BILL ANALYSIS
SB 1096
Page 1
Date of Hearing: June 16, 2010
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Joe Coto, Chair
SB 1096 (Wiggins) - As Introduced: February 17, 2010
SENATE VOTE : 32-0
SUBJECT : Alcoholic beverages: tied-house restrictions.
SUMMARY : Makes various technical and code maintenance changes
to several provisions of the Alcoholic Beverage Control Act
(Act) to keep up with modern technology. Specifically, this
bill :
1)Revises the direct inquiry provisions to include any
electronic inquiries from consumers.
2)Makes technical, nonsubstantive changes to the Act.
EXISTING LAW :
1)Establishes the Department of Alcoholic Beverage Control (ABC)
and grants it exclusive authority to administer the provisions
of the 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.
2)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).
3)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 non-retail 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
SB 1096
Page 2
prohibited inducement to the listed on-sale retailer, if
specified conditions are met.
FISCAL EFFECT : Unknown.
COMMENTS :
Purpose of the bill : 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.
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 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."
Background : 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
SB 1096
Page 3
to do business as another type of licensee within the
"three-tier" system.
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.
REGISTERED SUPPORT / OPPOSITION :
Support
Family Winemakers of California
Opposition
None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531