BILL ANALYSIS
SB 1260
Page 1
SENATE THIRD READING
SB 1260 (Yee)
As Amended August 2, 2010
Majority vote
SENATE VOTE :30-0
GOVERNMENTAL ORGANIZATION 18-0 APPROPRIATIONS 17-0
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|Ayes:|Coto, Anderson, |Ayes:|Fuentes, Conway, |
| |Blakeslee, Chesbro, Cook, | |Bradford, |
| |Evans, Galgiani, Hall, | |Huffman, Coto, Davis, De |
| |Hill, Jeffries, Ma, | |Leon, Gatto, Hall, |
| |Mendoza, Nestande, | |Harkey, Miller, Nielsen, |
| |Portantino, Silva, | |Norby, Skinner, Solorio, |
| |Torres, Torrico, Tran | |Torlakson, Torrico |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Amends an existing provision of the Alcoholic Beverage
Control Act (Act) to enable guests to purchase beer and wine in
sealed containers from hotel or motel gift shops for consumption
on the premises. Specifically, this bill :
1)Authorizes hotels and motels, as defined, to sell 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 :
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.
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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)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.
3)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.
4)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.
5)Permits 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, 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.
6)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
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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.
7)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.
8)Authorizes 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.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Given the large number of lodging establishments that could
now be interested in licenses to sell beer and wine, costs
could be in excess of $300,000 for workload associated with
ABC providing licenses and enforcement for new beer and wine
licenses for these limited service establishments. These costs
would be fully offset by increased licensing revenue.
2)Negligible, non-reimbursable costs for prosecution and/or
incarceration, offset by fine revenue, for misdemeanor
violations of provisions associated with significantly
expanding the number and types of facilities that will likely
sell alcoholic beverages.
COMMENTS : The bill's sponsor, the California Hotel and Lodging
Association, states 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
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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 ABC - 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. In addressing this issue, 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.
Background: Under current law, hotels and motels in the state
that do not have a bar or restaurant on the premises can only
sell alcohol under limited circumstances. They can obtain a
restricted (Type 70) license which allows them to sell small
bottles of liquor, 50 milliliters or less, through
restricted-access mini bars located in guests' rooms, or they
can include the cost of wine and beer in the cost of the room
and host receptions where the alcohol is provided without an
additional charge. These licenses are offered by ABC, with an
initial fee of $6,000. In addition, under current law, hotels
and motels may also apply for off-sale beer and wine (Type 20)
licenses that do not restrict sales to guests and their
invitees. Only 34 hotels in the state currently hold both Type
20 and Type 70 liquor licenses.
In support: The sponsor contends this bill 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.
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The sponsor further states, this bill 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; 2)
limit the individuals who can purchase the beverages - that is,
only guests and invitees of guests; 3) provide safeguards
through the ABC licensing process; and, 4) the restricted
service lodging establishment license may be transferred to
another person but not to another location.
Prior/related legislation: SB 696 (Yee) of the 2007-08 Session,
a similar measure, would have enabled "restricted service
lodging establishments" to expand the manner in which they may
sell beer and wine to their guests. The bill died on the
Assembly Appropriations Committee Suspense File.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0005965