BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 557 (Hall) - Alcoholic beverages: advertising: promotions
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|Version: April 6, 2015 |Policy Vote: G.O. 7 - 0 |
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|Urgency: No |Mandate: No |
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|Hearing Date: May 11, 2015 |Consultant: Maureen Ortiz |
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This bill does not meet the criteria for referral to the
Suspense File.
Bill
Summary: SB 557 eliminates the sunset on the tied-house
exemption in the Alcoholic Beverage Control Act that authorizes
wine, beer and spirits producers to participate in promotional
events held at an off-sale retail licensed location for the
purpose of providing autographs to consumers.
Fiscal
Impact:
Potentially $95,000 annually for one PY in the Trade
Enforcement Unit at the Department of Alcoholic Beverage
Control (Special).
According to the ABC, there are currently 7,825 authorized
licensees that will be allowed to hold up to two events per
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calendar year at 28,555 off-sale retail licensed premises
statewide. Investigations involve monitoring the events,
reviewing records, conducting interviews and other duties.
Background: Existing law, known as the "tied-house" law, separates the
alcoholic beverage industry into three component parts, or
tiers, of manufacturer (including breweries, wineries and
distilleries), wholesaler, and retailer (both on-sale and
off-sale).
Existing law also provides that no licensee shall, directly or
indirectly, give any premium, gift, free goods, or other thing
of value in connection with the sale, distribution, or sale and
distribution of alcoholic beverages, and no retailer shall,
directly or indirectly, receive any premium, gift, free goods or
other thing of value from a supplier of alcoholic beverages,
except as authorized by the Department of Alcoholic Beverage
Control.
Existing law defines an "on-sale" license as authorizing the
sale of all types of alcoholic beverages; namely, beer, wine and
distilled spirits, for consumption on the premises (such as at a
restaurant or bar). An "off-sale" license authorizes the sale
of all types of alcoholic beverages for consumption off the
premises in original, sealed containers.
Proposed Law:
SB 557 does the following:
1)Eliminates the January 1, 2016 sunset which authorizes the
appearance of a person employed or engaged by an "authorized
licensee," as defined, at a promotional event held at the
premises of an off-sale retail licensee for the purpose of
providing autographs only under the following conditions:
a) A fee is not charged to attend the event and a purchase
from the off-sale retail licensee is not required.
b) The promotional event does not exceed 4 hours in
duration and there are no more than two such events per
calendar year involving the same authorized licensee at a
single premise of an off-sale licensee.
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c) Autographing may only be provided on consumer
advertising specialties given by the authorized licensee to
a consumer or on any item provided by the consumer.
d) The off-sale retail licensee may advertise the
promotional event, but only in publications of the
authorized licensee, subject to specified conditions.
e) A wholesaler may not directly or indirectly underwrite,
share in, or contribute to any costs related to the
promotional event, other than for a promotional event for
which the wholesaler employs or engages the person
providing autographs to consumers at the event.
f) The authorized licensee must notify the ABC in writing
of the event at least 30 days in advance and maintain
records necessary to establish compliance with this law.
2)Defines "authorized licensee" to mean a manufacturer,
winegrower, manufacturer's agent, California winegrower's
agent, rectifier, importer, brandy manufacturer, brandy
importer, or wholesaler.
Related
Legislation: AB 2184 (Hall, Chapter 480, Statutes of 2012),
until January 1, 2016, created a new tied-house exemption in the
ABC Act that authorized wine, beer and spirts producers to
participate in promotional events held at off-sale retail
licensed locations for the purpose of providing autographs to
consumers.
Staff
Comments: It has become more and more common for individuals in
the entertainment industry in particular to acquire an ownership
interest in a brand of distilled spirits or to create a new
spirits line and then arrange to have those brands distributed
in the normal and lawful distribution system established by ABC
laws. Additionally, those individuals will often promote the
product at the retail point of sale through personal appearances
which may include bottle signing events in licensed premises
which carry the product. Examples of "celebrities" who have
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garnered an ownership interest in distilled spirits include:
Dan Ackroyd, Crystal Head Vodka; Sean "P. Ditty" Combs, Ciroc
Vodka (primary owner Diageo); Sammy Hagar, Cabo Wabo Tequila
(primary owner Gruppo Campari); Donald Trump, Trump Vodka; Danny
DeVito, Danny DeVito's Limoncello; and, Jay-Z, Armadale Vodka.
The Department of ABC has taken the position that the appearance
of any public personality, with an ownership interest in an
alcoholic beverage product, at a licensed retail premises to
autograph bottles of his or her product, constitutes a "thing of
value" in violation of current tied-house provisions of the ABC
Act - the department considers the autographed bottle a
"premium."
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