BILL ANALYSIS                                                                                                                                                                                                    Ó



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

          Bill No:           SB 325           Hearing Date:    4/14/2015
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          |Author:    |Hall                                                 |
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          |Version:   |3/26/2015                                            |
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          |Urgency:   |No                     |Fiscal:      |Yes             |
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          |Consultant:|Arthur Terzakis                                      |
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          SUBJECT: Alcoholic beverages


            DIGEST:    This bill modifies an existing Alcoholic Beverage  
          Control (ABC) Act provision that requires the Department of ABC,  
          on or before March 1 of each year, to produce a specified annual  
          report to the Legislature and instead, requires the department  
          to provide the report upon request of the Legislature.  This  
          bill also makes clarifying changes to an outdated provision of  
          law relating to airline "club" licenses to reflect current  
          business models. 

          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  
            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)Requires the Director of ABC, on or before March 1 of each  
            year, to make an annual report to the Legislature on the ABC's  
            activities and to post the report on its Internet Web site.   
            (B & P Code Section 23055)








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          3)For purposes of the ABC Act, defines "club" to mean a  
            corporation or association which is the owner, lessee, or  
            occupant of an establishment operated solely for objects of a  
            social or athletic nature but not for pecuniary gain, having a  
            bona fide membership list, and the majority of the members of  
            which pay dues at least once in every year, and the property  
            as well as the advantages of which belong to the members, and  
            which sells alcoholic beverages only to its members and its  
            bona fide guests.  (B & P Code Section 23037)

          4)Provides for the issuance of a "club" license allowing the  
            sale of alcoholic beverages to a plethora of  
            clubs/organizations (e.g., golf club, swimming club, tennis  
            club, horse riding club, beach and athletic club, handball or  
            racquetball club, nonprofit mobile homeowners social club,  
            national fraternal organizations, rod and gun club, peace  
            officers and firefighters associations, nonprofit social and  
            religious club, National Guard or Air National Guard club,  
            labor council, American Citizens club, local dental society  
            club, condominium homeowners' association, Hidalgo Society,  
            nonprofit lawn bowls club, etc.). 

          5)Also, authorizes the issuance of a club license to clubs  
            operated by common carriers by air at an airport terminal, as  
            specified.  (B & P Code Section 23428.13) 

          6)Prohibits the Department of ABC from issuing new club licenses  
            to clubs that are not organized as a nonprofit (B & P Code  
            Section 23434).  Also, prohibits the Department of ABC from  
            issuing new club licenses to clubs that do not have at least  
            100 members (B & P Code Section 23435). 

           This bill:

          1)Eliminates the existing requirement that the Department of  
            ABC, on or before March 31 of each year, prepare and submit to  
            the Legislature an annual report on the department's  
            activities and , instead, provides that ABC shall produce such  
            a report upon request of the Legislature.

          2)Clarifies that the restrictions relating to nonprofit status  
            and number of members do not apply to club licenses issued to  
            clubs operated by common carriers by air at an airport  
            terminal.  









          SB 325 (Hall)                                       Page 3 of ?
          
          
          Background

          Purpose of SB 325: This measure is simply intended to make  
          technical, clarifying and non-controversial changes to the ABC  
          Act.

          Existing law requires the Department of ABC, on or before March  
          1 of each year, to provide an annual report to the Legislature  
          on the department's activities and to post the report on its  
          Internet Web site.  The report must include information for the  
          previous fiscal year pertaining to: (a) the amount of funds  
          allocated and spent for licensing, enforcement, and  
          administration: (b) the number of licenses issued, renewed,  
          denied, suspended, and revoked; (c) the average time for  
          processing license applications, by license category; (d) the  
          number and type of enforcement activities conducted; and, (e)  
          the number, type, and amount of penalties, fines, and other  
          disciplinary actions taken.

          The Department of ABC has been producing and providing workload  
          reports for the industry it regulates and groups interested in  
          its licensing and enforcement activities since 1941.  In 1999  
          the Department began posting all of its annual reports on the  
          Department's Internet Web site.  For example, the ABC provides  
          on an annual basis:  the Annual Workload Summary, the  
          Performance Management Report, and the License Count Summary  
          Report.  ABC indicates that all of the information requested by  
          Business and Professions Code Section 23055 is already captured  
          in the Department's various reports.

          This measure would modify the annual reporting requirement to  
          instead require the ABC to provide the report upon request of  
          the Legislature.  The author's office emphasizes that this  
          measure does not eliminate the statutory requirement for the  
          report - it simply eliminates the requirement for a separate  
          annual report to the Legislature thus enabling ABC to use its  
          resources for other purposes.    ABC believes that providing a  
          separate report for the Legislature is duplicative and  
          consumptive of limited resources and staff.

          The author's office points out that over the years numerous  
          "club" licenses have been added to the ABC Act allowing the  
          license holder to sell and serve alcoholic beverages for  
          consumption within the licensed establishment and only to  
          members of the club and their guests.  Currently, the law  








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          prohibits ABC from issuing "airline" club licenses to clubs that  
          are not organized as a nonprofit or which do not have at least  
          100 members.  The author's office notes that this particular law  
          no longer reflects the structure of the current licensees.   
          Specifically, airline club licenses are no longer established as  
          nonprofits and the 100 member requirement is no longer needed.   
          Therefore, this measure proposes to amend outdated licensing  
          requirements for this type of licensee to reflect the realities  
          of the business models currently in place.  

          Prior/Related Legislation
          
          AB 749 (Hall), Chapter 221, Statutes of 2011.  Changed the  
          period covered by the Department of ABC annual report to the  
          Legislature from a "calendar" year time period to a "fiscal"  
          year.
           
          SB 1480 (Committee on Governmental Organization), Chapter 296,  
          Statutes of 2010.  Among other things, deleted the requirement  
          that the Director of ABC include recommendations for legislation  
          in the annual ABC report to the Legislature.  
           
          AB 2793 (Governmental Organization Committee), Chapter 273,  
          Statutes of 2010.  Among other things, authorized the Department  
          of ABC to issue a club license to nonprofit lawn bowls clubs  
          that do not discriminate or restrict membership, as specified.

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


            SUPPORT:  

          None received

          OPPOSITION:

          None received