BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 131|
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CONSENT
Bill No: SB 131
Author: Wiggins (D)
Amended: 4/29/09
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE : 12-0, 4/28/09
AYES: Wright, Harman, Benoit, Calderon, Denham, Florez,
Negrete McLeod, Oropeza, Padilla, Wiggins, Wyland, Yee
NO VOTE RECORDED: Vacancy
SUBJECT : Alcoholic beverages: tied-house restrictions
SOURCE : Author
DIGEST : This bill makes various technical and code
maintenance changes to an existing provision of the
Alcoholic Beverage Control Act that permits wineries and
brandy manufacturers to respond to consumer inquiries as to
where, and at which restaurants, their products may be
found.
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 beverages in this state
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and the collection of license fees or occupation taxes for
this purpose.
Existing law, known as the "tied-house" law, separates the
alcoholic beverage industry into three component parts, or
tiers, of manufacturer (including breweries, wineries and
distilleries), wholesaler, and retailer (both on-sale and
off-sale).
Tied house refers to a practice in this country prior to
Prohibition and still occurring in England today where a
bar or public house, from whence comes the "house" of tied
house, is tied to the products of a particular
manufacturer, either because the manufacturer owns the
house, or the house is contractually obligated to carry
only a particular manufacturer's products.
The original policy rationale for this body of law was to:
(a) promote the state's interest in an orderly market, (b)
prohibit the vertical integration and dominance by a single
producer in the marketplace, (c) prohibit commercial
bribery and protect the public from predatory marketing
practices, and, (d) discourage and/or prevent the
intemperate use of alcoholic beverages. Generally, other
than exceptions 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.
An existing tied-house provision (Business & Professions
Code Section 25500.1) provides that the listing of the
names, addresses, telephone numbers or e-mail addresses, or
both, or web site addresses, of two or more unaffiliated
on-sale retailers selling wine or brandy, or both, and
operating and licensed as bona fide public eating places
selling the wine or brandy produced, distributed or
imported by a nonretail industry member in response to a
direct inquiry from a consumer received by telephone, by
mail, by electronic Internet inquiry or in person does not
constitute a thing of value or prohibited inducement to the
listed on-sale retailer, if specified conditions are met.
Background
According to the author's office, the complex restrictions
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of the ABC Act's tied-house laws make it difficult for wine
and brandy manufacturers to utilize simple, modern ways of
responding to consumer inquiries. Due to the fact that
existing provisions are so specific, e-mail and responses
over the Internet are allowable but, "texting," for
example, over a cellular phone network, is not.
Under existing law, a response to a direct inquiry from a
consumer received by telephone, by mail, by electronic
Internet inquiry or in person does not constitute a thing
of value or prohibited inducement to the listed on-sale
retailer. Therefore, this bill is simply intended to
modify the current restrictions to include, "electronic
inquiry," instead of just "electronic Internet inquiry."
Prior/Related legislation
SB 1423 (Chesbro) Chapter 205, Statutes of 2000 .
Authorized wineries and brandy manufacturers to advertise
the name and location of restaurants that sell their
products.
SB 1233 (Chesbro) Chapter 666, Statutes of 1999 . Allowed
for the limited dissemination of information regarding the
off-sale availability of alcoholic beverages.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
TSM:do 4/29/09 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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