BILL ANALYSIS �
AB 2184
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Date of Hearing: April 18, 2012
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Isadore Hall, Chair
AB 2184 (Hall) - As Introduced: February 23, 2012
SUBJECT : Alcoholic beverages: tied-house restrictions.
SUMMARY : Provides that the autographing of a bottle or
bottles of distilled spirits at a promotional event conducted at
an off-sale licensed retail premises by a person who holds an
ownership interest in that distilled spirits brand is not a
thing of value.
EXISTING LAW:
1) Establishes ABC and grants it the exclusive authority to
administer the provisions of the ABC Act in accordance with laws
enacted by the Legislature.
2) 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 holder of one type of
license is not permitted to do business as another type of
licensee within the "Three-tier" system.
3) Prohibits specified licensees from furnishing, giving, or
lending money or other thing of value, directly or indirectly,
to a person engaged in operating, owning, or maintaining an
off-sale licensed premises.
4) Prohibits the ABC from imposing a dollar limit of less than
$5 for consumer advertising specialties furnished by a distilled
spirits supplier to a retailer or the general public. Allows
beer manufacturers to give adult consumers promotional
advertising items valued up to $5. Existing law provides that
consumer-advertising specialties furnished by a wine supplier to
a retailer or to the general public shall not exceed $1 per unit
original cost to the supplier who purchased it.
FISCAL EFFECT : Unknown.
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COMMENTS :
Tied-House Law : Tied-House Law refers to the statutory scheme
restricting any cross-ownership among the three independent
tiers of the alcohol industry: a) manufacturers; b)
distributors/wholesalers; and, c) retailers. The term
"Tied-House" refers to a practice which was common in this
country prior to prohibition, and is still occurring in England
today, where a bar or "public house" is tied to the products of
a particular manufacturer. The original rationale for
Tied-House restrictions was to promote the state's interest in
maintaining an orderly market, to prohibit the vertical
integration of the alcohol industry, to protect the public from
predatory marketing practices, and to prevent the intemperate
consumption of alcoholic beverages. In order to further these
policy goals, the Legislature has generally prohibited forms of
cross-ownership between manufacturers and retailers, and
discouraged manufacturers from providing anything of value to
distributors or retailers, be it free goods, services or
advertising.
Numerous exceptions to these restrictions have been enacted
through the years in those specific instances where the
Legislature determined that the public's interests were
protected. Generally, the business community is interested in
removing unnecessary business regulations and creating
conditions that facilitate investment and expansion
opportunities for companies that have some degree of ownership
in multiple segments of the industry.
Purpose of bill : According to the author, this bill is intended
to allow public figures who have an ownership interest in a
brand of distilled spirits to conduct marketing and promotional
events which include autograph bottle signing at a location that
holds an off-sale general license issued by the ABC.
In recent years, it has become more and more common for
individuals in the entertainment industry in particular to
acquire an ownership interest in a brand of distilled spirits or
create a new spirits line and arrange to have those brands
distributed in the normal and lawful distribution system
established by the ABC Act. These individuals will often
promote the product at the retail point of sale through personal
appearances which may include bottle signing events in grocery
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stores and bottle shops which stock the product.
ABC has taken the position that the appearance of any public
personality appearing at a licensed retail premises constitutes
a "thing of value" which is in violation of current ABC
Tied-house laws presumably because the presence of that
individual at the licensed location would draw an extraordinary
level of business to that retailer. In addition, if a bottle
were to be autographed by the public figure it would be
considered a "premium" which would be in violation of the ABC
Act.
In support : The Wine and Spirits Wholesalers of California,
Inc. believe that any brand owner should be allowed to help
promote a product in which he or she holds an equity interest by
participating in events held on off-sale retail premises that in
all other respects are lawful.
Prior legislation : AB 605 (Portantino), Chapter 230, Statutes
of 2010. Creates a new type of license (instructional tasting
license) that allows the tasting of beer, wine, and distilled
spirits at off-sale licensed premises.
AB 2293 (De Leon), Chapter 638, Statutes of 2008. Added a new
provision to the ABC Act that permits a manufacturer of
distilled spirits, winegrower, rectifier, or distiller, or its
authorized agent to provide their product, as well as
entertainment and food to consumers over 21 years of age during
invitation-only events (free of charge), as specified. The
events must occur on premises for which a caterer's permit
authorization has been issued. The bill sunsets on January 1,
2014.
AB 1245 (Torrico), Chapter 629, Statutes of 2008. Modified an
existing provision of the ABC Act to allow beer manufacturers to
give adult consumers promotional advertising items valued up to
$3.
SB 88 (Chesbro) Chapter 588, Statutes of 2003, creates a new ABC
wine sales event permit to allow winegrowers to sell bottled
wine at charity events.
REGISTERED SUPPORT / OPPOSITION :
Support
AB 2184
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California Society of Addiction Medicine
Wine and Spirits Wholesalers of California, Inc.
Opposition
None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531