BILL ANALYSIS                                                                                                                                                                                                    



                                                                    SB 1032  


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          Date of Hearing:  August 3, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          SB 1032  
          (Galgiani) - As Amended May 19, 2016


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          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  


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          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  


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            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