BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 2739| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 2739 Author: Chiu (D), et al. Introduced:2/19/16 Vote: 27 - Urgency SENATE GOVERNMENTAL ORG. COMMITTEE: 12-0, 6/14/16 AYES: Hall, Bates, Block, Gaines, Galgiani, Glazer, Hernandez, Hill, Hueso, Lara, McGuire, Vidak NO VOTE RECORDED: Berryhill SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8 ASSEMBLY FLOOR: 76-0, 4/28/16 (Consent) - See last page for vote SUBJECT: Department of Alcoholic Beverage Control: special on-sale general license: for-profit theater SOURCE: Curran Live, LLC 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 Alcoholic Beverage Control (ABC) and grants it exclusive authority to administer the provisions of the ABC Act in accordance with laws enacted by the AB 2739 Page 2 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 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. AB 2739 Page 3 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 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 AB 2739 Page 4 general license or from serving alcoholic beverages to its patrons when it reopens to the public in January 2017. 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 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, from 1/1/2017 to 12/31/2017, no more than a total of 5 additional new original on-sale general licenses for bona fide public eating places 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 Senate Appropriations 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. 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. AB 2739 Page 5 FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No SUPPORT: (Verified 8/1/16) Curran Live, LLC (source) OPPOSITION: (Verified 8/1/16) Alcohol Justice ARGUMENTS IN SUPPORT: - - - 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." ASSEMBLY FLOOR: 76-0, 4/28/16 AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon NO VOTE RECORDED: Chávez, Daly, Mathis, Olsen Prepared by:Arthur Terzakis / G.O. / (916) 651-1530 8/3/16 18:40:33 **** END **** AB 2739 Page 6