Existing law, the Alcoholic Beverage Control Act, administered by the Department of Alcoholic Beverage Control, regulates the sale and distribution of alcoholic beverages and the granting of licenses for the manufacture, distribution, and sale of alcoholic beverages within the state. Existing law limits the amount of on-sale general licenses that may be issued by the department based on the population of the county in which the licensed premises are located.

This bill would provide an exception to the limitation described above by authorizing the issuance of up to 10 additional new original on-sale general licenses for bona fide public eating places in the County of Placer. The bill would prohibit the department from issuing more than 4 of these licenses per year. The bill would specify that a person holding a valid on-sale general license for seasonal business is not prohibited from applying for licenses to be issued pursuant to this authorization. The bill would prohibit transferring the new licenses out of the county or to a premises that does not qualify under these provisions. The bill would also prohibit selling or transferring the new licenses for a price greater than the original fee paid by the seller or transferor.

This bill would make legislative findings and declarations as to the necessity of a special statute for the County of Placer.

Existing law, the Alcoholic Beverage Control Act, administered by the Department of Alcoholic Beverage Control, regulates the sale and distribution of alcoholic beverages and the granting of licenses for the manufacture, distribution, and sale of alcoholic beverages within the state. Existing law limits the amount of on-sale general licenses that may be issued by the department based on the population of the county in which the licensed premises are located.

This bill would provide an exception to the limitation described above by authorizing the issuance of up to 10 additional new original on-sale general licenses for bona fide public eating places in the County of Placer. The bill would prohibit the department from issuing more than 4 of these licenses per year. The bill would specify that a person holding a valid on-sale general license for seasonal business is not prohibited from applying for licenses to be issued pursuant to this authorization. The bill would prohibit transferring the new licenses out of the county or to a premises that does not qualify under these provisions. The bill would also prohibit selling or transferring the new licenses for a price greater than the original fee paid by the seller or transferor.

This bill would make legislative findings and declarations as to the necessity of a special statute for the County of Placer.

Existing law, the Alcoholic Beverage Control Act, administered by the Department of Alcoholic Beverage Control, regulates the sale and distribution of alcoholic beverages and the granting of licenses for the manufacture, distribution, and sale of alcoholic beverages within the state. Existing law limits the amount of on-sale general licenses that may be issued by the department based on the population of the county in which the licensed premises are located.

This bill would provide exceptions to the limitation described above by authorizing the issuance of up to 10 additional new original on-sale general licenses for bona fide public eating places in the County of Placer. The bill would prohibit the department from issuing more than 4 of these licenses per year. The bill would specify that a person holding a valid on-sale general license for seasonal business is not prohibited from applying for licenses to be issued pursuant to this authorization. The bill would prohibit transferring the new licenses out of the county or to a premises that does not qualify under these provisions. The bill would also prohibit selling or transferring the new licenses for a price greater than the original fee paid by the seller or transferor.

This bill would make legislative findings and declarations as to the necessity of a special statute for the County of Placer.

Existing law, the Alcoholic Beverage Control Act, administered by the Department of Alcoholic Beverage Control, regulates the sale and distribution of alcoholic beverages and the granting of licenses for the manufacture, distribution, and sale of alcoholic beverages within the state. Existing law limits the amount of on-sale general licenses that may be issued by the department based on the population of the county in which the licensed premises are located.

This bill would provide exceptions to the limitation described above by authorizing the issuance of up to 10 additional new original on-sale general licenses for bona fide public eating places in the County of Placer. The bill would prohibit the department from issuing more than 4 of these licenses per year. The bill would specify that a person holding a valid on-sale general license for seasonal business is not prohibited from applying for licenses to be issued pursuant to this authorization. The bill would prohibit transferring the new licenses out of the county or to a premises that does not qualify under these provisions. The bill would also prohibit selling or transferring the new licenses for a price greater than the original fee paid by the seller or transferor.

This bill would make legislative findings and declarations as to the necessity of a special statute for the County of Placer.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 1668

Author:(Joe Patterson and Megan Dahle)

As Amended Ver:July 11, 2023

Majority vote

SUMMARY

This bill authorizes the Department of Alcoholic Beverage Control (ABC) to issue no more than a total of 10 additional new original on-sale general licenses for bona fide public eating places in the County of Placer. The bill would prohibit the department from issuing more than four of these licenses per year. The bill would prohibit transferring the new licenses out of the county or sold for a price greater than the original fee paid by the seller.

Senate Amendments

Make a technical and clarifying amendment.

COMMENTS

Background.

Type 47 alcohol license. A Type 47 license is specifically designated for businesses that primarily serve food ("bona fide eating place"). The license is meant for those who seek to serve beer, wine, and distilled spirits for consumption on the licenses premises. The license holder must maintain suitable kitchen facilities and make actual and substantial sales of meals for consumption on the premises. Generally, this means that the business must generate at least 51% of all gross sales from food. Minors are allowed on the premises.

A Type 47 license is one of the most common types of liquor licenses for restaurants in California. Some common businesses that use the Type 47 license include full-service restaurants, hotels and resorts, bowling alleys, golf courses, and other eating establishments. There are 17,097 on-sale general (Type 47) licenses statewide. 

Alcohol license limitation. There are more than 60 different types of ABC licenses authorized in California, each with its own set of privileges and obligations specific to the category of license involved. Existing law provides for a limit on the number of new on-sale general licenses ABC may issue each year based on the population growth of the county in which the licensed premises are located. The ratio is one on-sale general license for each 2,000 residents. For example, if a county grows by 10,000 people in a specific year, the department will issue five new licenses in that county.

If ABC receives more applications than there are licenses available, a public drawing is held. To take part in such a drawing, an applicant must have been a resident of California for at least 90 days prior to the scheduled drawing. ABC notifies successful drawing participants that they have 90 days to complete a formal application for their specific premises. The cost of these new licenses is $17,335 each.

Individuals seeking to open a full-service restaurant with a bar or cocktail menu who cannot obtain a liquor license through this process must locate an existing licensed owner willing to sell their license. This usually happens by contacting an alcohol license broker. The cost of acquiring a license on the secondary market is driven by supply and demand and can reach upwards of

$400,000.

Impact on counties. As previously noted, when a county experiences population growth, ABC issues additional licenses based on the population growth; currently 2,000 residents per one on-sale general license. While this system tends to work for most counties, there are a substantial number of counties where the demand for alcohol licenses far outweighs the current number of alcohol licenses in those counties. The reasons for the lack of licenses are generally a lack of population growth or because of the amount of tourism in the particular county, which results in higher demand for these types of businesses.

For example, in the County of Napa, the number of visitors continues to increase while the population of the county has not grown. While the majority of visitors to Napa take day trips, more than one million of these visitors spend at least one night in local lodgings. Tourism has thus become one of the major economic drivers in the region. In 2016, AB 1670 (Dodd), Chapter 347 authorized ABC to issue up to five additional new original on-sale general licenses to bona fide public eating places in the county, for a one-year period. While the bill allowed for the issuance of the five new licenses, demand far outweighed the availability of these licenses. In 2017, when ABC issued the five new licenses, there were a total of 38 applications for those five licenses.

County of Placer. As of the 2020 census, the population in Placer County was 404,739. Cities in Placer County include Auburn (county seat), Colfax, Lincoln, Roseville, and Rocklin. Roseville is the most populous city in the county, with a population of more than 147,000. Placer County is included in the Greater Sacramento metropolitan area. It is in both the Sacramento Valley and Sierra Nevada regions, in what is known as the Gold Country. The county stretches roughly 65 miles from Sacramento's suburbs at Roseville to the Nevada border and the shore of Lake Tahoe. Placer features easy access for visitors and residents alike to experience a year-round mix of spring, summer, fall and winter sports and activities, outdoor adventure, tantalizing food and wine grown in Placer's Mediterranean climate, world-class shopping, dining, arts and culture and more.

According to the Author

According to the author’s office, "Placer County is one of the fastest-growing counties in the state and has not been able to receive enough ABC licenses to support its growth. The goal of this bill is to support small businesses and help ensure restaurants thrive." The author's office notes that, "many new or growing Placer County businesses that apply for a license often must wait for months or longer before even having the possibility of securing a license. If no licenses are available from the state due AB 1668 Page 4 to population restrictions, businesses interested in obtaining an ABC license may purchase one from an existing licensee for whatever price the market will bear. This is a major impediment for small, local restaurants. Current law has been harmful to many small businesses within the county and has stunted the continued economic growth of the community."

Arguments in Support

According to the Placer County Board of Supervisors, "as of October 2022, Placer County was over its allocated active on-sale general licenses based on the population, thus ABC has not granted new licenses to businesses seeking them in years. This shortage has effectively created a secondary market at which these alcohol licenses are bought and sold – most, if not all the time, at a very high premium. Due to the cost of these licenses, many small businesses do not have the capital necessary to purchase a license for their establishment which can impact the business’ ability to succeed."

Arguments in Opposition

According to Alcohol Justice, "on-sale outlet concentration is strongly linked with increased alcohol harm and mortality. The first major summary of the efficacy of outlet concentration limits was summarized by the CDC-convened Task Force on Community Preventive Services in 2009, and highlighted increases in consumption, motor vehicle crashes, and violent injury."

FISCAL COMMENTS

According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs.

VOTES:

ASM GOVERNMENTAL ORGANIZATION: 20-0-2

YES: Santiago, Lackey, Aguiar-Curry, Berman, Bryan, Megan Dahle, Davies, Garcia, Gipson, Jones-Sawyer, Low, McCarty, McKinnor, Jim Patterson, Quirk-Silva, Ramos, Robert Rivas, Blanca Rubio, Ta, Villapudua

ABS, ABST OR NV: Cervantes, Mathis

ASM APPROPRIATIONS: 14-0-2

YES: Holden, Megan Dahle, Calderon, Wendy Carrillo, Dixon, Mike Fong, Hart, Lowenthal, Mathis, Papan, Robert Rivas, Sanchez, Weber, Wilson

ABS, ABST OR NV: Bryan, Pellerin

ASSEMBLY FLOOR: 79-0-1

YES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Vince Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones‑Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, Mathis, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon

ABS, ABST OR NV: Jim Patterson

SENATE FLOOR: 39-0-1

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

ABS, ABST OR NV: Padilla

UPDATED

VERSION: July 11, 2023

CONSULTANT: Eric Johnson / G.O. / (916) 319-2531 FN: 0001747

 THIRD READING  

Bill No: AB 1668

Author: Joe Patterson (R) and Megan Dahle (R), et al.

Amended: 7/11/23 in Senate

Vote: 21

SENATE GOVERNMENTAL ORG. COMMITTEE: 14-0, 6/13/23

AYES: Dodd, Wilk, Alvarado-Gil, Archuleta, Ashby, Bradford, Glazer, Nguyen, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto

NO VOTE RECORDED: Jones

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 79-0, 4/27/23 (Consent) - See last page for vote

SUBJECT: Alcoholic beverages: licenses: County of Placer

SOURCE: Author

DIGEST: This bill authorizes the Department of Alcoholic Beverage Control (ABC) to issue no more than 10 new original on-sale general licenses for bona fide public eating places in the County of Placer, as specified.

Senate Floor Amendments of 7/11/23 are technical and clarifying.

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.
2. Provides that the Department of ABC must deny an application for a license if issuance would create a law enforcement problem, or if issuance would result in, or add to, an undue concentration of licenses in the area where the license is desired. However, for liquor stores and other specified retail licenses, the Department of ABC is authorized to issue a license if the respective local government determines that public convenience or necessity would be served by granting the license.
3. Caps the number of new on-sale and off-sale general licenses issued by the Department of ABC. The ratios are one on-sale general license for each 2,000 persons in the county in which the premises are situated and one off-sale general license for each 2,500 persons.
4. Defines an “on-sale” license as authorizing the sale of all types of alcoholic beverages: namely, beer, wine and distilled spirits, for consumption on the premises (such as at a restaurant or bar) and an “off-sale” license as authorizing the sale of all types of alcoholic beverages for consumption off the premises in original, sealed containers.
5. Defines “bona fide public eating place” to mean a place which is regularly and in a bona fide manner used and kept open for the serving of meals to guests for compensation and which has suitable kitchen facilities connected therewith, containing conveniences for cooking an assortment of foods which may be required for ordinary meals, the kitchen of which must be kept in a sanitary condition with the proper amount of refrigeration for keeping of food on said premises and must comply with all the regulations of the local Department of Health.
6. Authorizes, beginning January 1, 2017, the Department of ABC to issue no more than five new original neighborhood-restricted special on-sale general licenses, for premises located within specified City and County of San Francisco neighborhoods, subject to certain requirements and restrictions.
7. Provides that in Napa County, from January 1, 2017, to December 31, 2017, the Department of ABC, in addition to those licenses currently issued under the law may issue no more than five additional new original on-sale general licenses for bona fide public eating places. Any premises to qualify for a license shall have a seating capacity for 25 or more diners.
8. Authorizes, beginning January 1, 2018, the Department of ABC to issue no more than five new original neighborhood-restricted special on-sale general licenses per year, until a total of 30 licenses are issued, to premises located in any of the census tracts, as specified, within the City and County of San Francisco.
9. Authorizes, beginning on January 1, 2018, the Department of ABC, to issue a maximum of 20 new original on-sale general licenses, over a four-year period, in the County of Napa, as specified.
10. Authorizes, beginning on January 1, 2021, the Department of ABC to issue up to 10 additional new original on-sale general licenses in Mariposa County and up to 10 additional new original on-sale general licenses per year in Napa County for a period of five years.
11. Authorizes, beginning on January 1, 2023, the Department of ABC to issue up to 10 new original on-sale general licenses for bona fide public eating places in both the County of El Dorado and in the County of Shasta, as specified.

This bill:

1. Authorizes the Department of ABC to issue no more than a total of 10 new original on-sale general licenses for bona fide public eating places in the County of Placer.
2. Prohibits the Department of ABC to issue more than four of these licenses per year.
3. Provides that this bill does not prohibit a person that currently holds a valid on-sale general license for seasonal business from applying for an original on-sale general license.
4. Prohibits a license issued under this bill from being transferred from one county to another or from being transferred to any premises not qualifying under the provisions of this bill.
5. Provides that no license issued under this bill shall be sold or transferred for a price greater than the original fee paid by the seller.

Background

Author Statement. According to the author’s office, "Placer County is one of the fastest-growing counties in the state and has not been able to receive enough ABC licenses to support its growth. The goal of this bill is to support small businesses and help ensure restaurants thrive."

The author’s office notes that, “many new or growing Placer County businesses that apply for a license often must wait for months or longer before even having the possibility of securing a license. If no licenses are available from the state due to population restrictions, businesses interested in obtaining an ABC license may purchase one from an existing licensee for whatever price the market will bear. This is a major impediment for small, local restaurants. Current law has been harmful to many small businesses within the county and has stunted the continued economic growth of the community.”

Type 47 Alcohol License. An on-sale general eating-place license, or Type 47 license, authorizes the consumption of beer, wine, and distilled spirits for consumption on the licensed premise. The licensee is required to operate and maintain the licensed premises as a bona fide eating-place, which must include suitable kitchen facilities. The licensee must make actual and substantial sales of meals for consumption on the premises. Generally, this means that the business must generate at least 51% of all gross sales from food. As such, a Type 47 license is one of the most common types of liquor licenses for restaurants in California.

Some common businesses that use the Type 47 license include full-service restaurants, hotels and resorts, bowling alleys, golf courses, and other eating establishments. There are approximately 15,750 on-sale general (Type 47) licenses statewide.

Alcohol License Limitation. Existing law provides for a limitation on the number of new on-sale general licenses that may be issued in a given year by the Department of ABC based on the population growth of the county in which the licensed premises are located. The ratio is one on-sale general license for each 2,000 residents. For example, if a county grows by 10,000 people in a given year, the Department of ABC will issue five new licenses in that county.

If the Department of ABC receives more applications than there are licenses available, a public drawing is held. To participate in such a drawing, an applicant must have been a resident of California for at least 90 days prior to the date of the scheduled drawing. Successful drawing participants will be notified that they have 90 days to complete a formal application for their specific premises. The cost of these new licenses is $17,335 each.

Individuals seeking to open a full-service restaurant with a bar or cocktail menu who fail to obtain a liquor license through this process typically must locate an existing licensed owner willing to sell their license. Usually, that is done by contacting a liquor license broker. The cost of obtaining a license on the secondary market is driven by supply and demand and can reach upwards of $400,000. With such a high initial cost, the only restaurants that can generally afford to open in those counties are those that are backed by wealthy investors or corporations.

Impact on Counties. As previously noted, when a county experiences population growth, the Department of ABC issues additional licenses based on the population growth; currently 2,000 residents per one on-sale general license. While this system tends to work for most counties, there are a substantial number of counties where the demand for alcohol licenses far outweighs the current number of alcohol licenses. The reasons for the lack of licenses are generally a lack of population growth or because of the amount of tourism in the particular county, which results in higher demand for these types of businesses.

For example, in Napa County the number of visitors to Napa continues to increase while the population of the county has not grown. While the majority of visitors to Napa take day trips, more than one million of these visitors spend at least one night in local lodgings. Tourism has therefore become one of the major economic drivers in the region. Unfortunately, for counties like Napa County, while tourism clearly increases the demand for these types of businesses, the alcohol license limitation does not allow counties to meet that demand.

Related/Prior Legislation

SB 787 (Dahle, 2023) authorizes the Department of ABC to issue to more than 10 new original on-sale general licenses for bona fide public eating places in the County of Nevada, as specified. (Pending on the Governor’s Desk)

SB 1452 (Dahle, Chapter 889, Statutes of 2022) authorized, beginning on January 1, 2022, the Department of ABC to issue up to 10 new original on-sale general licenses for bona fide public eating places in both the County of El Dorado and in the County of Shasta, as specified.

AB 2459 (Bigelow, Chapter 53, Statutes of 2020) authorized the Department of ABC to issue up to 10 additional new original on-sale general licenses in Mariposa County and up to 10 additional new original on-sale general licenses per year in Napa County for a period of five years.

SB 866 (Dodd, 2020) would have authorized the Department of ABC to issue up to 10 additional new original on-sale general licenses per year to bona fide public eating places in Napa County for a period of five years. (Never heard in Senate Governmental Organization Committee)

SB 352 (Dodd, 2019) would have authorized the Department of ABC, in counties that have reached its limit of on-sale general licenses, to issue up to 10 additional new original on-sale general licenses for bona fide eating places following the year the limit is reached. (Held in the Assembly Appropriations Committee Suspense File)

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

SUPPORT: (Verified 7/11/23)

Family Winemakers of California

Placer County Board of Supervisors

Roseville Area Chamber of Commerce

OPPOSITION: (Verified 7/11/23)

Alcohol Justice

ARGUMENTS IN SUPPORT: According to the Placer County Board of Supervisors, “as of October 2022, Placer County was over its allocated active on-sale general licenses based on the population, thus ABC has not granted new licenses to businesses seeking them in years. This shortage has effectively created a secondary market at which these alcohol licenses are bought and sold – most, if not all the time, at a very high premium. Due to the cost of these licenses, many small businesses do not have the capital necessary to purchase a license for their establishment which can impact the business’ ability to succeed.”

ARGUMENTS IN OPPOSITION: According to Alcohol Justice, “on-sale outlet concentration is strongly linked with increased alcohol harm and mortality. The first major summary of the efficacy of outlet concentration limits was summarized by the CDC-convened Task Force on Community Preventive Services in 2009, and highlighted increases in consumption, motor vehicle crashes, and violent injury.”

ASSEMBLY FLOOR: 79-0, 4/27/23

AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Vince Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, Mathis, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon

NO VOTE RECORDED: Jim Patterson

Prepared by: Felipe Lopez / G.O. / (916) 651-1530

7/12/23 14:03:35

**** END ****

 THIRD READING  

Bill No: AB 1668

Author: Joe Patterson (R) and Megan Dahle (R), et al.

Introduced: 2/17/23

Vote: 21

SENATE GOVERNMENTAL ORG. COMMITTEE: 14-0, 6/13/23

AYES: Dodd, Wilk, Alvarado-Gil, Archuleta, Ashby, Bradford, Glazer, Nguyen, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto

NO VOTE RECORDED: Jones

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 79-0, 4/27/23 (Consent) - See last page for vote

SUBJECT: Alcoholic beverages: licenses: County of Placer

SOURCE: Author

DIGEST: This bill authorizes the Department of Alcoholic Beverage Control (ABC) to issue no more than 10 new original on-sale general licenses for bona fide public eating places in the County of Placer, as specified.

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.
2. Provides that the Department of ABC must deny an application for a license if issuance would create a law enforcement problem, or if issuance would result in, or add to, an undue concentration of licenses in the area where the license is desired. However, for liquor stores and other specified retail licenses, the Department of ABC is authorized to issue a license if the respective local government determines that public convenience or necessity would be served by granting the license.
3. Caps the number of new on-sale and off-sale general licenses issued by the Department of ABC. The ratios are one on-sale general license for each 2,000 persons in the county in which the premises are situated and one off-sale general license for each 2,500 persons.
4. Defines an “on-sale” license as authorizing the sale of all types of alcoholic beverages: namely, beer, wine and distilled spirits, for consumption on the premises (such as at a restaurant or bar) and an “off-sale” license as authorizing the sale of all types of alcoholic beverages for consumption off the premises in original, sealed containers.
5. Defines “bona fide public eating place” to mean a place which is regularly and in a bona fide manner used and kept open for the serving of meals to guests for compensation and which has suitable kitchen facilities connected therewith, containing conveniences for cooking an assortment of foods which may be required for ordinary meals, the kitchen of which must be kept in a sanitary condition with the proper amount of refrigeration for keeping of food on said premises and must comply with all the regulations of the local Department of Health.
6. Authorizes, beginning January 1, 2017, the Department of ABC to issue no more than five new original neighborhood-restricted special on-sale general licenses, for premises located within specified City and County of San Francisco neighborhoods, subject to certain requirements and restrictions.
7. Provides that in Napa County, from January 1, 2017, to December 31, 2017, the Department of ABC, in addition to those licenses currently issued under the law may issue no more than five additional new original on-sale general licenses for bona fide public eating places. Any premises to qualify for a license shall have a seating capacity for 25 or more diners.
8. Authorizes, beginning January 1, 2018, the Department of ABC to issue no more than five new original neighborhood-restricted special on-sale general licenses per year, until a total of 30 licenses are issued, to premises located in any of the census tracts, as specified, within the City and County of San Francisco.
9. Authorizes, beginning on January 1, 2018, the Department of ABC, to issue a maximum of 20 new original on-sale general licenses, over a four-year period, in the County of Napa, as specified.
10. Authorizes, beginning on January 1, 2021, the Department of ABC to issue up to 10 additional new original on-sale general licenses in Mariposa County and up to 10 additional new original on-sale general licenses per year in Napa County for a period of five years.
11. Authorizes, beginning on January 1, 2023, the Department of ABC to issue up to 10 new original on-sale general licenses for bona fide public eating places in both the County of El Dorado and in the County of Shasta, as specified.

This bill:

1. Authorizes the Department of ABC to issue no more than a total of 10 new original on-sale general licenses for bona fide public eating places in the County of Placer.
2. Prohibits the Department of ABC to issue more than four of these licenses per year.
3. Provides that this bill does not prohibit a person that currently holds a valid on-sale general license for seasonal business from applying for an original on-sale general license.
4. Prohibits a license issued under this bill from being transferred from one county to another or from being transferred to any premises not qualifying under the provisions of this bill.
5. Provides that no license issued under this bill shall be sold or transferred for a price greater than the original fee paid by the seller.

Background

Author Statement. According to the author’s office, "Placer County is one of the fastest-growing counties in the state and has not been able to receive enough ABC licenses to support its growth. The goal of this bill is to support small businesses and help ensure restaurants thrive."

The author’s office notes that, “many new or growing Placer County businesses that apply for a license often must wait for months or longer before even having the possibility of securing a license. If no licenses are available from the state due to population restrictions, businesses interested in obtaining an ABC license may purchase one from an existing licensee for whatever price the market will bear. This is a major impediment for small, local restaurants. Current law has been harmful to many small businesses within the county and has stunted the continued economic growth of the community.”

Type 47 Alcohol License. An on-sale general eating-place license, or Type 47 license, authorizes the consumption of beer, wine, and distilled spirits for consumption on the licensed premise. The licensee is required to operate and maintain the licensed premises as a bona fide eating-place, which must include suitable kitchen facilities. The licensee must make actual and substantial sales of meals for consumption on the premises. Generally, this means that the business must generate at least 51% of all gross sales from food. As such, a Type 47 license is one of the most common types of liquor licenses for restaurants in California.

Some common businesses that use the Type 47 license include full-service restaurants, hotels and resorts, bowling alleys, golf courses, and other eating establishments. There are approximately 15,750 on-sale general (Type 47) licenses statewide.

Alcohol License Limitation. Existing law provides for a limitation on the number of new on-sale general licenses that may be issued in a given year by the Department of ABC based on the population growth of the county in which the licensed premises are located. The ratio is one on-sale general license for each 2,000 residents. For example, if a county grows by 10,000 people in a given year, the Department of ABC will issue five new licenses in that county.

If the Department of ABC receives more applications than there are licenses available, a public drawing is held. To participate in such a drawing, an applicant must have been a resident of California for at least 90 days prior to the date of the scheduled drawing. Successful drawing participants will be notified that they have 90 days to complete a formal application for their specific premises. The cost of these new licenses is $17,335 each.

Individuals seeking to open a full-service restaurant with a bar or cocktail menu who fail to obtain a liquor license through this process typically must locate an existing licensed owner willing to sell their license. Usually, that is done by contacting a liquor license broker. The cost of obtaining a license on the secondary market is driven by supply and demand and can reach upwards of $400,000. With such a high initial cost, the only restaurants that can generally afford to open in those counties are those that are backed by wealthy investors or corporations.

Impact on Counties. As previously noted, when a county experiences population growth, the Department of ABC issues additional licenses based on the population growth; currently 2,000 residents per one on-sale general license. While this system tends to work for most counties, there are a substantial number of counties where the demand for alcohol licenses far outweighs the current number of alcohol licenses. The reasons for the lack of licenses are generally a lack of population growth or because of the amount of tourism in the particular county, which results in higher demand for these types of businesses.

For example, in Napa County the number of visitors to Napa continues to increase while the population of the county has not grown. While the majority of visitors to Napa take day trips, more than one million of these visitors spend at least one night in local lodgings. Tourism has therefore become one of the major economic drivers in the region. Unfortunately, for counties like Napa County, while tourism clearly increases the demand for these types of businesses, the alcohol license limitation does not allow counties to meet that demand.

Related/Prior Legislation

SB 787 (Dahle, 2023) authorizes the Department of ABC to issue to more than 10 new original on-sale general licenses for bona fide public eating places in the County of Nevada, as specified. (Pending in the Assembly Appropriations Committee)

SB 1452 (Dahle, Chapter 889, Statutes of 2022) authorized, beginning on January 1, 2022, the Department of ABC to issue up to 10 new original on-sale general licenses for bona fide public eating places in both the County of El Dorado and in the County of Shasta, as specified.

AB 2459 (Bigelow, Chapter 53, Statutes of 2020) authorized the Department of ABC to issue up to 10 additional new original on-sale general licenses in Mariposa County and up to 10 additional new original on-sale general licenses per year in Napa County for a period of five years.

SB 866 (Dodd, 2020) would have authorized the Department of ABC to issue up to 10 additional new original on-sale general licenses per year to bona fide public eating places in Napa County for a period of five years. (Never heard in Senate Governmental Organization Committee)

SB 352 (Dodd, 2019) would have authorized the Department of ABC, in counties that have reached its limit of on-sale general licenses, to issue up to 10 additional new original on-sale general licenses for bona fide eating places following the year the limit is reached. (Held in the Assembly Appropriations Committee Suspense File)

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

SUPPORT: (Verified 6/26/23)

Placer County Board of Supervisors

Roseville Area Chamber of Commerce

OPPOSITION: (Verified 6/26/23)

Alcohol Justice

ARGUMENTS IN SUPPORT: According to the Placer County Board of Supervisors, “as of October 2022, Placer County was over its allocated active on-sale general licenses based on the population, thus ABC has not granted new licenses to businesses seeking them in years. This shortage has effectively created a secondary market at which these alcohol licenses are bought and sold – most, if not all the time, at a very high premium. Due to the cost of these licenses, many small businesses do not have the capital necessary to purchase a license for their establishment which can impact the business’ ability to succeed.”

ARGUMENTS IN OPPOSITION: According to Alcohol Justice, “on-sale outlet concentration is strongly linked with increased alcohol harm and mortality. The first major summary of the efficacy of outlet concentration limits was summarized by the CDC-convened Task Force on Community Preventive Services in 2009, and highlighted increases in consumption, motor vehicle crashes, and violent injury.”

ASSEMBLY FLOOR: 79-0, 4/27/23

AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Vince Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, Mathis, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon

NO VOTE RECORDED: Jim Patterson

Prepared by: Felipe Lopez / G.O. / (916) 651-1530

6/28/23 11:06:31

**** END ****

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Bill Dodd

Chair

2023 - 2024 Regular

Bill No: AB Hearing Date: 6/13/2023

SUBJECT:

DIGEST: This bill authorizes the Department of Alcoholic Beverage Control (ABC) to issue no more than 10 new original on-sale general licenses for bona fide public eating places in the County of Placer, as specified.

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.
2. Provides that the Department of ABC must deny an application for a license if issuance would create a law enforcement problem, or if issuance would result in, or add to, an undue concentration of licenses in the area where the license is desired. However, for liquor stores and other specified retail licenses, the Department of ABC is authorized to issue a license if the respective local government determines that public convenience or necessity would be served by granting the license.
3. Caps the number of new on-sale and off-sale general licenses issued by the Department of ABC. The ratios are one on-sale general license for each 2,000 persons in the county in which the premises are situated and one off-sale general license for each 2,500 persons.
4. Defines an “on-sale” license as authorizing the sale of all types of alcoholic beverages: namely, beer, wine and distilled spirits, for consumption on the premises (such as at a restaurant or bar) and an “off-sale” license as authorizing the sale of all types of alcoholic beverages for consumption off the premises in original, sealed containers.
5. Defines “bona fide public eating place” to mean a place which is regularly and in a bona fide manner used and kept open for the serving of meals to guests for compensation and which has suitable kitchen facilities connected therewith, containing conveniences for cooking an assortment of foods which may be required for ordinary meals, the kitchen of which must be kept in a sanitary condition with the proper amount of refrigeration for keeping of food on said premises and must comply with all the regulations of the local Department of Health.
6. Authorizes, beginning January 1, 2017, the Department of ABC to issue no more than five new original neighborhood-restricted special on-sale general licenses, for premises located within specified City and County of San Francisco neighborhoods, subject to certain requirements and restrictions.
7. Provides that in Napa County, from January 1, 2017, to December 31, 2017, the Department of ABC, in addition to those licenses currently issued under the law may issue no more than five additional new original on-sale general licenses for bona fide public eating places. Any premises to qualify for a license shall have a seating capacity for 25 or more diners.
8. Authorizes, beginning January 1, 2018, the Department of ABC to issue no more than five new original neighborhood-restricted special on-sale general licenses per year, until a total of 30 licenses are issued, to premises located in any of the census tracts, as specified, within the City and County of San Francisco.
9. Authorizes, beginning on January 1, 2018, the Department of ABC, to issue a maximum of 20 new original on-sale general licenses, over a four-year period, in the County of Napa, as specified.
10. Authorizes, beginning on January 1, 2021, the Department of ABC to issue up to 10 additional new original on-sale general licenses in Mariposa County and up to 10 additional new original on-sale general licenses per year in Napa County for a period of five years.
11. Authorizes, beginning on January 1, 2023, the Department of ABC to issue up to 10 new original on-sale general licenses for bona fide public eating places in both the County of El Dorado and in the County of Shasta, as specified.

This bill:

1. Authorizes the Department of ABC to issue no more than a total of 10 new original on-sale general licenses for bona fide public eating places in the County of Placer.
2. Prohibits the Department of ABC to issue more than four of these licenses per year.
3. Provides that this bill does not prohibit a person that currently holds a valid on-sale general license for seasonal business from applying for an original on-sale general license.
4. Prohibits a license issued under this bill from being transferred from one county to another or from being transferred to any premises not qualifying under the provisions of this bill.
5. Provides that no license issued under this bill shall be sold or transferred for a price greater than the original fee paid by the seller.

Background

Author Statement. According to the author’s office, "Placer County is one of the fastest-growing counties in the state and has not been able to receive enough ABC licenses to support its growth. The goal of this bill is to support small businesses and help ensure restaurants thrive."

The author’s office notes that, “many new or growing Placer County businesses that apply for a license often must wait for months or longer before even having the possibility of securing a license. If no licenses are available from the state due to population restrictions, businesses interested in obtaining an ABC license may purchase one from an existing licensee for whatever price the market will bear. This is a major impediment for small, local restaurants. Current law has been harmful to many small businesses within the county and has stunted the continued economic growth of the community.”

Type 47 Alcohol License. An on-sale general eating-place license, or Type 47 license, authorizes the consumption of beer, wine, and distilled spirits for consumption on the licensed premise. The licensee is required to operate and maintain the licensed premises as a bona fide eating-place, which must include suitable kitchen facilities. The licensee must make actual and substantial sales of meals for consumption on the premises. Generally, this means that the business must generate at least 51% of all gross sales from food. As such, a Type 47 license is one of the most common types of liquor licenses for restaurants in California.

Some common businesses that use the Type 47 license include full-service restaurants, hotels and resorts, bowling alleys, golf courses, and other eating establishments. There are approximately 15,750 on-sale general (Type 47) licenses statewide.

Alcohol License Limitation. Existing law provides for a limitation on the number of new on-sale general licenses that may be issued in a given year by the Department of ABC based on the population growth of the county in which the licensed premises are located. The ratio is one on-sale general license for each 2,000 residents. For example, if a county grows by 10,000 people in a given year, the Department of ABC will issue five new licenses in that county.

If the Department of ABC receives more applications than there are licenses available, a public drawing is held. To participate in such a drawing, an applicant must have been a resident of California for at least 90 days prior to the date of the scheduled drawing. Successful drawing participants will be notified that they have 90 days to complete a formal application for their specific premises. The cost of these new licenses is $17,335 each.

Individuals seeking to open a full-service restaurant with a bar or cocktail menu who fail to obtain a liquor license through this process typically must locate an existing licensed owner willing to sell their license. Usually, that is done by contacting a liquor license broker. The cost of obtaining a license on the secondary market is driven by supply and demand and can reach upwards of $400,000. With such a high initial cost, the only restaurants that can generally afford to open in those counties are those that are backed by wealthy investors or corporations.

Impact on Counties. As previously noted, when a county experiences population growth, the Department of ABC issues additional licenses based on the population growth; currently 2,000 residents per one on-sale general license. While this system tends to work for most counties, there are a substantial number of counties where the demand for alcohol licenses far outweighs the current number of alcohol licenses. The reasons for the lack of licenses are generally a lack of population growth or because of the amount of tourism in the particular county, which results in higher demand for these types of businesses.

For example, in Napa County the number of visitors to Napa continues to increase while the population of the county has not grown. While the majority of visitors to Napa take day trips, more than one million of these visitors spend at least one night in local lodgings. Tourism has therefore become one of the major economic drivers in the region. Unfortunately, for counties like Napa County, while tourism clearly increases the demand for these types of businesses, the alcohol license limitation does not allow counties to meet that demand.

Prior/Related Legislation

SB 787 (Dahle, 2023) authorizes the Department of ABC to issue to more than 10 new original on-sale general licenses for bona fide public eating places in the County of Nevada, as specified. (Pending in the Assembly Governmental Organization Committee)

SB 1452 (Dahle, Chapter 889, Statutes of 2022) authorizes, beginning on January 1, 2022, the Department of ABC to issue up to 10 new original on-sale general licenses for bona fide public eating places in both the County of El Dorado and in the County of Shasta, as specified.

AB 2459 (Bigelow, Chapter 53, Statutes of 2020) authorizes the Department of ABC to issue up to 10 additional new original on-sale general licenses in Mariposa County and up to 10 additional new original on-sale general licenses per year in Napa County for a period of five years.

SB 866 (Dodd, 2020) would have authorized the Department of ABC to issue up to 10 additional new original on-sale general licenses per year to bona fide public eating places in Napa County for a period of five years. (Never heard in Senate Governmental Organization Committee)

SB 352 (Dodd, 2019) would have authorized the Department of ABC, in counties that have reached its limit of on-sale general licenses, to issue up to 10 additional new original on-sale general licenses for bona fide eating places following the year the limit is reached. (Held in the Assembly Appropriations Committee Suspense File)

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

SUPPORT:

Placer County Board of Supervisors

Roseville Area Chamber of Commerce

OPPOSITION:

Alcohol Justice

ARGUMENTS IN SUPPORT: According to the Placer County Board of Supervisors, “as of October 2022, Placer County was over its allocated active on-sale general licenses based on the population, thus ABC has not granted new licenses to businesses seeking them in years. This shortage has effectively created a secondary market at which these alcohol licenses are bought and sold – most, if not all the time, at a very high premium. Due to the cost of these licenses, many small businesses do not have the capital necessary to purchase a license for their establishment which can impact the business’ ability to succeed.”

ARGUMENTS IN OPPOSITION: According to Alcohol Justice, “on-sale outlet concentration is strongly linked with increased alcohol harm and mortality. The first major summary of the efficacy of outlet concentration limits was summarized by the CDC-convened Task Force on Community Preventive Services in 2009, and highlighted increases in consumption, motor vehicle crashes, and violent injury.”

Date of Hearing: April 19, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

ABPCA Bill Id:AB 1668

Author:(Joe Patterson) – As Introduced Ver:February 17, 2023

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill authorizes the Department of Alcoholic Beverage Control (ABC) to issue up to 10 additional new original on-sale general licenses for bona fide public eating places in the County of Placer, but no more than four licenses per year.

The new license cannot be transferred out of the county or sold for a price greater than the original fee paid by the seller.

FISCAL EFFECT:

Minor and absorbable costs to ABC. Any additional licensing and enforcement investigations generated by the 10 additional on-sale licenses issued over time should be covered by corresponding licensing fees.

However, this committee sees a wide array of bills that propose to modify the scope of alcohol laws. Generally, modest changes such as those proposed by this bill do not generate major new enforcement workload for ABC, but taken together, these proposals could lead to significant new costs and future budget requests.

COMMENTS:

1. Purpose. According to the author:

Placer County is one of the fastest-growing counties in the state and has not been able to receive enough ABC licenses to support its growth. The goal of this bill is to support small businesses and help ensure restaurants thrive.

1. Support and Opposition. This bill is supported by the Placer County Board of Supervisors, which notes the county was allocated all its on-sale general licenses based on the county’s population size in October 2022 and the “shortage has effectively created a secondary market at which these licenses are bought and sold – most, if not all the time, at a very high premium.” This bill is also supported by the Roseville Area Chamber of Commerce.

This bill is opposed by Alcohol Justice, which argues existing “overconcentration restrictions are a tool to restrain alcohol-related harms” and should be honored.

1. Limited On-sale General Licenses. An on-sale general license for a business primarily serving food as a “bona fide eating place” (Type 47) allows the licensee to also serve beer, wine and distilled spirits for consumption on the licensed premises. There are over 17,000 Type 47 licenses issued statewide to full-service restaurants, hotels, bowling alleys, golf courses and other eating establishments.

Existing law limits the number of new on-sale general licenses ABC may issue based on the population growth of the county in which the licensed premises are located. The ratio is one on-sale general license for each 2,000 residents. Because many counties have reached their cap, businesses seeking a license may need to buy one on the secondary market, which can cost up to $400,000. While ABC’s formula generally works for most counties, demand for licenses far outweighs the population-based allotment in some counties, generally due to the county’s slower population growth or the local economy’s reliance on tourism. This bill authorizes ABC to additionally issue, outside of ABC’s population-based formula, up to 10 new Type 47 licenses in the County of Placer.

1. Prior Legislation. SB 1452 (Dahle), Chapter 889, Statutes of 2022, authorized ABC to issue up to 10 additional new original on-sale general licenses for bona fide public eating places in the County of El Dorado and 10 additional licenses in the County of Shasta, in a manner identical to this bill.

AB 2459 (Bigelow), Chapter 53, Statutes of 2020, authorized ABC to issue up to 10 additional new original on-sale general licenses for bona fide public eating places in the County of Mariposa and 10 additional licenses in the County of Napa, as specified.

Analysis Prepared by: Irene Ho / APPR. / (916) 319-2081

Date of Hearing: March 22, 2023

ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION

Miguel Santiago, Chair

ABPCA Bill Id:AB 1668 (

Author:Joe Patterson) – As Introduced Ver:February 17, 2023

SUBJECT: Alcoholic beverages: licenses: County of Placer

SUMMARY: This bill authorizes the Department of Alcoholic Beverage Control (ABC) to issue no more than a total of 10 additional new original on-sale general licenses for bona fide public eating places in the County of Placer. The bill would prohibit the department from issuing more than 4 of these licenses per year. The bill would prohibit transferring the new licenses out of the county or sold for a price greater than the original fee paid by the seller. Specifically, this bill:

1) Allows ABC in the County of Placer to issue no more than a total of 10 additional new original on-sale general licenses for bona fide public eating places. The department shall not issue more than four licenses under this bill per year, as defined.

2) Provides that this bill does not prohibit a person that currently holds a valid on-sale general license for seasonal business from applying for an original on-sale general license.

3) Provides that a license issued under this bill shall not be transferred from one county to another, nor shall it be transferred to any premises not qualifying under this section.

4) Provides that no license issued under this bill shall be sold or transferred for a price greater than the original fee paid by the seller or transferor.

5) States the department may designate licenses issued pursuant to this bill as on-sale general for special use. This designation does not alter any license privileges or restrictions established by this bill.

6) Makes legislative findings and declarations as to the necessity of a special statute for the County of Placer.

EXISTING LAW:

1) Establishes ABC and grants it exclusive authority to administer the provisions of the 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.

2) Provides that ABC must deny an application for a license if issuance would create a law enforcement problem, or if issuance would result in, or add to, an undue concentration of licenses in the area where the license is desired. However, for liquor stores and other specified retail licenses, the department is authorized to issue a license if the respective local government determines that public convenience or necessity would be served by granting the license.

3) Caps the number of new on-sale and off-sale general licenses issued by ABC. The ratios are one on-sale general license for each 2,000 persons in the county in which the premises are situated and one off-sale general license for each 2,500 persons. (California Business and Professions § 23816 and 23817)

4) Defines an “on-sale” license as authorizing the sale of all types of alcoholic beverages: namely, beer, wine and distilled spirits, for consumption on the premises (such as at a restaurant or bar) and an “off-sale” license as authorizing the sale of all types of alcoholic beverages for consumption off the premises in original, sealed containers. (California Business and Professions § 23393, 23394, 23396 and 23399)

5) Defines “bona fide public eating place” to mean a place which is regularly and in a bona fide manner used and kept open for the serving of meals to guests for compensation and which has suitable kitchen facilities connected therewith, containing conveniences for cooking an assortment of foods which may be required for ordinary meals, the kitchen of which must be kept in a sanitary condition with the proper amount of refrigeration for keeping of food on said premises and must comply with all the regulations of the local Department of Health. (California Business and Professions § 23038)

6) Provides that in Napa County, from January 1, 2017, to December 31, 2017, ABC, in addition to those licenses currently issued under the law may issue no more than five additional new original on-sale general licenses for bona fide public eating places, for a period of one-year. Any premises to qualify for a license shall have a seating capacity for 50 or more diners. (California Business and Professions § 23826.10)

7) Authorizes, beginning January 1, 2017, ABC to issue no more than five new original neighborhood-restricted special on-sale general licenses, for premises located within specified City and County of San Francisco neighborhoods, subject to certain requirements and restrictions. (California Business and Professions § 23826.13)

8) Authorizes, beginning January 1, 2018, ABC to issue no more than five new original neighborhood-restricted special on-sale general licenses per year, until a total of 30 licenses are issued, to premises located in any of the census tracts, as specified, within the City and County of San Francisco. (California Business and Professions § 23826.13)

9) Authorizes, beginning on January 1, 2021, ABC to issue a total of 10 new original on-sale genera licenses in Mariposa County and up to 10 additional new original on-sale general licenses per year in Napa County over a 5-year period. (California Business and Professions § 23826.10)

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

COMMENTS:

Background.

Type 47 alcohol license. A Type 47 license is specifically designated for businesses that primarily serve food ("bona fide eating place"). The license is meant for those who seek to serve beer, wine, and distilled spirits for consumption on the licenses premises. The license holder must maintain suitable kitchen facilities and make actual and substantial sales of meals for consumption on the premises. Generally, this means that the business must generate at least 51 percent of all gross sales from food. Minors are allowed on the premises.

A Type 47 license is one of the most common types of liquor licenses for restaurants in California. Some common businesses that use the Type 47 license include full-service restaurants, hotels and resorts, bowling alleys, golf courses, and other eating establishments. There are 17,097 on-sale general (Type 47) licenses statewide. 

Alcohol license limitation. There are more than 60 different types of ABC licenses authorized in California, each with its own set of privileges and obligations specific to the category of license involved. Existing law provides for a limit on the number of new on-sale general licenses ABC may issue each year based on the population growth of the county in which the licensed premises are located. The ratio is one on-sale general license for each 2,000 residents. For example, if a county grows by 10,000 people in a specific year, the department will issue five new licenses in that county.

If ABC receives more applications than there are licenses available, a public drawing is held. To take part in such a drawing, an applicant must have been a resident of California for at least 90 days prior to the scheduled drawing. ABC notifies successful drawing participants that they have 90 days to complete a formal application for their specific premises. The cost of these new licenses is $17,335 each.

Individuals seeking to open a full-service restaurant with a bar or cocktail menu who cannot obtain a liquor license through this process must locate an existing licensed owner willing to sell their license. This usually happens by contacting an alcohol license broker. The cost of acquiring a license on the secondary market is driven by supply and demand and can reach upwards of

$400,000.

Impact on counties. As previously noted, when a county experiences population growth, ABC issues additional licenses based on the population growth; currently 2,000 residents per one on-sale general license. While this system tends to work for most counties, there are a substantial number of counties where the demand for alcohol licenses far outweighs the current number of alcohol licenses in those counties. The reasons for the lack of licenses are generally a lack of population growth or because of the amount of tourism in the particular county, which results in higher demand for these types of businesses.

For example, in the County of Napa, the number of visitors continues to increase while the population of the county has not grown. While the majority of visitors to Napa take day trips, more than one million of these visitors spend at least one night in local lodgings. Tourism has thus become one of the major economic drivers in the region. In 2016, AB 1670 (Dodd, Chapter 347) authorized ABC to issue up to five additional new original on-sale general licenses to bona fide public eating places in the county, for a one-year period. While the bill allowed for the issuance of the five new licenses, demand far outweighed the availability of these licenses. In 2017, when ABC issued the five new licenses, there were a total of 38 applications for those five licenses.

County of Placer. As of the 2020 census, the population in Placer County was 404,739. Cities in Placer County include Auburn (county seat), Colfax, Lincoln, Roseville, and Rocklin. Roseville is the most populous city in the county, with a population of more than 147,000. Placer County is included in the Greater Sacramento metropolitan area. It is in both the Sacramento Valley and Sierra Nevada regions, in what is known as the Gold Country. The county stretches roughly 65 miles from Sacramento's suburbs at Roseville to the Nevada border and the shore of Lake Tahoe. Placer features easy access for visitors and residents alike to experience a year-round mix of spring, summer, fall and winter sports and activities, outdoor adventure, tantalizing food and wine grown in Placer’s Mediterranean climate, world-class shopping, dining, arts and culture and more.

Purpose of the bill. According to the author’s office, "Placer County is one of the fastest-growing counties in the state and has not been able to receive enough ABC licenses to support its growth. The goal of this bill is to support small businesses and help ensure restaurants thrive."

The author’s office notes that many new or growing Placer County businesses that apply for a license often must wait for months or longer before even having the possibility of securing a license. If no licenses are available from the state due to population restrictions, businesses interested in obtaining an ABC license may purchase one from an existing licensee for whatever price the market will bear. This is a major impediment for small, local restaurants. Current law has been harmful to many small businesses within the county and has stunted the continued economic growth of the community.

In opposition. According to Alcohol Justice, "On-sale outlet overconcentration (which includes full-bar restaurants) is strongly linked with increased alcohol harm and mortality. The first major summary of the efficacy of outlet concentration limits was summarized by a 2009 Task Force of the Centers for Disease Control and Prevention that highlighted increases in consumption, motor vehicle crashes, and violent injury. What’s more, these licenses are extraordinarily difficult to retire—be it in an effort to restrict alcohol harm, to protect the viability of restaurants without alcohol licenses, or to reflect population change—both administratively and ethically. The simplest, kindest, and, most importantly, safest option is to simply honor the outlet concentration limits.”

Prior legislation. SB 1452 (B. Dahle), Chapter 889, Statutes of 2022. This bill authorized the ABC to issue no more than a total of 10 new original on-sale general licenses for bona fide public eating places in both the County of El Dorado and in the County of Shasta, as specified.

AB 2459 (Bigelow), Chapter 53, Statutes of 2020. Authorized ABC to issue no more than a total of 10 additional new original on-sale general licenses for bona fide public eating places in Mariposa County and up to 10 additional new original on-sale general licenses per year to bona fide public eating places in the County of Napa over a 5-year period.

AB 471 (Ting), Chapter 442, Statutes of 2017. Authorized ABC to issue no more than five new original neighborhood-restricted special on-sale general licenses per year, until a total of 30 licenses are issued, to premises located in any of the census tracts, as specified, within the City and County of San Francisco. Additionally, authorized ABC to issue a maximum of 20 new original on-sale general licenses, over a four-year period, in Napa County, as specified.

AB 1670 (Dodd), Chapter 347, Statutes of 2016. Authorized ABC to issue no more than 5 additional new original on-sale general licenses to bona fide public eating places in the County of Napa with a seating capacity of 25 or more diners, for a period of one-year.

SB 1285 (Leno), Chapter 790, Statutes of 2016. Authorized, beginning January 1, 2017, ABC to issue no more than a total of five new original “neighborhood-restricted” special on-sale general licenses, for premises located within specified City and County of San Francisco neighborhoods, subject to certain requirements and restrictions.

AB 1558 (Mathis), Chapter 256, Statutes of 2016. Authorized ABC to issue, over a two-year period, five additional new on-sale general licenses for restaurants, with a seating capacity of 50 or more, in Inyo County.

REGISTERED SUPPORT / OPPOSITION:

Support

None on file

Opposition

Alcohol Justice

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