BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 462|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
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THIRD READING
Bill No: SB 462
Author: Wolk (D), et al.
Amended: 5/11/15
Vote: 27 - Urgency
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.
Senate Floor Amendments of 5/11/15 (1) add a co-author; (2) add
an urgency clause; (3) add language clarifying that other brands
of beer, wine or distilled spirits, distributed by competing
wholesaler entities, must be served at the complex venue in
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addition to the brand that is donated; (4) add legislative
findings language to Section 1 of this bill (identical to
language found in Section 2 of this bill) relative to the
exceptions established by this bill to the general prohibition
against tied-house interests; (5) strike reference to licensees
who operate as a wholesaler in addition to selling wine to
consumers (known as a type 17/20 combination license); and, (6)
make other minor and technical changes.
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.
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
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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
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
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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.
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)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
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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;
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; and,
g) The permanent retail on-sale licensee in the complex
must serve other brands of beer, wine or distilled spirits,
distributed by competing wholesaler entities in addition to
the brand that is donated.
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)Contains legislative findings (boiler plate language) with
respect to the exceptions established by this bill to the
general prohibition against tied house interests.
7)Contains an urgency clause to take effect immediately.
8)Makes other minor, conforming, and technical changes.
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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 bill allows 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 bill
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 bill amends 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
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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
Francisco Symphony under specified conditions.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: No
SUPPORT: (Verified 5/11/15)
California State University, Office of the Chancellor
California State University Sonoma
Family Winemakers of California
OPPOSITION: (Verified 5/11/15)
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
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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
5/13/15 16:56:02
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