BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 327|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
CONSENT
Bill No: SB 327
Author: Hall (D)
Amended: 4/22/15
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE: 7-0, 4/28/15
AYES: Hall, Block, Hernandez, Hill, Hueso, Lara, McGuire
NO VOTE RECORDED: Berryhill, Gaines, Galgiani, Vidak
SUBJECT: Alcoholic beverages: licensees: tied-house
restrictions
SOURCE: Author
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 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.
SB 327
Page 2
2)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). (Referred to as the "tied-house" law
or "three-tier" system.) 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.
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
two 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
SB 327
Page 3
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"
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
bill 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.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: No Local: No
SB 327
Page 4
SUPPORT: (Verified 4/28/15)
California Beer & Beverage Distributors
OPPOSITION: (Verified 4/28/15)
None received
Prepared by:Arthur Terzakis / G.O. / (916) 651-1530
4/29/15 16:13:05
**** END ****