BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1282|
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THIRD READING
Bill No: AB 1282
Author: Hall (D), et al
Amended: 7/6/09 in Senate
Vote: 27 - Urgency
SENATE GOVERNMENTAL ORG. COMMITTEE : 10-0, 7/8/09
AYES: Wright, Harman, Benoit, Denham, Florez, Negrete
McLeod, Padilla, Price, Wyland, Yee
NO VOTE RECORDED: Calderon, Oropeza, Wiggins
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 72-3, 5/18/09 - See last page for vote
SUBJECT : Alcoholic beverages
SOURCE : Heineken USA
DIGEST : This bill 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.
ANALYSIS : 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, importation and sale of alcoholic
CONTINUED
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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 $0.25 per
unit, or cost more than $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 $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.
This bill:
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 per unit original cost to the beer
manufacturer who purchased it.
2. Makes it explicit that beer manufacturers cannot require
beer wholesalers to fund consumer advertising
specialties furnished by the beer manufacturer.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 7/20/09)
Heineken USA (source)
Anheuser-Busch Companies, Inc.
Crown Imports LLC.
Diageo North America
MillerCoors
OPPOSITION : (Verified 7/20/09)
California Council on Alcohol Policy
ARGUMENTS IN SUPPORT : According to the bill's sponsor,
Heineken USA, this bill corrects an inequity that
inadvertently occurred last year with enactment of AB 1245
(Torrico), Chapter 629, Statutes of 2008, which increased
the trade spending limit imposed on a "beer manufacturer"
that had existed since 1986, from $0.25 to $3; 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
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remains subject to the $0.25 trade spending limit.
This bill corrects 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 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 spending cap.
Furthermore, this bill clarifies that beer manufacturers
cannot ask beer distributors to "chip in" for consumer
specialty promotions as authorized by last year's AB 1245.
ARGUMENTS IN OPPOSITION : According to the opposition:
"Alcohol problems contribute to and complicate most
social, criminal justice and health problems including
underage drinking, driving under the influence, violence,
and unintentional injury. Alcohol problems affect all
sectors of our society, and we believe that sound alcohol
policies can prevent and reduce alcohol-related problems
in our state and communities.
"Youth are already overexposed to beer ads during
sporting events, on television, radio, the Internet, and
on billboards and other new forms of outdoor advertising.
High cost giveaways, in the form of t-shirts, glasses,
and toys, are just another advertising scheme to create
brand recognition at an early age. And it works.
Research has shown that youth who own alcohol brand
promotional items-such as T-shirts and baseball caps-are
more than 1.5 times more likely to use alcohol than youth
who do not."
ASSEMBLY FLOOR :
AYES: Adams, Anderson, Arambula, Bill Berryhill, Tom
Berryhill, Blakeslee, Block, Blumenfield, Brownley,
Buchanan, Caballero, Charles Calderon, Carter, Chesbro,
Conway, Cook, Coto, De La Torre, De Leon, DeVore, Duvall,
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Emmerson, Evans, Fletcher, Fong, Fuentes, Fuller,
Furutani, Gaines, Galgiani, Garrick, Gilmore, Hagman,
Hall, Harkey, Hayashi, Hernandez, Hill, Huber, Huffman,
Jeffries, Jones, Knight, Krekorian, Lieu, Logue, Bonnie
Lowenthal, Ma, Mendoza, Miller, Monning, Nava, Nestande,
Niello, Nielsen, John A. Perez, V. Manuel Perez,
Portantino, Salas, Silva, Skinner, Smyth, Solorio, Audra
Strickland, Swanson, Torlakson, Torres, Torrico, Tran,
Villines, Yamada, Bass
NOES: Ammiano, Beall, Feuer
NO VOTE RECORDED: Davis, Eng, Price, Ruskin, Saldana
TSM:mw 7/27/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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