BILL ANALYSIS �
Bill No: AB
252
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2011-2012 Regular Session
Staff Analysis
AB 252 Author: Calderon
As Introduced: February 3, 2011
Hearing Date: June 28, 2011
Consultant: Art Terzakis
SUBJECT
Alcoholic Beverages
DESCRIPTION
AB 252 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 a
"distilled spirits manufacturer's agent."
EXISTING LAW
Existing law establishes the Department of 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.
Existing law, known as the "tied-house" law, separates the
alcoholic beverage industry into three component parts of
manufacturer, wholesaler, and retailer. The original
policy rationale for this body of law was to prohibit the
vertical integration of the alcohol industry and to protect
the public from predatory marketing practices. Generally,
other than exemptions granted by the Legislature, the
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holder of one type of license is not permitted to do
business as another type of licensee within the
"three-tier" system.
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 ABC to
impose a fee to cover the costs of administering such
events.
Existing law authorize the Department of ABC to issue to
the holder of an "off-sale" retail license an
"instructional tasting license" for the purpose of
furnishing tastings of alcoholic beverages to consumers,
subject to certain limitations.
The ABC Act permits an on-sale retail licensee of wine or
distilled spirits to conduct "instructional" consumer
tastings on the licensed retail premise provided the
following conditions are met: (1) no more than ounce of
distilled spirits is offered in one tasting; (2) no more
than one ounce of wine is offered in one tasting; and, (3)
no more than three tastings are offered to an individual in
one day. An instruction may include the history, nature,
values and characteristics of the product being offered,
and the methods of presenting and serving the product.
Existing law authorizes beer manufacturers and wholesalers
to offer beer samples (not to exceed 8 ounces per person,
per day) to individuals of legal drinking age at on-sale
retail licensed premises under specified conditions.
Existing law permits a licensed winegrower, manufacturer,
importer, or wholesaler to provide samples of the alcoholic
beverages which are authorized to be sold by the licensee
in accordance with rules prescribed by the ABC. A retail
licensee, however, is not authorized to provide any free
samples of alcoholic beverages. Moreover, ABC regulations
provide that samples of alcoholic beverages may only be
given away to licensees or employees of licensees who are
in a position to purchase the product or who are in need of
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additional information about the product, as specified.
Existing law authorizes distilled spirits manufacturers to
conduct tastings and provide distilled spirits without
charge for events sponsored by nonprofit organizations.
Only persons affiliated with the nonprofit organization,
including up to three guests, may attend. No distilled
spirits may be sold or solicited for sale at the tasting,
and the organization must obtain a permit from ABC prior to
the event.
BACKGROUND
Purpose of AB 252: According to the author's office, this
measure is intended to correct a minor oversight discovered
since enactment of AB 2293 (De Leon), Chapter 638, Statutes
of 2008. AB 2293 (De Leon) allowed distilled spirits
manufacturers and winegrowers to provide their product
offerings free of charge to consumers, at an
invitation-only event, where a caterer's permit has been
authorized by ABC. AB 2293 contained restrictive criteria
in order to provide appropriate controls relating to these
promotional events.
According to the sponsor of AB 252 (Calderon), the
Distilled Spirits Council of the United States (DISCUS),
the list of licensees authorized by AB 2293 to provide
supplier hosted promotion and entertainment events did not
include all its member companies. For example, the holder
of a distilled spirits manufacturer's agent license has not
been able to secure a license from ABC to participate in
these promotional events. DISCUS states, AB 252 is simply
intended to correct this oversight and provide the same
privilege to a "distilled spirits manufacturer's agent."
According to the Department of ABC, since enactment of AB
2293, only 5 such event authorizations have been granted.
ABC has not identified any enforcement problems and no
disciplinary action has been taken relating to these
events. The sponsor of AB 252 contends that the low number
of invitation-only events is directly related to the very
narrow criteria placed in AB 2293 that clearly define how
these private events must be operated by the licensee.
Staff Comments: SB 1323 (Walters) of 2010 was similar to
this measure but would have extended the privileges
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contained in AB 2293 to include a distilled spirits
manufacturer's agent, a holder of a distilled spirits
importer's general license, a holder of a distilled spirits
rectifier's general license and a holder of an out-of-state
distilled spirits shipper's certificate. SB 1323 was held
in the Senate Appropriation Committee suspense file. AB
252 would only add distilled spirits manufacturer's agents
to the list of licensees who are able to take advantage of
the promotional events referenced above. There are
currently 16 licensees who would be able to take advantage
of this expansion.
PRIOR/RELATED LEGISLATION
SB 1323 (Walters) 2009-10 Session. Would have modified an
existing provision of the 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 spirits
shipper's certificate. (Held in Senate Appropriations
Suspense File)
SB 1022 (Strickland) Chapter 281, Statutes of 2010.
Expanded an existing tied-house exception 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.
AB 2293 (De Leon) Chapter 638, Statutes of 2008. Allowed
distilled spirits manufacturers and winegrowers to provide
their product offerings including food 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 June 24, 2011:
Distilled Spirits Council of the United States (DISCUS)
OPPOSE: As of June 24, 2011:
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California Council on Alcohol Problems
FISCAL COMMITTEE: Senate Appropriations Committee
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