BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Isadore Hall, III
Chair
2015 - 2016 Regular
Bill No: SB 327 Hearing Date: 4/28/2015
-----------------------------------------------------------------
|Author: |Hall |
|-----------+-----------------------------------------------------|
|Version: |4/22/2015 |
-----------------------------------------------------------------
------------------------------------------------------------------
|Urgency: |No |Fiscal: |No |
------------------------------------------------------------------
-----------------------------------------------------------------
|Consultant:|Arthur Terzakis |
| | |
-----------------------------------------------------------------
SUBJECT: Alcoholic beverages: licensees: tied-house
restrictions.
DIGEST: This bill consolidates two similar tied-house
exceptions (one pertaining to "on-sale" retailers and the other
to "off-sale" retailers) within the Alcoholic Beverage Control
(ABC) Act, which authorize the dissemination of information
pertaining to the retail availability of products by alcoholic
beverage producers, distributors or importers in response to
direct inquiries from consumers.
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)(Referred to as the "tied-house" law or "three-tier" system),
separates the alcoholic beverage industry into three component
parts, or tiers, of manufacturer (including breweries,
wineries and distilleries), wholesaler, and retailer (both
on-sale and off-sale). The original policy rationale for this
SB 327 (Hall) Page 2 of ?
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.
3)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.
4)Provides that the listing of the names, addresses, telephone
numbers, email addresses, or Internet Web site addresses, of 2
or more unaffiliated off-sale retailers selling beer, wine, or
distilled spirits and operating and licensed as bona fide
public eating places selling the beer, wine, or distilled
spirits produced, distributed, or imported by a nonretail
industry member in response to a direct inquiry from a
consumer, as specified, does not constitute a thing of value
or prohibited inducement to the listed off-sale retailer, if
specified conditions are met.
5)Includes similar provisions applicable to "on-sale" licensed
premises, except that those provisions also extend the
exception described in item #4 above to others forms of
"electronic" media.
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 an existing tied-house exception pertaining to the
listing of "off-sale" licensed retailers as a thing of value
or prohibited inducement and instead includes "off-sale"
SB 327 (Hall) Page 3 of ?
retailers within the exception previously applicable only to
"on-sale" licensed retailers.
2)Makes other minor conforming changes.
Background
Tied-house: Tied-house refers to a practice in this country
prior to Prohibition and still occurring in England today where
a bar or public house, from whence comes the "house" of tied
house, is tied to the products of a particular manufacturer,
either because the manufacturer owns the house, or the house is
contractually obligated to carry only a particular
manufacturer's products. Existing tied-house laws generally
prohibit a manufacturer, importer or wholesaler from furnishing,
giving, or lending any money or other thing of value to any
person engaged in operating, owning, or maintaining any off-sale
or on-sale licensed retail premise. Existing law also provides
two separate tied-house exceptions (one pertaining to "on-sale"
retailers and the other to "off-sale" retailers) relative to the
listing of a licensed retailer as a thing of value or prohibited
inducement.
Purpose of SB 327: The author's office states that under
existing law a response to a direct inquiry from a consumer
received by telephone, by mail, by electronic Internet inquiry
or in person does not constitute a thing of value or prohibited
inducement to the listed on-sale or off-sale retailer. This
measure is simply intended to recast existing ABC statutes by
consolidating into a single statute the "on-sale" and "off-sale"
tied-house exceptions pertaining to direct inquiries.
Prior/Related Legislation
AB 2349 (Nestande), Chapter 374, Statutes of 2012. Provided
that the listing of names, addresses, telephone numbers, or
email addresses in other forms of electronic media do not
constitute a thing of value. Also, revised the direct inquiry
provisions to remove the requirement that the unaffiliated
on-sale retailer operate and be licensed as a bona fide public
eating place.
SB 1096 (Wiggins), Chapter 285, Statutes of 2010. Among other
things, revised the direct inquiry provisions in the ABC Act
pertaining to the authority of producers, wholesalers and
SB 327 (Hall) Page 4 of ?
importers to respond to consumer inquiries as to where their
products may be found to include any "electronic" inquiries from
consumers.
SB 1423 (Chesbro), Chapter 205, Statutes of 2000. Authorized
wineries and brandy manufacturers to advertise the name and
location of restaurants that sell their products.
SB 1233 (Chesbro), Chapter 666, Statutes of 1999. Allowed for
the limited dissemination of information regarding the off-sale
availability of alcoholic beverages.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: No Local: No
SUPPORT:
California Beer & Beverage Distributors
OPPOSITION:
None received