BILL ANALYSIS Ó AB 1971 Page 1 Date of Hearing: May 4, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 1971 (Cooper) - As Introduced February 16, 2016 ----------------------------------------------------------------- |Policy |Governmental Organization |Vote:|21 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- 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 Page 2 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 Page 3 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