SB 1426 Senate Bill - INTRODUCED

BILL NUMBER: SB 1426	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Hall
   (Coauthor: Senator De León)

                        FEBRUARY 19, 2016

   An act to add and repeal Section 25513 of the Business and
Professions Code, relating to alcoholic beverages.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1426, as introduced, Hall. Alcoholic beverage control:
tied-house restrictions: compensation.
   Existing law generally restricts certain alcoholic beverage
licensees from paying, crediting, or compensating a retailer for
advertising in connection with the advertising and sale of alcoholic
beverages and expressly authorizes exceptions to this prohibition.
   This bill would authorize, until January 1, 2022, a person, as
defined, who has an ownership interest in a retail license, to be
compensated by an authorized licensee, as defined, for promotional or
marketing services of the authorized licensee's products subject to
the specified conditions, including that the compensation be based
solely on the promotional and marketing activities. The bill would
also make an authorized licensee who, through coercion or other
illegal means, induces the holder of a wholesaler's license to
provide compensation pursuant to these provisions guilty of a
misdemeanor. The bill would additionally make an authorized licensee
or a person who violates these provisions guilty of a misdemeanor.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 25513 is added to the Business and Professions
Code, to read:
   25513.  (a) For purposes of this section:
   (1) "Authorized licensee" means a manufacturer, winegrower,
manufacturer's agent, rectifier, California winegrower's agent, beer
manufacturer, holder of an out-of-state beer manufacturer's
certificate, distilled spirits manufacturer, distilled spirits
rectifier, distilled spirits manufacturer's agent, or craft
distiller.
   (2) "Person" means a natural person 21 years of age or older.
   (b) Notwithstanding any other provision of this division, an
authorized licensee may compensate a person with ownership interest
in a retail license for promotional or marketing services of the
authorized licensee's products, subject to the following conditions:
   (1) Any compensation agreement with the person shall be in the
form of a written contract and include the conditions outlined in
this section.
   (2) The person shall not be directly or indirectly involved in the
retailer's purchasing decisions of the brands of alcoholic beverages
owned by the authorized licensee compensating the person.
   (3) The authorized licensee compensating the person shall not
utilize the person to conduct promotional and marketing activities to
promote or market alcoholic beverages on the premises of the
retailer in which the person has an ownership interest.
   (4) All compensation the authorized licensee pays to the person
shall be based solely on the person's promotional and marketing
activities and shall not be related directly or indirectly to the
sale of alcoholic beverages by the retailer in which the person has
an ownership interest.
   (5) The name, image, and brand of the retailer in which the person
has an ownership interest shall not be featured or referenced in any
way in any advertising of brands sold by the authorized licensee
compensating the person.
   (6) The person shall not be involved in the decisions by the
authorized license regarding the selection of retailers that will
offer for sale the brands the person is compensated to promote and
market.
   (c) A licensee that is not an authorized license shall not shall
not compensate a person under this section and shall not directly or
indirectly underwrite, share in, or contribute to the costs of
compensation authorized by this section.
   (d) Any officer, director, or agent of an authorized licensee that
is compensated by that authorized licensee for promotional or
marketing services of the authorized licensee's products shall not be
subject to the conditions of subdivision (b), notwithstanding the
fact that the authorized licensee, or any officer, director, or agent
of that authorized licensee, holds an ownership interest in a retail
license.
   (e) (1) An authorized licensee who, through coercion or other
illegal means, induces, directly or indirectly, a holder of a
wholesaler's license to provide compensation to a person pursuant to
this section shall be guilty of a misdemeanor and shall be punished
by imprisonment in the county jail not exceeding six months, or by a
fine in an amount of ten thousand dollars ($10,000), or by both
imprisonment and fine.
   (2) An authorized licensee or person who violates any provision of
this section shall be guilty of a misdemeanor and shall be punished
by imprisonment in the county jail not exceeding six months, or by a
fine in the amount of ten thousand dollars ($10,000), or by both
imprisonment and fine.
   (f) Nothing in this section shall limit the activities authorized
under Section 25503.1.
   (g) The Legislature finds and declares both of the following:
   (1) That it is necessary and proper to require a separation
between manufacturing interests, wholesale interests, and retail
interests in the production and distribution of alcoholic beverages
in order to prevent suppliers from dominating local markets through
vertical integration and to prevent excessive sales of alcoholic
beverages produced by overly aggressive marketing techniques.
   (2) Any exception established by the Legislature to the general
prohibition against tied interests must be limited to the express
terms of the exception so as to not undermine the general
prohibitions.
   (h) This section will remain in effect only until January 1, 2022,
and as of that date is repealed.
  SEC. 2.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.