BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 2913|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
CONSENT
Bill No: AB 2913
Author: Committee on Governmental Organization
Amended: 6/13/16 in Senate
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE: 13-0, 6/28/16
AYES: Hall, Berryhill, Bates, Block, Gaines, Galgiani, Glazer,
Hernandez, Hill, Hueso, Lara, McGuire, Vidak
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 78-0, 5/12/16 (Consent) - See last page for
vote
SUBJECT: Alcoholic beverages: licensees: tied-house
restrictions
SOURCE: Author
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.
AB 2913
Page 2
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
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
AB 2913
Page 3
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)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, Chapter 519, Statutes 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
AB 2913
Page 4
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 corrects the oversight and instead
prohibits 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
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 Legislation
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.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: Yes
SUPPORT: (Verified 8/1/16)
None received
OPPOSITION: (Verified 8/1/16)
AB 2913
Page 5
None received
ASSEMBLY FLOOR: 78-0, 5/12/16
AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,
Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Calderon,
Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper,
Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines,
Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,
Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger
Hernández, Holden, Irwin, Jones, Kim, Lackey, Levine, Linder,
Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,
Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,
Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
Wilk, Williams, Wood, Rendon
NO VOTE RECORDED: Burke, Jones-Sawyer
Prepared by: Arthur Terzakis / G.O. / (916) 651-1530
8/3/16 19:43:08
**** END ****