BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 2184|
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THIRD READING
Bill No: AB 2184
Author: Hall (D)
Amended: 8/9/12 in Senate
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMM. : 13-0, 6/26/12
AYES: Wright, Anderson, Berryhill, Calderon, Cannella,
Corbett, De Le�n, Evans, Hernandez, Padilla, Walters,
Wyland, Yee
SENATE APPROPRIATIONS COMMITTEE : 7-0, 8/6/12
AYES: Kehoe, Walters, Alquist, Dutton, Lieu, Price,
Steinberg
ASSEMBLY FLOOR : 73-0, 5/10/12 (Consent) - See last page
for vote
SUBJECT : Alcoholic beverages: tied-house restrictions
SOURCE : Author
DIGEST : This bill creates a new tied-house exception in
the Alcoholic Beverage Control (ABC) Act that authorizes
wine, beer and spirits producers to participate in
promotional events held at an off-sale retail licensed
location for the purpose of providing autographs on bottles
or other items to consumers.
Senate Floor Amendments of 8/9/12 are requested by the beer
wholesalers to clarify what type of wholesalers can
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participate in activities permitted by the bill.
specifically, the amendments (1) make a minor technical
correction by striking out "4" and inserting "four" on page
2, line 13, and (2) modify one of the conditions imposed on
alcohol producers (wine, beer and spirits) to permit a beer
and wine wholesaler that holds at least six distilled
spirits wholesaler licenses to directly or indirectly
underwrite, share in, or contribute to any costs related to
a promotional event under which autographs by a n alcohol
producer may be offered.
ANALYSIS : Existing law, known as tied-house
restrictions, 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.
This bill permits, until January 1, 2016, the appearance of
a person employed or engaged by an "authorized licensee,"
as defined, at a promotional event held at the premises of
an off-sale retail licensee for the purpose of providing
autographs only under the following conditions:
1. A fee is not charged to attend the event and a purchase
from the off-sale retail licensee is not required.
2. The promotional event does not exceed four hours in
duration and there are no more than two such events per
calendar year involving the same authorized licensee at
a single premise of an off-sale licensee.
3. Autographing may only be provided on consumer
advertising specialties given by the authorized licensee
to a consumer or on any item provided by the consumer.
4. The off-sale retail licensee may advertise the
promotional event. Additionally, an authorized licensee
may advertise in advance of the event only in
publications of the authorized licensee, subject to
specified conditions.
5. A wholesaler does not directly or indirectly underwrite,
share in, or contribute to any costs related to the
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promotional event, except that a beer and wine
wholesaler that holds at least six distilled spirits
wholesaler licenses may directly or indirectly
underwrite, share in, or contribute to any costs related
to a promotional event for which the wholesaler employs
or engages the person providing autographs to consumers
at the event.
6. The authorized licensee notifies ABC in writing of the
event at least 30 days in advance and maintains records
necessary to establish compliance with this law.
Comments
Purpose of the 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 that include autograph
bottle signing at a location that holds an off-sale general
license issued by the Department of Alcoholic Beverage
Control (ABC).
In recent years, it has become 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. These individuals will often
promote the product at the retail point of sale through
personal appearances which may include bottle signing
events in grocery 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 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.
Tied-house laws . California's tied-house laws separate the
alcoholic beverage industry into three component parts or
tiers of manufacturers (including breweries, wineries, and
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distilleries), wholesalers, and retailers (both on-sale and
off-sale). These laws restrict certain ownership
structures and business relationships within the alcoholic
beverage industry, and create a public policy model for the
following purposes:
To promote the state's interest in an orderly market.
To prohibit vertical integration and dominance by a
single producer.
To prohibit commercial bribery and protect the public
from predatory marketing practices.
To discourage or prevent the intemperate use of alcoholic
beverages.
The Legislature has generally prohibited forms of
cross-ownership between manufacturers and retailers, and
discouraged manufacturers from providing anything of value
- free goods, services, or advertising - to distributors or
retailers. Numerous exceptions to these restrictions have
been enacted over the years in instances where the
Legislature determined that the public's interests are
protected.
Related Legislation
AB 605 (Portantino), Chapter 230, Statutes of 2010, creates
a new type of 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). The events
must occur on premises for which a caterer's permit
authorization has been issued. The bill sunsets on January
1, 2014.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
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According to the Senate Appropriations Committee,
potentially $95,000 annually for one PY �personnel year] in
the Trade Enforcement Unit at the Department of Alcoholic
Beverage Control (Special).
According to the ABC, there are currently 7,825 authorized
licensees that will be allowed to hold up to two events per
calendar year at 28,555 off-sale retail licensed premises
statewide. Investigations involve monitoring the events,
reviewing records, conducting interviews and other duties.
SUPPORT : (Verified 8/10/12)
California Society of Addiction Medicine
Family Winemakers of California
Wine and Spirits Wholesalers of California, Inc.
Young's Market
ARGUMENTS IN SUPPORT : Proponents emphasize that this
bill has been carefully crafted to include a number of
well-reasoned provisions and built-in safeguards that do
not require purchase of a product, prevent charging a fee
for an autograph, and provide a limitation on the number
and duration of events. Additionally, proponents point out
that this bill provides for limitations on how such events
are advertised, as well as a requirement that the ABC be
notified in advance of any such event.
Proponents note that the alcoholic beverage industry is
highly competitive with thousands of competing brands in
the wine and spirits categories - this bill will provide
brand owners and producers the opportunity to market their
product on a personal basis and help build brand awareness
and loyalty.
ASSEMBLY FLOOR : 73-0, 5/10/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Davis, Dickinson,
Donnelly, Eng, Feuer, Fong, Fuentes, Beth Gaines,
Galgiani, Garrick, Gatto, Gordon, Gorell, Grove, Hagman,
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Halderman, Hall, Harkey, Hayashi, Roger Hern�ndez, Hill,
Huber, Hueso, Huffman, Jones, Knight, Lara, Logue, Bonnie
Lowenthal, Ma, Mansoor, Mendoza, Miller, Mitchell,
Monning, Morrell, Nestande, Nielsen, Pan, Perea,
Portantino, Silva, Skinner, Smyth, Solorio, Swanson,
Torres, Valadao, Wagner, Wieckowski, Williams, Yamada,
John A. P�rez
NO VOTE RECORDED: Cook, Fletcher, Furutani, Jeffries,
Norby, Olsen, V. Manuel P�rez
DLW:m 8/13/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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