BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Isadore Hall, III
Chair
2015 - 2016 Regular
Bill No: AB 1767 Hearing Date: 6/28/2016
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|Author: |Bigelow |
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|Version: |3/17/2016 Amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Arthur Terzakis |
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SUBJECT: Alcoholic beverages: tied-house restrictions:
advertising
DIGEST: This bill expands the specified conditions under
which designated alcoholic beverage licensees may purchase
advertising space or time in connection with events held on the
premises of an exposition, park, stadium or arena owned by the
on-sale licensee to include circumstances in which the premises
are "leased" by the on-sale licensee.
ANALYSIS:
Existing law:
1)Establishes the Department of Alcoholic Beverage Control (ABC)
and grants it exclusive authority to administer the provisions
of the ABC 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
AB 1767 (Bigelow) Page 2 of ?
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.
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, the
Forum in the City of Inglewood, Levi's Stadium in the City of
Santa Clara, and other venues].
This bill expands the specified conditions under which
designated alcoholic beverage licensees may purchase advertising
space or time in connection with events held on the premises of
an exposition, park, stadium or arena owned by the on-sale
licensee to include circumstances in which the premises are
"leased" by the on-sale licensee.
Background
Purpose of AB 1767. According to the author's office, this bill
is intended to expand existing tied-house exceptions to
circumstances in which the on-sale licensee is not actually the
owner of a stadium or arena in which the paid-for advertising is
allowed. The author's office notes that due to the evolving
ownership structure of sports and entertainment venues, it is
AB 1767 (Bigelow) Page 3 of ?
rare that the on-sale licensee is the owner of the venue. Thus,
this bill will ensure that existing tied-house exceptions remain
intact even if there is a change in ownership.
Prior/Related Legislation
AB 1971 (Cooper, 2016) creates a stand-alone tied-house
exception in the ABC Act to allow holders of manufacturer
licenses, as specified, to purchase advertising from retail
licensees at outdoor stadiums and indoor arenas, subject to
specified conditions. (Pending in Senate Appropriations
Committee)
AB 866 (Garcia, 2016) 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 outdoor stadiums with
specified seating capacities located in the Cities of Inglewood
and San Diego, specifically, the future home of the National
Football League Los Angeles Rams and Petco Park, home of the San
Diego Padres Major League Baseball team. (Pending on Senate
floor)
SB 557 (Hall, Chapter 420, Statutes of 2015) extended an
existing tied-house exception pertaining to the general
prohibition against advertising arrangements between retail,
wholesale and manufacturer licensees to include a fairgrounds
with a horse racetrack and equestrian and sports facilities
located in San Diego County.
SB 462 (Wolk, Chapter 315, Statutes of 2015) among other things,
extended an existing tied-house exception 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.
AB 600 (Bonta, Chapter 139, Statutes of 2014) extended an
existing tied-house exception 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 seats
located in the City of Santa Clara (Levi's Stadium - new home of
the San Francisco 49ers).
AB 1767 (Bigelow) Page 4 of ?
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.
SB 351 (Negrete-McLeod, 2007) would have extended an existing
tied-house exception pertaining to the general prohibition
against advertising arrangements between retail, wholesale and
manufacturer licensees so that alcoholic beverage manufacturers
may purchase advertising from on-sale retail licensees in order
to promote "safe ride home programs" at specified stadiums and
arenas. (Placed on Assembly inactive file)
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 (Chavez, Chapter 587, Statutes of 2006) extended an
existing tied-house exception pertaining to the general
prohibition against advertising arrangements between retail,
wholesale and manufacturer licensees to the HP Pavilion in Santa
Clara County.
AB 1442 (Horton, Chapter 617, Statutes of 2005) extended an
existing tied-house exception pertaining to the general
prohibition against advertising arrangements between retail,
wholesale and manufacturer licensees to the Home Depot Center, a
sports and athletic complex within the City of Carson in Los
Angeles and the Nokia Theater, located within the Los Angeles
Sports and Entertainment District, adjacent to STAPLES Center.
AB 1767 (Bigelow) Page 5 of ?
SB 1647 (Perata, Chapter 275, Statutes of 2004) extended an
existing tied-house exception pertaining to the general
prohibition against advertising arrangements between retail,
wholesale and manufacturer licensees to the Oakland Coliseum in
Alameda County.
SB 1189 (Costa, Chapter 47, Statutes of 2002) extended an
existing tied-house exception pertaining to the general
prohibition against advertising arrangements between retail,
wholesale and manufacturer licensees to the Visalia Oaks Stadium
in Visalia and the California Speedway in Fontana.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: No
SUPPORT:
None received
OPPOSITION:
Alcohol Justice
ARGUMENTS IN OPPOSITION: Writing in opposition, Alcohol Justice
believes that "AB 1767 will increase catastrophic
alcohol-related harms and costs to the state because it erodes
the separation of the three tiers, especially by promoting
alcohol advertising by big producers in sports stadiums and
entertainment venues where vast quantities of over-consumption
already take place."