Existing law, the Alcoholic Beverage Control Act, which is administered by the Department of Alcoholic Beverage Control, regulates the application, issuance, and suspension of alcoholic beverage licenses. Existing law, known as tied-house restrictions, generally prohibits specified licensees, or their officers, directors, or agents, from giving or lending money or a thing of value to a person operating, owning, or maintaining any on-sale premises where alcoholic beverages are sold. In this regard, existing law specifically prohibits paying a retailer for advertising. Existing law creates a variety of exceptions to this prohibition, as specified.

This bill would authorize certain licensees to sponsor events promoted by, and purchase advertising space or time from, an operator of a for-profit cemetery, subject to specified conditions, including that the for-profit cemetery be more than 100 years old and be located in, and designated, a Historic-Cultural Monument by the City of Los Angeles. The bill would require any sponsorship of events or purchase of advertising space or time to be conducted pursuant to a written agreement. The bill would make it a misdemeanor for certain licensees to induce, through coercion or other illegal means, the holder of a wholesalers license to fulfill contractual obligations, as specified, and for an on-sale licensee to solicit or coerce certain licensees to purchase advertising space or time, as specified. By creating new crimes, the bill would impose a state-mandated local program.

This bill would make legislative findings and declarations as to the necessity of a special statute for cemeteries more than 100 years old and located in, and designated, a Historic-Cultural Monument by the City of Los Angeles.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law, the Alcoholic Beverage Control Act, which is administered by the Department of Alcoholic Beverage Control, regulates the application, issuance, and suspension of alcoholic beverage licenses. Existing law, known as tied-house restrictions, generally prohibits specified licensees, or their officers, directors, or agents, from giving or lending money or a thing of value to a person operating, owning, or maintaining any on-sale premises where alcoholic beverages are sold. In this regard, existing law specifically prohibits paying a retailer for advertising. Existing law creates a variety of exceptions to this prohibition, as specified.

This bill would authorize certain licensees to sponsor events promoted by, and purchase advertising space or time from, an operator of a for-profit cemetery, subject to specified conditions, including that the for-profit cemetery be more than 100 years old and be located in, and designated, a Historic-Cultural Monument by the City of Los Angeles. The bill would require any sponsorship of events or purchase of advertising space or time to be conducted pursuant to a written agreement. The bill would make it a misdemeanor for certain licensees to induce, through coercion or other illegal means, the holder of a wholesalers license to fulfill contractual obligations, as specified, and for an on-sale licensee to solicit or coerce certain licensees to purchase advertising space or time, as specified. By creating new crimes, the bill would impose a state-mandated local program.

This bill would make legislative findings and declarations as to the necessity of a special statute for cemeteries more than 100 years old and located in, and designated, a Historic-Cultural Monument by the City of Los Angeles.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law, the Alcoholic Beverage Control Act, which is administered by the Department of Alcoholic Beverage Control, regulates the application, issuance, and suspension of alcoholic beverage licenses. Existing law, known as tied-house restrictions, generally prohibits specified licensees, or their officers, directors, or agents, from giving or lending money or a thing of value to a person operating, owning, or maintaining any on-sale premises where alcoholic beverages are sold. In this regard, existing law specifically prohibits paying a retailer for advertising. Existing law creates a variety of exceptions to this prohibition, as specified.

This bill would authorize certain licensees to sponsor events promoted by, and purchase advertising space or time from, an operator of a for-profit cemetery, subject to specified conditions, including that the for-profit cemetery be more than 100 years old and be located in, and designated, a Historic-Cultural Monument by the City of Los Angeles. The bill would require any sponsorship of events or purchase of advertising space or time to be conducted pursuant to a written agreement. The bill would make it a misdemeanor for certain licensees to induce, through coercion or other illegal means, the holder of a wholesalers license to fulfill contractual obligations, as specified, and for an on-sale licensee to solicit certain licensees to purchase advertising space or time, as specified. By creating new crimes, the bill would impose a state-mandated local program.

This bill would make legislative findings and declarations as to the necessity of a special statute for cemeteries more than 100 years old and located in, and designated, a Historic-Cultural Monument by the City of Los Angeles.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Date of Hearing: June 19, 2024

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

SBPCA Bill Id:SB 1495

Author:(Wilk) – As Introduced Ver:February 16, 2024

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

SUMMARY:

This bill creates a tied-house exception authorizing specified licensees regulated by the Department of Alcoholic Beverage Control (ABC) to sponsor events promoted by, and purchase advertising space and time from, an operator of a for-profit cemetery meeting certain conditions in the City of Los Angeles (Hollywood Forever).

Specifically, this bill authorizes licensee sponsorship and advertisements in connection with the promotion of a live artistic, concert, musical, film screening, food and beverage, lifestyle, or other cultural event permitted at the cemetery and establishes rules for such contractual arrangements, including specified misdemeanor penalties for a licensee convicted of coercion.

FISCAL EFFECT:

Minor and absorbable enforcement costs to ABC.

This committee sees a wide array of bills that propose to modify the scope of alcohol laws. Generally, advertising tied-house exceptions such as those proposed by this bill do not generate major new enforcement workload for ABC, but many similar exceptions for other premises across the state have been approved in recent years. Over time, these proposals in the aggregate could lead to significant new costs and future budget requests.

COMMENTS:

1. Purpose. The author notes that tied-house restrictions prohibit alcohol “manufacturers and distributors from sponsoring events and festivals at Hollywood Forever.” However, the author contends numerous exceptions to these “state restrictions” have been previously granted and “Given the precedents and Hollywood Forever’s unique operations as both a functioning cemetery but also a cultural space, a state-level tied-house restriction exception for Hollywood Forever is appropriate.” This bill is sponsored by Hollywood Forever and supported by the California Association of Winegrape Growers.
2. Background.

Hollywood Forever. The Hollywood Forever cemetery is on the National Register of Historic Places and is the final resting place of many founders of the City of Los Angeles, as well as various Hollywood icons. In 1999, Hollywood Forever began a cultural events program to transform the cemetery into a cultural center for both the living and the dead. Hollywood Forever currently hosts outdoor movie screenings, indoor performances, and a Dia de los Muertos celebration, among other events. AB 1217 (Santiago), Chapter 474, Statutes of 2018, authorized ABC to issue a special on-sale general license to Hollywood Forever, allowing the sale of alcohol during events.

Tied-house Law. California’s tied-house law prevents the vertical integration of the alcohol industry by keeping the manufacturer, wholesaler, and retailer separated. Generally, one type of license holder is not permitted to do business as another type of licensee, and licensees are prohibited from directly or indirectly giving away anything of value, such as free goods, services, or advertising, in connection with the sale or distribution of an alcoholic beverage.

Another Exception. Over the years, numerous exceptions to this tied-house prohibition have been added for arenas and stadiums with on-sale licenses, such as those for Chase Center and Petco Park, allowing sponsorship deals with alcohol manufacturers and distributors. Current exceptions also exist for numerous facilities on the premises of California’s colleges, such as the Los Angeles Memorial Coliseum and a multi-building arts complex at Sonoma State University. This bill grants an advertising and sponsorship tied-house exception to Hollywood Forever in connection with the cemetery’s cultural events.

1. Related Legislation. SB 392 (Bradford), Chapter 604, Statutes of 2023, provided a similar tied-house exception to Intuit Dome in the City of Inglewood.

AB 840 (Addis), Chapter 346, Statutes of 2023, provided a similar tied-house exception to facilities situated on specified California State University campuses and St. Mary’s College and revised the exception already provided to a motorsports entertainment complex located in the County of San Bernardino.

AB 1294 (Boerner), Chapter 471, Statutes of 2023, provided a similar tied-house exception to a company that owns a wave basin facility located in the County of Kings.

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

Date of Hearing: June 5, 2024

ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION

Blanca Rubio, Chair

SBPCA Bill Id:SB 1495

Author:(Wilk) – As Introduced Ver:February 16, 2024

SENATE VOTE: 38-0

SUBJECT: Tied-house restrictions: for-profit cemeteries: City of Los Angeles

SUMMARY: This bill authorizes specified alcohol licensees to sponsor events or purchase advertising space and time from, an operator of a for-profit cemetery (Hollywood Forever Cemetery). Specifically, this bill:

1) Authorizes specified alcohol licenses to sponsor events promoted by, and purchase advertising space or time from the operator of the Hollywood Forever Cemetery only if the sponsorship and the advertising space is purchased in connection with the cultural events, as specified, and permitted by the local jurisdiction.

2) Requires the on-sale licensee to serve other brands of beer, distilled spirits, and wine in addition to any brand manufactured or distributed by the sponsoring alcohol licensee.

3) Prohibits the advertising space or time purchased to be placed in an on-sale licensed premises, other than where the cultural event will take place.

4) Provides that an agreement for the sponsorship of advertising space and time should not be conditioned directly or indirectly, on the purchase, sale, or distribution of any alcoholic beverage manufactured or distributed by the advertising or sponsoring alcohol licensee.

5) Requires that any sponsorship of events or purchase of advertising space or time shall be conducted pursuant to a written contract.

6) Provides that any alcohol licensee who, through coercion or other illegal means induces a holder of a wholesaler’s license to sponsor events is guilty of a misdemeanor, 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 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 onsale and off-sale). This is referred to as the “Tied-house” law or “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, an alcohol manufacturer, wholesaler, or any officer, director, or agent of any such person from owning, directly or indirectly, any interest in any on-sale license, or from providing anything of value to retailers, be it free goods, services, or advertising. Numerous exceptions to these restrictions have been enacted throughout the years in those specific instances where the Legislature determined that the public's interests were protected.

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. 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.

5) 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 restaurant or bar). An “off-sale” license authorizes the sale of all types of alcoholic beverages for consumption off the premises in original sealed containers.

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

COMMENTS:

Purpose of the bill. According to the author’s office, “tied-house restrictions prohibit a non-retail license holder from having an economic interest in an on-sale license. This includes holding ownership, giving money or anything of value, ownership interest in equipment, or lease any premises. Hollywood Forever is a permanent retail on-sale license holder. Accordingly, it cannot receive ‘money or anything of value’ from a manufacturer, bottler, importer, or wholesaler. In addition to money, this also includes sponsorships and advertising at cultural events. This prohibits manufacturers and distributors from sponsoring events and festivals at Hollywood Forever.”

Additionally, the author’s office states that, “the Legislature has granted numerous properties exceptions from these state restrictions due to unique circumstances that they face. Given the precedents and Hollywood Forever’s unique operations as both a functioning cemetery but also a cultural space, a state-level tied-house restriction exception for Hollywood Forever is appropriate.”

Background.

Tied-house laws. Most states have some version of Tied-house laws to keep each tier independent of the others, mainly for the purpose of prohibiting tied houses and the anti-competitive results and temperance issues they raise. There are many variations on this theme among the states, since the Twenty-First Amendment gave the states the power to create their own regulatory schemes.

State and federal laws generally prohibit certain relationships among those who produce, distribute, and sell alcoholic beverages. The term “Tied-house” is derived from a common practice in England whereby a bar or public house was “tied”—by ownership, contractual obligations, or other influences—to a specific manufacturer. In some instances, that model encouraged intemperance in alcohol consumption. This was because retailers would offer manufacturers generous favors, such as expensive business meals and gifts. In order to recoup these costs, aggressive product promotion was needed. Manufacturers sometimes used their influence to force tied houses to sell their products and exclude products from other manufacturers.

As a result, after the repeal of prohibition in 1933, California’s current “three-tier” system was introduced. This body of law was initially created to: a) promote the state’s interest in an orderly market; b) prohibit vertical integration and dominance by a single producer in the market place; c) stop commercial bribery and safeguard the public from predatory marketing techniques; d) discourage and/or prevent intemperate drinking. These provisions prohibit a manufacturer from paying for advertising space at any facility where the facility is licensed to sell alcoholic beverages. In essence, if a licensee at a higher level of the distribution chain were allowed to give things of value to a licensee at a lower level, said licensee might have added incentive to give preference to the products of the person/entity making the gift.

In general, state law prohibits suppliers from providing retailers with “things of value.” These “tied-house” restrictions are generally aimed at preventing undue influence by suppliers over retailers. The Act, however, also contains numerous exceptions to tied-house laws in those specific instances where the Legislature determined that the public's interests are protected.

Additionally, over the years, several tied-house exceptions have been also granted by the Legislature for a number of stadiums, parks, entertainment complexes, and arenas. Some examples are 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 many other related venues. In some cases, it was commonly accepted that the tied-house exception was necessary because the project was privately financed and the revenue from the sale of advertising and sponsorship would help to offset construction costs. (For other related tied-house exceptions, see prior legislation)

Generally, the business community is interested in removing unnecessary business regulations and creating conditions that facilitate investment and expansion opportunities for companies that have some degree of ownership in multiple segments of the industry. Opponents' of tied-house exceptions have generally expressed concern over the further erosion of California’s tied-house laws because the creation of another exception to the general rule.

Why the need for the bill? SB 1495 would similarly provide a tied-house advertising exception to the Hollywood Forever Cemetery during cultural events as defined in this bill. This bill includes similar provisions as other tied-house advertising exception bills, including language that the on-sale licensee to serve other brands of beer, distilled spirits, and wine in addition to any brand manufactured or distributed by the sponsoring alcohol licensee.

Hollywood Forever Cemetery. The Hollywood Forever Cemetery in the City of Los Angeles was founded in 1899. The Cemetery is on the National Register of Historic Places and is designated a Historic-Cultural Monument by the City of Los Angeles. It is the final resting place of many of the founders of the City of Los Angeles as well as various Hollywood icons. After declaring bankruptcy in 1995, Hollywood Forever purchased the cemetery in 1998 with approval of the Los Angeles City Council and the State of California.

The purchase included a plan to transform the cemetery and making it a cultural center in Los Angeles for both the living and the dead. In 1999, Hollywood Forever began a Cultural Events Program. This has evolved to include outdoor movie screenings, indoor performances, and a Dia de los Muertos Celebration, which has included up to 35,000 attendees.

In 2018, AB 1217 (Santiago, Chapter 474, Statutes of 2018) was signed into a law and allowed the ABC to issue a special on-sale general license to Hollywood Forever Cemetery. Prior to this authorization, Hollywood Forever had to obtain a one-day permit from the ABC any time that it wanted to sell alcohol to guests during events.

Related legislation. AB 2896 (Valencia) of 2024. This bill would have expanded defined exceptions in law to additionally permit, in the case of a theme or amusement park located in Orange County, the advertising space or time to be purchased from or on behalf of an entity that is under common ownership with the theme or amusement park in connection with the activities of the entity. (Never heard in the Assembly Committee on Governmental Organization)

Prior legislation. SB 392 (Bradford), Chapter 604, Statutes of 2023. Authorized specified licensees to purchase advertising space and time from, or on behalf of, an on-sale licensee that is the owner, manager, or major tenant of a fully enclosed arena with a seating capacity of at least 18,000 seats located in the City of Inglewood (Intuit Dome), as specified.

SB 430 (Dodd) of 2023. Would have authorized specified licensees to purchase advertising services from an advertising subsidiary that is under the common ownership with a retail licensee subsidiary if specified conditions are met. (Held in the Assembly Appropriations Committee Suspense File)

AB 840 (Addis), Chapter 346, Statutes of 2023. Authorized specified licensees to purchase advertising space and time from, or on behalf of, an on-sale licensee that is the owner, manager, or major tenants at various facilities that are situated on California State University campuses located in the Counties of San Luis Obispo, Fresno, Monterey, Orange, Santa Clara, and Los Angeles, as specified.

AB 1294 (Boerner), Chapter 471, Statutes of 2023. Authorized specified licensees to purchase advertising space and time from, or on behalf of, a company that owns a facility that includes a wave basin located in the County of Kings (Surf Ranch) in connection with activities conducted on the premises of a permanent retail licensee located at the wave basin facility, as specified.

SB 1280 (Hueso), Chapter 304, Statutes of 2022. Authorized specified licensees to purchase advertising space and time from, or on behalf of, an on-sale licensee that is the owner, manager, or major tenant at specified facilities on the campus of San Diego State University.

AB 98 (Kalra), Chapter 267, Statutes of 2022. Authorized specified licensees to purchase advertising space and time from, or on behalf of, an on-sale licensee that is the owner, manager, or major tenant of a fully enclosed arena with a fixed capacity in excess of 4,000 seats located in the City of San Jose (Tech CU Arena).

AB 1323 (Haney), Chapter 271, Statutes of 2022. Authorized specified licensees to purchase advertising space and time from, or on behalf of, an on-sale licensee that is the owner, manager, or major tenant of an on-sale retail licensed premises configured with theatrical seating of at least 1,600 seats but no more than 2,400 seats in the City and County of San Francisco (Curran Theater), as specified.

AB 1330 (Mayes), Chapter 272, Statutes of 2022. Authorized specified licensees to purchase advertising space and time from, or on behalf of, an on-sale licensee that is the owner, manager, or major tenant at a fully enclosed arena with a fixed capacity in excess of 10,000 seats located in the County of Riverside (Acrisure Arena).

SB 386 (Umberg), Chapter 309, Statutes of 2021. Authorized specified alcohol licensees to sponsor events promoted by, and to purchase advertising space and time from, or on behalf, an on-sale licensee that is the owner, operator agent of the operator, or sole assignee or the operator’s advertising rights of a mixed-use district located in the County of Orange (ocV!BE), as specified.

AB 3139 (Gray), Chapter 175, Statutes of 2020. Extended, among other things, a current tied-house exception to the Orpheum and Golden Gate Theater in the City and County of San Francisco.

AB 1217 (Santiago), Chapter 474, Statutes of 2018. Authorized ABC to issue a special on-sale general license to the operator of a specified for-profit cemetery (Hollywood Forever Cemetery).

In support. According to Hollywood Forever, “Hollywood Forever events are in good standing with the Los Angeles Police Department, Los Angeles Fire Department, Los Angeles City Council, and with ABC. Furthermore, in the more than 20 years Hollywood Forever has been conducting these events, there are no records of arrests or public safety problems related to the special events. This bill seeks a legislative solution to grant an exception to the tied-house restrictions and allow licensed beer, distilled spirits manufacturers, and winegrower and distributors to sponsor events and festivals at Hollywood Forever. These sponsorships generate important revenues for the care, maintenance, and improvements of the cemetery grounds, maintain financial stability and enhance its ability to continue to serve the Los Angeles region by hosting cultural events.”

REGISTERED SUPPORT / OPPOSITION:

Support

Hollywood Forever (Sponsor)

CA Assn of Winegrape Growers

Opposition

None on file

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

 THIRD READING  

Bill No: SB 1495

Author: Wilk (R)

Introduced: 2/16/24

Vote: 21

SENATE GOVERNMENTAL ORG. COMMITTEE: 16-0, 4/23/24

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

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

SUBJECT: Tied-house restrictions: for-profit cemeteries: City of Los Angeles

SOURCE: Hollywood Forever

DIGEST: This bill authorizes specified alcohol licensees to sponsor events or purchase advertising space and time from, an operator of a for-profit cemetery (Hollywood Forever Cemetery).

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 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 “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. Authorizes specified licensees to purchase advertising space and time from, or on behalf of, an on-sale licensee that is the owner, manager, or major tenant at specified facilities on various campuses at the California State University.
6. 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.
7. Authorizes the ABC to issue a special on-sale general license to the operator of a specified for profit cemetery (Hollywood Forever Cemetery).

This bill:

1. Authorizes specified alcohol licenses to sponsor events promoted by, and purchase advertising space or time from the operator of the Hollywood Forever Cemetery only if the sponsorship and the advertising space is purchased in connection with the cultural events, as specified, and permitted by the local jurisdiction.
2. Requires the on-sale licensee to serve other brands of beer, distilled spirits, and wine in addition to any brand manufactured or distributed by the sponsoring alcohol licensee.
3. Prohibits the advertising space or time purchased to be placed in an on-sale licensed premises, other than where the cultural event will take place.
4. Provides that an agreement for the sponsorship of advertising space and time should not be conditioned directly or indirectly, on the purchase, sale, or distribution of any alcoholic beverage manufactured or distributed by the advertising or sponsoring alcohol licensee.
5. Requires that any sponsorship of events or purchase of advertising space or time shall be conducted pursuant to a written contract.
6. Provides that any alcohol licensee who, through coercion or other illegal means induces a holder of a wholesaler’s license to sponsor events is guilty of a misdemeanor, as specified.

Background

1. Author Statement. According to the author’s office, “tied-house restrictions prohibit a non-retail license holder from having an economic interest in an on-sale license. This includes holding ownership, giving money or anything of value, ownership interest in equipment, or lease any premises. Hollywood Forever is a permanent retail on-sale license holder. Accordingly, it cannot receive ‘money or anything of value’ from a manufacturer, bottler, importer, or wholesaler. In addition to money, this also includes sponsorships and advertising at cultural events. This prohibits manufacturers and distributors from sponsoring events and festivals at Hollywood Forever.”

Additionally, the author’s office states that, “the Legislature has granted numerous properties exceptions from these state restrictions due to unique circumstances that they face. Given the precedents and Hollywood Forever’s unique operations as both a functioning cemetery but also a cultural space, a state-level tied-house restriction exception for Hollywood Forever is appropriate.”

1. 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 any facility where the facility is licensed to sell alcoholic beverages. Over the years, numerous exceptions to this prohibition have been added to a number of stadiums, parks, entertainment complexes, and arenas. Some examples are Levi’s Stadium in Santa Clara, Honda Center in Anaheim, Kern County Arena in Bakersfield, the National Orange Show Events Center in San Bernardino, Grizzly Stadium in Fresno, Sutter Health Park in West Sacramento, SAP Center in San Jose, Dignity Health in Carson, and numerous other venues.

This bill would similarly provide a tied-house advertising exception to the Hollywood Forever Cemetery during cultural events as defined in this bill. This bill includes similar provisions as other tied-house advertising exception bills, including language that the on-sale licensee to serve other brands of beer, distilled spirits, and wine in addition to any brand manufactured or distributed by the sponsoring alcohol licensee.

1. Hollywood Forever Cemetery. The Hollywood Forever Cemetery in the City of Los Angeles was founded in 1899. The Cemetery is on the National Register of Historic Places and is designated a Historic-Cultural Monument by the City of Los Angeles. It is the final resting place of many of the founders of the City of Los Angeles as well as various Hollywood icons. After declaring bankruptcy in 1995, Hollywood Forever purchased the cemetery in 1998 with approval of the Los Angeles City Council and the State of California.

The purchase included a plan to transform the cemetery and making it a cultural center in Los Angeles for both the living and the dead. In 1999, Hollywood Forever began a Cultural Events Program. This has evolved to include outdoor movie screenings, indoor performances, and a Dia de los Muertos Celebration, which has included up to 35,000 attendees.

In 2018, AB 1217 (Santiago, Chapter 474, Statutes of 2018) was signed into a law and allowed the ABC to issue a special on-sale general license to Hollywood Forever Cemetery. Prior to this authorization, Hollywood Forever had to obtain a one-day permit from the ABC any time that it wanted to sell alcohol to guests during events.

Related/Prior Legislation

SB 392 (Bradford, Chapter 604, Statutes of 2023) authorized specified licensees to purchase advertising space and time from, or on behalf of, an on-sale licensee that is the owner, manager, or major tenant of a fully enclosed arena with a seating capacity of at least 18,000 seats located in the City of Inglewood (Intuit Dome), as specified.

SB 430 (Dodd, 2023) authorized specified licensees to purchase advertising services from an advertising subsidiary that is under the common ownership with a retail licensee subsidiary if specified conditions are met. Held in the Assembly Appropriations Committee Suspense File.

AB 840 (Addis, Chapter 346, Statutes of 2023) authorized specified licensees to purchase advertising space and time from, or on behalf of, an on-sale licensee that is the owner, manager, or major tenants at various facilities that are situated on California State University campuses located in the Counties of San Luis Obispo, Fresno, Monterey, Orange, Santa Clara, and Los Angeles, as specified.

AB 1294 (Boerner, Chapter 471, Statutes of 2023) authorized specified licensees to purchase advertising space and time from, or on behalf of, a company that owns a facility that includes a wave basin located in the County of Kings (Surf Ranch) in connection with activities conducted on the premises of a permanent retail licensee located at the wave basin facility, as specified.

SB 1280 (Hueso, Chapter 304, Statutes of 2022) authorized specified licensees to purchase advertising space and time from, or on behalf of, an on-sale licensee that is the owner, manager, or major tenant at specified facilities on the campus of San Diego State University.

AB 98 (Kalra, Chapter 267, Statutes of 2022) authorized specified licensees to purchase advertising space and time from, or on behalf of, an on-sale licensee that is the owner, manager, or major tenant of a fully enclosed arena with a fixed capacity in excess of 4,000 seats located in the City of San Jose (Tech CU Arena).

AB 1323 (Haney, Chapter 271, Statutes of 2022) authorized specified licensees to purchase advertising space and time from, or on behalf of, an on-sale licensee that is the owner, manager, or major tenant of an on-sale retail licensed premises configured with theatrical seating of at least 1,600 seats but no more than 2,400 seats in the City and County of San Francisco (Curran Theater), as specified.

AB 1330 (Mayes, Chapter 272, Statutes of 2022) authorized specified licensees to purchase advertising space and time from, or on behalf of, an on-sale licensee that is the owner, manager, or major tenant at a fully enclosed arena with a fixed capacity in excess of 10,000 seats located in the County of Riverside (Acrisure Arena).

SB 386 (Umberg, Chapter 309, Statutes of 2021) authorized specified alcohol licensees to sponsor events promoted by, and to purchase advertising space and time from, or on behalf, an on-sale licensee that is the owner, operator agent of the operator, or sole assignee or the operator’s advertising rights of a mixed-use district located in the County of Orange (ocV!BE), as specified.

AB 3139 (Gray, Chapter 175, Statutes of 2020) extended, among other things, a current tied-house exception to the Orpheum and Golden Gate Theater in the City and County of San Francisco.

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

SUPPORT: (Verified 5/6/24)

Hollywood Forever (source)

OPPOSITION: (Verified 5/6/24)

None received

ARGUMENTS IN SUPPORT: According to Hollywood Forever, “Hollywood Forever events are in good standing with the Los Angeles Police Department, Los Angeles Fire Department, Los Angeles City Council, and with ABC. Furthermore, in the more than 20 years Hollywood Forever has been conducting these events, there are no records of arrests or public safety problems related to the special events. SB 1495 seeks a legislative solution to grant an exception to the tied-house restrictions and allow licensed beer, distilled spirits manufacturers, and winegrower and distributors to sponsor events and festivals at Hollywood Forever. These sponsorships generate important revenues for the care, maintenance, and improvements of the cemetery grounds, maintain financial stability and enhance its ability to continue to serve the Los Angeles region by hosting cultural events.”

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

5/7/24 10:52:32

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SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Bill Dodd

Chair

2023 - 2024 Regular

Bill No: SB Hearing Date: 4/23/2024

SUBJECT:

DIGEST: This bill authorizes specified alcohol licensees to sponsor events or purchase advertising space and time from, an operator of a for-profit cemetery (Hollywood Forever Cemetery).

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 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 “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. Authorizes specified licensees to purchase advertising space and time from, or on behalf of, an on-sale licensee that is the owner, manager, or major tenant at specified facilities on various campuses at the California State University.
6. 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.
7. Authorizes the Department of ABC to issue a special on-sale general license to the operator of a specified for profit cemetery (Hollywood Forever Cemetery).

This bill:

1. Authorizes specified alcohol licenses to sponsor events promoted by, and purchase advertising space or time from the operator of the Hollywood Forever Cemetery only if the sponsorship and the advertising space is purchased in connection with the cultural events, as specified, and permitted by the local jurisdiction.
2. Requires the on-sale licensee to serve other brands of beer, distilled spirits, and wine in addition to any brand manufactured or distributed by the sponsoring alcohol licensee.
3. Prohibits the advertising space or time purchased to be placed in an on-sale licensed premises, other than where the cultural event will take place.
4. Provides that an agreement for the sponsorship of advertising space and time should not be conditioned directly or indirectly, on the purchase, sale, or distribution of any alcoholic beverage manufactured or distributed by the advertising or sponsoring alcohol licensee.
5. Requires that any sponsorship of events or purchase of advertising space or time shall be conducted pursuant to a written contract.
6. Provides that any alcohol licensee who, through coercion or other illegal means induces a holder of a wholesaler’s license to sponsor events is guilty of a misdemeanor, as specified.

Background

Author Statement. According to the author’s office, “tied-house restrictions prohibit a non-retail license holder from having an economic interest in an on-sale license. This includes holding ownership, giving money or anything of value, ownership interest in equipment, or lease any premises. Hollywood Forever is a permanent retail on-sale license holder. Accordingly, it cannot receive ‘money or anything of value’ from a manufacturer, bottler, importer, or wholesaler. In addition to money, this also includes sponsorships and advertising at cultural events. This prohibits manufacturers and distributors from sponsoring events and festivals at Hollywood Forever.”

Additionally, the author’s office states that, “the Legislature has granted numerous properties exceptions from these state restrictions due to unique circumstances that they face. Given the precedents and Hollywood Forever’s unique operations as both a functioning cemetery but also a cultural space, a state-level tied-house restriction exception for Hollywood Forever is appropriate.”

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: (1) promote the state’s interest in an orderly market; (2) prohibit the vertical integration and dominance by a single producer in the marketplace; (3) prohibit commercial bribery and to protect the public from predatory marketing practices; and (4) discourage and/or prevent the intemperate use of alcoholic beverages.

These provisions prohibit a manufacturer from paying for advertising space at any facility where the facility is licensed to sell alcoholic beverages. Over the years, numerous exceptions to this prohibition have been added to a number of stadiums, parks, entertainment complexes, and arenas. Some examples are Levi’s Stadium in Santa Clara, Honda Center in Anaheim, Kern County Arena in Bakersfield, the National Orange Show Events Center in San Bernardino, Grizzly Stadium in Fresno, Sutter Health Park in West Sacramento, SAP Center in San Jose, Dignity Health in Carson, and numerous other venues.

This bill would similarly provide a tied-house advertising exception to the Hollywood Forever Cemetery during cultural events as defined in the bill. The bill includes similar provisions as other tied-house advertising exception bills, including language that the on-sale licensee to serve other brands of beer, distilled spirits, and wine in addition to any brand manufactured or distributed by the sponsoring alcohol licensee.

Hollywood Forever Cemetery. The Hollywood Forever Cemetery in the City of Los Angeles was founded in 1899. The Cemetery is on the National Register of Historic Places and is designated a Historic-Cultural Monument by the City of Los Angeles. It is the final resting place of many of the founders of the City of Los Angeles as well as various Hollywood icons. After declaring bankruptcy in 1995, Hollywood Forever purchased the cemetery in 1998 with approval of the Los Angeles City Council and the State of California.

The purchase included a plan to transform the cemetery and making it a cultural center in Los Angeles for both the living and the dead. In 1999, Hollywood Forever began a Cultural Events Program. This has evolved to include outdoor movie screenings, indoor performances, and a Dia de los Muertos Celebration, which has included up to 35,000 attendees.

In 2018, AB 1217 (Santiago, Chapter 474, Statutes of 2018) was signed into a law and allowed the Department of ABC to issue a special on-sale general license to Hollywood Forever Cemetery. Prior to this authorization, Hollywood Forever had to obtain a one-day permit from the Department of ABC any time that it wanted to sell alcohol to guests during events.

Prior/Related Legislation

SB 392 (Bradford, Chapter 604, Statutes of 2023) authorizes specified licensees to purchase advertising space and time from, or on behalf of, an on-sale licensee that is the owner, manager, or major tenant of a fully enclosed arena with a seating capacity of at least 18,000 seats located in the City of Inglewood (Intuit Dome), as specified.

SB 430 (Dodd, 2023) authorizes specified licensees to purchase advertising services from an advertising subsidiary that is under the common ownership with a retail licensee subsidiary if specified conditions are met. (Held in the Assembly Appropriations Suspense File)

AB 840 (Addis, Chapter 346, Statutes 2023) authorizes specified licensees to purchase advertising space and time from, or on behalf of, an on-sale licensee that is the owner, manager, or major tenants at various facilities that are situated on California State University campuses located in the Counties of San Luis Obispo, Fresno, Monterey, Orange, Santa Clara, and Los Angeles, as specified.

AB 1294 (Boerner, Chapter 471, Statutes of 2023) authorizes specified licensees to purchase advertising space and time from, or on behalf of, a company that owns a facility that includes a wave basin located in the County of Kings (Surf Ranch) in connection with activities conducted on the premises of a permanent retail licensee located at the wave basin facility, as specified.

SB 1280 (Hueso, Chapter 304, Statutes of 2022) authorizes specified licensees to purchase advertising space and time from, or on behalf of, an on-sale licensee that is the owner, manager, or major tenant at specified facilities on the campus of San Diego State University.

AB 98 (Kalra, Chapter 267, Statutes of 2022) authorizes specified licensees to purchase advertising space and time from, or on behalf of, an on-sale licensee that is the owner, manager, or major tenant of a fully enclosed arena with a fixed capacity in excess of 4,000 seats located in the City of San Jose (Tech CU Arena).

AB 1323 (Haney, Chapter 271, Statutes of 2022) authorizes specified licensees to purchase advertising space and time from, or on behalf of, an on-sale licensee that is the owner, manager, or major tenant of an on-sale retail licensed premises configured with theatrical seating of at least 1,600 seats but no more than 2,400 seats in the City and County of San Francisco (Curran Theater), as specified.

AB 1330 (Mayes, Chapter 272, Statutes 2022) authorizes specified licensees to purchase advertising space and time from, or on behalf of, an on-sale licensee that is the owner, manager, or major tenant at a fully enclosed arena with a fixed capacity in excess of 10,000 seats located in the County of Riverside (Acrisure Arena).

SB 386 (Umberg, Chapter 309, Statutes of 2021) authorizes specified alcohol licensees to sponsor events promoted by, and to purchase advertising space and time from, or on behalf, an on-sale licensee that is the owner, operator agent of the operator, or sole assignee or the operator’s advertising rights of a mixed-use district located in the County of Orange (ocV!BE), as specified.

AB 3139 (Gray, Chapter 175, Statutes of 2020) among other things, extended a current tied-house exception to the Orpheum and Golden Gate Theater in the City and County of San Francisco.

AB 1217 (Santiago, Chapter 474, Statutes of 2018) authorizes the Department of ABC to issue a special on-sale general license to the operator of a specified for profit cemetery (Hollywood Forever Cemetery).

AB 2000 (Kalra, Chapter 483, Statutes of 2018) extended an existing exception in the ABC Act pertaining to the general prohibition against advertising arrangements between retail, wholesale, and manufacturer licensees to include an outdoor professional sports stadium with a fixed seating capacity of at least 3,000 seats located in the City of San Jose (San Jose Municipal Stadium – minor league baseball San Jose Giants), and an outdoor professional sports stadium with a fixed seating capacity of at least 15,000 seats located in the City of San Jose (Avaya Stadium – San Jose Earthquakes).

AB 2146 (Gloria, Chapter 487, Statutes of 2018) extended an existing exception in the ABC Act 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 43,000 seats located in the City of San Diego (Petco Park – San Diego Padres).

SB 664 (Dodd, Chapter 486, Statutes of 2017) extended an existing exception in the ABC Act pertaining to the general prohibition against advertising arrangements between retail, wholesale, and manufacturer licensees to include an outdoor stadium (AT&T Park – the home of the San Francisco Giants) and an indoor arena (Chase Center – the home of the Golden State Warriors) with specified seating capacities located in the City and County of San Francisco.

AB 1724 (Jones-Sawyer, Chapter 478, Statutes of 2017), among other things, extended an existing exception in the ABC Act pertaining to the general prohibition against advertising arrangements between retail, wholesale, and manufacturer licensees to include a specified outdoor stadium located in the City of Los Angeles (Banc of California Stadium, the future home of the Los Angeles Football Club).

SB 582 (Bradford, Chapter 672, Statutes of 2017) allows beer manufacturers, winegrowers, distilled spirits rectifiers, distilled spirits manufacturers, or distilled spirits manufacturer’s agents to purchase advertising space and time from, or on behalf of, on-sale retail licensees at a specified stadium (The Los Angeles Stadium at Hollywood Park) and performance venue located in the City of Inglewood.

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

SUPPORT:

Hollywood Forever (Source)

OPPOSITION:

None received

ARGUMENTS IN SUPPORT: According to Hollywood Forever, “Hollywood Forever events are in good standing with the Los Angeles Police Department, Los Angeles Fire Department, Los Angeles City Council, and with ABC. Furthermore, in the more than 20 years Hollywood Forever has been conducting these events, there are no records of arrests or public safety problems related to the special events. SB 1495 seeks a legislative solution to grant an exception to the tied-house restrictions and allow licensed beer, distilled spirits manufacturers, and winegrower and distributors to sponsor events and festivals at Hollywood Forever. These sponsorships generate important revenues for the care, maintenance, and improvements of the cemetery grounds, maintain financial stability and enhance its ability to continue to serve the Los Angeles region by hosting cultural events.”