BILL ANALYSIS Ó SB 1032 Page 1 Date of Hearing: August 3, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair SB 1032 (Galgiani) - As Amended May 19, 2016 ----------------------------------------------------------------- |Policy |Governmental Organization |Vote:|20 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: YesReimbursable: No SUMMARY: This bill expands the prohibition on beer manufacturers and beer wholesalers from offering consumer coupons, as defined, to include those involved in the production of wine, such as winemakers, winegrowers, and wine blenders. This bill also prohibits licensed retailers from accepting or redeeming such coupons from these nonretail licensees. SB 1032 Page 2 FISCAL EFFECT: Minor enforcement costs to the Department of Alcoholic Beverage Control (ABC). COMMENTS: 1)Background. Instant redeemable coupons (IRCs) offered by alcohol manufacturers provide an instant reduction in the price of a product when purchased at a retail licensee. However, AB 1928 (Bocanegra), Chapter 145, Statutes of 2014, prohibited beer manufacturers and beer wholesalers from IRCs. Supporters of that bill contended that these coupons were prone to problems such as fraud and that they gave an unfair competitive advantage to large beer manufacturers because smaller craft breweries could not afford to offer such coupons. 2)Purpose. According to supporters of this bill, which include The Wine Institute and Family Winemakers of California, current coupon practices in the wine industries can create competitive imbalances between large and small wineries as well as between large grocery chains and smaller independent retailers. Proponents state that these coupons raise social responsibility issues as well by promoting excessive drinking. 3)Nonretail licensees and coupon exemption. This bill expands the IRC prohibition to nonretail licensees, defined as those involved in the production, manufacturing, rectification, importation, or wholesaling of alcoholic beverages. However, SB 1032 Page 3 SB 1032 also contains provisions that state that the prohibition does not apply to distilled spirit producers and manufactures or in instances when wineries offer discounts directly to consumers through wine clubs or on internet purchases. 4)Opposition. The California Grocers Association and the California Retailers Association oppose this bill, arguing that these discount programs are important to retailers and consumers. Analysis Prepared by:Luke Reidenbach / APPR. / (916) 319-2081