Bill Text: CA SB1426 | 2015-2016 | Regular Session | Amended
Bill Title: Alcoholic beverage control: tied-house restrictions: compensation.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Failed) 2016-11-30 - From Assembly without further action. [SB1426 Detail]
Download: California-2015-SB1426-Amended.html
BILL NUMBER: SB 1426 AMENDED
BILL TEXT
AMENDED IN SENATE MAY 31, 2016
INTRODUCED BY Senator Hall
(Coauthor: Senator De León)
FEBRUARY 19, 2016
An act to add and repeal Section 25513 of the Business and
Professions Code, relating to alcoholic beverages.
LEGISLATIVE COUNSEL'S DIGEST
SB 1426, as amended, Hall. Alcoholic beverage control: tied-house
restrictions: compensation.
Existing law generally restricts certain alcoholic beverage
licensees from paying, crediting, or compensating a retailer for
advertising in connection with the advertising and sale of alcoholic
beverages and expressly authorizes exceptions to this prohibition.
This bill would authorize, until January 1, 2022, a person, as
defined, who has an ownership interest in a
an on-sale retail license, license,
subject to a numerical limitation, to be compensated
by an authorized licensee, as defined, for promotional or marketing
services of the authorized licensee's products subject to
the specified conditions, including that the compensation
be based solely on the promotional and marketing activities. The bill
would also make create several new crimes,
including that an authorized licensee who, through coercion or
other illegal means, induces the holder of a wholesaler's license to
provide compensation pursuant to these provisions guilty of a
misdemeanor. The bill would additionally make an authorized licensee
or a person who violates these provisions guilty of a misdemeanor.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 25513 is added to the Business and Professions
Code, to read:
25513. (a) For purposes of this section:
(1) "Authorized licensee" means a manufacturer, winegrower,
manufacturer's agent, rectifier, California winegrower's agent, beer
manufacturer, holder of an out-of-state beer manufacturer's
certificate, distilled spirits manufacturer, holder of a
distilled spirits rectifier, rectifier's
general license, distilled spirits manufacturer's agent,
brandy manufacturer, brandy importer, holder of an out-of-state
distilled spirits shipper's certificate, holder of a distilled
spirits importer's general license, distilled spirits importer,
or craft distiller.
(2) "Person" means a natural person 21 years of age or
older. older who does not hold an ownership interest in
more than five California on -sale retail licenses.
(b) Notwithstanding any other provision of this division, an
authorized licensee may compensate a person with ownership interest
in a an on-sale retail license for
promotional or marketing services of the authorized licensee's
products, subject to the following conditions:
(1) Any compensation agreement with the person shall be in the
form of a written contract and include the conditions outlined in
this section.
(2) The authorized licensee may have written contracts regarding
compensation authorized pursuant to this section with no more than
five persons at any given time.
(2)
(3) The person shall not be directly or
indirectly involved in the retailer's purchasing
exclusively responsible for the on-sale retail licensee's
decisions of the brands of alcoholic beverages owned by the
authorized licensee compensating the person.
(3)
(4) The authorized licensee compensating the person
shall not utilize the person to conduct promotional and
marketing activities to promote or market alcoholic beverages on the
premises of the retailer engage in any endorsement or
promotional or marketing activity for alcoholic beverages on the
premises of the on-sale retail licensee in which the person has
an ownership interest.
(4)
(5) All compensation the authorized licensee pays to
the person shall be based solely on the person's promotional and
marketing activities and shall not be related directly or indirectly
to the sale of alcoholic beverages by the retailer
on-sale retail licensee in which the person has an
ownership interest.
(6) The person shall not personally serve any alcoholic beverages
while on the premises of an on-sale retail licensee. This paragraph
shall not apply to an event held at an unlicensed venue under a
caterer's permit.
(7) The on-sale retail licensee in which a person holds an
ownership interest shall offer for sale, and serve, alcoholic
beverages that compete with the brands of the authorized licensee
compensating the person for promotional or marketing services.
(5)
(8) The name, image, and brand of the retailer
on-sale retail licensee in which the person has
an ownership interest shall not in any way be featured or
referenced in any way in any advertising of
brands sold by the authorized licensee compensating the
person. person, except the name and address
of an on-sale retail licensee in which the person has an ownership
interest may be advertised when promoting specific events at which
the compensated person does not provide services.
(6)
(9) The person shall not be involved in the decisions
by the authorized license licensee
regarding the selection of retailers on-sale
retail licensees that will offer for sale the brands the person
is compensated to promote and market.
(c) An on-sale retail licensee in which the compensated person has
an ownership interest that solicits or receives any compensation
from an authorized licensee for any unlawful activity relating to
promotional or marketing services shall be guilty of a misdemeanor
and shall be punished by imprisonment in the county jail not
exceeding six months, or by a fine in an amount of ten thousand
dollars ($10,000), or by both imprisonment and fine.
(c)
(d) A licensee that is not an authorized
license shall not licensee shall not compensate
a person under this section and shall not directly or indirectly
underwrite, share in, or contribute to the costs of compensation
authorized by this section.
(d)
(e) Any officer, director, or agent of an authorized
licensee that is compensated by that authorized licensee for
promotional or marketing services of the authorized licensee's
products shall not be subject to the conditions of subdivision (b),
notwithstanding the fact that the authorized licensee, or any
officer, director, or agent of that authorized licensee, holds an
ownership interest in a an on-sale
retail license.
(e)
(f) (1) An authorized licensee who, through coercion or
other illegal means, induces, directly or indirectly, a holder of a
wholesaler's license to provide compensation to a person pursuant to
this section shall be guilty of a misdemeanor and shall be punished
by imprisonment in the county jail not exceeding six months, or by a
fine in an amount of ten thousand dollars ($10,000), or by both
imprisonment and fine.
(2) An on-sale retail licensee who, through coercion or other
illegal means, induces or conditions, directly or indirectly, the
purchase or sale of alcoholic beverages upon an authorized licensee's
decision about the promotional or marketing services of a person
compensated by the authorized licensee shall be guilty of a
misdemeanor and shall be punished by imprisonment in the county jail
not exceeding six months, or by a fine in an amount of ten thousand
dollars ($10,000), or by both imprisonment and fine.
(2)
(3) An authorized licensee or person who violates any
provision of this section shall be guilty of a misdemeanor and shall
be punished by imprisonment in the county jail not exceeding six
months, or by a fine in the amount of ten thousand dollars ($10,000),
or by both imprisonment and fine.
(f)
(g) Nothing in this section shall limit the activities
authorized under Section 25503.1.
(g)
(h) The Legislature finds and declares both of the
following:
(1) That it is necessary and proper to require a separation
between manufacturing interests, wholesale interests, and retail
interests in the production and distribution of alcoholic beverages
in order to prevent suppliers from dominating local markets through
vertical integration and to prevent excessive sales of alcoholic
beverages produced by overly aggressive marketing techniques.
(2) Any exception established by the Legislature to the general
prohibition against tied interests must be limited to the express
terms of the exception so as to not undermine the general
prohibitions.
(h)
(i) This section will remain in effect only until
January 1, 2022, and as of that date is repealed.
SEC. 2. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
