BILL ANALYSIS Ó
AB 1558
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB
1558 (Mathis)
As Amended August 16, 2016
Majority vote
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|ASSEMBLY: |76-0 |(April 28, |SENATE: |38-0 |(August 18, |
| | |2016) | | |2016) |
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Original Committee Reference: G.O.
SUMMARY: Adds a new Section to the Alcoholic Beverage Control
Act that authorizes the Department of Alcoholic Beverage Control
(ABC) to issue, over a two-year period, five additional new
on-sale general licenses for restaurants, with a seating
capacity of 50 or more, in Inyo County. Specifically, this
bill:
1)Authorizes ABC to issue, from January 1, 2017, to December 31,
2019, no more than a total of five additional new original
on-sale general licenses in Inyo County for bona fide public
eating places, public premises, or both. In order to qualify
for such a license, the premises must have 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.
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3)Makes it explicit that a person that currently holds a valid
on-sale general license for seasonal business shall not be
prohibited from applying for an original on-sale general
license pursuant to this bill.
4)Stipulates that a license issued pursuant to this bill shall
not be transferred from one county to another, nor shall it be
transferred to any premises not qualifying under the
provisions of this bill.
The Senate amendments renumber the new Section of law proposed
to be added by this bill to the Business and Professions Code to
avoid a chaptering out issue with SB 1285 (Leno).
EXISTING LAW:
1)The enactment of the 21st Amendment to the United States
(U.S.) Constitution in 1933 repealed the 18th Amendment and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 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.
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
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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
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: According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
AB 1558
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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,
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
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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.
Analysis Prepared by:
Eric Johnson / G.O. / (916) 319-2531 FN:
0004741