Existing law, the Alcoholic Beverage Control Act, authorizes a retail licensee to return beer to the wholesaler or manufacturer from whom the retail licensee purchased the beer, or any successor thereto, and the wholesaler, manufacturer, or successor thereto is authorized to accept that return if the beer is returned in exchange for the identical quantity and brand of beer.

This bill would authorize the return of regular beer in exchange for an identical quantity of a specific full-calorie brand or a specific reduced-calorie brand of the same manufacturer or importer, as specified.

Existing law, the Alcoholic Beverage Control Act, authorizes a retail licensee to return beer to the wholesaler or manufacturer from whom the retail licensee purchased the beer, or any successor thereto, and the wholesaler, manufacturer, or successor thereto is authorized to accept that return if the beer is returned in exchange for the identical quantity and brand of beer.

This bill would require that the beer is returned in exchange for the identical quantity and brand of beer produced or sold by the same manufacturer. The bill would authorize the return of regular beer in exchange for an identical quantity of light beer, or the return of light beer in exchange for an identical quantity of regular beer, if the beer exchanged for the returned beer has a value no greater than the original sales price to the retail licensee of the returned beer and the beers involved in the exchange are labeled under the same brand name. of a specific full-calorie brand or a specific reduced-calorie brand of the same manufacturer or importer, as specified.

Existing law, the Alcoholic Beverage Control Act, authorizes a retail licensee to return beer to the wholesaler or manufacturer from whom the retail licensee purchased the beer, or any successor thereto, and the wholesaler, manufacturer, or successor thereto is authorized to accept that return if the beer is returned in exchange for the identical quantity and brand of beer.

This bill would require that the beer is returned in exchange for the identical quantity and brand of beer produced or sold by the same manufacturer. The bill would authorize the return of regular beer in exchange for an identical quantity of lite light beer, or the return of lite light beer in exchange for an identical quantity of regular beer, if the beer exchanged for the returned beer has a value no greater than the original sales price to the retail licensee of the returned beer and the beers involved in the exchange are labeled under the same brand name.

Existing law, the Alcoholic Beverage Control Act, authorizes a retail licensee to return beer to the wholesaler or manufacturer from whom the retail licensee purchased the beer, or any successor thereto, and the wholesaler, manufacturer, or successor thereto is authorized to accept that return if the beer is returned in exchange for the identical quantity and brand of beer.

This bill would require that the beer is returned in exchange for the identical quantity and brand of beer produced or sold by the same manufacturer. The bill would authorize the return of regular beer in exchange for an identical quantity of lite beer, or the return of lite beer in exchange for an identical quantity of regular beer, if the beer exchanged for the returned beer has a value no greater than the original sales price to the retail licensee of the returned beer and the beers involved in the exchange are labeled under the same brand name.

The Alcoholic Beverage Control Act contains various provisions regulating the application for, the issuance of, the suspension of, and the conditions imposed upon, alcoholic beverage licenses by the Department of Alcoholic Beverage Control. Existing law prohibits the issuance of a license, other than an on-sale beer license, for premises situated more than one mile outside the limits of an incorporated city and within 2 miles of any camp or establishment of men, numbering 25 or more, engaged upon or in connection with the construction, repair, or operation of any work, improvement, or utility of a public or quasi-public character.

This bill would repeal that prohibition, thus authorizing the department to issue any type of license for premises situated in the above-described location.

 VETO  

Bill No: SB 56

Author:

:

Vote: 7

SENATE GOVERNMENTAL ORG. COMMITTEE: 11-0, 5/9/17

AYES: Glazer, Berryhill, Bradford, Cannella, Dodd, Gaines, Hill, Hueso, Mendoza, Portantino, Vidak

NO VOTE RECORDED: Galgiani, Lara

SENATE FLOOR: 37-0, 5/22/17

AYES: Allen, Atkins, Bates, Beall, Berryhill, Bradford, Cannella, De León, Dodd, Gaines, Galgiani, Glazer, Hernandez, Hertzberg, Hill, Hueso, Jackson, Lara, Leyva, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Newman, Nguyen, Nielsen, Portantino, Roth, Skinner, Stern, Stone, Vidak, Wieckowski, Wiener, Wilk

NO VOTE RECORDED: Anderson, Fuller, Pan

SENATE FLOOR: 40-0, 9/7/17

AYES: Allen, Anderson, Atkins, Bates, Beall, Berryhill, Bradford, Cannella, De León, Dodd, Fuller, Gaines, Galgiani, Glazer, Hernandez, Hertzberg, Hill, Hueso, Jackson, Lara, Leyva, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Newman, Nguyen, Nielsen, Pan, Portantino, Roth, Skinner, Stern, Stone, Vidak, Wieckowski, Wiener, Wilk

ASSEMBLY FLOOR: 75-0, 9/5/17 - See last page for vote

SUBJECT:

SOURCE: California Beer and Beverage Distributors

DIGEST: This bill authorizes the return of beer in exchange for an identical quantity of a specific full-calorie brand or a specific reduced-calorie brand of the same manufacturer or importer, as specified.

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 the manufacturer (including breweries, wineries, and distilleries), wholesaler, and retailer (both on-sale and off-sale). This is referred to as the “tied-house” law or the “three-tier” system.
3. Provides that a retail licensee may return beer to the wholesaler or manufacturer from whom the retail licensee purchased the beer, and the wholesaler or manufacturer may accept that return if the beer is returned in exchange for the identical quantity and brand of beer.
4. Provides that errors in delivery may be corrected by the wholesaler or manufacturer who sold the beer. Additionally, provides that if a package had been broken or otherwise damaged prior to or at the time of actual delivery, a credit memorandum may be issued for the returned package by the wholesaler or manufacturer who sold the beer, in lieu of exchange for an identical package when the return and corrections are completed within 15 days from the date the beer was delivered to the retail licensee.
5. Allows beer that is recalled or that is considered by a manufacturer, importer, or governmental entity to present health, safety, or product quality issues to be accepted for return at any time from a retailer and be picked up by the seller of beer, as specified.
6. Authorizes a wholesaler or manufacturer of beer, with Department of ABC approval, to accept the return of quantities of discontinued or seasonal brands of beer from a retail licensee, provided that the returned beer is exchanged for a quantity of beer of a brand produced or sold by the same manufacturer with a value not greater than the original sales price to the retail licensee of the returned beer.
7. Provides additional instances where a wholesaler or manufacturer may accept the return of beer purchased from that wholesaler or manufacturer, in the following circumstances:
   1. From a seasonal or temporary licensee if at the termination of the period of the license the seasonal or temporary licensee has beer remaining unsold, or from an annual licensee operating on a temporary basis if at the termination of the temporary period the annual licensee has beer remaining unsold.
   2. From the holder of a retail license following the revocation of, suspension of, voluntary surrender of, or failure to renew the retail license, and in these circumstances a wholesaler or manufacturer may credit the account of the retailer in an amount not to exceed the original sales price to the retailer of the returned beer, provided that the beer has been paid for in full.
   3. From an organization that obtained a temporary daily license, and in these circumstances the licensee may credit the account of the organization in an amount not to exceed the original sales price of the returned beer, provided that the beer has been paid for in full.
   4. Authorizes an on-sale retail licensee that purchases beer for sale at an event for which a catering authorization is issued by the Department of ABC to return the unused and unopened beer to the original selling licensee at the conclusion of the catered event or upon expiration of the catering authorization, as specified.

This bill:

1. Provides that a retail licensee may return beer to the wholesaler or manufacturer from whom the retail licensee purchased the beer, or any successor thereto, and the wholesaler, manufacturer, or successor thereto may accept that return, if the beer is returned in exchange for the identical quantity of a specific full-calorie brand or specific reduced-calorie brand of the same beer manufacturer or importer.
2. Stipulates that the aforementioned exchange for the identical quantity of a specific full-calorie brand or specific reduced-calorie brand of the same beer manufacturer or importer can occur only if both of the following apply:
   1. The reduced-calorie beer of the beer manufacturer or importer uses substantially the same word, name, group of letters, symbol, or combination thereof, that is adopted and used by the brewer or importer to identify its specific full-calorie brand, and the substantially similar name is used to distinguish the beer manufacturer’s or importer’s reduced-calorie brand from its similarly named full-calorie brand.
   2. The reduced-calorie brand incorporates a substantial part of the branding of the specific full-calorie brand.

Background

Purpose of the bill. According to the author's office, this bill has been introduced on behalf of beer distributors in California who want to clarify the law in order to allow the exchange of a beer manufacturer’s lower calorie beer for an identical quantity of the beer manufacturer’s full calorie beer. For example, distributors would like the flexibility to exchange a case of Budweiser, for a case of Budweiser Select or Bud Light.

Product returns and exchanges. According to a bulletin issued by the Department of ABC in 1993, the purpose of the product return statues contained in the ABC Act is to prohibit unlawful business practices that may constitute consignment sales, commercial bribery, or similar conduct. The penalties for failing to comply with these statues include possible misdemeanor criminal liability as well as administrative sanctions against the licensees of all parties involved.

In addition to specified circumstances, existing law permits the return or exchange of beer for errors in delivery, health and safety recalls, product quality issues, and the identical exchange of out-of-code products.

Some beer manufacturers assign a “code date” to their products to prevent stale or outdated products from remaining in the market. If beer has remained in a retailer’s licensed premise beyond its assigned date, the wholesaler or manufacturer may pick up the out-of-code beer, and exchange the beer for the identical quality and brand of beer originally sold to the retailer. There is no time limit or requirement for Department of ABC approval for this type of exchange. Additionally, beer may only be exchanged by the wholesaler or manufacturer who originally sold the beer to the retailer.

Similarly, beer that has been recalled or that is considered to present health, safety, or product quality issues may be accepted for return at any time from a retailer. Existing law specifies that a wholesaler or beer manufacturer may pick up by the recalled beer and exchange it for identical product, if safe inventory or quality-controlled product inventory is available, issue a deferred exchange memorandum showing the beer was picked up and is to be replaced when inventory is available, or issue a credit memorandum to the retailer for the returned beer.

SB 56 allows exchanges of a manufacturer’s regular and light beers when specific conditions apply.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 10/12/17)

California Beer and Beverage Distributors (source)

OPPOSITION: (Verified 10/12/17)

None received

ARGUMENTS IN SUPPORT: The California Beer and Beverage Distributors argue that, “this bill would extend the existing identical exchange exception for beer to permit the exchange of a beer manufacturer’s lower calorie beer for an identical quantity of the beer manufacturer’s full calorie beer.”

GOVERNOR'S VETO MESSAGE:

I am returning Senate Bill 56 without my signature.

This bill would allow a retail licensee to return beer, to the wholesaler or manufacturer, for different beer within the same brand.

Current law already allows a retailer to exchange beer for the identical quantity, value, and brand for a host of reasons. Given this existing authority, it is unclear how current law is deficient.

ASSEMBLY FLOOR: 75-0, 9/5/17

AYES: Acosta, Aguiar-Curry, Travis Allen, Arambula, Baker, Berman, Bigelow, Bloom, Bocanegra, Bonta, Brough, Burke, Caballero, Calderon, Cervantes, Chau, Chávez, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dababneh, Dahle, Daly, Eggman, Flora, Fong, Friedman, Gallagher, Cristina Garcia, Gipson, Gloria, Gonzalez Fletcher, Gray, Grayson, Harper, Holden, Irwin, Jones-Sawyer, Kalra, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Quirk-Silva, Reyes, Rodriguez, Rubio, Salas, Santiago, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Wood, Rendon

NO VOTE RECORDED: Frazier, Eduardo Garcia, Ridley-Thomas, Steinorth

Prepared by:

1/2/18 9:56:17

**** END ****

 UNFINISHED BUSINESS  

Bill No: SB 56

Author:

:

Vote:

SENATE GOVERNMENTAL ORG. COMMITTEE: 11-0, 5/9/17

AYES: Glazer, Berryhill, Bradford, Cannella, Dodd, Gaines, Hill, Hueso, Mendoza, Portantino, Vidak

NO VOTE RECORDED: Galgiani, Lara

SENATE FLOOR: 37-0, 5/22/17

AYES: Allen, Atkins, Bates, Beall, Berryhill, Bradford, Cannella, De León, Dodd, Gaines, Galgiani, Glazer, Hernandez, Hertzberg, Hill, Hueso, Jackson, Lara, Leyva, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Newman, Nguyen, Nielsen, Portantino, Roth, Skinner, Stern, Stone, Vidak, Wieckowski, Wiener, Wilk

NO VOTE RECORDED: Anderson, Fuller, Pan

ASSEMBLY FLOOR: 75-0, 9/5/17 - See last page for vote

SUBJECT:

SOURCE: California Beer and Beverage Distributors

DIGEST: This bill authorizes the return of beer in exchange for an identical quantity of a specific full-calorie brand or a specific reduced-calorie brand of the same manufacturer or importer, as specified.

Assembly Amendments

(1) rewrite the provisions of the prior version of the bill to specifically authorize the exchange of beer for an identical quantity of a specific full-calorie brand or a specific reduced-calorie brand of the same manufacturer or importer; (2) add conditions which need to apply for the specified exchange of beer to occur.

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 the manufacturer (including breweries, wineries, and distilleries), wholesaler, and retailer (both on-sale and off-sale). This is referred to as the “tied-house” law or the “three-tier” system.
3. Provides that a retail licensee may return beer to the wholesaler or manufacturer from whom the retail licensee purchased the beer, and the wholesaler or manufacturer may accept that return if the beer is returned in exchange for the identical quantity and brand of beer.
4. Provides that errors in delivery may be corrected by the wholesaler or manufacturer who sold the beer. Additionally, provides that if a package had been broken or otherwise damaged prior to or at the time of actual delivery, a credit memorandum may be issued for the returned package by the wholesaler or manufacturer who sold the beer, in lieu of exchange for an identical package when the return and corrections are completed within 15 days from the date the beer was delivered to the retail licensee.
5. Allows beer that is recalled or that is considered by a manufacturer, importer, or governmental entity to present health, safety, or product quality issues to be accepted for return at any time from a retailer and be picked up by the seller of beer, as specified.
6. Authorizes a wholesaler or manufacturer of beer, with Department of ABC approval, to accept the return of quantities of discontinued or seasonal brands of beer from a retail licensee, provided that the returned beer is exchanged for a quantity of beer of a brand produced or sold by the same manufacturer with a value not greater than the original sales price to the retail licensee of the returned beer.
7. Provides additional instances where a wholesaler or manufacturer may accept the return of beer purchased from that wholesaler or manufacturer, in the following circumstances:
   1. From a seasonal or temporary licensee if at the termination of the period of the license the seasonal or temporary licensee has beer remaining unsold, or from an annual licensee operating on a temporary basis if at the termination of the temporary period the annual licensee has beer remaining unsold.
   2. From the holder of a retail license following the revocation of, suspension of, voluntary surrender of, or failure to renew the retail license, and in these circumstances a wholesaler or manufacturer may credit the account of the retailer in an amount not to exceed the original sales price to the retailer of the returned beer, provided that the beer has been paid for in full.
   3. From an organization that obtained a temporary daily license, and in these circumstances the licensee may credit the account of the organization in an amount not to exceed the original sales price of the returned beer, provided that the beer has been paid for in full.
   4. Authorizes an on-sale retail licensee that purchases beer for sale at an event for which a catering authorization is issued by the Department of ABC to return the unused and unopened beer to the original selling licensee at the conclusion of the catered event or upon expiration of the catering authorization, as specified.

This bill:

1. Provides that a retail licensee may return beer to the wholesaler or manufacturer from whom the retail licensee purchased the beer, or any successor thereto, and the wholesaler, manufacturer, or successor thereto may accept that return, if the beer is returned in exchange for the identical quantity of a specific full-calorie brand or specific reduced-calorie brand of the same beer manufacturer or importer.
2. Stipulates that the aforementioned exchange for the identical quantity of a specific full-calorie brand or specific reduced-calorie brand of the same beer manufacturer or importer can occur only if both of the following apply:
   1. The reduced-calorie beer of the beer manufacturer or importer uses substantially the same word, name, group of letters, symbol, or combination thereof, that is adopted and used by the brewer or importer to identify its specific full-calorie brand, and the substantially similar name is used to distinguish the beer manufacturer’s or importer’s reduced-calorie brand from its similarly named full-calorie brand.
   2. The reduced-calorie brand incorporates a substantial part of the branding of the specific full-calorie brand.

Background

Purpose of the bill. According to the author's office, this bill has been introduced on behalf of beer distributors in California who want to clarify the law in order to allow the exchange of a beer manufacturer’s lower calorie beer for an identical quantity of the beer manufacturer’s full calorie beer. For example, distributors would like the flexibility to exchange a case of Budweiser, for a case of Budweiser Select or Bud Light.

Product returns and exchanges. According to a bulletin issued by the Department of ABC in 1993, the purpose of the product return statues contained in the ABC Act is to prohibit unlawful business practices that may constitute consignment sales, commercial bribery, or similar conduct. The penalties for failing to comply with these statues include possible misdemeanor criminal liability as well as administrative sanctions against the licensees of all parties involved.

In addition to specified circumstances, existing law permits the return or exchange of beer for errors in delivery, health and safety recalls, product quality issues, and the identical exchange of out-of-code products.

Some beer manufacturers assign a “code date” to their products to prevent stale or outdated products from remaining in the market. If beer has remained in a retailer’s licensed premise beyond its assigned date, the wholesaler or manufacturer may pick up the out-of-code beer, and exchange the beer for the identical quality and brand of beer originally sold to the retailer. There is no time limit or requirement for Department of ABC approval for this type of exchange. Additionally, beer may only be exchanged by the wholesaler or manufacturer who originally sold the beer to the retailer.

Similarly, beer that has been recalled or that is considered to present health, safety, or product quality issues may be accepted for return at any time from a retailer. Existing law specifies that a wholesaler or beer manufacturer may pick up by the recalled beer and exchange it for identical product, if safe inventory or quality-controlled product inventory is available, issue a deferred exchange memorandum showing the beer was picked up and is to be replaced when inventory is available, or issue a credit memorandum to the retailer for the returned beer.

SB 56 allows exchanges of a manufacturer’s regular and light beers when specific conditions apply.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 9/5/17)

California Beer and Beverage Distributors (source)

OPPOSITION: (Verified 9/5/17)

None received

ARGUMENTS IN SUPPORT: The California Beer and Beverage Distributors argue that, “this bill would extend the existing identical exchange exception for beer to permit the exchange of a beer manufacturer’s lower calorie beer for an identical quantity of the beer manufacturer’s full calorie beer.”

ASSEMBLY FLOOR: 75-0, 9/5/17

AYES: Acosta, Aguiar-Curry, Travis Allen, Arambula, Baker, Berman, Bigelow, Bloom, Bocanegra, Bonta, Brough, Burke, Caballero, Calderon, Cervantes, Chau, Chávez, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dababneh, Dahle, Daly, Eggman, Flora, Fong, Friedman, Gallagher, Cristina Garcia, Gipson, Gloria, Gonzalez Fletcher, Gray, Grayson, Harper, Holden, Irwin, Jones-Sawyer, Kalra, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Quirk-Silva, Reyes, Rodriguez, Rubio, Salas, Santiago, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Wood, Rendon

NO VOTE RECORDED: Frazier, Eduardo Garcia, Ridley-Thomas, Steinorth

Prepared by:

9/5/17 19:33:52

**** END ****

SENATE THIRD READING

STR Bill Id:SB 56

Author:(Mendoza)

As Amended Ver:August 31, 2017

Majority vote

SENATE VOTE: 37-0

SUMMARY: Would authorize the return of regular beer in exchange for an identical quality of a specific full-calorie brand or a specific reduced-calorie brand of the same manufacturer or importer, as specified. Specifically, this bill:

1. Provides a retail licensee may return beer to the wholesaler or manufacturer from whom the retail licensee purchased the beer, or any successor thereto, and the wholesaler, manufacturer, or successor thereto may accept that return under the following conditions:
   1. The beer is returned in exchange for the identical quantity and brand of beer.
   2. The beer is returned in exchange for the identical quantity of a specific full-calorie brand or specific reduced-calorie brand of the same beer manufacturer or importer if both of the following apply:
      1. The reduced-calorie beer of the beer manufacturer or importer uses substantially the same word, name, group of letters, symbol, or combination thereof, that is adopted and used by the brewer or importer to identify its specific full-calorie brand, and the substantially similar name is used to distinguish the beer manufacturer's or importer's reduced-calorie brand from its similarly named full-calorie brand.
      2. The reduced-calorie brand incorporates a substantial part of the branding of the specific full-calorie brand.

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 (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 the manufacturer (including breweries, wineries, and distilleries), wholesaler, and retailer (both on-sale and off-sale). This is referred to as the "Tied-house" law or the "three-tier" system.
3. Provides that a retail licensee may return beer to the wholesaler or manufacturer from whom the retail licensee purchased the beer, and the wholesaler or manufacturer may accept that return if the beer is returned in exchange for the identical quantity and brand of beer.
4. Provides that errors in delivery may be corrected by the wholesaler or manufacturer who sold the beer. Additionally, provides that if a package had been broken or otherwise damaged prior to or at the time of actual delivery, a credit memorandum may be issued for the returned package by the wholesaler or manufacturer who sold the beer, in lieu of exchange for an identical package when the return and corrections are completed within 15 days from the date the beer was delivered to the retail licensee.
5. Allows beer that is recalled or that is considered by a manufacturer, importer, or governmental entity to present health, safety, or product quality issues to be accepted for return at any time from a retailer and be picked up by the seller of beer, as specified.
6. Authorizes a wholesaler or manufacturer of beer, with ABC approval, to accept the return of quantities of discontinued or seasonal brands of beer from a retail licensee, provided that the returned beer is exchanged for a quantity of beer of a brand produced or sold by the same manufacturer with a value not greater than the original sales price to the retail licensee of the returned beer.
7. Provides additional instances where a wholesaler or manufacturer may accept the return of beer purchased from that wholesaler or manufacturer, in the following circumstances:
   1. From a seasonal or temporary licensee if at the termination of the period of the license the seasonal or temporary licensee has beer remaining unsold, or from an annual licensee operating on a temporary basis if at the termination of the temporary period the annual licensee has beer remaining unsold.
   2. From the holder of a retail license following the revocation of, suspension of, voluntary surrender of, or failure to renew the retail license, and in these circumstances a wholesaler or manufacturer may credit the account of the retailer in an amount not to exceed the original sales price to the retailer of the returned beer, provided that the beer has been paid for in full.
   3. From an organization that obtained a temporary daily license, and in these circumstances, the licensee may credit the account of the organization in an amount not to exceed the original sales price of the returned beer, provided that the beer has been paid for in full.
   4. Authorizes an on-sale retail licensee that purchases beer for sale at an event for which a catering authorization is issued by ABC to return the unused and unopened beer to the original selling licensee at the conclusion of the catered event or upon expiration of the catering authorization, as specified.

FISCAL EFFECT: None. This bill is keyed non-fiscal by the Legislative Counsel.

COMMENTS:

Background: According to a bulletin issued by ABC in 1993, the purpose of the product return statues contained in the Act is to prohibit unlawful business practices that may constitute consignment sales, commercial bribery, or similar conduct. The penalties for failing to comply with these statues include possible misdemeanor criminal liability as well as administrative sanctions against the licensees of all parties involved.

In addition to specified circumstances, existing law permits the return or exchange of beer for errors in delivery, health and safety recalls, product quality issues, and the identical exchange of out-of-code products.

Some beer manufacturers assign a "code date" to their products to prevent stale or outdated products from remaining in the market. If beer has remained in a retailer's licensed premise beyond its assigned date, the wholesaler or manufacturer may pick up the out-of-code beer, and exchange the beer for the identical quality and brand of beer originally sold to the retailer. There is no time limit or requirement for ABC approval for this type of exchange. Additionally, beer may only be exchanged by the wholesaler or manufacturer who originally sold the beer to the retailer.

Similarly, beer that has been recalled or that is considered to present health, safety, or product quality issues may be accepted for return at any time from a retailer. Currently, a wholesaler or beer manufacturer may pick up by the recalled beer and exchange it for identical product, if safe inventory or quality-controlled product inventory is available, issue a deferred exchange memorandum showing the beer was picked up and is to be replaced when inventory is available, or issue a credit memorandum to the retailer for the returned beer.

This bill would allow returns of a manufacturer's regular and light beers, provided the exchange is for the identical quantity of beer with a value no greater than the original sales price to the retail licensee and the manufacturer's regular and light beers involved in the exchange are labeled under the same brand name.

Purpose of the bill: According to the author's office, this bill has been introduced on behalf of beer distributors in California who want to clarify the law in order to allow the exchange of a beer manufacturer's lower calorie beer for an identical quantity of the beer manufacturer's full calorie beer. For example, distributors would like the flexibility to exchange a case of Budweiser, for a case of Budweiser Select or Bud Light.

In support: The California Beer and Beverage Distributors, the sponsor of this bill, states, "this bill would extend the existing identical exchange exception for beer to permit the exchange of a beer manufacturer's lower calorie beer for an identical quantity of the beer manufacturer's full calorie beer."

Analysis Prepared by: Eric Johnson / G.O. / (916) 319-2531 FN: 0001257

SENATE THIRD READING

STR Bill Id:SB 56

Author:(Mendoza)

As Amended Ver:June 28, 2017

Majority vote

SENATE VOTE: 37-0

SUMMARY: States that a retail licensee may return beer to the wholesaler or manufacturer from whom the retail licensee purchased the beer if the beer is returned in exchange for a manufacturer's light beer, or return of a manufacturer's light beer in exchange for a manufacturer's regular beer, as specified.

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 (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 the manufacturer (including breweries, wineries, and distilleries), wholesaler, and retailer (both on-sale and off-sale). This is referred to as the "Tied-house" law or the "three-tier" system.
3. Provides that a retail licensee may return beer to the wholesaler or manufacturer from whom the retail licensee purchased the beer, and the wholesaler or manufacturer may accept that return if the beer is returned in exchange for the identical quantity and brand of beer.
4. Provides that errors in delivery may be corrected by the wholesaler or manufacturer who sold the beer. Additionally, provides that if a package had been broken or otherwise damaged prior to or at the time of actual delivery, a credit memorandum may be issued for the returned package by the wholesaler or manufacturer who sold the beer, in lieu of exchange for an identical package when the return and corrections are completed within 15 days from the date the beer was delivered to the retail licensee.
5. Allows beer that is recalled or that is considered by a manufacturer, importer, or governmental entity to present health, safety, or product quality issues to be accepted for return at any time from a retailer and be picked up by the seller of beer, as specified.
6. Authorizes a wholesaler or manufacturer of beer, with ABC approval, to accept the return of quantities of discontinued or seasonal brands of beer from a retail licensee, provided that the returned beer is exchanged for a quantity of beer of a brand produced or sold by the same manufacturer with a value not greater than the original sales price to the retail licensee of the returned beer.
7. Provides additional instances where a wholesaler or manufacturer may accept the return of beer purchased from that wholesaler or manufacturer, in the following circumstances:
   1. From a seasonal or temporary licensee if at the termination of the period of the license the seasonal or temporary licensee has beer remaining unsold, or from an annual licensee operating on a temporary basis if at the termination of the temporary period the annual licensee has beer remaining unsold.
   2. From the holder of a retail license following the revocation of, suspension of, voluntary surrender of, or failure to renew the retail license, and in these circumstances a wholesaler or manufacturer may credit the account of the retailer in an amount not to exceed the original sales price to the retailer of the returned beer, provided that the beer has been paid for in full.
   3. From an organization that obtained a temporary daily license, and in these circumstances, the licensee may credit the account of the organization in an amount not to exceed the original sales price of the returned beer, provided that the beer has been paid for in full.
   4. Authorizes an on-sale retail licensee that purchases beer for sale at an event for which a catering authorization is issued by ABC to return the unused and unopened beer to the original selling licensee at the conclusion of the catered event or upon expiration of the catering authorization, as specified.

FISCAL EFFECT: None. This bill is keyed non-fiscal by the Legislative Counsel.

COMMENTS:

Background: According to a bulletin issued by ABC in 1993, the purpose of the product return statues contained in the Act is to prohibit unlawful business practices that may constitute consignment sales, commercial bribery, or similar conduct. The penalties for failing to comply with these statues include possible misdemeanor criminal liability as well as administrative sanctions against the licensees of all parties involved.

In addition to specified circumstances, existing law permits the return or exchange of beer for errors in delivery, health and safety recalls, product quality issues, and the identical exchange of out-of-code products.

Some beer manufacturers assign a "code date" to their products to prevent stale or outdated products from remaining in the market. If beer has remained in a retailer's licensed premise beyond its assigned date, the wholesaler or manufacturer may pick up the out-of-code beer, and exchange the beer for the identical quality and brand of beer originally sold to the retailer. There is no time limit or requirement for ABC approval for this type of exchange. Additionally, beer may only be exchanged by the wholesaler or manufacturer who originally sold the beer to the retailer.

Similarly, beer that has been recalled or that is considered to present health, safety, or product quality issues may be accepted for return at any time from a retailer. Currently, a wholesaler or beer manufacturer may pick up by the recalled beer and exchange it for identical product, if safe inventory or quality-controlled product inventory is available, issue a deferred exchange memorandum showing the beer was picked up and is to be replaced when inventory is available, or issue a credit memorandum to the retailer for the returned beer.

This bill would allow returns of a manufacturer's regular and light beers, provided the exchange is for the identical quantity of beer with a value no greater than the original sales price to the retail licensee and the manufacturer's regular and light beers involved in the exchange are labeled under the same brand name.

Purpose of the bill: According to the author's office, this bill has been introduced on behalf of beer distributors in California who want to clarify the law in order to allow the exchange of a beer manufacturer's lower calorie beer for an identical quantity of the beer manufacturer's full calorie beer. For example, distributors would like the flexibility to exchange a case of Budweiser, for a case of Budweiser Select or Bud Light.

In support: The California Beer and Beverage Distributors, the sponsor of this bill, states, "this bill would extend the existing identical exchange exception for beer to permit the exchange of a beer manufacturer's lower calorie beer for an identical quantity of the beer manufacturer's full calorie beer."

Analysis Prepared by: Eric Johnson / G.O. / (916) 319-2531 FN: 0001106

Date of Hearing: July 5, 2017

ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION

Adam Gray, Chair

SBPCA Bill Id:SB 56

Author:(Mendoza) – As Amended Ver:June 28, 2017

SENATE VOTE: 37-0

SUBJECT: Alcoholic beverages: retail licensees: beer returns

SUMMARY: States that a retail licensee may return beer to the wholesaler or manufacturer from whom the retail licensee purchased the beer if the beer is returned in exchange for a manufacturer's light beer, or return of a manufacturer's light beer in exchange for a manufacturer's regular beer, as specified.

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 (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 the manufacturer (including breweries, wineries, and distilleries), wholesaler, and retailer (both on-sale and off-sale). This is referred to as the “Tied-house” law or the “three-tier” system.
3. Provides that a retail licensee may return beer to the wholesaler or manufacturer from whom the retail licensee purchased the beer, and the wholesaler or manufacturer may accept that return if the beer is returned in exchange for the identical quantity and brand of beer.
4. Provides that errors in delivery may be corrected by the wholesaler or manufacturer who sold the beer. Additionally, provides that if a package had been broken or otherwise damaged prior to or at the time of actual delivery, a credit memorandum may be issued for the returned package by the wholesaler or manufacturer who sold the beer, in lieu of exchange for an identical package when the return and corrections are completed within 15 days from the date the beer was delivered to the retail licensee.
5. Allows beer that is recalled or that is considered by a manufacturer, importer, or governmental entity to present health, safety, or product quality issues to be accepted for return at any time from a retailer and be picked up by the seller of beer, as specified.
6. Authorizes a wholesaler or manufacturer of beer, with ABC approval, to accept the return of quantities of discontinued or seasonal brands of beer from a retail licensee, provided that the returned beer is exchanged for a quantity of beer of a brand produced or sold by the same manufacturer with a value not greater than the original sales price to the retail licensee of the returned beer.
7. Provides additional instances where a wholesaler or manufacturer may accept the return of beer purchased from that wholesaler or manufacturer, in the following circumstances:
   1. From a seasonal or temporary licensee if at the termination of the period of the license the seasonal or temporary licensee has beer remaining unsold, or from an annual licensee operating on a temporary basis if at the termination of the temporary period the annual licensee has beer remaining unsold.
   2. From the holder of a retail license following the revocation of, suspension of, voluntary surrender of, or failure to renew the retail license, and in these circumstances a wholesaler or manufacturer may credit the account of the retailer in an amount not to exceed the original sales price to the retailer of the returned beer, provided that the beer has been paid for in full.
   3. From an organization that obtained a temporary daily license, and in these circumstances, the licensee may credit the account of the organization in an amount not to exceed the original sales price of the returned beer, provided that the beer has been paid for in full.
   4. Authorizes an on-sale retail licensee that purchases beer for sale at an event for which a catering authorization is issued by ABC to return the unused and unopened beer to the original selling licensee at the conclusion of the catered event or upon expiration of the catering authorization, as specified.

FISCAL EFFECT: This bill is keyed non-fiscal by Legislative Counsel.

COMMENTS:

Background: According to a bulletin issued by ABC in 1993, the purpose of the product return statues contained in the Act is to prohibit unlawful business practices that may constitute consignment sales, commercial bribery, or similar conduct. The penalties for failing to comply with these statues include possible misdemeanor criminal liability as well as administrative sanctions against the licensees of all parties involved.

In addition to specified circumstances, existing law permits the return or exchange of beer for errors in delivery, health and safety recalls, product quality issues, and the identical exchange of out-of-code products.

Some beer manufacturers assign a “code date” to their products to prevent stale or outdated products from remaining in the market. If beer has remained in a retailer’s licensed premise beyond its assigned date, the wholesaler or manufacturer may pick up the out-of-code beer, and exchange the beer for the identical quality and brand of beer originally sold to the retailer. There is no time limit or requirement for ABC approval for this type of exchange. Additionally, beer may only be exchanged by the wholesaler or manufacturer who originally sold the beer to the retailer.

Similarly, beer that has been recalled or that is considered to present health, safety, or product quality issues may be accepted for return at any time from a retailer. Currently, a wholesaler or beer manufacturer may pick up by the recalled beer and exchange it for identical product, if safe inventory or quality-controlled product inventory is available, issue a deferred exchange memorandum showing the beer was picked up and is to be replaced when inventory is available, or issue a credit memorandum to the retailer for the returned beer.

SB 56 would allow returns of a manufacturer’s regular and light beers, provided the exchange is for the identical quantity of beer with a value no greater than the original sales price to the retail licensee and the manufacturer's regular and light beers involved in the exchange are labeled under the same brand name.

Purpose of the bill: According to the author's office, SB 56 has been introduced on behalf of beer distributors in California who want to clarify the law in order to allow the exchange of a beer manufacturer’s lower calorie beer for an identical quantity of the beer manufacturer’s full calorie beer. For example, distributors would like the flexibility to exchange a case of Budweiser, for a case of Budweiser Select or Bud Light.

In support: The California Beer and Beverage Distributors, the sponsor of this bill, states, "this bill would extend the existing identical exchange exception for beer to permit the exchange of a beer manufacturer’s lower calorie beer for an identical quantity of the beer manufacturer’s full calorie beer.”

REGISTERED SUPPORT / OPPOSITION:

Support

California Beer and Beverage Distributors

Opposition

Alcohol Justice

California Alcohol Policy Alliance

Analysis Prepared by: Eric Johnson / G.O. / (916) 319-2531

 THIRD READING  

Bill No: SB 56

Author:

:

Vote:

SENATE GOVERNMENTAL ORG. COMMITTEE: 11-0, 5/9/17

AYES: Glazer, Berryhill, Bradford, Cannella, Dodd, Gaines, Hill, Hueso, Mendoza, Portantino, Vidak

NO VOTE RECORDED: Galgiani, Lara

SUBJECT:

SOURCE: California Beer and Beverage Distributors

DIGEST: This bill provides that a retail licensee may return beer to the wholesaler or manufacturer from whom the retail licensee purchased the beer if the beer is returned in exchange for a manufacturer's lite beer, or return of a manufacturer's lite beer in exchange for a manufacturer's regular beer, as specified.

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 the manufacturer (including breweries, wineries, and distilleries), wholesaler, and retailer (both on-sale and off-sale). This is referred to as the “tied-house” law or the “three-tier” system.
3. Provides that a retail licensee may return beer to the wholesaler or manufacturer from whom the retail licensee purchased the beer, and the wholesaler or manufacturer may accept that return if the beer is returned in exchange for the identical quantity and brand of beer.
4. Provides that errors in delivery may be corrected by the wholesaler or manufacturer who sold the beer. Additionally, provides that if a package had been broken or otherwise damaged prior to or at the time of actual delivery, a credit memorandum may be issued for the returned package by the wholesaler or manufacturer who sold the beer, in lieu of exchange for an identical package when the return and corrections are completed within 15 days from the date the beer was delivered to the retail licensee.
5. Allows beer that is recalled or that is considered by a manufacturer, importer, or governmental entity to present health, safety, or product quality issues to be accepted for return at any time from a retailer and be picked up by the seller of beer, as specified.
6. Authorizes a wholesaler or manufacturer of beer, with Department of ABC approval, to accept the return of quantities of discontinued or seasonal brands of beer from a retail licensee, provided that the returned beer is exchanged for a quantity of beer of a brand produced or sold by the same manufacturer with a value not greater than the original sales price to the retail licensee of the returned beer.
7. Provides additional instances where a wholesaler or manufacturer may accept the return of beer purchased from that wholesaler or manufacturer, in the following circumstances:
   1. From a seasonal or temporary licensee if at the termination of the period of the license the seasonal or temporary licensee has beer remaining unsold, or from an annual licensee operating on a temporary basis if at the termination of the temporary period the annual licensee has beer remaining unsold.
   2. From the holder of a retail license following the revocation of, suspension of, voluntary surrender of, or failure to renew the retail license, and in these circumstances a wholesaler or manufacturer may credit the account of the retailer in an amount not to exceed the original sales price to the retailer of the returned beer, provided that the beer has been paid for in full.
   3. From an organization that obtained a temporary daily license, and in these circumstances the licensee may credit the account of the organization in an amount not to exceed the original sales price of the returned beer, provided that the beer has been paid for in full.
   4. Authorizes an on-sale retail licensee that purchases beer for sale at an event for which a catering authorization is issued by the Department of ABC to return the unused and unopened beer to the original selling licensee at the conclusion of the catered event or upon expiration of the catering authorization, as specified.

This bill specifies that a retail licensee may return beer to the wholesaler or manufacturer from whom the retail licensee purchased the beer if the beer is returned in exchange for a manufacturer's lite beer, or return of a manufacturer's lite beer in exchange for a manufacturer's regular beer, as specified.

Background

Purpose of the bill. According to the author's office, this bill has been introduced on behalf of beer distributors in California who want to clarify the law in order to allow the exchange of a beer manufacturer’s lower calorie beer for an identical quantity of the beer manufacturer’s full calorie beer. For example, distributors would like the flexibility to exchange a case of Budweiser, for a case of Budweiser Select or Bud Light.

Product returns and exchanges. According to a bulletin issued by the Department of ABC in 1993, the purpose of the product return statues contained in the ABC Act is to prohibit unlawful business practices that may constitute consignment sales, commercial bribery, or similar conduct. The penalties for failing to comply with these statues include possible misdemeanor criminal liability as well as administrative sanctions against the licensees of all parties involved.

In addition to specified circumstances, existing law permits the return or exchange of beer for errors in delivery, health and safety recalls, product quality issues, and the identical exchange of out-of-code products.

Some beer manufacturers assign a “code date” to their products to prevent stale or outdated products from remaining in the market. If beer has remained in a retailer’s licensed premise beyond its assigned date, the wholesaler or manufacturer may pick up the out-of-code beer, and exchange the beer for the identical quality and brand of beer originally sold to the retailer. There is no time limit or requirement for Department of ABC approval for this type of exchange. Additionally, beer may only be exchanged by the wholesaler or manufacturer who originally sold the beer to the retailer.

Similarly, beer that has been recalled or that is considered to present health, safety, or product quality issues may be accepted for return at any time from a retailer. Existing law specifies that a wholesaler or beer manufacturer may pick up by the recalled beer and exchange it for identical product, if safe inventory or quality-controlled product inventory is available, issue a deferred exchange memorandum showing the beer was picked up and is to be replaced when inventory is available, or issue a credit memorandum to the retailer for the returned beer.

This bill seeks to allow returns of a manufacturer’s regular and light beers, provided the exchange is for the identical quantity of beer with a value no greater than the original sales price to the retail licensee and the manufacturer's regular and light beers involved in the exchange are labeled under the same brand name.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 5/17/17)

California Beer and Beverage Distributors (source)

OPPOSITION: (Verified 5/17/17)

None received

ARGUMENTS IN SUPPORT: The California Beer and Beverage Distributors argue that, “this bill would extend the existing identical exchange exception for beer to permit the exchange of a beer manufacturer’s lower calorie beer for an identical quantity of the beer manufacturer’s full calorie beer.”

Prepared by:

5/17/17 15:29:29

**** END ****

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Steven Glazer

Chair

2017 - 2018 Regular

Bill No: SB Hearing Date: 5/9/2017

SUBJECT: : beer returns

DIGEST: This bill specifies that a retail licensee may return beer to the wholesaler or manufacturer from whom the retail licensee purchased the beer, if the beer is returned in exchange for the identical quantity and brand of beer produced or sold by the same manufacturer.

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 the manufacturer (including breweries, wineries, and distilleries), wholesaler, and retailer (both on-sale and off-sale). This is referred to as the “tied-house” law or the “three-tier” system.
3. Provides that a retail licensee may return beer to the wholesaler or manufacturer from whom the retail licensee purchased the beer, and the wholesaler or manufacturer may accept that return if the beer is returned in exchange for the identical quantity and brand of beer.
4. Provides that errors in delivery may be corrected by the wholesaler or manufacturer who sold the beer. Additionally, provides that if a package had been broken or otherwise damaged prior to or at the time of actual delivery, a credit memorandum may be issued for the returned package by the wholesaler or manufacturer who sold the beer, in lieu of exchange for an identical package when the return and corrections are completed within 15 days from the date the beer was delivered to the retail licensee.
5. Allows beer that is recalled or that is considered by a manufacturer, importer, or governmental entity to present health, safety, or product quality issues to be accepted for return at any time from a retailer and be picked up by the seller of beer, as specified.
6. Authorizes a wholesaler or manufacturer of beer, with Department of ABC approval, to accept the return of quantities of discontinued or seasonal brands of beer from a retail licensee, provided that the returned beer is exchanged for a quantity of beer of a brand produced or sold by the same manufacturer with a value not greater than the original sales price to the retail licensee of the returned beer.
7. Provides additional instances where a wholesaler or manufacturer may accept the return of beer purchased from that wholesaler or manufacturer, in the following circumstances:
   1. From a seasonal or temporary licensee if at the termination of the period of the license the seasonal or temporary licensee has beer remaining unsold, or from an annual licensee operating on a temporary basis if at the termination of the temporary period the annual licensee has beer remaining unsold.
   2. From the holder of a retail license following the revocation of, suspension of, voluntary surrender of, or failure to renew the retail license, and in these circumstances a wholesaler or manufacturer may credit the account of the retailer in an amount not to exceed the original sales price to the retailer of the returned beer, provided that the beer has been paid for in full.
   3. From an organization that obtained a temporary daily license, and in these circumstances the licensee may credit the account of the organization in an amount not to exceed the original sales price of the returned beer, provided that the beer has been paid for in full.
   4. Authorizes an on-sale retail licensee that purchases beer for sale at an event for which a catering authorization is issued by the Department of ABC to return the unused and unopened beer to the original selling licensee at the conclusion of the catered event or upon expiration of the catering authorization, as specified.

This bill specifies that a retail licensee may return beer to the wholesaler or manufacturer from whom the retail licensee purchased the beer, and authorizes the wholesaler or manufacturer to accept that return, if the beer is returned in exchange for the identical quantity and brand of beer produced or sold by the same manufacturer.

Background

Purpose of the bill. According to the author's office, this bill has been introduced on behalf of beer distributors in California who want to clarify the law in order to allow the exchange of a beer manufacturer’s lower calorie beer for an identical quantity of the beer manufacturer’s full calorie beer. For example, distributors would like the flexibility to exchange a case of Budweiser, for a case of Budweiser Select or Bud Light.

Product returns and exchanges. According to a bulletin issued by the Department of ABC in 1993, the purpose of the product return statues contained in the ABC Act is to prohibit unlawful business practices that may constitute consignment sales, commercial bribery, or similar conduct. The penalties for failing to comply with these statues include possible misdemeanor criminal liability as well as administrative sanctions against the licensees of all parties involved.

In addition to specified circumstances, existing law permits the return or exchange of beer for errors in delivery, health and safety recalls, product quality issues, and the identical exchange of out-of-code products.

Some beer manufacturers assign a “code date” to their products to prevent stale or outdated products from remaining in the market. If beer has remained in a retailer’s licensed premise beyond its assigned date, the wholesaler or manufacturer may pick up the out-of-code beer, and exchange the beer for the identical quality and brand of beer originally sold to the retailer. There is no time limit or requirement for Department of ABC approval for this type of exchange. Additionally, beer may only be exchanged by the wholesaler or manufacturer who originally sold the beer to the retailer.

Similarly, beer that has been recalled or that is considered to present health, safety, or product quality issues may be accepted for return at any time from a retailer. Existing law specifies that a wholesaler or beer manufacturer may pick up by the recalled beer and exchange it for identical product, if safe inventory or quality-controlled product inventory is available, issue a deferred exchange memorandum showing the beer was picked up and is to be replaced when inventory is available, or issue a credit memorandum to the retailer for the returned beer.

This bill seeks to clarify existing law by allowing the exchange of the identical quantity and brand of beer produced or sold by the same manufacturer.

Policy considerations. The author’s office and the sponsor of this bill have noted that the intent of the bill is to allow for the exchange of a beer manufacturer’s lower calorie beer for an identical quantity of the beer manufacturer’s full-calorie beer, which are usually comparable in price and value.

However, as currently written, the bill could apply more broadly. The author may wish to amend the bill as follows to provide more specificity:

On page 2, line 9, after “manufacturer” add “or the wholesaler, manufacturer or successor thereto may accept return of a manufacturer's regular beer in exchange for a manufacturer's lite beer, or return of a manufacturer's lite beer in exchange for a manufacturer's regular beer, for the identical quantity of beer produced or sold by the manufacturer with a value no greater than the original sales price to the retail licensee of the returned beer, provided the manufacturer's regular and lite beers involved in the exchange are labeled under the same brand name.”

Prior/Related Legislation

AB 2010 (Gray, Chapter 808, Statutes of 2014) among other things, added beer that a brewer considers to have “product quality” issues to the list of conditions under which beer may be returned to a wholesaler or manufacturer.

AB 782 (Bocanegra, Chapter 242, Statutes of 2013) authorizes a licensed caterer who has obtained a caterer’s event permit to return unsold beer to the beer distributor or manufacturer for credit, thereby eliminating the need for a beer distributor or manufacturer to continuously exchange out-of-code beer involving catered events.

SB 1393 (Negrete McLeod, Chapter 163, Statutes of 2012) allowed an alcoholic beverage licensee to accept the return of unsold and unopened beer from organizations that obtain a particular license, as specified, and allowed the return of beer that is recalled or that is considered to present a health and safety issue by the manufacturer, importer, or governmental entity if distributed, offered for sale, or sold in the state. Also, this bill allowed for the exchange of beer or a credit memorandum.

AB 517 (Hall, Chapter 12, Statutes of 2012) would have allowed a wholesaler or manufacturer to accept the return of unsold and unopened beer from an organization that obtained a specified temporary license, as provided. (Amended to contain a tribal gaming compact for the Federated Indians of Graton Rancheria)

SB 487 (Negrete McLeod, 2011) would have added a new provision to the ABC Act authorizing the return of unsold and unopened beer from an organization that obtained a temporary license. (Held in Senate Governmental Organization Committee)

AB 3071 (Committee on Governmental Organization, Chapter 508, Statutes of 2008) among other things, authorized beer that is recalled for health or safety issues to be accepted for return at any time from a retailer and be picked up by the seller of beer. Also, permitted the seller of beer to exchange the returned beer for identical product, issue a deferred exchange memorandum showing the beer was picked-up and is to be replaced when inventory is available, or issue a credit to the retailer for the returned beer.

SB 1035 (Perata, Chapter 657, Statutes of 2001) restored the authorization permitting a former licensee in possession of a stock of lawfully acquired alcoholic beverages following the revocation or voluntary surrender of, or failure to renew, an alcoholic beverage license to sell that stock to licensees, as authorized by the Department of ABC.

SB 452 (Maddy, Chapter 273, Statutes of 1998) among other things, authorized a wholesaler or manufacturer of beer to accept the return of discontinued or seasonal brands of beer from a retail licensee, provided that the returned beer is exchanged for a quantity of beer of a brand produced or sold by the same manufacturer with a value not greater than the original sales price to the retail licensee of the returned beer.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT:

California Beer and Beverage Distributors (Source)

OPPOSITION:

None received

ARGUMENTS IN SUPPORT: The California Beer and Beverage Distributors argue that, “current law permits beer that has been recalled or identified to present a health and/or safety issue may be picked up and distributors may either exchange it for identical product that does not present a health and/or safety issue, if available, or issue a credit or deferred exchange memorandum.”

Further, the California Beer and Beverage Distributors state that “this bill would extend the existing identical exchange exception for beer to permit the exchange of a beer manufacturer’s lower calorie beer for an identical quantity of the beer manufacturer’s full calorie beer.”

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Steven Glazer

Chair

2017 - 2018 Regular

Bill No: SB Hearing Date: 4/25/2017

SUBJECT:

DIGEST: This bill authorizes the Department of Alcoholic Beverage Control (ABC) to issue a sports entertainment facility permit (SEF permit) that would allow the permitholder to sell beer, wine, distilled spirits, or a combination thereof, for consumption on the premises of a sports entertainment facility, as defined. Additionally, this bill allows authorized licensees, as defined, to purchase advertising space and time at a sports entertainment facility from the owner or major tenant of the facility that is not a retail licensee or an on-sale licensee, subject to the specified conditions.

ANALYSIS:

Existing law:

1. Establishes the Department of 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 for this purpose.
2. Separates the alcoholic beverage industry into three component parts, or tiers, of the manufacturer (including breweries, wineries, and distilleries), wholesaler, and retailer (both on-sale and off-sale). This is referred to as the “tied-house” law or the “three-tier” system. 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.
3. Prohibits, in general, a manufacturer, winegrower, manufacturer's agent, rectifier, distiller, bottler, importer, or wholesaler, or any officer, director or agent of any such person from owning, directly or indirectly, any interest in any on-sale license.
4. Prohibits, in general, a manufacturer, winegrower, distiller, bottler, or wholesaler, among other licensees, or agents of these licensees, from paying a retailer for advertising.
5. Provides a variety of exceptions from the advertising prohibition, including permitting specified licensees to purchase advertising space and time from, or on behalf of, an on-sale retail licensee that is an owner, manager, or major tenant of certain stadiums, parks, entertainment complexes, and arenas, subject to specified conditions.

This bill:

1. Authorizes the Department of ABC to issue an SEF permit to sell beer, wine, beer and wine, or beer, wine, and distilled spirits at retail for consumption upon the sports entertainment facility premises only and specifies that except as otherwise provided, only a retail licensee holding an SEF permit is authorized to sell alcoholic beverages at retail for consumption on the premises of the sports entertainment facility.
2. Provides that the fee for an SEF permit shall be consistent with the fee for a caterer’s permit to cover the “reasonable administrative costs.” Currently, the Type 58 Caterer's Permit costs $127 annually.
3. Provides that an SEF permit may be issued to a retail licensee providing alcoholic beverage service at a sports entertainment facility and states that an existing retail licensee providing alcoholic beverages at a sports entertainment facility as of January 1, 2018, shall obtain an SEF permit within 12 months if that retail licensee provides alcoholic beverage service at the facility on or after January 1, 2018.
4. Provides that the SEF permit is subject to all of the following conditions:
   1. Except as otherwise provided, an on-sale licensee shall not enter into any agreement with any authorized licensee for the purchase of advertising space and time at the sports entertainment facility, including the premises of the on-sale licensee.
   2. For any sports entertainment facility at which an authorized licensee has entered into an agreement with the owner or major tenant of the facility for the purchase of advertising space and time at the facility, any on-sale licensee at the facility shall offer to sell and serve other brands of alcoholic beverages distributed by a competing wholesaler that are not the brands sold, manufactured, or marketed by an authorized licensee that purchased the advertising space and time.
5. States that the conditions of the SEF permit shall not apply to specified facilities where there is an existing agreement on January 1, 2017, with an authorized licensee for the purchase of advertising space and time.
6. Requires an authorized licensee with a specified existing agreement to notify the Department of ABC within 45 days after January 1, 2018, and specifies the information that shall be included in the notification to the Department of ABC.
7. States that when a specified existing agreement is modified, renewed, or extended, or a new agreement for advertising space and time at the facility is entered into on or after January 1, 2018, the facility and any alcoholic beverages sold at the facility shall be subject to the aforementioned conditions of the SEF permit.
8. Requires the authorized licensee to notify the Department of ABC within 30 days of any amendment, extension, modification, or renewal of the existing agreement, and of any new agreement, entered into on or after January 1, 2018, and stipulates that this notification shall not be under penalty of perjury.
9. Specifies that the filing of a false declaration shall be subject to license suspension by the Department of ABC.
10. States, notwithstanding any other provision of law and except as otherwise provided, an authorized licensee may purchase advertising space and time at a sports entertainment facility from the owner or major tenant of the facility that is not a retail licensee or an on-sale licensee, subject to the following conditions:
    1. The purchase of advertising space and time shall be conducted pursuant to a written agreement containing all the terms and conditions of that purchase.
    2. The authorized licensee shall submit to the Department of ABC within 30 days of execution of the agreement a notification stating that the authorized licensee has entered into a written agreement for the purchase of advertising space and time at a sports entertainment facility, along with a fee of $2,500 to cover the “reasonable administrative costs.” The authorized licensee shall notify the department within 30 days of any amendment, extension, modification, or renewal of that agreement or of any new agreement. This notification shall include specified information.
11. Provides that the agreement shall not be conditioned on the purchase or sale of the authorized licensee’s brands of alcoholic beverages by an on-sale licensee for the facility or limit the purchase and sale of competing brands of alcoholic beverages manufactured, distributed, sold, or marketed by other authorized licensees at the facility by the on-sale licensee.
12. Provides that the agreement shall not provide for anything of value to be furnished, directly or indirectly, to an on-sale licensee.
13. Provides that the agreement shall not, directly or indirectly, require or result in a licensee that is not an authorized licensee to underwrite, share in, or contribute to, to the purchase or implementation costs of an authorized licensee’s agreement for advertising space and time at a sports entertainment facility, or any other related costs.
14. Authorizes the Department of ABC to conduct audits to determine compliance with the specified parameters of the agreements relating to the purchase of advertising time and space, as specified.

1. Requires the Department of ABC penalize a violation by the suspension of the authorized licensee’s license or by a fine equal to the contract value of the agreement for advertising.
2. States the parameters required of agreements shall not apply to specified facilities where there is an existing agreement on January 1, 2017.
3. States that for any specified existing agreement, the authorized licensee in the agreement shall notify the Department of ABC of the existing agreement within 45 days of January 1, 2018, and specifies the information that shall be included in the notification to the Department of ABC. This notification shall not be under penalty of perjury.
4. Requires the authorized licensee notify the Department of ABC within 30 days of any amendment, extension, modification, or renewal of a specified existing agreement, and of any new agreement, that is entered into on or after January 1, 2018.
5. States that when a specified existing agreement is modified, renewed, or extended, or a new agreement is entered into, on or after January 1, 2018, the facility and the modified, renewed, or extended or a new agreement shall be subject to aforementioned parameters.
6. Makes various exceptions to existing law relative to the purchase of advertising time and space inoperative on specified dates.
7. Defines the following terms:
   1. “Agreement” to include any amendment, modification, other revision, or extensions to the agreement if it relates in any manner to the purchase of advertising space and time at the sports entertainment facility from the owner or major tenant of the facility.
   2. “Authorized licensee” to mean a winegrower, 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’s general license, distilled spirits manufacturer’s agent, brandy manufacturer, holder of an out-of-state distilled spirits shipper’s certificate, holder of a distilled spirits importer’s general license, craft distiller, or holder of a beer and wine importer’s general license.
   3. “Existing agreement” to mean an agreement in effect on January 1, 2017, and which continues in effect on and after the effective date of this article, with an authorized licensee for its purchase of advertising space and time at a specified facility, as those provisions read on January 1, 2017, regardless if that section or subparagraph is later repealed or made inoperative.
   4. “On-sale licensee” to mean a person holding an SEF permit to sell, serve, and allow consumption of alcoholic beverages on the premises of a sports entertainment facility.
   5. “Retail licensee” to mean a retailer licensed to sell alcoholic beverages to consumers.
   6. “Sports entertainment facility” to mean a publicly or privately owned stadium, coliseum, motor speedway, or a fully enclosed arena that is a permanent structure, with a fixed seating capacity of 5,000 seats or more where sporting or entertainment events are presented for a price of admission and specifies that the facility does not have to be used exclusively for sporting or entertainment events. Additionally, defines a “sports entertainment facility” to mean certain specified facilities described existing law.
8. Makes legislative findings and declarations pertaining to advertising of alcoholic beverage products and tied-house exceptions.

Background

Purpose of the bill. The author states that this bill “will modernize California law with respect to the purchase of advertising space and time at sports entertainment facilities by beer, wine and distilled spirits manufacturers and other authorized licensees.”

Further, the author’s office notes that, “this bill will allow alcohol beverage manufacturers and other authorized licensees to purchase advertising from the owner or major tenant of a sports entertainment facility provided that the owner or major tenant is not the retail licensee for the facility and the advertising revenue will not be shared with the independent on-sale licensee/concessionaire for the facility.”

Tied-house laws. Tied-house laws generally prohibit suppliers and retailers from sharing common owners and legally restrict alcohol beverage suppliers’ ability to gain control over retailers through indirect means. The original policy rationale for this body of law was to (a) promote the state’s interest in an orderly market; (b) prohibit the vertical integration and dominance by a single producer in the marketplace; (c) prohibit commercial bribery and to protect the public from predatory marketing practices; and, (d) discourage and/or prevent the intemperate use of alcoholic beverages.

These provisions prohibit a manufacturer from paying for advertising space at a stadium or sports arena where the facility is licensed to sell alcoholic beverages at events held at the stadium or arena.

Over the years numerous exceptions to this prohibition have been added to the ABC Act, e.g. Levi’s Stadium in Santa Clara, Oakland Coliseum in Oakland, Arrowhead Pond Arena in Anaheim, Kern County Arena in Bakersfield, the National Orange Show Events Center in San Bernardino, Auto Club Speedway, (formerly California Speedway) in Fontana, Grizzly Stadium in Fresno, Raley Field in West Sacramento, HP Pavilion in San Jose, StubHub Center (formerly the Home Depot Center) in Carson, and several other venues.

On March 28^th, this committee passed SB 582 (Bradford) which would provide an exception from the advertising prohibition for the Los Angeles Stadium at Hollywood Park in the City of Inglewood.

Retail Digital Network litigation. On January 7, 2016, the U.S. Court of Appeals for the Ninth Circuit issued an opinion relating to the legality of certain restrictions on alcohol beverage advertising under the First Amendment. Specifically, the case concerns the legality of California Business and Professions Code Section 25503(f)-(h), which prohibit manufacturers and wholesalers, and their agents, from giving anything of value to retailers in exchange for advertising their products.

The plaintiff, Retail Digital Network, LLC (RDN) installs liquid crystal display advertisements in retail stores. RDN generates revenue by contracting with parties to advertise their products and services on the displays and pays each retail store a

percentage of the advertising fees. Litigation arose after RDN’s attempts to contract with alcohol manufacturers failed due to the manufacturers’ concerns that such advertising would violate those specified tied-house provisions.

In 2011, RDN filed a suit in the U.S. District Court for the Central District of California seeking declaratory relief that California Business and Professions Code Section 25503(f)-(h) were unconstitutional under the First Amendment. It also sought an injunction against the State’s enforcement of the law. The state moved for a summary judgment, which the District Court granted, based on precedent. In 1986, the Ninth Circuit held in Actmedia, Inc. v. Stroh, 830 F.2d 957 that Section 25503(h) does not violate the First Amendment.

RDN appealed the decision of the lower court. In the case, RDN LLC v. Jacob Appelsmith, at the time the Director of ABC, the Ninth Circuit overturned the 29-year-old precedent, which held those portions of the ABC Act prohibiting alcoholic beverage suppliers and wholesalers from paying for the privilege of advertising at a retail establishment did not violate the First Amendment. The Ninth Circuit applied recent U.S. Supreme Court jurisprudence to require a heightened scrutiny standard on state-imposed limitations of non-deceptive commercial speech whereby alcohol beverage suppliers and wholesalers are prohibited from, directly or indirectly, giving anything of value to retailers for advertising their products.

Thus, the Ninth Circuit remanded the case to the lower court that had upheld the earlier precedent for it to reconsider using a heightened scrutiny standard. In doing so, the Ninth Circuit basically asked whether the government “has shown that there is a real danger that paid advertising of alcoholic beverages would lead to vertical or horizontal integration under circumstances existing in the alcoholic beverage market today.” Additionally, the Ninth Circuit noted the increasing number of statutory exceptions to section 25503(f)–(h) and called into doubt whether the existing statute materially advances the State’s goals of preventing vertical and horizontal integration and promoting temperance.

In March of 2016, the state filed a petition and brief for panel rehearing or rehearing en banc and the Ninth Circuit granted the en banc review of a three-judge panel. An 11 judge en banc panel of the Ninth Circuit heard arguments on the RDN appeal on January 19, 2017, in San Francisco. The case is currently pending.

Staff Comments. Given that the RDN case related to the legality of certain restrictions on alcohol beverage advertising under the First Amendment is pending, it raises the question of whether this bill is premature and whether the outcome of the case may help better inform legislation on this issue in the future.

Prior/Related Legislation

SB 582 (Bradford, 2017) extends an existing exception in the ABC Act pertaining to the general prohibition against advertising arrangements between retail, wholesale, and manufacturer licensees to include a stadium with a fixed seating capacity of at least 70,000 seats (The Los Angeles Stadium at Hollywood Park) and a performance venue with a seating capacity of at least 5,000 seats adjacent to the stadium located in the City of Inglewood. (Pending in Senate Appropriations Committee)

SB 1105 (Mendoza, 2016) among other things, would have authorized the Department of ABC to issue a general on-sale license for a sports entertainment facility bona fide public eating place that would allow the licensee to sell beer, wine, and distilled spirits at retail for consumption on the premises in a sports entertainment facility, as defined. (Never heard in Assembly Governmental Organization Committee)

AB 1971 (Cooper, 2016) would have created a stand-alone tied-house exception in the ABC Act to allow holders of manufacturer licenses, as specified, to purchase advertising from retail licensees at outdoor stadiums and indoor arenas, subject to specified conditions. (Placed on Senate inactive file)

AB 2096 (Low, 2016) would have added leased premises to a specified condition in law that allows designated licensees to purchase advertising space or time from, or on behalf of, an on-sale retail licensee in connection with events which are held on the premises of an exposition park, stadium, or arena owned by the on-sale licensee. (Never heard in Assembly Governmental Organization Committee)

AB 866 (E. Garcia, 2016) would have extended an existing tied-house exception in the ABC Act pertaining to the general prohibition against advertising arrangements between retail, wholesale and manufacturer licensees to include outdoor stadiums with specified seating capacities located in the Cities of Inglewood and San Diego. (Placed on Senate Inactive File)

AB 527 (Dodd, Chapter 517, Statutes of 2015) created a new tied-house exception in the ABC Act that authorizes certain alcoholic beverage licensees to sponsor a limited number of events promoted by or to purchase advertising space and time from, or on behalf of, a live entertainment marketing company that conducts live artistic, musical, sports, food, beverage, culinary, or other cultural entertainment events at venues located solely in the County of Napa, under specified conditions.

SB 557 (Hall, Chapter 420, Statutes of 2015) extended an existing tied-house exception pertaining to the general prohibition against advertising arrangements between retail, wholesale and manufacturer licensees to include a fairgrounds with a horse racetrack and equestrian and sports facilities located in San Diego County.

SB 462 (Wolk, Chapter 315, Statutes of 2015) among other things, extended an existing tied-house exception pertaining to the general prohibition against advertising arrangements between retail, wholesale and manufacturer licensees to include a specified entertainment complex, known as the Green Music Center, located on the campus of Sonoma State University.

AB 600 (Bonta, Chapter 139, Statutes of 2014) extended an existing tied-house exception pertaining to the general prohibition against advertising arrangements between retail, wholesale and manufacturer licensees to include an outdoor stadium with a fixed seating capacity of at least 68,000 seats located in the City of Santa Clara (Levi’s Stadium).

SB 324 (Wright, Chapter 164, Statutes of 2013) extended an existing tied-house exception pertaining to the general prohibition against advertising arrangements between retail, wholesale and manufacturer licensees to include a fully enclosed arena with a fixed seating capacity in excess of 13,000 seats (the Forum) in the City of Inglewood.

SB 351 (Negrete-McLeod, 2007) would have extended an existing tied-house exception pertaining to the general prohibition against advertising arrangements between retail, wholesale and manufacturer licensees so that alcoholic beverage manufacturers may purchase advertising from on-sale retail licensees in order to promote “safe ride home programs” at specified stadiums and arenas. (Placed on Assembly inactive file)

AB 776 (Aghazarian, Chapter 221, Statutes of 2007) created a new tied-house exception by authorizing a beer manufacturer to sponsor or purchase advertising space and time from, or on behalf of, an off-sale retail licensee that is an owner or co-owner of a professional sports team (California Cougars indoor soccer team) that plays its home games, in an arena with a fixed seating capacity of 10,000 seats located in San Joaquin County (Stockton Arena).

AB 663 (Galgiani, Chapter 745, Statutes of 2007) extended an existing tied-house exception pertaining to the general prohibition against advertising arrangements between retail, wholesale and manufacturer licensees to include an outdoor professional sports facility with a fixed seating capacity of at least 4,200 located in San Joaquin County (Banner Island Ballpark).

AB 3046 (Chavez, Chapter 587, Statutes of 2006) extended an existing tied-house exception pertaining to the general prohibition against advertising arrangements between retail, wholesale and manufacturer licensees to a fully enclosed arena with a fixed seating capacity in excess of 15,000 seats located in Santa Clara County (HP Pavilion).

AB 1442 (Horton, Chapter 617, Statutes of 2005) extended an existing tied-house exception pertaining to the general prohibition against advertising arrangements between retail, wholesale and manufacturer licensees to the Home Depot Center, a sports and athletic complex within the City of Carson in Los Angeles and the Nokia Theater, located within the Los Angeles Sports and Entertainment District, adjacent to Staples Center.

SB 1647 (Perata, Chapter 275, Statutes of 2004) extended an existing tied-house exception pertaining to the general prohibition against advertising arrangements between retail, wholesale and manufacturer licensees to an outdoor stadium or a fully enclosed stadium, with a fixed seating capacity in excess of 10,000 seats located in Alameda County (Oakland Coliseum).

SB 1189 (Costa, Chapter 47, Statutes of 2002) extended an existing tied-house exception pertaining to the general prohibition against advertising arrangements between retail, wholesale and manufacturer licensees to an outdoor stadium and an enclosed arena with fixed seating capacities in excess of 1,500 seats located in Tulare County (Visalia Oaks Stadium) and to motorsports entertainment complex of not less than 50 acres that includes within its boundaries an outdoor speedway with a fixed seating capacity of at least 50,000 seats, located within San Bernardino County (California Speedway).

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT:

California Beer and Beverage Distributors

OPPOSITION:

Anheuser-Busch

California Association of Winegrape Growers

Diageo

Distilled Spirits Council

MillerCoors

Wine Institute

ARGUMENTS IN SUPPORT: California Beer and Beverage Distributors state that, “SB 56 will avoid the need for multiple bills to be presented year-after-year that request another specific exception to the tied-house laws to allow the purchase of stadium advertising from the owner or major tenant of a sports facility.”

Further, the California Beer and Beverage Distributors note that “a recent federal court opinion, Retail Digital Network v. Prieto, since granted rehearing, opined that the stator exceptions to allow paid advertising could undermine the constitutionality of California’s law prohibiting manufacturer gifts to retailers. If those laws are struck down, it would open the door to widespread pay-to-play and legalize exclusive arrangements that shut out competition and consumer choice.”

ARGUMENTS IN OPPOSITION: Opponents state that, “this bill interferes with existing contracts and lawfully passed tied-house exemptions. The longstanding relationships between alcohol manufactures and stadiums/arenas have resulted in decades of successful partnerships. With the potential to negatively affect multi-million dollar contracts, we do not believe the legislature should act to overhaul this complex law without some level of comfortability from the stakeholders actually involved in this process. If the goal of the bill is to remove the need to legislatively approve tied-house exemptions, we believe there are better ways to achieve this purpose.”

Additionally, the opponents state that, “addressing sponsorships in stadiums and arenas alone is short sighted. To properly address the issue of sponsorships, it is imperative that there is consideration of the more difficult area of law concerning our sponsorships. Tackling only large stadiums and arenas will cast doubt among all involved, including regulators, as to the legislature’s intent to forego fixing the most glaring of sponsorships including those at music festivals and county fairgrounds.”