BILL ANALYSIS
Bill No: SB
1096
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2009-2010 Regular Session
Staff Analysis
SB 1096 Author: Wiggins
As Introduced: February 17, 2010
Hearing Date: March 23, 2010
Consultant: Art Terzakis
SUBJECT
Alcoholic Beverages: tied-house restrictions
DESCRIPTION
SB 1096 makes various technical and code maintenance
changes to several provisions of the Alcoholic Beverage
Control (ABC) Act to keep up with modern technology.
EXISTING LAW
The enactment of the 21st Amendment to the U.S.
Constitution in 1933 repealed the 18th Amendment and ended
the era of Prohibition. Accordingly, states were granted
the authority to establish alcoholic beverage laws and
administrative structures to regulate the sale and
distribution of alcoholic beverages.
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
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
SB 1096 (Wiggins) continued
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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
Purpose of SB 1096: According to the author's office, the
complex restrictions 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.
The author's office notes that current law references
electronic internet inquiries which could be narrowly
construed to prohibit other types of electronic
communications - such as texting.
SB 1096 (Wiggins) continued
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Under existing law (Business & Professions Code Sections
25500.1, 25500.2 and 25502.1), 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 or off-sale retailer. Therefore, this
measure is simply intended to modify the current
restrictions to include, "electronic inquiry," instead of
just "electronic Internet inquiry."
Staff Comments: This measure is similar to SB 131
(Wiggins) of 2009 which passed out of this committee on
consent (12-0 vote) on April 28, 2009. It should be noted
that SB 131 was gutted late in the session for purposes of
creating a tied-house exception to allow the San Francisco
Symphony to accept both monetary and alcoholic beverage
contributions in support of its performing arts program.
Additionally, this measure is similar to SB 806 (Wiggins)
which passed out of this committee on consent (9-0 vote) on
January 19, 2010. SB 806 is currently pending in the
Assembly Committee on Governmental Organization.
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.
SUPPORT: Family Winemakers of California
OPPOSE: None on file as of March19, 2010.
FISCAL COMMITTEE: No.