BILL NUMBER: SB 1480 CHAPTERED
BILL TEXT
CHAPTER 296
FILED WITH SECRETARY OF STATE SEPTEMBER 24, 2010
APPROVED BY GOVERNOR SEPTEMBER 23, 2010
PASSED THE SENATE AUGUST 19, 2010
PASSED THE ASSEMBLY AUGUST 12, 2010
AMENDED IN ASSEMBLY AUGUST 2, 2010
AMENDED IN ASSEMBLY JUNE 14, 2010
AMENDED IN ASSEMBLY JUNE 2, 2010
INTRODUCED BY Committee on Governmental Organization (Senators
Wright (Chair), Calderon, Denham, Florez, Harman, Negrete McLeod,
Oropeza, Padilla, Price, Wyland, and Yee)
MARCH 8, 2010
An act to amend Sections 23055, 23357.2, 23358.3, 23366.3,
23399.4, 24044.5, 24045.11, 25503.15, and 25505 of the Business and
Professions Code, relating to alcoholic beverages.
LEGISLATIVE COUNSEL'S DIGEST
SB 1480, Committee on Governmental Organization. Alcoholic
beverages: tied-house restrictions: operating permits.
(1) Under existing law, the Alcoholic Beverage Control Act is
administered by the Department of Alcoholic Beverage Control.
Existing law requires the director of the department to make an
annual report to the Legislature on the department's activities,
which includes recommendations for legislation to improve the
department's abilities to administer the act.
This bill would revise the report requirements to no longer
include legislative recommendations.
(2) The Alcoholic Beverage Control Act provides for the issuance
of licenses for which various annual fees are charged depending upon
the type of license issued. Existing law authorizes the Department of
Alcoholic Beverage Control to annually adjust the fees charged
commencing with the 2010 calendar year by an amount not to exceed an
inflation factor based on the Consumer Price Index.
This bill would make technical, nonsubstantive changes to reflect
existing law.
(3) Existing provisions of the Alcoholic Beverage Control Act,
known as "tied-house" restrictions, generally prohibit a winegrower
from having an ownership interest in an on-sale alcoholic beverage
license, with limited exceptions. Among other exemptions, existing
law exempts from the tied-house restrictions any licensed winegrower
who meets specified conditions and any on-sale licensee that holds
any ownership or interest in a winegrower, including that the
winegrower or on-sale licensee, or his or her officer, director, or
agent, enters into an undertaking, approved by the Department of
Alcoholic Beverage Control, that makes specified statements regarding
the sale or furnishing of wine by the winegrower, or any officer,
director, or agent of the winegrower.
This bill would retain the requirement that the winegrower or
on-sale licensee, or officer, director, or agent meet the specified
conditions regarding the sale or furnishing of wine under the
circumstances described above, but would eliminate the requirement
that statements describing these conditions be made pursuant to an
undertaking approved by the department.
(4) Existing law authorizes the Department of Alcoholic Beverage
Control, in its discretion, to issue an interim retail permit to an
applicant for any retail license to operate the premises during the
period an application for a license at the premises is pending,
subject to specified conditions.
This bill would revise the authorization of the Department of
Alcoholic Beverage Control to, in its discretion, issue an interim
operating permit to an applicant for any license to operate the
premises during the period an application for a license at the
premises is pending, subject to specified conditions applicable to
all licensees or retail licensees only.
(5) The Alcoholic Beverage Control Act provides that a violation
of any of its provisions for which another penalty or punishment is
not specifically provided is a misdemeanor. This bill would expand
existing crimes by imposing additional duties on a licensee under the
act, thus, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 23055 of the Business and Professions Code is
amended to read:
23055. On or before March 1 of each year, the director shall
prepare and submit to the Legislature an annual report on the
department's activities. The report shall include, but not be limited
to, the following information for the previous calendar year:
(a) The amount of funds allocated and spent by the department for
licensing, enforcement, and administration.
(b) The number of licenses issued, renewed, denied, suspended, and
revoked, by license category.
(c) The average time for processing license applications, by
license category.
(d) The number and type of enforcement activities conducted by the
department and by local law enforcement agencies in conjunction with
the department.
(e) The number, type, and amount of penalties, fines, and other
disciplinary actions taken by the department.
SEC. 2. Section 23357.2 of the Business and Professions Code is
amended to read:
23357.2. (a) An out-of-state beer manufacturer's certificate may
be issued by the department upon the written undertaking and
agreement by the applicant:
(1) That it and its agents and all agencies within this state
controlled by it shall comply with all laws of this state and all
rules of the department with respect to the sale of alcoholic
beverages, including, but not limited to, Chapter 12 (commencing with
Section 25000) of Division 9, and Section 25509, to the same extent
as licensees.
(2) That it shall make available, both in California and outside
the state, for inspection and copying by the department, all books,
documents, and records, located both within and without this state,
which are pertinent to the activities of the applicant, its agents
and agencies within this state controlled by it, in connection with
the sale and distribution of its products within this state.
(b) The department may suspend or revoke an out-of-state beer
manufacturer's certificate for cause in the manner provided for the
suspension or revocation of licenses, and after a hearing which shall
be held in the City of Sacramento or in any other county seat in
this state as the department determines to be convenient to the
holder of an out-of-state certificate.
(c) The annual fees for an out-of-state beer manufacturer's
certificate shall be fifty-four dollars ($54) for certificates issued
during the 2002 calendar year, fifty-seven dollars ($57) for
certificates issued during the 2003 calendar year, sixty dollars
($60) for certificates issued during the 2004 calendar year, and for
certificates issued during the years thereafter, the annual fee shall
be calculated pursuant to subdivisions (c) and (d) of Section 23320.
(d) All money collected from the fees provided for in this section
shall be deposited in the Alcohol Beverage Control Fund as provided
by Section 25761.
SEC. 3. Section 23358.3 of the Business and Professions Code is
amended to read:
23358.3. A wine grape grower's storage license authorizes the
holder to store bulk wine, made from grapes produced by the holder,
on the premises of a licensed winegrower and to sell that wine,
within this state, to winegrowers, distilled spirits manufacturers,
brandy manufacturers, wine blenders, and vinegar producers.
The annual fee for a wine grape grower's storage license shall be
sixty dollars ($60) for licenses issued during the 2002 calendar
year, sixty-four dollars ($64) for licenses issued during the 2003
calendar year, sixty-seven dollars ($67) for licenses issued during
the 2004 calendar year, and for licenses issued during the years
thereafter, the annual fee shall be calculated pursuant to
subdivisions (c) and (d) of Section 23320.
SEC. 4. Section 23366.3 of the Business and Professions Code is
amended to read:
23366.3. (a) An out-of-state distilled spirits shipper's
certificate may be issued by the department upon the written
undertaking and agreement by the applicant:
(1) That it and its agents and all agencies within this state
controlled by it shall comply with all laws of this state and all
rules of the department with respect to the sale of alcoholic
beverages;
(2) That it shall make available, both in California and outside
the state, for inspection and copying by the department, all books,
documents, and records, located both within and without the state,
which are pertinent to the activities of the applicant, its agents
and agencies within this state controlled by it, in connection with
the sale and distribution of its products within this state.
(b) The department may suspend or revoke an out-of-state distilled
spirits shipper's certificate for cause in the manner provided for
the suspension and revocation of licenses, and after a hearing which
shall be held in the City of Sacramento or in such other county seat
in the state as the department determines to be convenient to the
holder of an out-of-state distilled spirits shipper's certificate.
(c) The annual fees for an out-of-state distilled spirits shipper'
s certificate shall be fifty-four dollars ($54) for certificates
issued during the 2002 calendar year, fifty-seven dollars ($57) for
certificates issued during the 2003 calendar year, sixty dollars
($60) for certificates issued during the 2004 calendar year, and for
certificates issued during the years thereafter, the annual fee shall
be calculated pursuant to subdivisions (c) and (d) of Section 23320.
(d) All money collected from the fees provided for in this section
shall be deposited in the Alcohol Beverage Control Fund, as provided
by Section 25761.
SEC. 5. Section 23399.4 of the Business and Professions Code is
amended to read:
23399.4. (a) A licensee under a winegrower's license may apply to
the department for a certified farmers' market sales permit. A
certified farmers' market sales permit shall authorize the licensee,
a member of the licensee's family, or an employee of the licensee to
sell wine produced and bottled by the winegrower entirely from grapes
grown by the winegrower at a certified farmers' market at any place
in the state approved by the department. The permit may be issued for
up to 12 months but shall not be valid for more than one day a week
at any single specified certified farmers' market location. A
winegrower may hold more than one certified farmers' market sales
permit. The department shall notify the city, county, or city and
county and applicable law enforcement agency where the certified
farmers' market is to be held of the issuance of the permit. A
"certified farmers' market" means a location operated in accordance
with Chapter 10.5 (commencing with Section 47000) of Division 17 of
the Food and Agricultural Code, and the regulations adopted pursuant
thereto.
(b) The licensed winegrower eligible for the certified farmers'
market sales permit shall not sell more than 5,000 gallons of wine
annually pursuant to all certified farmers' market sales permits held
by any single winegrower. The licensed winegrower shall report total
certified farmers' market wine sales to the department on an annual
basis. The report may be included within the annual report of
production submitted to the department, or pursuant to any regulation
as may be prescribed by the department.
(c) The fee for any permit issued pursuant to this section shall
be forty-four dollars ($44) for permits issued during the 2002
calendar year, forty-seven dollars ($47) for permits issued during
the 2003 calendar year, fifty dollars ($50) for permits issued during
the 2004 calendar year, and for permits issued during the years
thereafter, the annual fee shall be calculated pursuant to
subdivisions (c) and (d) of Section 23320.
(d) All money collected as fees pursuant to this section shall be
deposited in the Alcohol Beverage Control Fund as provided in Section
25761.
SEC. 6. Section 24044.5 of the Business and Professions Code is
amended to read:
24044.5. (a) The department, in its discretion, may issue an
interim operating permit to an applicant for any license to operate
the premises during the period an application for a license at the
premises is pending and when all of the following conditions exist:
(1) The application has been protested pursuant to Article 3
(commencing with Section 24011).
(2) The department has made a determination based upon its
investigation that the license should be issued.
(3) The applicant for the interim operating permit has filed with
the department an application for issuance of a license at the
premises to himself or herself.
(4) The application for the interim operating permit is
accompanied by a fee of one hundred dollars ($100).
(b) An interim operating permit issued by the department pursuant
to this section shall be for a period not to exceed 120 days. An
interim operating permit may be extended at the discretion of the
department for additional 120-day periods as necessary upon payment
of an additional fee of one hundred dollars ($100) and upon
compliance with all conditions required by this section. Any interim
operating permit issued by the department shall be automatically
canceled when a final determination made by the department regarding
the protests becomes effective or when the application for the
license is withdrawn, whichever occurs first. An interim operating
permit is a conditional permit and authorizes the holder to whom
issued to exercise the rights and privileges of the license for which
the application has been filed with the department. Any conditions
for which the applicant has petitioned pursuant to Article 1.5
(commencing with Section 23800) of Chapter 5 shall apply to any
interim operating permit issued by the department.
(c) Purchase of beer and wine by the holder of an interim
operating permit issued to an applicant for a retail license shall be
made only upon payment before or at the time of delivery in currency
or by check. Purchase of distilled spirits by the holder of an
interim operating permit issued to an applicant for a retail license
shall be made only upon payment before or at the time of delivery in
currency or by certified check. However, the holder of an interim
operating permit issued to an applicant for a retail license, who
also holds one or more retail licenses and is operating under the
retail license or licenses in addition to the interim operating
permit, and who is not delinquent under the provisions of Section
25509 as to any retail license under which he or she operates, may
purchase alcoholic beverages on credit under the interim operating
permit.
(d) All checks received by a seller for beer or wine purchased by
the holder of an interim operating permit issued to an applicant for
a retail license shall be deposited not later than the second
business day following the date the beer or wine is delivered.
A check dishonored on presentation shall not be deemed payment.
The receipt by the seller or his or her agent in good faith from a
holder of an interim operating permit of a check dishonored on
presentation shall not be cause for disciplinary action against the
seller.
(e) Issuance of the license for which the holder of an interim
operating permit issued to an applicant for a retail license has
filed an application shall not be approved by the department until
the holder of the interim operating permit has filed with the
department a statement executed under penalty of perjury that all
current obligations have been discharged, and that all outstanding
checks issued by him or her in payment for alcoholic beverages will
be honored on presentation.
(f) It shall not be a violation of this section or grounds for
disciplinary action for any licensee to extend credit to the holder
of an interim operating permit issued to an applicant for a retail
license or to receive payment from the holder of an interim operating
permit in a manner other than authorized herein unless the seller
has knowledge of the fact that the purchaser was operating under an
interim operating permit. Knowledge of the fact may be established by
evidence, including, but not limited to, evidence that, at the time
of receipt of payment or the extension of credit, the premises
operated under an interim operating permit were posted with the
notice required by Section 23985, or the holder of the interim
operating permit has recorded notice as required by Section 24073, or
the holder of the interim operating permit has published notice as
required by Section 23986, or the holder of the interim operating
permit has recorded and published notice pursuant to Division 6
(commencing with Section 6101) of the Commercial Code.
(g) Refusal by the department to issue or extend an interim
operating permit shall not entitle the applicant to petition for the
permit pursuant to Section 24011, or to a hearing pursuant to Section
24012. Articles 2 (commencing with Section 23985) and 3 (commencing
with Section 24011) shall not apply to interim operating permits.
(h) Notwithstanding any other provision of law, the department
may, in its discretion, cancel or suspend summarily at any time an
interim operating permit if the department determines that good cause
for the cancellation or suspension exists. Chapter 8 (commencing
with Section 24300) shall not apply to interim operating permits.
(i) Application for an interim operating permit shall be on any
form the department shall prescribe. If an application for an interim
operating permit is withdrawn before issuance or is refused by the
department, the fee that accompanied the application shall be
refunded in full, and Section 23959 shall not apply. Fees received by
the department for issuance of interim operating permits shall be
deposited in the Alcohol Beverage Control Fund as provided in Section
25761.
SEC. 7. Section 24045.11 of the Business and Professions Code is
amended to read:
24045.11. The department may issue a special on-sale wine license
to an establishment licensed to do business as a bed and breakfast
inn.
"Bed and breakfast inn," as used in this section, means an
establishment of 20 guestrooms or less, which provides overnight
transient occupancy accommodations, which serves food only to its
registered guests, which serves only a breakfast or similar early
morning meal, and with respect to which the price of the food is
included in the price of the overnight transient occupancy
accommodation. For purposes of this section, "bed and breakfast inn"
refers to an establishment as to which the predominant relationship
between the occupants thereof and the owner or operator of the
establishment is that of innkeeper and guest. For purposes of this
section, the existence of some other legal relationships as between
some occupants and the owner or operator is immaterial.
An establishment holding a license under this section is
authorized to serve wine purchased from a licensed winegrower or wine
wholesaler only to registered guests of the establishment. Wine
shall not be given away to guests but the price of the wine shall be
included in the price of the overnight transient occupancy
accommodation. Guests shall not be permitted to remove wine served in
the establishment from the grounds.
The applicant for a license shall accompany the application with
an original fee of fifty dollars ($50) and shall pay an annual
renewal fee of six dollars ($6) for each guestroom in the
establishment until December 31, 2004, and for each year thereafter
the annual fee shall be calculated pursuant to subdivisions (c) and
(d) of Section 23320.
SEC. 8. Section 25503.15 of the Business and Professions Code is
amended to read:
25503.15. (a) Notwithstanding any other provision of this
division, a winegrower who manufactures, produces, bottles,
processes, imports, or sells wine only, or any officer, director, or
agent of that person, may hold the ownership of any interest in any
on-sale license, if both of the following conditions exist:
(1) Neither that person, nor any officer, director, or agent of
that person, sells or furnishes to the holder of the license any
wine, or permits the sale pursuant to that license of any wine,
manufactured, produced, wholesaled, bottled, processed, imported, or
sold by that person or that person's principal for as long as that
ownership continues.
(2) Neither that person, nor any officer, director, or agent of
that person, enters into any collusive scheme, whereby he or she
unfairly sells or promotes, in his or her on-sale businesses, the
wine of another winegrower who manufactures, produces, bottles,
processes, imports, or sells wine only, in return for his or her wine
being unfairly sold or promoted in the on-sale businesses of that
winegrower.
(b) Notwithstanding any other provision of this division, any
licensed winegrower or any winegrower who has a wholesale license, or
any officer, director, or agent of that person, may hold, directly
or indirectly, the ownership of any interest in an on-sale license,
provided that each of the following conditions is met:
(1) The on-sale licensed premises are licensed as a bona fide
public eating place as defined in Section 23038, or as a bona fide
bed and breakfast inn as defined in Section 24045.11.
(2) The on-sale licensed premises purchases all alcoholic
beverages sold and served at the on-sale licensed premises only from
California wholesale licensees, other than the licensed winegrower
who has a wholesale license and an interest in an on-sale license,
unless one of the following conditions is met:
(A) The wine purchased is produced or bottled by, or produced and
packaged for, the same licensed winegrower that holds an interest in
the on-sale license.
(B) The wine is produced or bottled by, and is purchased from, a
licensed winegrower who sells no more than 125,000 gallons of wine
per year for distribution in this state under all brands or trade
names owned by that winegrower.
(C) The wine is purchased by an on-sale licensee in whose on-sale
license a licensed winegrower holds an interest, provided that the
winegrower sells no more than 125,000 gallons of wine per year for
distribution in this state under all brands or trade names owned by
that winegrower.
(3) The licensed winegrower and any officer, director, or agent of
that person, whether individually or in the aggregate, do not sell
and serve the wine products produced or bottled under any brand or
trade name owned by that winegrower through more than two on-sale
licensed premises in which any of them holds an ownership interest.
(4) The number of wine items by brand offered for sale by the
on-sale licensed premises that are produced, bottled, processed,
imported, or sold by the licensed winegrower or by any person holding
any interest in the winegrower does not exceed 15 percent of the
total wine items by brand listed and offered for sale in the licensed
bona fide public eating place selling and serving that wine. This
paragraph does not apply to a bona fide bed and breakfast inn.
(c) The Legislature finds that it is necessary and proper to
require a separation between manufacturing interests, wholesale
interests, and retail interests in the production and distribution of
alcoholic beverages in order to prevent suppliers from dominating
local markets through vertical integration and to prevent excessive
sales of alcoholic beverages produced by overly aggressive marketing
techniques. The Legislature further finds that the exceptions
established by this section to the general prohibition against tied
interests must be limited to their express terms so as not to
undermine the general prohibition, and intends that this section be
construed accordingly.
SEC. 9. Section 25505 of the Business and Professions Code is
amended to read:
25505. No on-sale licensee, or any officer, director, employee,
or agent of that licensee, shall hold any ownership or interest,
directly or indirectly, in any manufacturer's, winegrower's,
rectifier's, importer's, or wholesaler's license, the business
conducted under that license, or the property used in the business.
The provisions of this section shall not apply to the holding by
one person of a wholesaler's license and an on-sale license in a
county with a population that does not exceed 15,000.
The provisions of this section shall not apply to the financial or
representative relationship between a manufacturer, winegrower,
manufacturer's agent, rectifier, distiller, bottler, importer, or
wholesaler, or any officer, director, or agent of that person, and,
except as otherwise specified, a person holding only one of the
following types of licenses:
(a) On-sale general license for a bona fide club.
(b) Club license (issued under Article 4 (commencing with Section
23425) of Chapter 3 of this division).
(c) Veterans' club license (issued under Article 5 (commencing
with Section 23450) of Chapter 3 of this division).
(d) On-sale license for boats, trains, sleeping cars or airplanes,
except as provided in subdivision (e), where the alcoholic beverages
produced or sold by that manufacturer, winegrower, manufacturer's
agent, rectifier, bottler, importer, or wholesaler or any officer,
director, or agent of that person are not sold, furnished or given,
directly or indirectly to the on-sale licensee.
The provisions of this section shall not prohibit the leasing of
property by an on-sale licensee to a manufacturer, winegrower,
rectifier, importer or wholesaler provided that the lease agreement
is first approved by the department. The department shall approve the
lease agreement unless it finds that the rent payable is not the
fair rental value of the property or that the purpose of the lease is
to violate any of the provisions of this chapter.
The provisions of this section shall not prohibit the holding of
any ownership or interest by an on-sale licensee, or any officer,
director, employee, or agent of any on-sale licensee, in any
winegrower's license, which winegrower manufactures, produces,
bottles, processes, imports, or sells wine only, or in the business
conducted under any winegrower's license, provided the on-sale
licensee, or the officer, director, employee, or agent thereof does
not sell pursuant to that on-sale license any wine manufactured,
produced, processed, imported, or sold by the licensed winegrower for
so long as the holding of the ownership or interest continues.
(e) Any and all of the licenses specifically enumerated,
mentioned, or described in Section 25503.30, either singly or in
combination.
SEC. 10. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.