BILL ANALYSIS
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CONSENT
Bill No: SB 1096
Author: Wiggins (D)
Amended: As introduced
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE : 9-0, 3/23/10
AYES: Wright, Harman, Florez, Negrete McLeod, Oropeza,
Padilla, Price, Wyland, Yee
NO VOTE RECORDED: Calderon, Denham
SUBJECT : Alcoholic beverages: tied-house restrictions
SOURCE : Author
DIGEST : This bill makes various technical and code
maintenance changes to several provisions of the Alcoholic
Beverage Control Act to keep up with modern technology.
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 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
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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.
Comment
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.
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This bill is intended to modify the current restrictions to
include, "electronic inquiry," instead of just "electronic
Internet inquiry."
Prior/Related Legislation
SB 131 (Wiggins) 2009-10 Session, a similar measure, was
amended 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.
SB 806 (Wiggins) 2009-10 Session a similar measure which
passed the Senate Floor 31-0, on 1/19/10 (in Assembly
Governmental Organization Committee).
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 3/23/10)
Family Winemakers of California
TSM:do 3/23/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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