BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 327


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          Date of Hearing:   July 15, 2015


                   ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION


                                  Adam Gray, Chair


          SB  
          327 (Hall) - As Amended April 22, 2015


          SENATE VOTE:  35-0


          SUBJECT:  Alcoholic beverages: licensees: tied-house  
          restrictions.


          SUMMARY:   Consolidates two similar tied-house exceptions (one  
          pertaining to "on-sale" retailers and the other to "off-sale"  
          retailers) within the Alcoholic Beverage Control Act (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.  Specifically, 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. 













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          2)Makes other minor conforming changes.


          EXISTING LAW:   


          1)Establishes the Department of Alcoholic Beverage Control (ABC)  
          and grants it exclusive authority to administer the provisions  
          of the 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)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,  








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          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 sale  
          of all types of alcoholic beverages for consumption off the  
          premises in original, sealed containers.  









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          FISCAL EFFECT:  Unknown


          COMMENTS:  


           Purpose of the bill  . 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.





           Prior 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  
          importers to respond to consumer inquiries as to where their  
          products may be found to include any "electronic" inquiries from  
          consumers.









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          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.





          REGISTERED SUPPORT / OPPOSITION:




          Support


          California Beer & Beverage Distributors




          Opposition


          None on file










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          Analysis Prepared by:Eric Johnson / G.O. / (916)  
          319-2531