BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
                              Senator Isadore Hall, III
                                        Chair
                                2015 - 2016  Regular 

          Bill No:           AB 2739          Hearing Date:    6/14/2016
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          |Author:    |Chiu                                                 |
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          |Version:   |2/19/2016    Introduced                              |
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          |Urgency:   |Yes                    |Fiscal:      |Yes             |
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          |Consultant:|Arthur Terzakis                                      |
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          SUBJECT: Department of Alcoholic Beverage Control:  special  
          on-sale general license:  for-profit theater


            DIGEST:    This bill deletes the requirement that a special  
          on-sale general license for a for-profit theater in San  
          Francisco cannot be issued until any existing license is  
          canceled.

          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 or occupation  
            taxes for this purpose. 

          2)Establishes various alcoholic beverage license categories and  
            a schedule of annual fees charged to the licensees.  

          3)Authorizes the Department of ABC to issue a special on-sale  
            general license to any nonprofit theater company - a theater  
            company holding such a license may sell and serve alcoholic  
            beverages to ticket holders only during, and two hours prior  
            to and one hour after, a bona fide theater performance of the  







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            company.

          4)Provides that the Department of ABC may issue a special  
            on-sale general license to the operator of any for-profit  
            theater, configured with theatrical seating of at least 1,000  
            seats and primarily devoted to live theatrical performances,  
            located within the City and County of San Francisco to sell  
            and serve alcoholic beverages in the lobbies and seating areas  
            of the theater for the period beginning two consecutive hours  
            prior to a live theatrical performance and ending one hour  
            after completion of the performance.  

          5)Caps the number of new on and off-sale general licenses issued  
            by the ABC at one for every 2,500 inhabitants of the county  
            where the establishment is located (2,000:1 for on sale  
            licenses).  If no licenses are available from the state due to  
            the population restrictions, those people interested in  
            obtaining a liquor license may purchase one from an existing  
            licensee, for whatever price the market bears.  In 1994, the  
            Legislature approved a 3-year moratorium on the issuance of  
            new off-sale beer and wine licenses, which at the time was not  
            bound by any population to license restriction.  In 1997 this  
            moratorium was made permanent.

          6)Defines an "on-sale" license as authorizing the sale of all  
            types of alcoholic beverages: namely, beer, wine and distilled  
            spirits, for consumption on the premises (such as at a  
            restaurant or bar).  An "off-sale" license authorizes the sale  
            of all types of alcoholic beverages for consumption off the  
            premises in original, sealed containers.  

          This bill:

          1)Deletes the requirement that a special on-sale general license  
            for a for-profit theater, within the City and County of San  
            Francisco, cannot be issued by the Department of ABC until any  
            existing licenses for the premises of the theater are  
            canceled.

          2)Contains an urgency clause, to take effect immediately. 

          Background

          Current law provides for the issuance of a special on-sale  
          general license (Type 71) that enables the operator of any  








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          for-profit theater configured with theatrical seating of at  
          least 1,000 seats and located within the City and County of San  
          Francisco to serve alcoholic beverages (beer, wine and spirits)  
          during certain hours in specified areas of the theater.  [AB 525  
          (Ting, Chapter 235, Statutes of 2013)]

          AB 525 of 2013 was narrowly crafted to enhance the experience of  
          theatergoers at several of San Francisco's grand and historic  
          theaters (e.g., Curran, Orpheum & Golden Gate theaters) and  
          contained several provisions to ensure appropriate controls  
          relating to licensing including prohibiting the issuance of such  
          a license until any existing license is canceled. 

          Purpose of AB 2739.  According to the author's office, this bill  
          has been introduced on behalf of Curran Live, LLC, which  
          operates the historic Curran Theater in San Francisco.  The  
          Curran Theater, which opened in February 1922, closed on January  
          1, 2015 for renovations and is scheduled to reopen in January  
          2017.  Prior to its closure, the Curran Theater was operated by  
          an ABC licensee that will no longer have an ownership interest  
          in the theater or the alcoholic beverage service when it  
          reopens.

          The author's office contends that a change in statute is  
          necessary because current law did not take into account the  
          possibility that an owner or operator of an existing theater may  
          change ownership, which would leave the new owner without the  
          ability to apply for and be issued a new license by ABC unless  
          the prior license is canceled by the previous owner(s).  The  
          author's office argues that this existing requirement prevents  
          the Curran Theatre from applying for a new special on-sale  
          general license or from serving alcoholic beverages to its  
          patrons when it reopens to the public in January 2017.

          Staff Comments. As noted above, the Curran Theater will be under  
          new ownership when it reopens in January 2017.  The current  
          special on-sale general license (Type 71) for the premises is  
          under surrender - meaning it's still a valid license, tied to  
          the theater location, but inactive.  The new ownership of the  
          theater is ineligible for a new type 71 license until the  
          existing license is canceled. Cancellation of the existing  
          license requires an action on the part of the licensee; however,  
          the licensee is unable or unwilling to do so.  By deleting the  
          requirement that any existing license issued for the premises  
          must be canceled prior to the issuance of a new license this  








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          bill will enable the new owners of the theater to apply for a  
          special on-sale general license for the theater premises.  

          Prior/Related Legislation
          
          AB 1670 (Dodd, 2016) authorizes the Department of ABC to issue a  
          total of 25 additional new original on-sale general licenses, as  
          specified, to bona fide public eating places with a seating  
          capacity of 25 or more diners, in Napa County.  Also authorizes  
          ABC to issue a special on-sale general license to the operator  
          of any for-profit theater located within Napa County, subject to  
          certain requirements and conditions.  (Pending in this  
          Committee)

          AB 525 (Ting, Chapter 235, Statutes of 2013) created a new  
          special on-sale general license in the ABC Act that enabled the  
          operator of any for-profit theater, configured with theatrical  
          seating of at least 1,000 seats and primarily devoted to live  
          theatrical performances, located within the City and County of  
          San Francisco to serve alcoholic beverages during certain hours  
          in specified areas of the theater.  

          SB 1531 (Wolk, Chapter 334, Statutes of 2012) created a narrow  
          tied-house exception, until January 1, 2018, enabling the Napa  
          Valley Opera House to accept wine and monetary donations from  
          wineries located within the Counties of Napa, Sonoma, Lake, and  
          Mendocino.  
          
          AB 2793 (Governmental Organization Committee, Chapter 273,  
          Statutes of 2010) among other things, authorized a licensed  
          winegrower to serve on the board of trustees of a nonprofit  
          theater company operating a theater in the City of Livermore, as  
          specified.  
           
           SB 131 (Wiggins, Chapter 638, Statutes of 2009) created an  
          exception to the ABC Act, until December 31, 2014, authorizing  
          the San Francisco Symphony, which holds an on-sales liquor  
          license, to accept monetary and alcoholic beverage product  
          contributions (for free) from licensed alcoholic beverage  
          manufacturers.

          AB 23 (Ma, Chapter 23, Statutes of 2008) allowed those licensees  
          operating a cabaret theater to admit persons under 21 years of  
          age to theater performances at any time, provided that alcoholic  
          beverages are not sold, served, or consumed on the premises  








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          during those performances. 

          AB 1429 (Governmental Organization, Chapter 567, Statutes of  
          2001) among other things, deleted the requirement that a  
          nonprofit theater company must be in existence for at least ten  
          years in order for ABC to issue a special on-sale general  
          license. 

          FISCAL EFFECT:                 Appropriation:  No    Fiscal  
          Com.:             Yes          Local:          No


            SUPPORT:  

          Curran Live, LLC 

          OPPOSITION:

          Alcohol Justice

          ARGUMENTS IN OPPOSITION:  Alcohol Justice states that "granting  
          yet another regulatory exemption for a segment of the alcohol  
          retailers 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 2739 will  
          ultimately increase those catastrophic alcohol-related harms and  
          costs in the state."