BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1480|
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CONSENT
Bill No: SB 1480
Author: Senate Governmental Organization Committee
Amended: As introduced
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE : 10-0, 0/13/10
AYES: Wright, Calderon, Denham, Florez, Negrete McLeod,
Oropeza, Padilla, Price, Wyland, Yee
NO VOTE RECORDED: Harman
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Alcoholic beverages: tied-house restrictions
SOURCE : Author
DIGEST : This bill makes a minor clarifying change, as
well as code maintenance changes, to existing provisions of
the Alcoholic Beverage Control Act in order to reduce
paperwork requirements of the Department of the Alcoholic
Beverage Control.
ANALYSIS : 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. 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.
CONTINUED
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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 to do business as
another type of licensee within the "three-tier" system.
Background
Current law provides as an exception to tied-house
restrictions that a winegrower who deals in wine only may
hold an ownership interest in any on-sale license, provided
that the winegrower has entered into an "undertaking"
approved by the Department of ABC not to sell or furnish
his or her wine to the holder of the license for as long as
the winegrower's ownership interest in the license
continues, or to enter into any collusive scheme to
unfairly sell or promote the wine of another winegrower in
his or her retail businesses in return for the same
treatment in the retail businesses of the other winegrower.
Current law also provides that a licensed winegrower may
hold an ownership interest in an on-sale license, if
certain conditions are met, including that the licensed
on-sale premises are operated as a bona fide eating place
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or a bona fide bed and breakfast inn; any alcoholic
beverage sold and served at the on-sale licensed premises
is purchased only from a California wholesale licensee,
except as specified; the winegrower and any officer,
director, or agent of that person, whether individually or
in the aggregate, do not sell and serve wine products
produced or bottled under any brand or trade name owned by
that winegrower through more than 2 on-sale licensed
premises in which any of them holds an ownership interest;
and, in the case of a bona fide public eating place, wine
produced by the winegrower does not exceed a specified
percentage of the wine items offered for sale in the
on-sale premises.
This bill retains the requirement that the winegrower meet
the specified conditions regarding the sale or furnishing
of wine under the circumstances described above, but
eliminates the requirement that statements describing these
conditions be made pursuant to an "undertaking approved by
the Department of ABC." Additionally, this bill makes
other minor technical changes to this section of law
intended to streamline, simplify and provide for a more
conforming tied-house exception without materially
impacting its effect.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
TSM:nl 4/26/10 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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