BILL ANALYSIS
Bill No: SB
1260
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2009-2010 Regular Session
Staff Analysis
SB 1260 Author: Yee
As Proposed to be Amended: April 13, 2010
Hearing Date: April 13, 2010
Consultant: Art Terzakis
SUBJECT
Alcoholic Beverages
DESCRIPTION
SB 1260 amends an existing provision of the Alcoholic
Beverage Control (ABC) Act to enable guests to purchase
alcohol (beer and wine) in sealed containers from hotel or
motel gift shops. Specifically, this measure:
1. Authorizes hotels and motels, as defined, to sell or
furnish beer and wine in sealed containers from "food
sale areas" for consumption by guests and their invitees
on the premises.
2. Defines "food sale area" as a food facility that
routinely offers for sale, throughout the area's normal
hours of operation each day to all of the lodging
establishment's transient guests and their invitees,
primarily items like prepackaged sandwiches, salads,
snacks, candy, dairy products, water, soft drinks and
other nonalcoholic beverages in bottles or cans, and
similar food items, as well as, various sundries such as
health and beauty aids, nonprescription drugs, film, and
batteries.
EXISTING LAW
Existing law establishes the Department of Alcoholic
Beverage Control and grants it exclusive authority to
administer the provisions of the Alcoholic Beverage Control
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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 (Business and Professions Code Section
23355.2), enacted in 1985, permits full service hotels to
offer alcoholic beverages for sale by means of "mini bars"
in guest rooms. This provision of law was enacted in
response to the introduction of mini bars in hotels in
other states and internationally.
Existing law (B&P Code Section 23396.1) establishes an
on-sale general license for "restricted service lodging
establishments" (e.g., Embassy Suites, Days Inn, Residence
Inns, etc.) that permits hotels and motels to sell or
furnish alcoholic beverages for consumption on the premises
by means of: (1) controlled access alcoholic beverage
cabinets (mini bars) located in guestrooms; or, (2)
furnishing alcoholic beverages only to their transient
guests and their invitees under circumstances where the
cost of the alcoholic beverages is included in the price of
the overnight occupancy accommodation.
B&P Code Section 23396.1 provides that a hotel or motel
licensed pursuant to this section shall not sell or furnish
alcoholic beverages to the general public and shall not be
entitled to a caterer's permit. Such an establishment is
not permitted to operate a restaurant, it must have at
least 10 guestrooms, and it may not derive more than 5% of
its total gross annual revenues from sales of alcoholic
beverages. Such licensees are additionally required to
purchase all their alcoholic beverages from licensed
wholesalers or winegrowers and must pay an application fee
of $6,000 and an annual renewal fee, as specified.
Existing law (Business and Professions Code Section
24045.11), permits the ABC to issue a special on-sale wine
license to an establishment licensed to do business as a
bed and breakfast inn. This provision of law, enacted in
1987 (AB 2308 - N. Waters, Chapter 615), was intended to
permit bed and breakfast inns to provide small amounts of
wine to registered guests. This law was not intended to
place bed and breakfast inns in a competitive environment
with other licensed businesses.
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B&P Code Section 24045.11 defines "bed and breakfast inn,"
as an establishment of 20 guestrooms or less, which
provides overnight accommodations, serves food only to
registered guests, serves only a breakfast or similar early
morning meal, and in which the price of the food is
included in the price of the room. In addition, the
predominant relationship between occupant and owner or
operator is that of innkeeper and guest.
Existing law authorizes bed and breakfast inn licensees to
serve wine purchased from a licensed winegrower or
wholesaler only to registered guests. The law provides
that wine shall not be given away to guests, but the price
of the wine will be included in the price of the room. In
addition, existing law prohibits guests from removing wine
from the grounds of the establishment. The bed and
breakfast inn license requires an original fee of $50 and
an annual renewal fee of $6 for each guestroom in the
establishment until December 31, 2004, and for each year
thereafter the annual fee shall be calculated, as
specified.
Existing law (AB 1437 - Leslie, Chapter 53 of 2001) also
authorizes the Department of ABC to issue a special on-sale
"general" license to any person operating a bed and
breakfast inn, as specified, to serve any alcoholic
beverage, as defined, and to charge a $200 fee for that
license and a renewal fee of $15 for each guestroom in the
establishment, not to exceed $200.
BACKGROUND
Purpose of SB 1260: The sponsor of this measure, the
California Hotel & Lodging Association (CH&LA), points out
that going back several decades, the lodging industry was
comprised primarily of "full service" hotels, such as
Hiltons, Sheratons, Westins, and the like. At the same
time, the motel segment of the industry was still young and
there were very few, if any, bed and breakfast Inns.
Additionally, it was very rare that a lodging
establishment, other than a full service hotel, offered any
sort of alcoholic beverage service, or food service, for
that matter. Those full service hotels that desired to
sell alcoholic beverages would typically obtain one of the
two common types of licenses from the Department of ABC -
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the one for a restaurant (e.g., bona fide eating place) or
the one for a bar (e.g., public premise).
With the advent of a wide range of "limited service"
lodging establishments (e.g., Fairfield Inns, Residence
Inns, Days Inns, Embassy Suites, etc.), which rarely had
either a bar or restaurant, a problem arose in terms of
meeting guest expectations with respect to the furnishing
of alcoholic beverages. As noted above (see "existing
law"), the industry and the legislature, with the
cooperation of the ABC, responded with enactment of new
laws to allow limited service establishments to keep pace
with the evolving trends in the lodging industry. For
example, these "limited service" lodging establishments are
currently allowed to provide alcoholic beverages from a
controlled access cabinet (mini bar) in guest rooms and
they are also authorized to provide alcoholic beverages to
their guests during a manager's reception.
The sponsor contends that this measure represents a
carefully crafted expansion of existing law to enable
"restricted service lodging establishments" to sell beer
and wine from food sale areas for consumption by guests on
the premises.
According to the sponsor, this measure would: (1) limit the
type of alcoholic beverage service that can be provided -
that is, the license would permit the sale of beer and wine
only from a food sale area; (2) limit the individuals who
can purchase the beverages - that is, only guests and
invitees of guests; and, (3) provide safeguards through the
ABC licensing process.
PRIOR/RELATED LEGISLATION
AB 1750 (Hagman) 2009-10 Session. Identical to SB 696
(Yee) of 2007. (Pending in Assembly G.O. Committee)
SB 696 (Yee) 2007-08 Session. Similar to SB 1260 (Yee) of
2010 - Would have enabled "restricted service lodging
establishments" to expand the manner in which they may sell
beer and wine to their guests. (Died on Assembly
Appropriations Committee Suspense File)
SUPPORT: As of April 9, 2010:
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California Hotel & Lodging Association (sponsor)
Asian American Hotel Owners Association
Marriott International, Inc.
OPPOSE: None on file as of April 9, 2010.
FISCAL COMMITTEE: Senate Appropriations Committee
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