BILL ANALYSIS
Bill No: AB
1282
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2009-2010 Regular Session
Staff Analysis
AB 1282 Author: Hall
As Amended: July 6, 2009
Hearing Date: July 8, 2009
Consultant: Art Terzakis
SUBJECT
Alcoholic Beverages
DESCRIPTION
AB 1282 is an urgency measure that extends to out-of-state
domestic and overseas brewers, as well as importers, the
same privileges as California brewers have with respect to
the dollar value of advertising specialty items that may be
given away to adult consumers. Specifically, this measure:
1. Clarifies that a "beer manufacturer" that is either
licensed in California, a certified out-of-state
manufacturer, a certified out-of-state vendor, or a beer
and wine importer general's licensee may give "consumer
advertising specialties" to the general public that do
not exceed $3.00 per unit original cost to the beer
manufacturer who purchased it.
2. Also, makes it explicit that beer manufacturers cannot
require beer wholesalers to fund consumer advertising
specialties furnished by the beer manufacturer.
EXISTING LAW
Existing law establishes the Department of Alcoholic
Beverage Control (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,
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importation and sale of alcoholic beverages in this state
and the collection of license fees or occupation taxes for
this purpose.
Existing law provides that no licensee shall, directly or
indirectly, give any premium, gift, or free goods in
connection with the sale or distribution of any alcoholic
beverage, except as provided by rules that shall be adopted
by ABC, as defined.
Existing law specifies that no rule of ABC may permit a
licensee to give any premium, gift, or free goods of
greater than inconsequential value in connection with the
sale or distribution of beer. With respect to beer,
premiums, gifts, or free goods, including advertising
specialties that have no significant utilitarian value
other than advertising, shall be deemed to have greater
than inconsequential value if they cost more than
twenty-five cents ($0.25) per unit, or cost more than
fifteen dollars ($15) in the aggregate for all those items
given by a single supplier to a single retail premises per
calendar year.
Additionally, existing law provides that no rule of ABC may
impose a dollar limit for consumer advertising specialties
furnished by a beer manufacturer to the general public
other than three dollars ($3) per unit original cost to the
beer manufacturer who purchased it. The consumer
advertising specialties furnished by a beer manufacturer
are intended only for adults of legal drinking age. Coin
banks, toys, balloons, magic tricks, miniature bottles or
cans, confections, dolls, or other items that appeal to
minors or underage drinkers may not be used in connection
with the merchandising of beer.
Existing law, known as the "tied-house" law, separates the
alcoholic beverage industry into three component parts of
manufacturer, wholesaler, and retailer. The original
policy rationale for this body of law was to prohibit the
vertical integration of the alcohol industry and to protect
the public from predatory marketing practices. Generally,
other than exemptions 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.
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Tied-house restrictions generally prohibit a manufacturer
of alcoholic beverages and a winegrower from paying or
compensating a retailer for advertising or placing a sign
or advertisement with a retail licensee.
BACKGROUND
Purpose of AB 1282: According to the sponsor, Heineken
USA, this measure would correct an inequity that
inadvertently occurred last year with enactment of AB 1245
(Torrico). AB 1245 increased the trade spending limit
imposed on a "beer manufacturer" that had existed since
1986 from $0.25 to $3.00; subsequent to enactment of AB
1245 it was discovered that the ABC Act confines the term
"beer manufacturer" to companies that brew beer in
California. In light of the fact that Heineken USA does
not brew beer within California it remains subject to the
$0.25 trade spending limit.
AB 1282 would correct this inequity by revising the
definition of "beer manufacturer" to include companies that
brew beer outside of California and non-brewery importers
holding appropriate licenses and certificates issued by the
Department of ABC. The sponsor points out that the
proposed clarification would place Heineken, and other
similarly situated companies, on equal footing with
companies having breweries within California, thus enabling
them to offer consumer advertising specialties to the
general public that do not exceed the $3.00 spending cap.
Furthermore, AB 1282 would clarify that beer manufacturers
cannot ask beer distributors to "chip in" for consumer
specialty promotions as authorized by last year's AB 1245.
PRIOR/RELATED LEGISLATION
AB 1245 (Torrico) Chapter 629, Statutes of 2008. Provided
that no rule of the Department of ABC may impose a dollar
limit for consumer advertising specialties furnished by a
beer manufacturer to the general public other than three
dollars ($3) per unit original cost to the beer
manufacturer who purchased it.
SB 1246 (Negrete McLeod) Chapter 395, Statutes of 2008.
Allowed beer wholesalers to sell or rent exterior signs
advertising beer for use at any on-sale or off-sale retail
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premises. Also, provided that exterior signs must be sold
or rented at not less than cost, as defined.
SB 1548 (Murray) Chapter 670, Statutes of 2006. Authorized
beer manufacturers and wholesalers to offer beer samples
(not to exceed 8 ounces per person, per day) to individuals
of legal drinking age at on-sale retail licensed premises,
as specified.
SB 993 (Burton) Chapter 544, Statutes of 1997. Among other
things, provided that no rule of the Department of ABC may
impose a dollar limit for consumer advertising specialties
furnished by a distilled spirits supplier to a retailer or
to the general public of less than $5 per unit original
cost to the supplier who purchased it. Also, authorized a
licensed distilled spirits manufacturer to conduct tastings
of distilled spirits on the licensed premises under
specified conditions.
SUPPORT: As of July 6, 2009:
Heineken USA (sponsor)
Anheuser-Busch Companies, Inc.
Crown Imports LLC.
Diageo North America
MillerCoors
OPPOSE: As of July 6, 2009:
California Council on Alcohol Policy
FISCAL COMMITTEE: Senate Appropriations Committee
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