BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1971


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          Date of Hearing:   May 4, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          1971 (Cooper) - As Introduced February 16, 2016


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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill modifies the Alcohol Beverage Control Act's  
          prohibition against advertising arrangements among retail,  
          wholesale, and manufacturing licensees to allow an exception for  
          stadiums and arenas subject to the following conditions: 








                                                                    AB 1971


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          1)The stadium or arena has a fixed seating capacity of more than  
            1,500 people;


          2)The stadium or arena is not owned by a community college  
            district; 


          3)The advertising space is purchased only in connection to the  
            events to be held at the stadium or arena; and


          4)Other competing brands of the type of alcoholic beverage being  
            advertised are also sold. 


          FISCAL EFFECT:


          Minor and absorbable costs to the California Department of  
          Alcoholic Beverage Control (ABC). 


          COMMENTS:


          1)Purpose. This bill aims to standardize "tied-house" policy  
            regarding advertisements in larger stadiums and arenas. The  
            author and ABC contend that standardizing this exception is  
            preferable to creating individual exceptions by statute.


          2)Background. Current "tied-house" law, also called "three-tier"  
            law, prohibits paid advertising by winegrowers, beer  
            manufacturers and distilled spirits producers in cases where a  
            retail licensee also owns a sports or entertainment venue.  
            California's three-tier law is designed to prevent vertical  








                                                                    AB 1971


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            integration between alcohol producers, wholesalers, and  
            retailers. Limiting the ability for an alcoholic beverage  
            producer or winegrower to pay a retail licensee, including a  
            stadium or arena, for advertising its product is one way to  
            protect consumers from predatory marketing. 


            However, over the years numerous exceptions to this  
            prohibition have been added to the ABC Act (such as Sleep  
            Train Arena in Sacramento, Oakland Coliseum in Oakland, Levi's  
            Stadium in Santa Clara). In these cases, an owner in one tier  
            (Bud Light, for example) can pay a retail licensee (Santa  
            Clara Stadium Authority, for example) for displaying  
            advertising.





          Analysis Prepared by:Luke Reidenbach / APPR. / (916)  
          319-2081