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: 6/23/14 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
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
wholesaler, as defined.
Senate Floor Amendments of 6/23/14 clarify that the bill's
provisions apply only to beer manufacturers and beer
wholesalers.
ANALYSIS :
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AB 1928
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Existing law:
1. Establishes the Department of Alcoholic Beverage Control
(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. 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,
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AB 1928
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3
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.
6. 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.
This bill:
1. Stipulates that a beer manufacturer or a beer 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
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. "Beer wholesaler" as a holder of a beer and wine
wholesaler license when selling beer, malt beverages,
cider, or perry.
C. "Cider" and "perry" as set forth in the Code of
Federal Regulations.
D. "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,
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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.
E. "Wine wholesaler" as a holder of beer and wine
wholesaler license when selling wine.
4. Provides that "coupon" does not apply to:
A. A mail-in rebate by which the consumer purchases an
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 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 manufacturer, importer general, 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
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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.
"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 6/25/14)
Alcohol Justice
American Petroleum and Convenience Store Association
Anheuser-Busch
California Beer & Beverage Distributors
California Chamber of Commerce
California Craft Brewers Association
California Manufacturers &Technology Association
Constellation Brands Beer Division (Corona, etc.)
MillerCoors
Neighborhood Markets Association
Service Station Franchise Association, Inc.
OPPOSITION : (Verified 6/24/14)
California Grocers Association
California Retailers Association
Family Winemakers of California
ARGUMENTS IN SUPPORT : Writing in support, beer producers
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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 because they
wish 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 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 6/25/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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