the population of
that county which creates a problem for restaurants and hotels
that would like to cater to the large number of visitors in the
area but are unable to because they do not have a license to
serve alcohol. This measure is expected to lead to an increase
in full service restaurants in the County of Inyo
According to the author, while the County could not show
satisfactory proof of population growth, the number of
businesses unable to obtain a license each year demonstrates the
County's need for additional liquor licenses.
The author states, although the distribution of liquor licenses
across Inyo County reflects the population, ABC does not take
into account the many tourists who visit the County each year,
making it even more difficult for entrepreneurs to succeed in a
volatile economic climate. This bill will provide Inyo County
with five additional liquor licenses to accommodate the growing
tourism industry that accounts for a significant portion of the
local economy.
Related legislation : AB 1670 (Dodd) of 2016. Would authorize
ABC to issue a maximum of 25 new original on-sale general
licenses, over a five-year period, for bona fide public
eating-places in the County of Napa. (Pending in the Assembly
G.O. Committee)
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SB 1285 (Leno) of 2016. This bill would, beginning January 1,
2017, provide an exception to this limitation for a county of
the 6th class, as specified, for 28 new original special on-sale
general licenses for bona fide eating places for premises
located within specified census tracts in that county, subject
to specified requirements. (Pending in Senate G.O. Committee)
Prior legislation : AB 461 (Achadjian), Chapter 110, Statutes of
2013. Authorized ABC to issue no more than a total of five new
original on-sale general licenses, over a three-year period, for
bona fide public eating-places in the County of San Luis Obispo.
AB 1320 (Allen), Chapter 467, Statutes of 2012. Authorized ABC
to issue a maximum of 15 new original on-sale general licenses,
over a 3-year period, for bona fide public eating-places in the
County of Marin.
AB 2266 (Evans), Chapter 130, Statutes of 2008. Authorized ABC
to issue a maximum of 15 new original on-sale general licenses,
over a three-year period, for bona fide public eating-places in
the County of Napa.
SB 762 (Cox), Chapter 193, Statutes of 2007. Authorized ABC to
issue 10 new original on-sale general licenses for bona fide
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public eating-places in the County of Mono.
SB 1092 (Berryhill), Chapter 571, Statutes of 1975. Authorized
ABC to issue five additional new original on-sale general
licenses for bona fide public eating places (seating for 100 or
more diners) in any county where the inhabitants number less
than 5,000 but more than 3,000 (Mono County) according to the
1970 federal census and where the major economy of that county
is dependent upon the year-round use of that county's
recreational facilities.
SB 784 (Berryhill), Chapter 407, Statutes of 1975. Authorized
ABC to issue three additional original off-sale general licenses
in a county of the 58th class (Alpine County).
REGISTERED SUPPORT / OPPOSITION:
Support
Bishop Area Chamber of Commerce & Visitors Bureau
City of Bishop
Inyo County Board of Supervisors
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Opposition
None on file
Analysis Prepared by:Eric Johnson / G.O. / (916) 319-2531