BILL ANALYSIS Ó
AB 2135
Page 1
ASSEMBLY THIRD READING
AB
2135 (Levine)
As Amended April 11, 2016
Majority vote
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Governmental |21-0 |Gray, Bigelow, Alejo, | |
|Organization | |Bonta, Campos, | |
| | |Cooley, Cooper, Daly, | |
| | |Gallagher, Cristina | |
| | |Garcia, Eduardo | |
| | |Garcia, Gipson, | |
| | | | |
| | | | |
| | |Roger Hernández, | |
| | | | |
| | | | |
| | |Jones-Sawyer, Levine, | |
| | |Linder, Maienschein, | |
| | |Salas, Steinorth, | |
| | |Waldron, Wilk | |
| | | | |
| | | | |
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AB 2135
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SUMMARY: Specifies that a written agreement regarding the
sharing or splitting of gross revenue from the sale of alcoholic
beverages between a licensee and a California fair, as defined,
in connection with the sale of alcoholic beverages fair time
activities is not the exercise of a license privilege or
performance of an act for which a license is required.
Specifically, this bill:
1)Provides that a written agreement regarding the sharing or
splitting of gross revenue from the sale of alcoholic
beverages between a licensee and a district agricultural
association, the California Exposition and State Fair, a
county fair, or a citrus fruit fair, in connection with the
sale of alcoholic beverages during a state or county fair is
not the exercise of a license privilege or performance of an
act for which a license is required, unless the agreement, or
any other related agreement or understanding, results in an
unlicensed person exercising control or undue influence over a
licensee or the operation of a licensed business.
EXISTING LAW:
1)California Constitution Article XX Section 22: The State of
California, subject to the internal revenue laws of the United
States, shall have the exclusive right and power to license
and regulate the manufacture, sale, purchase, possession and
transportation of alcoholic beverages within the State, and
subject to the laws of the United States regulating commerce
between foreign nations and among the states shall have the
exclusive right and power to regulate the importation into and
exportation from the State, of alcoholic beverages. In the
exercise of these rights and powers, the Legislature shall not
constitute the State or any agency thereof a manufacturer or
seller of alcoholic beverages.
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2)Establishes the Department of Alcoholic Beverage Control (ABC)
and grants it exclusive authority to administer the provisions
of the Alcoholic Beverage Control Act (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.
3)Existing law, known as the "Tied-house" law or "three-tier"
system, separates the alcoholic beverage industry into three
component parts of manufacturer (the first tier), wholesaler
(the second tier), and retailer (the third tier). The
original policy rationale for this body of law was to prohibit
the vertical integration of the alcohol industry and to
protect the public from predatory marketing practices.
Tied-house laws generally prohibit suppliers and retailers
from sharing common owners and legally restrict alcohol
beverage suppliers' ability to gain control over retailers
through indirect means. Generally, other than exemptions
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.
4)Prohibits an alcoholic beverage supplier from paying money, or
giving or furnishing anything of value, for the privilege of
placing or painting a sign or advertisement, or window
display, on or in premises selling alcoholic beverages at
retail.
5)States in order to offer and/or profit from retail sell of
alcohol in California you must have a liquor license. There
are many types of liquor licenses that can be obtained and
they each serve their own purpose. On-Sale General authorizes
the sale of all types of alcoholic beverages (namely, beer,
wine and distilled spirits), for consumption on the premises,
and the sale of beer and wine for consumption off the
AB 2135
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premises; Off-Sale General authorizes the sale of all types of
alcoholic beverages for consumption off the premises in
original, sealed containers; On-Sale Beer and Wine authorizes
the sale of all types of wine and malt beverages (e.g., beer,
porter, ale, stout and malt liquor) for consumption on and off
the premises; Off-Sale Beer and Wine authorizes the sale of
all types of wine and malt beverages for consumption off the
premises in original, sealed containers; and On-Sale Beer
authorizes the sale of malt beverages for consumption on and
off the premises.
6)Defines a state-supported fair organization as any fair that
conducts an annual fair and submits an annual statement of
operations to the California Department of Food and
Agriculture (CDFA). The generic term of "fairs" refers to
District Agricultural Associations (DAA's), county fairs,
citrus fairs, and the California State Fair. The network of
California fairs includes 77 fair organizations. California's
fairs are located throughout the Golden State from early
spring to the fall of each year.
FISCAL EFFECT: None. This bill is keyed non-fiscal by
Legislative Counsel.
COMMENTS:
Purpose of the bill: Existing law defines a state-supported
fair organization as any fair that conducts an annual fair and
submits an annual statement of operations to the California
Department of Food and Agriculture. The generic term of "fair"
refers to a District Agricultural Association (DAA), county
fair, citrus fair, and the California State Fair. According to
the author's office, this bill would permit a fair to share in
the revenue from the sale of alcoholic beverages pursuant to a
concessionaire agreement.
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The author's office notes that it has become commonplace for
fair operators to seek to enhance revenues by entering into
concession agreements that include a sharing of revenue from the
sale of alcoholic beverages on the fairgrounds. Revenue sharing
is common with respect to non-alcohol products, but under the
comprehensive licensing scheme in the ABC Act, such activities
can result in the exercising of license privileges by
non-licensees, which is prohibited.
An Attorney General Opinion in 1966 (47 Ops. Cal. Atty. Gen.
182) determined that it would be a violation of the ABC Act for
a licensee to share revenue from the sale of alcoholic beverages
with a non-licensee, or otherwise allow a non-licensee to
exercise control over the licensed business. Additionally, the
State Constitution prohibits any agency of the state from being
established as a licensed seller of alcohol, which means that an
individual fair cannot hold an ABC license. This bill would
clarify such revenue sharing agreements is not considered the
exercising of license privileges, as defined in the ABC Act.
Analysis Prepared by:
Eric Johnson / G.O. / (916) 319-2531 FN:
0002791
AB 2135
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