BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 557|
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THIRD READING
Bill No: SB 557
Author: Hall (D)
Amended: 4/6/15
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE: 7-0, 4/28/15
AYES: Hall, Block, Hernandez, Hill, Hueso, Lara, McGuire
NO VOTE RECORDED: Berryhill, Gaines, Galgiani, Vidak
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/11/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
SUBJECT: Alcoholic beverages: advertising: promotions
SOURCE: Author
DIGEST: This bill deletes the January 1, 2016 repeal of an
existing provision of the Alcoholic Beverage Control (ABC) Act
that authorizes wine, beer, and spirits producers to participate
in promotional events held at off-sale retail licensed locations
for the purpose of providing autographs on bottles or other
items to consumers, subject to certain conditions.
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.
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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)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 ABC.
4)Authorizes, until January 1, 2016, the appearance of a person
employed or engaged by an authorized licensee at a promotional
event held at the premises of an off-sale retail licensee for
the purposes of providing autographs, subject to specified
conditions.
This bill:
1)Deletes the January 1, 2016 sunset date referenced above
relating to autographing alcoholic beverage bottles, thereby
extending this privilege indefinitely.
2)Makes technical changes to existing provisions of law that
prohibit paid advertising by winegrowers, beer manufacturers
and distilled spirits producers in cases where a retail
licensee also owns a sports or entertainment venue.
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Background
Purpose of SB 557. For several years, the Department of ABC had
taken the position that supplier promotional appearances are
"things of value" and that autographing alcoholic beverage
bottles and other items constituted a "premium, gift or free
goods" in violation of the ABC Act. In 2012, AB 2184 (Hall) was
enacted which authorized alcoholic beverage suppliers to
participate in promotional events held at off-sale licensed
premises involving autographs.
AB 2184 also established conditions under which a celebrity
brand owner or a winemaker or a brewer may go about autographing
bottles and other products for consumers at such promotional
events. Key components of this law include the following: (a)
consumers may not be required to purchase anything from the
retailer to get an autograph; (b) no fee to attend the event;
(c) the event may not exceed four hours in duration; (d) no more
than two such events may be held per calendar year at any single
location of an off-sale retailer; (e) the licensee must provide
notification to the Department of ABC at least 30 days prior to
the event; (f) the retailer where the autographing will occur
may advertise the event but the brand owner who will be doing
the autographing may not; and, (g) the licensee must maintain
records establishing compliance. Additionally, AB 2184 included
a January 1, 2016 sunset clause.
The author of SB 557 notes that AB 2184 of 2012 provided a
service that many consumers enjoy - namely, collectibles. Also,
AB 2184 granted licensed suppliers the authority to engage in
brand awareness events involving autographs at licensed off-sale
retail establishments.
The author of SB 557 believes that in light of the fact that the
Department of ABC has not reported any problems with AB 2184 of
2012, it makes sense to remove the sunset, thereby extending the
bottle signing privilege indefinitely.
Prior Legislation
AB 2184 (Hall, Chapter 480, Statutes of 2012) created, until
January 1, 2016, a new tied-house exception in the ABC Act that
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authorized wine, beer, and spirits producers to participate in
promotional events held at off-sale retail licensed locations
for the purpose of providing autographs on bottles or other
items to consumers, subject to certain conditions.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: No
According to the Senate Appropriations Committee, potentially
$95,000 annually for one personnel year in the Trade Enforcement
Unit at the Department of ABC (Special).
SUPPORT: (Verified 5/11/15)
Distilled Spirits Council of the United States
Family Winemakers of California
Southern Wine & Spirits Wholesalers, Inc.
Wine Institute
Young's Market Company
OPPOSITION: (Verified 5/11/15)
None received
ARGUMENTS IN SUPPORT: Proponents point out that existing law
(AB 2184 of 2012) provided alcoholic beverage producers a
valuable tool to help build brand awareness and loyalty by means
of promotional events and autographs. Proponents emphasize that
"sunsets provide a trial period to evaluate the efficacy of a
new statute. Since passage of AB 2184 in 2012, the lack of
enforcement actions by the Department of ABC underscores the
effectiveness of the statute's built-in safeguards."
Prepared by:Arthur Terzakis / G.O. / (916) 651-1530
5/13/15 16:55:45
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