BILL ANALYSIS �
AB 1928
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1928 (Bocanegra)
As Amended June 23, 2014
Majority vote
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|ASSEMBLY: |75-1 |(May 5, 2014) |SENATE: |33-0 |(June 30, |
| | | | | |2014) |
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Original Committee Reference: G.O.
SUMMARY : 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. Specifically, 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
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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.
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.
The Senate amendments :
1)Clarify that the bill's provisions apply only to beer
manufacturers and beer wholesalers.
2)Define the following terms relating to the implementation of
this bill:
a) "Beer wholesaler" means a holder of a beer and wine
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wholesaler license when selling beer, malt beverages,
cider, or perry.
b) "Wine wholesaler" means a holder of a beer and wine
wholesaler license when selling wine.
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
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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.
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.
AS PASSED BY THE ASSEMBLY , this bill prohibited a beer
manufacturer or a beer and wine wholesaler from offering,
funding, producing, sponsoring, promoting, furnishing, or
redeeming any type of coupon. The bill also prohibited 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.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS : This bill as amended in the Senate is consistent with
Assembly actions.
Purpose of the bill: 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% 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
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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."
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 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.
Analysis Prepared by : Eric Johnson / G.O. / (916) 319-2531
FN: 0004170