BILL ANALYSIS Ó SB 462 Page 1 SENATE THIRD READING SB 462 (Wolk) As Amended August 27, 2015 2/3 vote. Urgency SENATE VOTE: 36-0 -------------------------------------------------------------------- |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+-----------------------+---------------------| |Governmental |19-0 |Gray, Linder, | | |Organization | |Achadjian, Alejo, | | | | |Bigelow, Campos, | | | | |Cooley, Cooper, Daly, | | | | |Cristina Garcia, | | | | |Eduardo Garcia, | | | | |Jones-Sawyer, Levine, | | | | |Mayes, Perea, Salas, | | | | |Steinorth, Waldron, | | | | |Wilk | | | | | | | |----------------+-----+-----------------------+---------------------| |Appropriations |17-0 |Gomez, Bigelow, Bloom, | | | | |Bonta, Calderon, | | | | |Chang, Daly, Eggman, | | | | |Gallagher, Eduardo | | | | |Garcia, Holden, Jones, | | SB 462 Page 2 | | |Quirk, Rendon, Wagner, | | | | |Weber, Wood | | | | | | | | | | | | -------------------------------------------------------------------- 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. 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. SB 462 Page 3 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; 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 SB 462 Page 4 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 (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. 8)Makes other minor, conforming, and technical changes. 9)Incorporates language to avoid a chaptering issue with SB 557 (Hall) of the current legislative session. EXISTING LAW: SB 462 Page 5 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. 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 SB 462 Page 6 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. (Business and Professions Code (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 SB 462 Page 7 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: According to the Assembly Appropriations Committee, minor and absorbable enforcement costs to ABC. COMMENTS: Purpose of this 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 SB 462 Page 8 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. 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. 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. SB 462 Page 9 Analysis Prepared by: Eric Johnson / G.O. / (916) 319-2531 FN: 0001587