BILL ANALYSIS
Bill No: SB
1323
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2009-2010 Regular Session
Staff Analysis
SB 1323 Author: Walters
As Amended: April 7, 2010
Hearing Date: April 13, 2010
Consultant: Art Terzakis
SUBJECT
Alcoholic Beverages
DESCRIPTION
SB 1323 modifies an existing provision of the Alcoholic
Beverage Control (ABC) Act that allows, until January 1,
2014, a manufacturer, winegrower, rectifier, or distiller
to provide their product offerings directly to consumers
(free of charge) during invitation-only events, as
specified, to additionally grant the same privilege to: (1)
a distilled spirits manufacturer's agent; (2) a holder of
a distilled spirits importer's general license; (3) a
holder of a distilled spirits rectifier's general license;
and (4) a holder of an out-of-state distilled spirit's
shipper's certificate.
EXISTING LAW
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.
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 law generally prohibits alcoholic
beverage licensees from giving away any gift, premium or
SB 1323 (Walters) continued
Page 2
free goods in connection with the sale or distribution of
alcoholic beverages.
Existing law, until January 1, 2014, permits a
manufacturer, winegrower, rectifier, or distiller, or any
authorized agent of that person to provide, free of charge,
entertainment, food, and distilled spirits, wine, or
nonalcoholic beverages to consumers over 21 years of age at
an invitation-only event in connection with the sale or
distribution of wine or distilled spirits, as specified.
Existing law also authorizes the Department of Alcoholic
Beverage Control to impose a fee to cover the costs of
administering such events.
SB 1323 (Walters) continued
Page 3
BACKGROUND
Purpose of SB 1323: This measure is intended to correct a
minor oversight discovered since enactment of AB 2293 (De
Leon) Chapter 638 of 2008. AB 2293 of 2008 was introduced
to allow distilled spirits manufacturers and winegrowers to
provide their product offerings directly to consumers, by
invitation only, within a controlled environment for which
there is a caterer's permit authorization. The bill
contained significant restrictive criteria in order to
provide appropriate controls on promotional events.
The sponsor of this measure, the Distilled Spirits Council
of the United States (DISCUS), contends that the list of
licensees authorized by AB 2293 of 2008 to provide supplier
hosted promotion and entertainment was not inclusive of all
DISCUS member companies. In fact, the sponsor claims that
since enactment of AB 2293, certain licensees have not been
able to secure a permit from the Department of ABC to hold
an event. According to the sponsor, this measure is simply
intended to correct this shortcoming and follow through on
the original intent of AB 2293 of 2008.
Staff Comments: As introduced on February 19, 2010, this
measure would have increased the standard of proof required
to prove a violation per Business and Professions Code
Section 25503 relating to consignment sales; commercial
bribery; signs; and advertisement. Under the February 19th
version of the bill, a person would have to act "knowingly"
in order to be found in violation. Several labor
organizations had expressed opposition to that version of
the bill. The author's recent amendments (April 7, 2010)
have deleted the word "knowingly" from Business and
Professions Code Section 25503, thus removing the earlier
opposition and keeping this existing provision of law
intact.
PRIOR/RELATED LEGISLATION
SB 1022 (Strickland) 2009-10 Session. Would expand an
existing tied-house exception within the ABC Act to enable
licensed distilled spirits "rectifiers" to donate or sell
their products to specified nonprofit entities for the
purpose of assisting in fund-raising efforts. (Pending in
this Committee)
SB 1323 (Walters) continued
Page 4
AB 2293 (De Leon) Chapter 638, Statutes of 2008. Added a
new provision to the ABC Act that allows distilled spirits
manufacturers and winegrowers to provide their product
offerings directly to consumers (free of charge) during
invitation-only events on premises for which a caterer's
permit authorization has been issued.
SUPPORT: As of April 9, 2010:
Distilled Spirits Council of the United States (sponsor)
OPPOSE: None on file as of April 9, 2010.
FISCAL COMMITTEE: Senate Appropriations Committee
**********