BILL ANALYSIS �
Bill No: AB
600
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Lou Correa, Chair
2013-2014 Regular Session
Staff Analysis
AB 600 Author: Bonta
As Amended: March 17, 2014
Hearing Date: May 13, 2014
Consultant: Art Terzakis
SUBJECT
Alcoholic Beverages: tied-house restrictions: purchase of
advertising
DESCRIPTION
AB 600, an urgency measure, extends an existing
"tied-house" exception in the Alcoholic Beverage Control
(ABC) Act pertaining to the general prohibition against
advertising arrangements between retail, wholesale and
manufacturer licensees to include an outdoor stadium with a
fixed seating capacity of at least 68,000 seats located in
the City of Santa Clara (Levi's Stadium - new home of the
San Francisco 49ers).
EXISTING LAW
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 for this purpose.
Existing law, known as the "tied-house" law or "three-tier"
system, separates the alcoholic beverage industry into
three component parts of manufacturer (the first tier),
wholesaler (the second tier), and retailer (the third
tier). The original policy rationale for this body of law
AB 600 (Bonta) continued
Page 2
was to prohibit the vertical integration of the alcohol
industry and to protect the public from predatory marketing
practices.
Tied-house laws generally prohibit suppliers and retailers
from sharing common owners and legally restrict alcohol
beverage suppliers' ability to gain control over retailers
through indirect means. 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.
Existing "tied-house" law prohibits paid advertising by
winegrowers, beer manufacturers and distilled spirits
producers in cases where a retail licensee also owns a
sports or entertainment venue. Over the years numerous
exceptions to this prohibition have been added to the ABC
Act [e.g., Sleep Train Arena (formerly known as ARCO Arena)
in Sacramento, Oakland Coliseum in Oakland, Arrowhead Pond
Arena in Anaheim, Kern County Arena in Bakersfield, the
National Orange Show Event Center in San Bernardino,
California Speedway in Fontana, Grizzly Stadium in downtown
Fresno, Raley Field in West Sacramento, HP Pavilion in San
Jose, the Home Depot Center in the City of Carson and other
venues].
BACKGROUND
Levi's Stadium: Levi's Stadium, the new home of the 49ers,
is currently under construction in Santa Clara County and
is expected to be completed by July in time for the 2014
NFL season. The stadium is a $1.2 billion dollar venture
designed to host a wide range of events including
professional and college football, soccer, other sporting
events, concerts and civic events. The stadium will seat
68,500 fans during 49ers home games and will have the
capacity to accommodate up to 75,000 for other events.
Levi's Stadium will be the first stadium that will have
both a green roof and solar panels. The stadium will host
two college football games in 2014 - the Oregon v. Cal (Go
Bears!) game on October 24 and the Fight Hunger Bowl in
late December. It will also host Super Bowl L (50) in
February 2016.
Purpose of AB 600: The author's office points out that
Levi's Stadium is on target to open in late July of this
AB 600 (Bonta) continued
Page 3
year and will be operated under the auspices of the Santa
Clara Stadium Authority which will be the holder of an
alcoholic beverage on-sale retail license. The author's
office notes that existing ABC laws contain numerous
exceptions to the general prohibition against advertising
arrangements between retail, wholesale and manufacturer
licensees. This measure would include Levi's Stadium on the
list of exemptions in the law, thereby allowing the Santa
Clara Stadium Authority to develop certain alcoholic
beverage sponsorships with various manufacturers and
distributors. The author's office emphasizes that this
exemption would put Levi's Stadium on an even playing field
with other arenas and stadiums in California.
Additionally, the author's office notes that AB 600
contains an urgency clause because the first event
scheduled in the stadium is an August 2, 2014 MLS soccer
match between the San Jose Earthquakes and the Seattle
Sounders.
PRIOR/RELATED LEGISLATION
SB 324 (Wright), Chapter 164, Statutes of 2013. Extended
an existing tied-house exception pertaining to the general
prohibition against advertising arrangements between
retail, wholesale and manufacturer licensees to include a
fully enclosed arena with a fixed seating capacity in
excess of 13,000 seats (the Forum) in the City of
Inglewood.
SB 351 (Negrete-McLeod), 2007-08 Session. Would have
extended an existing "tied-house" exception pertaining to
the general prohibition against advertising arrangements
between retail, wholesale and manufacturer licensees so
that alcoholic beverage manufacturers may purchase
advertising from on-sale retail licensees in order to
promote "safe ride home programs" at specified stadiums and
arenas. (Placed on Assembly inactive file)
AB 776 (Aghazarian), Chapter 221, Statutes of 2007.
Created a new tied-house exception by authorizing a beer
manufacturer to sponsor or purchase advertising space and
time from, or on behalf of, an off-sale retail licensee
that is an owner or co-owner of a professional sports team
(California Cougars indoor soccer team) that plays its home
games, in an arena with a fixed seating capacity of 10,000
seats (Stockton Arena) located in San Joaquin County.
AB 600 (Bonta) continued
Page 4
AB 663 (Galgiani), Chapter 745, Statutes of 2007. Extended
an existing "tied-house" exception pertaining to the
general prohibition against advertising arrangements
between retail, wholesale and manufacturer licensees to
include an outdoor professional sports facility with a
fixed seating capacity of at least 4,200 (Banner Island
Ballpark - home of the Stockton Ports Class A baseball
team) located in San Joaquin County.
AB 3046 (Chavez), Chapter 587, Statutes of 2006. Extended
an existing "tied-house" exception pertaining to the
general prohibition against advertising arrangements
between retail, wholesale and manufacturer licensees to the
HP Pavilion in Santa Clara County.
AB 1442 (Horton), Chapter 617, Statutes of 2005. Extended
an existing "tied-house" exception pertaining to the
general prohibition against advertising arrangements
between retail, wholesale and manufacturer licensees to the
Home Depot Center, a sports and athletic complex within the
City of Carson in Los Angeles and the Nokia Theater,
located within the Los Angeles Sports and Entertainment
District, adjacent to STAPLES Center.
SB 1647 (Perata), Chapter 275, Statutes of 2004. Extended
an existing tied-house exception pertaining to the general
prohibition against advertising arrangements between
retail, wholesale and manufacturer licenses to the Oakland
Coliseum in Alameda County.
SB 1189 (Costa), Chapter 47, Statutes of 2002. Extended an
existing tied-house exception pertaining to the general
prohibition against advertising arrangements between
retail, wholesale and manufacturer licenses to the Visalia
Oaks Stadium in Visalia and the California Speedway in
Fontana.
SUPPORT: As of May 9, 2014:
San Francisco 49ers National Football League
Family Winemakers of California
OPPOSE: None on file as of May 9, 2014.
FISCAL COMMITTEE: Senate Appropriations Committee
AB 600 (Bonta) continued
Page 5
**********