BILL ANALYSIS �
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THIRD READING
Bill No: AB 816
Author: Hall (D)
Amended: 3/6/14 in Senate
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 11-0, 6/11/13
AYES: Wright, Nielsen, Berryhill, Calderon, Cannella, Correa,
De Le�n, Galgiani, Hernandez, Lieu, Padilla
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 75-0, 5/9/13 (Consent) - See last page for vote
SUBJECT : Alcoholic beverages
SOURCE : Author
DIGEST : This bill merges two similar tied-house exceptions
(one pertaining to on-sale retailers the other to off-sale
retailers) within the Alcoholic Beverage Control Act (ABC Act)
which authorizes the dissemination of information regarding the
retail availability of products by alcoholic beverage producers,
distributors or importers in response to direct requests from
consumers; and includes "cider and perry" within the definition
of "product."
Senate Floor Amendments of 3/6/14 add clarity to an existing
body of law within the ABC Act pertaining to brand transfer and
distribution rights by including "cider and perry" within the
definition of "product," and make other technical and code
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maintenance changes to this body of law.
ANALYSIS :
Existing law:
1.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.
2.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). This is known as the "tied-house" law.
3.Provides that no licensee shall, directly or indirectly, give
any premium, gift, free goods, or other thing of value in
connection with the sale, distribution, or sale and
distribution of alcoholic beverages, and no retailer shall,
directly or indirectly, receive any premium, gift, free goods
or other thing of value from a supplier of alcoholic
beverages, except as authorized by the Department of ABC.
4.Defines an "on-sale" license as authorizing the sale of all
types of alcoholic beverages: namely, beer, wine and distilled
spirits, for consumption on the premises (such as at a
restaurant or bar). An "off-sale" license authorizes the sale
of all types of alcoholic beverages for consumption off the
premises in original, sealed containers.
5.Requires each manufacturer, importer, and wholesaler of beer
to file, and thereafter maintain on file with ABC, a schedule
of selling prices charged for beer sold and distributed to
customers in California, as specified. These provisions are
also applicable to certain sales of beer made under contract
and existing law defines "contract beer manufacturer" and
"beer manufacturer" for these purposes.
6.Establishes, within the ABC Act, a framework to determine fair
market value to be paid to an existing beer wholesaler by a
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successor beer wholesaler when distribution rights to a brand
are cancelled and that right is granted to a successor beer
wholesaler.
7.Grants beer manufacturers producing more than 60,000 barrels
of beer per year the privilege of also manufacturing "cider or
perry" at their licensed premises and to sell the product to
any licensee authorized to sell wine.
This bill:
1.Merges two similar tied-house exceptions (one pertaining to
"on-sale" retailers the other to "off-sale" retailers) within
the ABC Act which authorizes the dissemination of information
regarding the retail availability of products by alcoholic
beverage producers, distributors or importers in response to
direct requests from consumers.
2.Includes "cider and perry" within the definition of "product"
found in those provisions of law, within the ABC Act,
pertaining to brand transfer and distribution rights among
successor beer manufacturers and existing beer wholesalers.
Background
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 (1)
promote the state's interest in an orderly market; (2) prohibit
the vertical integration and dominance by a single producer in
the marketplace; (3) prohibit commercial bribery and protect the
public from predatory marketing practices; and (4) 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.
Cider and perry . In California, cider and perry are considered
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wine because they are fermented from fruit (apples or pears) and
thus can only be manufactured by a holder of a Type 02 ABC
license (Winegrower), except as specified.
Related Legislation
AB 779 (Bocanegra, Chapter 379, Statutes of 2013) essentially
simplified the licensure process for certain alcoholic beverage
manufacturers by allowing the holder of a beer manufacturers
license (Type 01) to also produce cider and perry.
Specifically, AB 779 authorized licensed beer manufacturers that
produce more than 60,000 barrels of beer a year to also
manufacture cider or perry at their licensed premises of
production and to sell that product to any licensee authorized
to sell wine.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 6/4/14)
California Beer and Beverage Distributors
OPPOSITION : (Verified 6/4/14)
Wine Institute
ARGUMENTS IN SUPPORT : According to the author's office,
suppliers often list on a Facebook fan page or Web site, the
different restaurants where a consumer may purchase their
products. Thus, given the development of new social media,
distributors are utilizing the various social media mediums as a
marketing tool to inform consumers about additional retail
locations where a product can be purchased. This bill is simply
intended to clean-up existing ABC statutes by consolidating into
a single statute the "on-sale" and "off-sale" provisions of law
which authorize manufacturers and distributors, in response to a
direct inquiry from a consumer, to provide information relative
to where their product is available for purchase.
ARGUMENTS IN OPPOSITION : The Wine Institute writes: "AB 816
is overreaching: Wine and beer are very different products.
The wine industry does not share the same economic profile as
the beer industry, which is dominated by a handful of major,
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publicly-held beer manufacturers. California's 3,800 wineries
are composed primarily of family-owned businesses. The wine
industry has long opposed the imposition of wholesaler monopoly
protection laws on wine because those laws are harmful to
wineries, other wholesalers, and our consumers. ?Significantly,
this type of legislation is not necessary because a beer
wholesaler is free to negotiate contractual protection if it
feels such protection is necessary and this in fact has already
occurred between beer suppliers and beer wholesalers with these
wine products."
ASSEMBLY FLOOR : 75-0, 5/9/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Ch�vez, Chesbro, Conway,
Cooley, Dahle, Daly, Dickinson, Eggman, Fong, Fox, Frazier,
Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray,
Grove, Hagman, Hall, Harkey, Roger Hern�ndez, Jones,
Jones-Sawyer, Levine, Linder, Lowenthal, Maienschein, Mansoor,
Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi,
Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel
P�rez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone,
Ting, Torres, Wagner, Weber, Wieckowski, Wilk, Williams,
Yamada, John A. P�rez
NO VOTE RECORDED: Donnelly, Holden, Logue, Waldron, Vacancy
MW:nl 6/4/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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