BILL ANALYSIS Ó
SB 462
Page 1
Date of Hearing: July 8, 2015
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Adam Gray, Chair
SB
462 (Wolk) - As Amended May 11, 2015
SENATE VOTE: 36-0
SUBJECT: Alcoholic beverages: tied house restrictions: Sonoma
County.
SUMMARY: Extends an existing tied-house exception in the
Alcoholic Beverage Control Act (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 Act that allows alcoholic
beverage licensees, as specified, to make monetary or alcoholic
beverage contributions to the Green Music Center under certain
conditions. Specifically, this bill:
1)Expands an existing "tied-house" exception in the 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.
SB 462
Page 2
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 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;
SB 462
Page 3
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;
SB 462
Page 4
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 (boilerplate 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.
SB 462
Page 5
8)Makes other minor, conforming, and technical 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 (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.
SB 462
Page 6
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.
SB 462
Page 7
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. In addition,
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)
FISCAL EFFECT: Unknown
COMMENTS:
SB 462
Page 8
Purpose of the bill . 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.
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
alcoholic beverage sponsorships with various manufacturers and
distributors.
SB 462
Page 9
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.
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
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
SB 462
Page 10
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.
Prior 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.
REGISTERED SUPPORT / OPPOSITION:
Support
SB 462
Page 11
California State University, Office of the Chancellor
California State University Sonoma
Family Winemakers of California
Opposition
None on file
Analysis Prepared by:Eric Johnson / G.O. / (916)
319-2531