BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 1928|
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THIRD READING
Bill No: AB 1928
Author: Bocanegra (D)
Amended: 6/4/14 in Senate
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 8-0, 6/10/14
AYES: Correa, Cannella, De Le�n, Galgiani, Hernandez, Padilla,
Torres, Vidak
NO VOTE RECORDED: Berryhill, Lieu, Vacancy
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 75-1, 5/5/14 - See last page for vote
SUBJECT : Alcoholic beverages: coupons: beer
SOURCE : Author
DIGEST : This bill prohibits a beer manufacturer or a beer and
wine wholesaler from offering, promoting, or redeeming coupons,
as defined, and also prohibits an alcoholic beverage retail
licensee from accepting or redeeming any type of coupon that is
funded, produced or promoted by a beer manufacturer or beer and
wine wholesaler.
ANALYSIS :
Existing law:
1. Establishes the Department of Alcoholic Beverage Control
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(ABC) and grants it exclusive authority to administer the
provisions of the Alcoholic Beverage Control Act (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.
2. 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. This is known as the "tied-house" law.
3. Prohibits any licensee from giving any premium, gift, or free
goods in connection with the sale or distribution of any
alcoholic beverage, except as specifically authorized. The
ABC Act provides that a violation of any of its provisions
for which another penalty or punishment is not specifically
provided is a misdemeanor.
4. Provides that, with respect to beer, premiums, gifts, or free
goods, including advertising specialties that have no
significant utilitarian value other than advertising, shall
be deemed to have greater than inconsequential value if they
cost more than $0.25 per unit, or cost more than $15 in the
aggregate for all those items given by a single supplier to a
single retail premises per calendar year. Additionally,
prohibits ABC from imposing a dollar limit of less than $3
per unit original cost to the beer manufacturer who purchased
it.
5. Provides that, with respect to distilled spirits and wines, a
licensee may furnish, give, rent, loan, or sell advertising
specialties to a retailer, provided those items bear
conspicuous advertising required of a sign and the total
value of all retailer advertising specialties furnished by a
supplier, directly or indirectly, to a retailer do not exceed
$50 dollars per brand in any one calendar year per retail
premises.
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6. Prohibits 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.
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.
7. Prohibits the giving of any premium, gifts or goods of any
sort, whether by way of sweepstakes, drawings, prizes, cross
merchandizing promotions with a non-alcoholic beverage or
product, or any other method if the value of the premium,
gift or good exceeds $0.25 with respect to beer, $1 with
respect to wine, or $5 with respect to distilled spirits.
ABC Rule 106 authorizes alcohol suppliers to sponsor contests
and other similar activities subject to these monetary limits
and other specified conditions.
8. Permits, under the ABC Act, 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: (a) no more than one-fourth
ounce of distilled spirits is offered in one tasting; (b) no
more than one ounce of wine is offered in one tasting; and
(c) no more than three tastings are offered to an individual
in one day.
9. Authorizes beer manufacturers and wholesalers to offer beer
samples (not to exceed eight ounces per person, per day) to
individuals of legal drinking age at on-sale retail licensed
premises under specified conditions.
10.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 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 additional information about
the product, as specified.
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11.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.
This bill:
1. Stipulates that a beer manufacturer or a beer and wine
wholesaler shall not offer, fund, produce, sponsor, promote,
furnish, or redeem any type of coupon.
2. Prohibits a licensee authorized to sell alcoholic beverages
at retail from accepting, redeeming, possessing, or utilizing
any type of coupon that is funded, produced, sponsored,
promoted, or furnished by a beer manufacturer or beer and
wine wholesaler.
3. Defines the following terms:
A. "Beer manufacturer" to mean a holder of a beer
manufacturer's license, a holder of an out-of-state
beer manufacturer's certificate, a holder of a beer and
wine importer's general license when selling beer, malt
beverages, cider, or perry, or a winegrower that is a
wholly owned subsidiary of a beer manufacturer.
B. "Cider" and "perry" as set forth in the Code of
Federal Regulations.
C. "Coupon" to mean any method by which a consumer
receives an instant discount at the time of purchase
that is funded, produced, sponsored, promoted, or
furnished, either directly or indirectly, by a beer
manufacturer or beer and wine wholesaler, including,
but not limited to, a paper coupon, a digital coupon,
an instant redeemable coupon, or an electronic coupon
commonly referred to as a scan or scanback.
4. Provides that the above prohibition will not apply to:
A. A mail-in rebate by which the consumer purchases an
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item and submits required information in order to
receive a rebate or discount from the beer manufacturer.
B. A coupon that is offered and funded by a winegrower,
a wine rectifier, a wine blender, a beer and wine
wholesaler, a beer and wine importer, a beer and wine
importer general, or a wine broker that offers a
discount on the purchase of a wine product if beer, malt
beverages, cider, or perry are not advertised in
connection with the coupon.
C. A coupon that is offered and funded by a distilled
spirits producer, importer, or wholesaler that offers
a discount on the purchase of a distilled spirits
product if beer, malt beverages, cider, or perry are not
advertised in connection with the coupon.
D. A discount that is offered and funded by a beer
manufacturer on the purchase of beer, malt beverages,
cider, or perry at the licensed premises of production
or other licensed premises owned and operated by the
beer manufacturer.
Comments
According to the author, "Currently, there is a lack of
transparency in how coupons are used in the beer market. This
lack of transparency has contributed to the rise of counterfeit,
paper coupons in the beer market, which has been particularly
problematic for large beer manufacturers and distributors.
Electronic coupons (scanbacks) are also an issue, especially as
they relate to loyalty and club card programs, because there is
no way to know whether 100 percent of the coupon discount from
the beer manufacturer is actually being passed onto consumers by
the retailers.
"Additionally, this bill would bring greater equity to the
retail environment in the beer industry. It would level the
playing field between major brewing conglomerates and the craft
breweries that often cannot afford to offer their own coupons
and that are, at the same time, quickly becoming a sizeable part
of our state economy. The bill would also increase parity
between large and small retailers by ensuring that coupons
aren't simply made available to a select number of retailers.
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6
"To be clear, this bill only deals with the beer industry, and
it only deals with coupons that are in the beer market. Because
beer and other alcoholic products are uniquely subject to
'tied-house' regulations, AB 1928 only eliminates coupons that
come from beer manufacturers or beer distributors. Retailers
may still offer their own coupons and fund their own loyalty and
club card programs for beer purchases."
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 6/19/14)
Alcohol Justice
Anheuser-Busch
California Beer & Beverage Distributors
California Chamber of Commerce
California Craft Brewers Association
Constellation Brands Beer Division (Corona, etc.)
MillerCoors
Neighborhood Markets Association
OPPOSITION : (Verified 6/13/14)
California Grocers Association
California Retailers Association
ARGUMENTS IN SUPPORT : Writing in support, beer producers
emphasize that this bill does not prohibit all consumer discount
offers. Mail-in rebates and retailer-sponsored coupons are
still permitted, as they are coupon types that either have a
system for checks and balances or are not otherwise problematic.
Proponents state that this bill is narrowly tailored to only
prohibit instant coupons that are sponsored by beer
manufacturers and distributors, but still allows distilled
spirits and wine companies to offer coupons for spirits and
wine.
ARGUMENTS IN OPPOSITION : The California Retailers Association
and the California Grocers Association are opposed unless this
bill is amended to enable retailers to maintain the ability to
offer an instant electronic discount to the consumer at the time
of purchase that is funded in whole or in part by the beer
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manufacturer as part of a retail loyalty or card club program or
scanback.
ASSEMBLY FLOOR : 75-1, 5/5/14
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Ch�vez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Eggman, Fong, Fox, Frazier,
Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell,
Gray, Grove, Hagman, Hall, Harkey, Roger Hern�ndez, Holden,
Jones, Jones-Sawyer, Levine, Linder, Lowenthal, Maienschein,
Medina, Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan,
Patterson, Perea, V. Manuel P�rez, Quirk, Quirk-Silva, Rendon,
Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Wagner,
Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, John A.
P�rez
NOES: Donnelly
NO VOTE RECORDED: Logue, Mansoor, Melendez, Vacancy
MW:d 6/20/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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