BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Isadore Hall, III
Chair
2015 - 2016 Regular
Bill No: AB 1971 Hearing Date: 6/14/2016
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|Author: |Cooper |
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|Version: |2/16/2016 Introduced |
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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 creates a stand-alone tied-house exception
in the Alcoholic Beverage Control (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.
ANALYSIS:
Existing law:
1)Establishes the Department of 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
orderly market; (b) prohibit the vertical integration and
AB 1971 (Cooper) Page 2 of ?
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:
1)Provides that a beer manufacturer, the holder of a winegrowers
license, a distilled spirits rectifier, a distilled spirits
manufacturer, or distilled spirits manufacturer's agent may
purchase advertising time and space from, or on behalf of, an
on-sale retail licensee subject to all of the following
conditions:
a) The on-sale licensee is the owner, manager, agent of the
owner, assignee of the owner's advertising rights, or the
major tenant of the owner of any outdoor stadium or fully
enclosed arena with a fixed seating capacity in excess of
1,500 seats;
b) The outdoor stadium or fully enclosed arena is not owned
AB 1971 (Cooper) Page 3 of ?
by a community college district;
c) The advertising space or time is purchased only in
connection with events to be held on the premises of the
outdoor stadium or fully enclosed arena;
d) The on-sale licensee serves other brands of beer
distributed by a competing beer wholesaler in addition to
the brand manufactured or marketed by the beer
manufacturer, other brands of wine distributed by a
competing wine wholesaler in addition to the brand produced
by the winegrower, and other brands of distilled spirits
distributed by a competing distilled spirits wholesaler in
addition to the brand manufactured or marketed by the
distilled spirits rectifier, distilled spirits
manufacturer, or the distilled spirits manufacturer's agent
that purchased the advertising space or time.
2)Makes it explicit that this bill includes all stadiums and
arenas licensed prior to the effective date of this bill.
Background
Purpose of AB 1971. The author's office notes that over the
past 20 years, numerous individual exceptions to the tied-house
laws have been enacted to allow manufacturers or suppliers to
pay for advertising or become sponsors of specific entertainment
venues. In recent years advertising arrangements between
cities, stadiums, major tenants, and owners have become more
fluid and ever changing. Because the Department of ABC
continues to have the authority to investigate any complaints of
alcohol related violations at these stadiums, the ABC believes
that it is no longer necessary to make legislative changes to
address every advertising arrangement. This bill creates a
general exception allowing holders of manufacturer licenses to
purchase advertising from retail licensees at indoor arenas and
outdoor stadiums with fixed seating capacities in excess of
1,500 seats. This bill essentially allows the exemption for
similar situated facilities without requiring specific and
separate legislation for each facility.
Technical amendments.
1)On page 2, lines 5 & 6, strike "distilled spirits rectifier"
and add "rectifier"
AB 1971 (Cooper) Page 4 of ?
2)On page 2, lines 27 & 28, strike "distilled spirits rectifier"
and add "rectifier"
Prior/Related Legislation
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 in Senate
Appropriations Committee)
AB 1767 (Bigelow, 2016) 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. (Pending in this
Committee)
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 the County of San Diego.
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 1971 (Cooper) Page 5 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
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Sports and Entertainment District, adjacent to STAPLES Center.
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:
Department of Alcoholic Beverage Control
OPPOSITION:
Alcohol Justice
ARGUMENTS IN OPPOSITION: Alcohol Justice states that "granting
yet another regulatory exemption for a segment of the alcohol
industry only further erodes fair and effective alcohol
regulation in California. The state already suffers more than
$22 billion in alcohol-related harm and over 10,000
alcohol-related deaths annually. We believe AB 1971 will
ultimately increase those catastrophic alcohol-related harms and
costs in the state."