BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Isadore Hall, III
Chair
2015 - 2016 Regular
Bill No: AB 2913 Hearing Date: 6/28/2016
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|Author: |Committee on Governmental Organization |
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|Version: |6/13/2016 Amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Arthur Terzakis |
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SUBJECT: Alcoholic beverages: licensees: tied-house
restrictions
DIGEST: This bill makes minor clarifying and technical
changes to certain provisions of the Alcoholic Beverage Control
(ABC) Act.
ANALYSIS:
Existing law:
1)Establishes 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)Authorizes licensees, as specified, to sponsor or otherwise
participate in an event conducted by, and for the benefit of,
a nonprofit organization in which retail and nonretail
licensees are involved as sponsors or participants, subject to
specified conditions.
3)Authorizes a nonretail licensee to advertise or communicate
sponsorship or participation in the event and provides that
advertising or communication may include, but is not limited
AB 2913 (Committee on Governmental Organization) Page 2 of ?
to, initiating, sharing, reposting, or otherwise forwarding a
social media post by a permanent retail licensee or a
nonretail licensee, as specified. The law also prohibits a
retail licensee from receiving any advertising, sale, or
promotional benefit from any permanent retail licensee in
connection with the sponsorship or participation.
4)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
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.
5)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.
6)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:
AB 2913 (Committee on Governmental Organization) Page 3 of ?
1)Modifies certain provisions that allow a retail or nonretail
licensee to sponsor or participate in an event conducted by,
and for the benefit of, a nonprofit corporation as follows:
a) Clarifies that a nonretail licensee, instead of a retail
licensee, may not receive any advertising, sale, or
promotional benefit from any permanent retail licensee in
connection with the event.
b) Clarifies how a nonretail licensee can advertise or
communicate sponsorship or participation in the event.
2)Replaces the term "distilled spirits rectifier" with
"rectifier" in several provisions of the ABC Act to correctly
reflect there is no statutory definition for a "distilled
spirits rectifier."
Background
Purpose of AB 2913. This bill is the annual Assembly
Governmental Organization Committee "clean-up" bill that makes
clarifying, technical, and non-controversial changes to existing
statutes.
According to the Committee, this bill corrects a drafting error
in AB 776 (Cooper) of 2015. Specifically, AB 776 authorized
licensed alcoholic beverage manufacturers and retailers to
participate together in sponsoring and promoting events
conducted by, and for the benefit of, nonprofit organizations,
subject to certain conditions. As enacted, AB 776 inadvertently
prohibited a "retail" licensee from receiving, directly or
indirectly, any advertising, sale or promotional benefit from
any permanent retail licensee in connection with the sponsorship
or participation. This bill would correct the oversight and
instead would prohibit a "nonretail" licensee from receiving,
directly or indirectly, any advertising, sale, or promotional
benefit from any permanent retail licensee in connection with
the sponsorship or participation. In addition, this bill makes
a clarifying change with respect to the manner upon which a
nonretail licensee may advertise or communicate sponsorship or
participation in the event by deleting the word "initiating"
from that provision.
Furthermore, this bill addresses the use of the term "distilled
spirits rectifier" in statute. Existing law provides for: a
rectifier (Type 07), wine rectifier (Type 08), and a distilled
AB 2913 (Committee on Governmental Organization) Page 4 of ?
spirits rectifier's general license (Type 24). The old ABC
handbook indicates that a Type 07 is often incorrectly referred
to as a distilled spirits rectifier however there is no
statutory definition for a "distilled spirits rectifier."
Prior/Related Legislation
AB 1971 (Cooper, 2016) creates a stand-alone tied-house
exception in the 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. (Pending in Senate Appropriations
Committee)
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)
AB 776 (Cooper, Chapter 519, Statutes of 2015) among other
things, authorized licensees to sponsor or otherwise participate
in an event conducted by, and for the benefit of, a nonprofit
organization subject to specified conditions, including that a
nonretail or retail licensee may choose to participate in any
level of sponsorship.
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 San Diego County.
AB 2913 (Committee on Governmental Organization) Page 5 of ?
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).
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 an arena with a
fixed seating capacity in excess of 13,000 seats in the City of
Inglewood.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: Yes
SUPPORT:
None on file
OPPOSITION:
None on file