BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 462


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          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. 










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          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;











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          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; 









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          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.









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          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.  











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          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.












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          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:  








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           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.  












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           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  








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          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










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          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