BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Isadore Hall, III
Chair
2015 - 2016 Regular
Bill No: SB 462 Hearing Date: 4/14/2015
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|Author: |Wolk |
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|Version: |4/08/2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Arthur Terzakis |
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SUBJECT: Alcoholic beverages: tied house restrictions: Sonoma
County.
DIGEST: This bill extends an existing "tied-house" exception
in the Alcoholic Beverage Control (ABC) Act pertaining to the
general prohibition against advertising arrangements between
retail, wholesale and manufacturer licensees to include a
specified entertainment complex, known as the Green Music
Center, located on the campus of Sonoma State University.
Additionally, this bill adds a new section of law to the ABC Act
that allows alcoholic beverage licensees, as specified, to make
monetary or alcoholic beverage contributions to the Green Music
Center under certain conditions.
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,
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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.
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)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
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,
Levi's Stadium in the City of Santa Clara, and other venues].
5)Allows wineries, breweries, distilled spirits manufacturers,
and importers to donate their product(s) to certain nonprofit
organizations (e.g., fraternal orders, social organizations,
civic leagues, veterans' organizations, religious groups,
horticultural organizations) for the purpose of assisting in
fund-raising efforts.
6)Provides a narrow tied-house exception for certain alcoholic
beverage licensees to make monetary and alcoholic beverage
contributions to a symphony association (the San Francisco
Symphony) that is a nonprofit charitable corporation or
association, under specified conditions. The symphony
association must hold a retail on-sale license in a portion of
SB 462 (Wolk) Page 3 of ?
its premises and no such gift shall be used in or for the
benefit of the symphony association's retail on-sale license.
Additionally, the symphony association must sell or serve
competing brands of beer, wine, and spirits in addition to
brands produced or marketed by the donating licensees. (B & P
Code Section 25503.31)
7)Provides a narrow tied-house exception for the holder of a
winegrower's license whose licensed premises of production are
located within the Counties of Lake, Mendocino, Napa, or
Sonoma to donate wine and make monetary contributions to an
opera house (the Napa Opera House) that is a nonprofit
charitable corporation provided certain conditions are met.
The opera house must hold a permanent retail on-sale license
and no such donation or monetary contribution shall be used in
or for the benefit of the permanent retail on-sale licensee.
Also, donated wine may only be used or sold in connection with
fundraising activities held on or off the permanent licensed
premises. Additionally, the opera house is allowed to
acknowledge and thank donating winegrowers on the opera
house's Internet Web site, event programs and on stage during
an event. (B & P Code Section 25503.32)
This bill:
1)Expands an existing "tied-house" exception in the ABC Act
pertaining to the general prohibition against advertising
arrangements between retail, wholesale and manufacturer
licensees to include a complex of not more than 50 acres
located on the campus of Sonoma State University, in Sonoma
County, dedicated to presenting live artistic, musical,
sports, food, beverage, culinary, lifestyle, or other cultural
and entertainment events and performances with venues that
include a concert hall with a seating capacity of
approximately 1,500 seats, a second concert hall with a
seating capacity of up to 300 seats, an outdoor area with a
seating capacity of 5,000 seats and a further outdoor area
with a seating capacity of 10,000 seats.
2)Provides that, with respect to this complex, advertising space
and time may also be purchased from or on behalf of the owner
of the complex, a long-term tenant or licensee of the venue,
whether or not the owner, long-term tenant, or licensee holds
an on-sale license.
SB 462 (Wolk) Page 4 of ?
3)Makes it explicit that the advertising space or time shall be
purchased only in connection with live, artistic, musical,
sports, food, beverage, culinary, or other cultural
entertainment events and performances to be held on the
premises of the complex.
4)Additionally, creates a new section of law in the ABC Act that
allows alcoholic beverage licensees, as specified, to make
monetary or alcoholic beverage contributions to a complex
dedicated to the presentation of live artistic, musical,
sports, food, beverage, culinary, lifestyle, or other cultural
entertainment events or performances, if all the following
conditions are met:
a) The permanent retail on-sale licensee in the complex is
a nonprofit charitable corporation or association;
b) The complex is not more than 50 acres located on the
campus of , and owned by, Sonoma State University, in
Sonoma County, dedicated to presenting live artistic,
musical, sports, food, beverage, culinary, lifestyle, or
other cultural and entertainment events and performances
with venues that include a concert hall with a seating
capacity of approximately 1,500 seats, a second concert
hall with a seating capacity of up to 300 seats, an outdoor
area with a seating capacity of 5,000 seats and a further
outdoor area with a seating capacity of 10,000 seats;
c) The complex has a permanent retail on-sale license that
is a long-term tenant of the complex;
d) The donated alcoholic beverages shall not be used or
sold by the permanent retail licensee and a monetary
contribution shall not be used in, or for the benefit of,
the permanent retail on-sale licensee;
e) The donation or monetary contribution shall not be
conditioned directly or indirectly, in any way, on the
purchase, sale, or distribution of any alcoholic beverage
manufactured or distributed by the holder of the license by
the licensee of the complex; and,
f) The donated alcoholic beverages may only be used or sold
in connection with fund raising activities held on or off
the permanent licensed premises.
SB 462 (Wolk) Page 5 of ?
5)Allows the complex to acknowledge and thank a donating
alcoholic beverage licensee in event programs, on the
complex's Internet Web site, and on stage during an event or
program.
6)Specifies that the privilege granted to a beer and wine
wholesaler that also holds an off-sale beer and wine retail
license and only sells wine shall apply only to wine produced
for the donating licensee that is labeled with a brand owned
exclusively by the donating licensee.
7)Contains legislative findings (boiler plate language) with
respect to the exceptions established by this bill to the
general prohibition against tied house interests.
8)Makes other minor, conforming, and technical changes.
Background
Donald and Maureen Green Music Center: According to the
author's office, the Green Music Center is a focal point for
arts in Sonoma County, presenting year-round programming of
premier classical, contemporary, jazz, chamber and world music
artists in concert. The Green Music Center complex, located on
the campus of Sonoma State University, includes a 1,400+ seat
concert hall (Weill Hall), an intimate 240+ seat second concert
hall (Schroeder Hall), as well as an outdoor area with seating
for up to 5,000. Patrons seated on Weill Lawn are offered a
number of distinct experiences including a full-service gourmet
meal on the dining terrace, table seating, or lawn seating where
purchased food or picnics can be enjoyed.
Purpose of SB 462: The author's office states that as with any
performing arts venue, sponsorships and fund raising are
critical components to the viability of the programs offered at
the Green Center. Being located in Sonoma County, the local
wine and beer community has been very supportive of the Green
Center and would like to donate money or product and/or provide
sponsorship for various activities. This measure would allow
certain alcoholic beverage producers to donate wine, beer, or
spirits and also make monetary contributions to the Green
Center, if certain conditions are met. The Green Center, in
turn, would be allowed to sell those donated alcoholic beverages
SB 462 (Wolk) Page 6 of ?
to patrons at fund raising events. The author's office
emphasizes that the Legislature in past years has granted
similar ABC privileges to the San Francisco Symphony and the
Napa Opera House. (See prior/related legislation listed below.)
The author's office notes that the second component of this
measure relates to existing tied-house laws and the general
prohibition against advertising arrangements between retail,
wholesale and manufacturer licensees. The author's office points
out that in order to allow local wineries and other producers
and wholesalers of alcoholic beverages to pay for advertising at
Green Center events, it is necessary to carve an exemption in
the law. Over the years, numerous such exceptions have been
incorporated into the ABC Act (see "existing law" item #4
above.) Thus, this measure would amend ABC tied-house
provisions to include the Green Music Center complex on the list
of exemptions in the law, thereby allowing the Center to develop
certain alcoholic beverage sponsorships with various
manufacturers and distributors.
Prior/Related Legislation
AB 600 (Bonta) Chapter 139, Statutes of 2014. Extended an
existing "tied-house" exception in the ABC Act pertaining to the
general prohibition against advertising arrangements between
retail, wholesale and manufacturer licensees to include an
outdoor stadium with a fixed seating capacity of at least 68,000
seats located in the City of Santa Clara (Levi's Stadium - new
home of the San Francisco 49ers).
SB 324 (Wright), Chapter 164, Statutes of 2013. Extended an
existing tied-house exception pertaining to the general
prohibition against advertising arrangements between retail,
wholesale and manufacturer licensees to include a fully enclosed
arena with a fixed seating capacity in excess of 13,000 seats
(the Forum) in the City of Inglewood.
AB 1425 (Governmental Organization Committee), Chapter 463,
Statutes of 2013. Among other things, deleted the December 31,
2014 repeal of an existing provision authorizing the San
Francisco Symphony to accept monetary or alcoholic contributions
from alcoholic beverage licensees, thereby authorizing such
contributions indefinitely.
SB 1531 (Wolk), Chapter 334, Statutes of 2012. Authorized,
until January 1, 2018, the Napa Valley Opera House to accept
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wine and monetary donations from wineries located within the
Counties of Napa, Sonoma, Lake, and Mendocino under specified
conditions.
SB 131 (Wiggins), Chapter 638, Statutes of 2009. Authorized
alcoholic beverage licensees, until December 31, 2014, to make
monetary or alcoholic beverage contributions to the San
Francisco Symphony under specified conditions.
SB 351 (Negrete-McLeod), 2007-08 Session. Would have extended an
existing "tied-house" exception pertaining to the general
prohibition against advertising arrangements between retail,
wholesale and manufacturer licensees so that alcoholic beverage
manufacturers may purchase advertising from on-sale retail
licensees in order to promote "safe ride home programs" at
specified stadiums and arenas. (Placed on Assembly inactive
file)
AB 776 (Aghazarian), Chapter 221, Statutes of 2007. Created a
new tied-house exception by authorizing a beer manufacturer to
sponsor or purchase advertising space and time from, or on
behalf of, an off-sale retail licensee that is an owner or
co-owner of a professional sports team (California Cougars
indoor soccer team) that plays its home games, in an arena with
a fixed seating capacity of 10,000 seats (Stockton Arena)
located in San Joaquin County.
AB 663 (Galgiani), Chapter 745, Statutes of 2007. Extended an
existing "tied-house" exception pertaining to the general
prohibition against advertising arrangements between retail,
wholesale and manufacturer licensees to include an outdoor
professional sports facility with a fixed seating capacity of at
least 4,200 (Banner Island Ballpark - home of the Stockton Ports
Class A baseball team) located in San Joaquin County.
AB 3046 (Chavez), Chapter 587, Statutes of 2006. Extended an
existing "tied-house" exception pertaining to the general
prohibition against advertising arrangements between retail,
wholesale and manufacturer licensees to the HP Pavilion in Santa
Clara County.
AB 1442 (Horton), Chapter 617, Statutes of 2005. Extended an
existing "tied-house" exception pertaining to the general
prohibition against advertising arrangements between retail,
wholesale and manufacturer licensees to the Home Depot Center, a
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sports and athletic complex within the City of Carson in Los
Angeles and the Nokia Theater, located within the Los Angeles
Sports and Entertainment District, adjacent to STAPLES Center.
SB 1647 (Perata), Chapter 275, Statutes of 2004. Extended an
existing tied-house exception pertaining to the general
prohibition against advertising arrangements between retail,
wholesale and manufacturer licenses to the Oakland Coliseum in
Alameda County.
SB 1189 (Costa), Chapter 47, Statutes of 2002. Extended an
existing tied-house exception pertaining to the general
prohibition against advertising arrangements between retail,
wholesale and manufacturer licenses to: the Visalia Oaks Stadium
in Visalia and the California Speedway in Fontana.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: No
SUPPORT:
California State University, Office of the Chancellor
California State University Sonoma
Family Winemakers of California
OPPOSITION:
None received
ARGUMENTS IN SUPPORT:
Writing in support, the California State University (CSU) states
that Sonoma County wineries and breweries have been very
supportive of the Green Music Center and would like the
opportunity to partner with the Center for purposes of donating
product and/or providing sponsorship for various activities.
CSU believes that granting the Center an exemption similar to
what others in the state have received would enable the campus
to continue to support their Center and its mission.
Also writing in support, the Family Winemakers of California
(FWC) states that traditionally, entertainment venues sell a
variety of advertising signage that typically promote products
for sale at the facility or site, including alcoholic beverages.
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Current advertising restrictions in the ABC Act would preclude
any signage, paid for by the manufacturer, unless such an
exception is created. This exception is patterned after one
granted to the San Francisco Symphony in 2009, which has
operated without incident. Furthermore, FWC notes that the
exception does not change the existing requirement that other
brands of beer, wine, or distilled spirits, distributed by
competing wholesaler entities, be served at the venues in
addition to the brand that is advertised which creates some
equity for competing brands and wholesalers.