BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                        SB 462|
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                                   THIRD READING 


          Bill No:  SB 462
          Author:   Wolk (D)
          Amended:  4/8/15  
          Vote:     21  

           SENATE GOVERNMENTAL ORG. COMMITTEE:  9-0, 4/14/15
           AYES:  Hall, Berryhill, Block, Gaines, Hernandez, Hill, Lara,  
            McGuire, Vidak
           NO VOTE RECORDED:  Galgiani, Hueso

           SENATE APPROPRIATIONS COMMITTEE:  Senate Rule 28.8

           SUBJECT:   Alcoholic beverages:  tied house restrictions:   
                     Sonoma County


          SOURCE:    Author

          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:
          








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          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. 

          2)Separates the alcoholic beverage industry into three component  
            parts, or tiers (referred to as the "tied-house" law or  
            "three-tier" system), of manufacturer (including breweries,  
            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,  







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            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  
            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  







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            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.

          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;








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             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.

          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  







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          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  
          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
          
          SB 1531 (Wolk, Chapter 334, Statutes of 2012)  authorized, until  
          January 1, 2018, the Napa Valley Opera House to accept 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  







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          Francisco Symphony under specified conditions.

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



          SUPPORT:  (Verified 4/28/15)

          California State University, Office of the Chancellor
          California State University Sonoma
          Family Winemakers of California

          OPPOSITION: (Verified 4/28/15)

          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.  
           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.  
          
          Prepared by:Arthur Terzakis / G.O. / (916) 651-1530







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          4/29/15 16:07:27


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