Amended in Assembly August 19, 2016

Senate BillNo. 1105


Introduced by Senator Mendoza

February 17, 2016


An act tobegin delete repeal Section 23792 ofend deletebegin insert amend Sections 25503.6 and 25503.8 of, and to add Article 7 (commencing with Section 23550) to Chapter 3 of Division 9 of,end insert the Business and Professions Code, relating to alcoholic beverages.

LEGISLATIVE COUNSEL’S DIGEST

SB 1105, as amended, Mendoza. Alcoholic beverage licensees:begin delete restrictions.end deletebegin insert sports entertainment facilities.end insert

begin insert

The Alcoholic Beverage Control Act contains various provisions regulating the application for, the issuance of, the suspension of, and the conditions imposed upon alcoholic beverage licenses by the Department of Alcoholic Beverage Control. Existing law provides for various annual fees for the issuance of alcoholic beverage licenses, depending upon the type of license issued. Existing law additionally authorizes specified alcoholic beverage licensees to purchase advertising space and time from, or on behalf of, an on-sale retail licensee, under certain conditions, if the on-sale retail licensee is the owner, manager, agent of the owner, assignee of the owner’s advertising rights, or major tenant of specified facilities.

end insert
begin insert

This bill would authorize the Department of Alcoholic Beverage Control to issue an on-sale general for sports entertainment facility bona fide public eating place license (SEF-BFPEP license) that would allow the licensee to sell beer, wine, and distilled spirits at retail for consumption on the premises in a sports entertainment facility, as defined. The bill would impose an original fee and an annual renewal fee for the license, which would be deposited in the Alcohol Beverage Control Fund. The bill would also make the above-described provisions relating to the purchase of advertising time and space inoperative as of December 31, 2022, and instead provide for those purchases with revised parameters, including that the parties submit a declaration to the department relating to the agreement to purchase advertising time and space.

end insert
begin delete

The Alcoholic Beverage Control Act contains various provisions regulating the application for, the issuance of, the suspension of, and the conditions imposed upon, alcoholic beverage licenses by the Department of Alcoholic Beverage Control. Existing law prohibits the issuance of a license, other than an on-sale beer license, for premises situated more than one mile outside the limits of an incorporated city and within 2 miles of any camp or establishment of men, numbering 25 or more, engaged upon or in connection with the construction, repair, or operation of any work, improvement, or utility of a public or quasi-public character.

end delete
begin delete

This bill would repeal that prohibition, thus authorizing the department to issue any type of license for premises situated in the above-described location.

end delete

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertArticle 7 (commencing with Section 23550) is
2added to Chapter 3 of Division 9 of the end insert
begin insertBusiness and Professions
3Code
end insert
begin insert, to read:end insert

begin insert

4 

5Article begin insert7.end insert  Sports Entertainment Facility Bona Fide Public
6Eating Place License
7

 

8

begin insert23550.end insert  

For purposes of this article:

9
(a) “Agreement” includes any amendment, modification, other
10revision, or extensions to the agreement if it relates in any manner
11to the purchase of advertising space and time at the sports
12entertainment facility from the owner or major tenant of the facility.

13
(b) “Authorized licensee” means a winegrower, rectifier,
14California winegrower’s agent, beer manufacturer, holder of an
15out-of-state beer manufacturer’s certificate, distilled spirits
P3    1manufacturer, holder of a distilled spirits rectifier’s general
2license, distilled spirits manufacturer’s agent, brandy
3manufacturer, holder of an out-of-state distilled spirits shipper’s
4certificate, holder of a distilled spirits importer’s general license,
5craft distiller, or holder of a beer and wine importer’s general
6license.

7
(c) “On-sale licensee” means a person holding an on-sale
8general SEF-BFPEP license to serve alcoholic beverages on the
9premises of a sports entertainment facility.

10
(d) “SEF-BFPEP license” means an on-sale general for sports
11entertainment facility bona fide public eating place license issued
12pursuant to this article.

13
(e) “Sports entertainment facility” means a publicly or privately
14owned stadium, coliseum, motor speedway, or an enclosed arena
15with a spectator capacity exceeding 10,000 people where sporting
16or entertainment events are presented for a price of admission.
17The facility does not have to be used exclusively for sporting or
18entertainment events. A “sports entertainment facility” also means
19any facility described in Section 25503.6 or 25503.8 as those
20sections read on December 31, 2016, even if those sections are
21later repealed.

22

begin insert23552.end insert  

(a) In addition to the licenses specified in Section
2323320, the department may issue an SEF-BFPEP license to sell
24beer, wine, and distilled spirits at retail for consumption upon the
25premises only.

26
(b) The SEF-BFPEP license may be issued to the person
27providing alcoholic beverage and food service at the sports
28entertainment facility. Except as provided in this section, only
29licensees with an SEF-BFPEP license are authorized to sell beer,
30wine, and distilled spirits at retail for consumption upon the
31premises of the sports entertainment facility. The license shall only
32be transferable from person to person at the same premises. An
33SEF-BFPEP license shall not be transferred for a purchase price
34or consideration in excess of the original fee paid for that license.

35
(c) The original fee for an SEF-BFPEP license shall be thirteen
36thousand eight hundred dollars ($13,800) to cover the reasonable
37administrative costs of the department. The annual license fee
38shall be consistent with the on-sale general bona fide public eating
39place license and shall be adjusted pursuant to subdivisions (b)
40and (c) of Section 23320.

P4    1
(d) (1) Issuance of the license shall be subject to the provisions
2of Section 23958.4.

3
(2) Issuance of the license shall not be subject to the provisions
4of Section 23816.

5
(e) (1) Any person providing alcoholic beverage and food
6service at a sports entertainment facility pursuant to another type
7of on-sale license as of the effective date of this section shall obtain
8an SEF-BFPEP license within 12 months of the effective date of
9this section if that person provides alcoholic beverage and food
10service at the facility on or after January 1, 2017. The person may
11 elect to surrender that existing license in exchange for an
12SEF-BFPEP license or may transfer that license pursuant to
13applicable law. If, after a license surrender and exchange, the
14on-sale licensee that surrendered and exchanged its license for
15an SEF-BFPEP license no longer provides alcoholic beverage
16and food service at that facility, the on-sale licensee may surrender
17and exchange the SEF-BFPEP license for the licensee’s original
18license, subject to any applicable provisions of this division.

19
(2) The department may modify its rules regarding the surrender
20of licenses to implement this subdivision.

21

begin insert23553.end insert  

The SEF-BFPEP license is subject to all of the following
22conditions:

23
(a) Except as otherwise provided in this chapter, a person
24holding an SEF-BFPEP license shall not enter into any agreement
25with any authorized licensee for the purchase of advertising space
26and time at the sports entertainment facility, including the premises
27of the on-sale licensee.

28
(b) (1) For any sports entertainment facility at which an
29authorized licensee has entered into an agreement with the owner
30or major tenant of the facility for the purchase of advertising space
31and time at the facility, any on-sale licensee shall serve other
32brands of beer distributed by a competing wholesaler that are not
33the brands of beer sold, manufactured, or marketed by an
34authorized licensee, other brands of wine distributed by a
35competing wholesaler that are not the brands of wine sold,
36manufactured, or marketed by an authorized licensee, and other
37brands of distilled spirits distributed by a competing wholesaler
38that are not the brands sold, manufactured, or marketed by an
39authorized licensee that purchased the advertising space and time.
40An on-sale licensee may also serve brands of beer that are
P5    1manufactured and provided by an unaffiliated, competing licensed
2beer manufacturer that are not the brands of beer sold,
3manufactured, or marketed by an authorized licensee that
4purchased the advertising space and time.

5
(2) For the purpose of this subdivision, brands of an authorized
6licensee purchasing the advertising space and time shall mean
7brands of beer, wine, or distilled spirits that are sold,
8manufactured, or marketed by the authorized licensee or sold,
9manufactured, or marketed by any subsidiary or other business
10entity of the authorized licensee that the authorized licensee owns,
11manages, or controls.

12
(c) (1) An owner or major tenant of any sports entertainment
13facility described in Section 25503.6 or 25503.8, as those sections
14read on December 31, 2016, that is also the retail licensee for that
15facility as of December 31, 2016, is exempt from subdivisions (a)
16and (b) and Section 23554, but shall be subject to the provisions
17of Section 25503.6 or 25503.8 as they read on December 31, 2016,
18regardless if either or both of those sections are repealed, if there
19is an agreement existing on December 31, 2016, for the purchase
20of advertising space and time at the facility. An owner or major
21tenant that continues as the retail licensee for the facility on or
22after the effective date of this section shall comply with subdivision
23(e) of Section 23552.

24
(2) When an agreement existing on December 31, 2016, for the
25purchase of advertising space and time at the facility is modified,
26renewed, or extended, or a new agreement is entered into, on or
27after the effective date of this section, the owner or major tenant
28shall be subject to subdivisions (a) and (b), and to the provisions
29of subdivisions (a) to (f), inclusive, of Section 23554.

30
(3) A sports entertainment facility owner or major tenant which
31is also the retail licensee for that facility as of December 31, 2016,
32that seeks an exemption pursuant to this subdivision shall submit
33to the department, by January 31, 2017, a declaration stating that
34the sports entertainment facility is subject to an agreement for the
35purchase of advertising space and time at the facility that was in
36effect on December 31, 2016, and continues in effect on or after
37January 1, 2017. The declaration shall further state the name and
38address of the sports entertainment facility, the names of the parties
39to the agreement, and the time period that agreement will continue
40in effect. The licensee shall notify the department within 15 days
P6    1of any amendment, extension, modification, or renewal of that
2agreement, or of any new agreement, entered into on or after the
3effective date of this section. The declaration shall not be under
4penalty of perjury.

5
(d) A violation of any provision of this section or the filing of a
6false declaration shall be subject to license suspension by the
7department.

8

begin insert23554.end insert  

Notwithstanding any other provision of this division,
9and except as provided in subdivision (f), an authorized licensee
10may purchase advertising space and time at a sports entertainment
11facility from the owner or major tenant of the facility who is not
12a licensee under this article, subject to the following conditions:

13
(a) The purchase of advertising space and time shall be
14conducted pursuant to a written agreement entered into by the
15authorized licensee and the owner or major tenant of the facility
16containing all the terms and conditions of such purchase.

17
(b) (1) The authorized licensee shall submit to the department
18within 15 days of execution of the agreement a declaration stating
19that the authorized licensee has entered into a written agreement
20for the purchase of advertising space and time at a sports
21entertainment facility pursuant to and in compliance with the
22provisions of this section, along with a fee of two thousand five
23hundred dollars ($2,500) to cover the reasonable administrative
24costs of the department. The declaration shall further state the
25name and address of the sports entertainment facility, the names
26of the parties to the agreement, and the time period that agreement
27will continue in effect. The authorized licensee shall notify the
28department within 15 days of any amendment, extension,
29modification, or renewal of that agreement or of any new
30agreement.

31
(2) The declaration shall also state that there is no financial
32arrangement or agreement, written or oral, between the authorized
33licensee and the owner or major tenant of the facility or with any
34on-sale licensee that provides for the on-sale licensee to receive
35a share of the revenues, or anything of value, directly or indirectly,
36from the advertising agreement.

37
(3) The declaration required by this subdivision shall not be
38under penalty of perjury. Failure to comply with this subdivision
39or the filing of a false declaration shall be subject to license
40suspension by the department.

P7    1
(c) The agreement shall not contain any of the following terms
2or conditions:

3
(1) The agreement is conditioned on the purchase or sale of the
4authorized licensee’s brands of alcoholic beverages by the on-sale
5licensee or limits the purchase and sale of competing brands of
6alcoholic beverages manufactured, distributed, sold, or marketed
7by other authorized licensees at the facility by the on-sale licensee.

8
(2) The agreement provides for anything of value to be
9furnished, directly or indirectly, to the on-sale licensee.

10
(3) Any term or condition that violates any provision of this
11division.

12
(d) In monitoring the impacts of any agreements authorized by
13this article, the department may conduct audits to determine
14compliance with this section. Audits may include, but are not
15limited to, brand selection at the sports entertainment facility,
16purchase patterns of the on-sale licensee, and review of any
17agreement or amendments to an agreement or any other
18contractual or financial arrangement, written or oral, between or
19among the parties to the agreement and the on-sale licensee,
20including any affiliated business of the on-sale licensee or any
21affiliated business of the authorized licensee.

22
(e) The department shall penalize a violation of any provision
23of this section by the suspension of the authorized licensee’s license
24or by a fine equal to the contract value of the agreement for
25advertising.

26
(f) (1) Any sports entertainment facility described in Section
2725503.6 or 25503.8 as those sections read on December 31, 2016,
28shall be exempt from the provisions of this section if there is an
29agreement existing on December 31, 2016, for the purchase of
30advertising space and time at the facility, but shall for the duration
31of its exemption be subject to the provisions in those sections as
32they read on December 31, 2016, regardless if the section is later
33repealed. When an agreement existing on December 31, 2016, for
34the purchase of advertising space and time at the facility is
35modified, renewed, or extended, or a new agreement entered into,
36on or after the effective date of this section, the facility shall be
37subject to this section.

38
(2) An authorized licensee seeking an exemption pursuant to
39this subdivision shall submit to the department by January 31,
402017, a declaration stating the sports entertainment facility is
P8    1subject to an agreement for the purchase of advertising space and
2time at the facility that was in effect on December 31, 2016, and
3continues in effect on or after January 1, 2017. That declaration
4shall further state the name of the sports entertainment facility,
5the names of the parties to the agreement, and the time period the
6agreement will continue in effect. The authorized licensee shall
7notify the department within 15 days of any amendment, extension,
8modification, or renewal of that agreement, or any new agreement,
9entered into on or after the effective date of this section. The
10declaration shall not be under penalty of perjury. Failure to comply
11with this paragraph or the filing of a false declaration shall be
12subject to license suspension by the department.

13

begin insert23555.end insert  

The Legislature finds and declares all of the following:

14
(a) Statutes to implement a three-tier system, which requires a
15separation between manufacturing interests, wholesale interests,
16and retail interests in the production, distribution, and sale of
17alcoholic beverages, are as proper and necessary to the public
18welfare in the 21st Century as they were when first enacted
19following the enactment of the 21st Amendment to the United States
20Constitution and the repeal of prohibition; that the three-tier
21system by requiring economic separation between the tiers
22contributes to a fair, open, and competitive market resulting in
23interbrand and other competition within each tier, thereby
24broadening consumer choices; and that it also prevents disorderly
25market conditions arising from the domination of local markets
26through vertical integration leading to excessive sales of alcoholic
27beverages and consumption produced by overly aggressive
28marketing techniques, including, but not limited to, the domination
29of local markets and the undue economic influence of one tier over
30another. The Legislature further affirms that temperance is
31achieved, consistent with the structural regulation that promotes
32a competitive and orderly market, by controlled access to, and
33responsible use and consumption of, alcoholic beverages by
34persons of legal drinking age.

35
(b) The enactment of tied-house restrictions are necessary
36economic regulations that serve important public interests, and
37the restrictions prohibiting a manufacturer or wholesaler from
38furnishing, giving, or lending any money or other thing of value
39to a retail licensee, or from paying or compensating a retailer for
40advertising as provided in Section 25503, are necessary to promote
P9    1and maintain an orderly competitive market that is open and
2 accessible to all brands and to prevent manufacturers from
3dominating local markets through payment of incentives and
4compensation to retailers. The Legislature further finds and
5declares that limited exceptions have been made to this general
6prohibition to promote an identifiable public purpose and interest
7for the exception, which have been limited to the express terms of
8the exception so as to not undermine the general prohibition.

9
(c) Because this system of prohibition with limited, specific
10exceptions may be incorrectly construed to undermine the general
11prohibition despite legislative directives to the contrary, this
12section is necessary to clarify and reenforce the general prohibition
13as provided in Section 25503.

14
(d) There may be instances where the community public interest
15and welfare would benefit from the sports entertainment facility
16owner or its major tenant being able to receive revenue for the
17advertisement of alcoholic beverages on the premises of the facility.
18Therefore, this article is enacted to authorize manufacturers of
19alcoholic beverages to enter into agreements with the owner or
20major tenant of a sports entertainment facility for the placement
21of brand advertisements upon the premises of the facility where
22the alcoholic beverage sales on the facility premises are conducted
23by a separate, independent entity who is the on-sale general
24licensee and does not share in the advertising revenue.

25
(e) The provisions of this article and other exceptions in this
26division to the general prohibition against tied interests must be
27narrowly construed and limited to the express terms of the
28exception so as not to undermine the general prohibition. The
29Legislature expressly intends that this article and division be
30construed in accordance with these findings.

end insert
31begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 25503.6 of the end insertbegin insertBusiness and Professions Codeend insert
32
begin insert is amended to read:end insert

33

25503.6.  

(a) Notwithstanding any other provision of this
34chapter, a beer manufacturer, the holder of a winegrower’s license,
35a distilled spirits rectifier, a distilled spirits manufacturer, or
36distilled spirits manufacturer’s agent may purchase advertising
37space and time from, or on behalf of, an on-sale retail licensee
38subject to all of the following conditions:

P10   1(1) The on-sale licensee is the owner, manager, agent of the
2owner, assignee of the owner’s advertising rights, or the major
3tenant of the owner of any of the following:

4(A) An outdoor stadium or a fully enclosed arena with a fixed
5seating capacity in excess of 10,000 seats located in Sacramento
6County or Alameda County.

7(B) A fully enclosed arena with a fixed seating capacity in
8excess of 18,000 seats located in Orange County or Los Angeles
9County.

10(C) An outdoor stadium or fully enclosed arena with a fixed
11seating capacity in excess of 8,500 seats located in Kern County.

12(D) An exposition park of not less than 50 acres that includes
13an outdoor stadium with a fixed seating capacity in excess of 8,000
14seats and a fully enclosed arena with an attendance capacity in
15excess of 4,500 people, located in San Bernardino County.

16(E) An outdoor stadium with a fixed seating capacity in excess
17of 10,000 seats located in Yolo County.

18(F) An outdoor stadium and a fully enclosed arena with fixed
19seating capacities in excess of 10,000 seats located in Fresno
20County.

21(G) An athletic and entertainment complex of not less than 50
22acres that includes within its boundaries an outdoor stadium with
23a fixed seating capacity of at least 8,000 seats and a second outdoor
24stadium with a fixed seating capacity of at least 3,500 seats located
25in Riverside County.

26(H) An outdoor stadium with a fixed seating capacity in excess
27of 1,500 seats located in Tulare County.

28(I) A motorsports entertainment complex of not less than 50
29acres that includes within its boundaries an outdoor speedway with
30a fixed seating capacity of at least 50,000 seats, located in San
31Bernardino County.

32(J) An exposition park, owned or operated by a bona fide
33nonprofit organization, of not less than 400 acres with facilities
34including a grandstand with a seating capacity of at least 8,000
35people, at least one exhibition hall greater than 100,000 square
36feet, and at least four exhibition halls, each greater than 30,000
37square feet, located in the City of Pomona or the City of La Verne
38in Los Angeles County.

39(K) An outdoor soccer stadium with a fixed seating capacity of
40at least 25,000 seats, an outdoor tennis stadium with a fixed
P11   1capacity of at least 7,000 seats, an outdoor track and field facility
2with a fixed seating capacity of at least 7,000 seats, and an indoor
3velodrome with a fixed seating capacity of at least 2,000 seats, all
4located within a sports and athletic complex built before January
51, 2005, in the City of Carson in Los Angeles County.

6(L) An outdoor professional sports facility with a fixed seating
7capacity of at least 4,200 seats located in San Joaquin County.

8(M) A fully enclosed arena with a fixed seating capacity in
9excess of 13,000 seats in the City of Inglewood.

10(N) (i) An outdoor stadium with a fixed seating capacity of at
11least 68,000 seats located in the City of Santa Clara.

12(ii) A beer manufacturer, the holder of a winegrower’s license,
13a distilled spirits rectifier, a distilled spirits manufacturer, or
14distilled spirits manufacturer’s agent may purchase advertising
15space and time from, or on behalf of, a major tenant of an outdoor
16stadium described in clause (i), provided the major tenant does not
17hold a retail license, and the advertising may include the placement
18of advertising in an on-sale licensed premises operated at the
19outdoor stadium.

20(O) A complex of not more than 50 acres located on the campus
21of, and owned by, Sonoma State University dedicated to presenting
22live artistic, musical, sports, food, beverage, culinary, lifestyle, or
23other cultural and entertainment events and performances with
24venues that include a concert hall with a seating capacity of
25approximately 1,500 seats, a second concert hall with a seating
26capacity of up to 300 seats, an outdoor area with a seating capacity
27of up to 5,000 seats, and a further outdoor area with a seating
28capacity of up to 10,000 seats. With respect to this complex,
29advertising space and time may also be purchased from or on behalf
30of the owner of the complex, a long-term tenant or licensee of the
31venue, whether or not the owner, long-term tenant, or licensee
32holds an on-sale license.

33(P) A fairgrounds with a horse racetrack and equestrian and
34sports facilities located in San Diego County.

35(2) The outdoor stadium or fully enclosed arena described in
36paragraph (1) is not owned by a community college district.

37(3) The advertising space or time is purchased only in connection
38with the events to be held on the premises of the exposition park,
39stadium, or arena owned by the on-sale licensee. With respect to
40an exposition park as described in subparagraph (J) of paragraph
P12   1(1) that includes at least one hotel, the advertising space or time
2shall not be displayed on or in any hotel located in the exposition
3park, or purchased in connection with the operation of any hotel
4located in the exposition park. With respect to the complex
5described in subparagraph (O) of paragraph (1), the advertising
6space or time shall be purchased only in connection with live
7artistic, musical, sports, food, beverage, culinary, lifestyle, or other
8cultural and entertainment events and performances to be held on
9the premises of the complex.

10(4) The on-sale licensee serves other brands of beer distributed
11by a competing beer wholesaler in addition to the brand
12manufactured or marketed by the beer manufacturer, other brands
13of wine distributed by a competing wine wholesaler in addition to
14the brand produced by the winegrower, and other brands of distilled
15spirits distributed by a competing distilled spirits wholesaler in
16addition to the brand manufactured or marketed by the distilled
17spirits rectifier, the distilled spirits manufacturer, or the distilled
18spirits manufacturer’s agent that purchased the advertising space
19or time.

20(b) Any purchase of advertising space or time pursuant to
21subdivision (a) shall be conducted pursuant to a written contract
22entered into by the beer manufacturer, the holder of the
23winegrower’s license, the distilled spirits rectifier, the distilled
24spirits manufacturer, or the distilled spirits manufacturer’s agent
25and any of the following:

26(1) The on-sale licensee.

27(2) With respect to clause (ii) of subparagraph (N) of paragraph
28(1) of subdivision (a), the major tenant of the outdoor stadium.

29(3) With respect to subparagraph (O) of paragraph (1) of
30subdivision (a), the owner, a long-term tenant of the complex, or
31licensee of the complex, whether or not the owner, long-term
32tenant, or licensee holds an on-sale license.

33(c) Any beer manufacturer or holder of a winegrower’s license,
34any distilled spirits rectifier, any distilled spirits manufacturer, or
35any distilled spirits manufacturer’s agent who, through coercion
36or other illegal means, induces, directly or indirectly, a holder of
37a wholesaler’s license to fulfill all or part of those contractual
38obligations entered into pursuant to subdivision (a) or (b) shall be
39guilty of a misdemeanor and shall be punished by imprisonment
40in the county jail not exceeding six months, or by a fine in an
P13   1amount equal to the entire value of the advertising space, time, or
2costs involved in the contract, whichever is greater, plus ten
3thousand dollars ($10,000), or by both imprisonment and fine. The
4person shall also be subject to license revocation pursuant to
5Section 24200.

6(d) Any on-sale retail licensee, as described in subdivision (a),
7who, directly or indirectly, solicits or coerces a holder of a
8wholesaler’s license to solicit a beer manufacturer, a holder of a
9winegrower’s license, a distilled spirits rectifier, a distilled spirits
10manufacturer, or a distilled spirits manufacturer’s agent to purchase
11advertising space or time pursuant to subdivision (a) or (b) shall
12be guilty of a misdemeanor and shall be punished by imprisonment
13in the county jail not exceeding six months, or by a fine in an
14amount equal to the entire value of the advertising space or time
15involved in the contract, whichever is greater, plus ten thousand
16dollars ($10,000), or by both imprisonment and fine. The person
17shall also be subject to license revocation pursuant to Section
1824200.

19(e) For the purposes of this section, “beer manufacturer” includes
20any holder of a beer manufacturer’s license, any holder of an
21out-of-state beer manufacturer’s certificate, or any holder of a beer
22and wine importer’s general license.

23(f) The Legislature finds that it is necessary and proper to require
24a separation among manufacturing interests, wholesale interests,
25and retail interests in the production and distribution of alcoholic
26beverages in order to prevent suppliers from dominating local
27markets through vertical integration and to prevent excessive sales
28of alcoholic beverages produced by overly aggressive marketing
29techniques. The Legislature further finds that the exceptions
30established by this section to the general prohibition against tied
31interests shall be limited to their express terms so as not to
32undermine the general prohibition and intends that this section be
33construed accordingly.

begin insert

34
(g) This section shall become inoperative on December 31,
352022.

end insert
36begin insert

begin insertSEC. 3.end insert  

end insert

begin insertSection 25503.8 of the end insertbegin insertBusiness and Professions Codeend insert
37
begin insert is amended to read:end insert

38

25503.8.  

(a) Notwithstanding any other provision of this
39chapter, a beer manufacturer, the holder of a winegrower’s license,
40a California winegrower’s agent, a distilled spirits rectifier, a
P14   1distilled spirits manufacturer, or a distilled spirits manufacturer’s
2agent may purchase advertising space and time from, or on behalf
3of, an on-sale retail licensee if all of the following conditions are
4met:

5(1) The on-sale licensee is the owner of any of the following:

6(A) A fully enclosed auditorium or theater with a fixed seating
7capacity in excess of 6,000 seats, at least 60 percent of the use of
8which is for plays or musical concerts, not including sporting
9events.

10(B) A motion picture studio facility at which public tours are
11conducted for at least four million people per year.

12(C) A retail, entertainment development adjacent to, and under
13common ownership with, a theme park, amphitheater, and motion
14picture production studio.

15(D) A theme or amusement park and the adjacent retail, dining,
16and entertainment area located in the City of Los Angeles, Los
17Angeles County, or Orange County.

18(E) A fully enclosed theater, with box office sales and attendance
19by the public on a ticketed basis only, with a fixed seating capacity
20in excess of 6,000 seats, located in Los Angeles County within the
21area subject to the Los Angeles Sports and Entertainment District
22Specific Plan adopted by the City of Los Angeles pursuant to
23 ordinance number 174225, as approved on September 6, 2001.

24(F) A fully enclosed arena with a fixed seating capacity in excess
25of 15,000 seats located in Santa Clara County. With respect to the
26arena described in this subparagraph, advertising space may also
27be purchased from, or on behalf of, a lessee or manager of the
28arena.

29(2) The advertising space or time is purchased only in connection
30with one of the following:

31(A) In the case of a fully enclosed auditorium or theater, in
32connection with sponsorship of plays or musical concerts to be
33held on the premises of the auditorium or theater owned by the
34on-sale licensee.

35(B) In the case of a motion picture studio facility, in connection
36with sponsorship of the public tours or special events conducted
37at the studio facility.

38(C) In the case of a retail, entertainment development, in
39connection with sponsorship of public tours or special events
40conducted at the development.

P15   1(D) In the case of a theme or amusement park and the adjacent
2retail, dining, and entertainment area, located in the City of Los
3Angeles, Los Angeles County, or Orange County, in connection
4with daily activities and events at the theme or amusement park
5and the adjacent retail, dining, and entertainment area.

6(E) In the case of the fully enclosed theater described in
7subparagraph (E) of paragraph (1) of subdivision (a), in connection
8with events conducted at the theater.

9(F) In the case of a fully enclosed arena described in
10subparagraph (F) of paragraph (1) of subdivision (a), interior
11advertising in connection with events conducted within the arena.

12(3) The on-sale licensee serves other brands of beer distributed
13by a competing beer wholesaler in addition to the brand
14manufactured or marketed by the beer manufacturer, other brands
15of wine distributed by a competing wine wholesaler in addition to
16the brand produced or marketed by the winegrower or California
17winegrower’s agent, and other brands of distilled spirits distributed
18by a competing distilled spirits wholesaler in addition to the brand
19manufactured or marketed by the distilled spirits manufacturer or
20distilled spirits manufacturer’s agent purchasing the advertising
21space or time.

22(b) Any purchase of advertising space or time conducted
23pursuant to subdivision (a) shall be conducted pursuant to a written
24contract entered into by the beer manufacturer, the holder of the
25winegrower’s license, the California winegrower’s agent, the
26distilled spirits manufacturer, or the distilled spirits manufacturer’s
27agent, and the on-sale licensee, which contract shall not in any
28way involve the holder of a wholesaler’s license.

29(c) Any beer manufacturer, distilled spirits manufacturer,
30distilled spirits manufacturer’s agent, holder of a winegrower’s
31license, or California winegrower’s agent, who, through coercion
32or other illegal means, induces, directly or indirectly, a holder of
33a wholesaler’s license to fulfill those contractual obligations entered
34into pursuant to subdivision (a) or (b) shall be guilty of a
35misdemeanor and shall be punished by imprisonment in the county
36jail not exceeding six months, or by a fine in an amount equal to
37the entire value of the advertising space or time involved in the
38contract, whichever is greater, plus ten thousand dollars ($10,000),
39or by both imprisonment and fine. The person shall also be subject
40to license revocation pursuant to Section 24200.

P16   1(d) Any on-sale retail licensee, as described in subdivision (a),
2who solicits or coerces, directly or indirectly, a holder of a
3wholesaler’s license to solicit a beer manufacturer, distilled spirits
4manufacturer, or distilled spirits manufacturer’s agent, holder of
5a winegrower’s license, or California winegrower’s agent to
6purchase advertising space or time pursuant to subdivision (a) or
7(b) shall be guilty of a misdemeanor and shall be punished by
8imprisonment in the county jail not exceeding six months, or by
9a fine in an amount equal to the entire value of the advertising
10space or time involved in the contract, whichever is greater, plus
11ten thousand dollars ($10,000), or by both imprisonment and fine.
12The person shall also be subject to license revocation pursuant to
13Section 24200.

14(e) For the purposes of this section, “beer manufacturer” includes
15any holder of a beer manufacturer’s license, any holder of an
16out-of-state beer manufacturer’s certificate, or any holder of a beer
17and wine importer’s general license.

begin insert

18
(f) This section shall become inoperative on December 31, 2022.

end insert
begin delete19

SECTION 1.  

Section 23792 of the Business and Professions
20Code
is repealed.

end delete


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