Bill Text: CA AB3139 | 2019-2020 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

---

Bill Title: Alcoholic beverages: licensees.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Passed) 2020-09-25 - Chaptered by Secretary of State - Chapter 175, Statutes of 2020. [AB3139 Detail]

Download: California-2019-AB3139-Amended.html

---

Amended  IN  Senate  August 20, 2020

Amended  IN  Senate  July 23, 2020

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill

No. 3139

---

Introduced by Assembly Members Gray and Chiu

February 21, 2020

---

An act to amend Sections 24045.7, 24081, and 25503.6 of 24045.7 and 24081 of, and to add Section 25503.35 to, the Business and Professions Code, relating to alcoholic beverages, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL'S DIGEST

AB 3139, as amended, Gray. Alcoholic beverages: licensees.

(1) The Alcoholic Beverage Control Act, which is administered by the Department of Alcoholic Beverage Control, contains various provisions regulating the application for, the issuance of, the suspension of, and the conditions imposed upon, alcoholic beverage licenses by the Department of Alcoholic Beverage Control.

Existing law authorizes the department to issue a special on-sale general license to any nonprofit theater company, as specified, for use at a single location. Existing law, known as tied-house restrictions, generally prohibits certain alcoholic beverage licensees, including manufacturers, from holding any ownership interest in an on-sale license, subject to a variety of exceptions. In connection with special on-sale general licenses issued to nonprofit theater companies, existing law creates an exception to tied-house restrictions, by permitting a licensed manufacturer, winegrower, manufacturer’s agent, California winegrower’s agent, rectifier, distiller, bottler, importer, or wholesaler, among others, to serve on the board of trustees or as an officer, director, or employee of a nonprofit theater company operating in the County of Napa and in the City of Livermore.

This bill would extend the exception to tied-house restrictions provided to special on-sale general licenses for the trustees, officers, directors, and employees of nonprofit theater companies, described above, to a nonprofit theater company operating a theater in the City of Modesto.

(2) Existing law provides that a licensee whose licensed premises were destroyed as a result of fire or any act of God or other force beyond the control of the licensee may carry on the licensee’s business for a period of up to 180 days or six months, as applicable, at a location within 500 feet of the licensed premises while the destroyed premises are being repaired or rebuilt.

This bill would revise these provisions to authorize a licensee to carry on its business at a substitute location, within 1,000 feet of the destroyed premises for a period of up to 180 days. The bill would authorize the Director of Alcoholic Beverage Control to extend that time period, as provided.

(3) The Alcoholic Beverage Control Act generally prohibits a manufacturer, winegrower, distiller, bottler, or wholesaler, among other licensees, or agents of these licensees, from paying a retailer for advertising. The act creates a variety of exceptions from this 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. Existing law requires the purchase of advertising space or time in this context to be conducted pursuant to a written contract with the on-sale licensee. Existing law makes it a crime for an on-sale licensee to coerce certain licensees to purchase advertising space or time, as specified.

This bill would expand the exceptions described above to allow beer manufacturers, winegrowers, distilled spirits rectifiers, craft distillers, distilled spirits manufacturers, or distilled spirits manufacturer’s agents to purchase advertising space and time, in connection with described events, from, or on behalf of, on-sale retail licensees, as described above, at a for-profit theater with specified characteristics located in the City and County of San Francisco. The bill would also authorize the purchase of advertising space and time from, or on behalf of, the owner of the theater, a long-term tenant, or licensee of the theater, whether or not the owner, long-term tenant, or licensee holds an on-sale license. The bill would make conforming changes in provisions relating to written contracts pursuant to which the purchase is made. By expanding the definition of a crime, this bill would impose a state-mandated local program. require all payments for the purchase of advertising space and time to be made pursuant to a written contract with the owner of the theater, the licensee, or the long-term tenant, as appropriate.

(4) This bill would make legislative findings and declarations as to the necessity of a special statute for the City of Modesto and the City and County of San Francisco.

(5)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.

(6)

(5) This bill would declare that it is to take effect immediately as an urgency statute.

Digest Key

Vote: 2/3   Appropriation: NO   Fiscal Committee: YES   Local Program: YESNO  

---

Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 Section 24045.7 of the Business and Professions Code is amended to read:

24045.7.

 (a) (1) The department may issue a special on-sale general license to any nonprofit theater company that is exempt from the payment of income taxes under Section 23701d of the Revenue and Taxation Code and Section 501(c)(3) of the Internal Revenue Code of the United States. Any special on-sale general license issued to a nonprofit theater company pursuant to this subdivision shall be for a single specified premises only.

(2) Theater companies holding a license under this subdivision may, subject to Section 25631, sell and serve alcoholic beverages to ticketholders only during, and two hours prior to and one hour after, a bona fide theater performance of the company.

(3) Notwithstanding any other provision in this division, a licensed manufacturer, winegrower, manufacturer’s agent, California winegrower’s agent, rectifier, distiller, bottler, importer, or wholesaler, or any officer, director, employee, or agent of that person, may serve on the board of trustees or as an officer, director, or employee of a nonprofit theater company operating a theater in the County of Napa, the City of Livermore, or the City of Modesto, licensed pursuant to this subdivision.

(4) The Legislature finds that it is necessary and proper to require a separation between manufacturing interests, wholesale interests, and retail interests in the production and distribution of alcoholic beverages in order to prevent suppliers from dominating local markets through vertical integration and to prevent excessive sales of alcoholic beverages produced by overly aggressive marketing techniques. The Legislature further finds that the exceptions established by this subdivision to the general prohibition against tied interests must be limited to their express terms so as not to undermine the general prohibition, and intends that this section be construed accordingly.

(b) (1) The department may issue a special on-sale beer and wine license to any nonprofit theater company which has been in existence for at least eight years, which for at least six years has performed in facilities leased or rented from a local county fair association, and which is exempt from the payment of income taxes under Section 23701d of the Revenue and Taxation Code and Section 501(c)(3) of the Internal Revenue Code of the United States.

(2) Theater companies holding a license under this subdivision may, subject to Section 25631, sell and serve beer and wine to ticketholders only during, and two hours prior to, a bona fide theater performance of the company. Beer and wine may be sold from an open-air concession stand which is not attached to the theater building itself, if the concession stand is located on fair association property within 30 feet of the theater building and the alcoholic beverages sold are consumed only in the theater building itself, or within a designated outdoor area in front of and between the concession stand and the main public entrance to the theater building. Nothing in this section permits a theater company to sell beer or wine during the run of a county fair.

SEC. 2.

 Section 24081 of the Business and Professions Code is amended to read:

24081.

 (a) Notwithstanding any other provision of law in this division including, but not limited to, requirements relating to the issuance or transfer of a license, any licensee whose premises, for which a license, other than an off-sale license, has been issued, have been destroyed as a result of fire or any act of God or other force beyond the control of the licensee may carry on the business for a period of not more than 180 days at a location within 1,000 feet of the premises for which the license was issued and while the premises are being repaired or rebuilt and the licensee shall be entitled to carry on the licensee’s business under the existing license upon the former premises when they have been repaired or rebuilt.

(b) Notwithstanding any other provision of law in this division, including, but not limited to, requirements relating to the issuance or transfer of a license, any licensee whose premises, for which an off-sale license has been issued, have been destroyed as a result of fire or any act of God or other force beyond the control of the licensee, may carry on the business for a period of not more than 180 days at a location within 1,000 feet of the premises for which the license was issued and while the premises are being repaired or rebuilt and the licensee shall be entitled to carry on the licensee’s business under the existing license upon the former premises when they have been repaired or rebuilt.

(c) The director, in the director’s discretion, may extend the 180-day period described in subdivisions (a) and (b) by 60 days.

SEC. 3.Section 25503.6 of the Business and Professions Code is amended to read:

25503.6.

(a)Notwithstanding any other provision of this chapter, a beer manufacturer, the holder of a winegrower’s license, a rectifier, a craft distiller, a distilled spirits manufacturer, or distilled spirits manufacturer’s agent may purchase advertising space and time from, or on behalf of, an on-sale retail licensee subject to all of the following conditions:

(1)The on-sale licensee is the owner, manager, agent of the owner, assignee of the owner’s advertising rights, or the major tenant of the owner of any of the following:

(A)An outdoor stadium or a fully enclosed arena with a fixed seating capacity in excess of 10,000 seats located in Sacramento County or Alameda County.

(B)(i)A fully enclosed arena with a fixed seating capacity in excess of 18,000 seats located in Orange County or Los Angeles County.

(ii)An outdoor stadium of at least 70,000 seats located in Los Angeles County operated by a joint powers authority.

(C)An outdoor stadium or fully enclosed arena with a fixed seating capacity in excess of 8,500 seats located in Kern County.

(D)An exposition park of not less than 50 acres that includes an outdoor stadium with a fixed seating capacity in excess of 8,000 seats and a fully enclosed arena with an attendance capacity in excess of 4,500 people, located in San Bernardino County.

(E)An outdoor stadium with a fixed seating capacity in excess of 10,000 seats located in Yolo County.

(F)An outdoor stadium and a fully enclosed arena with fixed seating capacities in excess of 10,000 seats located in Fresno County.

(G)An athletic and entertainment complex of not less than 50 acres that includes within its boundaries an outdoor stadium with a fixed seating capacity of at least 8,000 seats and a second outdoor stadium with a fixed seating capacity of at least 3,500 seats located in Riverside County.

(H)An outdoor stadium with a fixed seating capacity in excess of 1,500 seats located in Tulare County.

(I)A motorsports entertainment complex of not less than 50 acres that includes within its boundaries an outdoor speedway with a fixed seating capacity of at least 50,000 seats, located in San Bernardino County.

(J)An exposition park, owned or operated by a bona fide nonprofit organization, of not less than 400 acres with facilities including a grandstand with a seating capacity of at least 8,000 people, at least one exhibition hall greater than 100,000 square feet, and at least four exhibition halls, each greater than 30,000 square feet, located in the City of Pomona or the City of La Verne in Los Angeles County.

(K)An outdoor soccer stadium with a fixed seating capacity of at least 25,000 seats, an outdoor tennis stadium with a fixed seating capacity of at least 7,000 seats, an outdoor track and field facility with a fixed seating capacity of at least 7,000 seats, and an indoor velodrome with a fixed seating capacity of at least 2,000 seats, all located within a sports and athletic complex built before January 1, 2005, in the City of Carson in Los Angeles County.

(L)An outdoor professional sports facility with a fixed seating capacity of at least 4,200 seats located in San Joaquin County.

(M)A fully enclosed arena with a fixed seating capacity in excess of 13,000 seats located in the City of Inglewood.

(N)(i)An outdoor stadium with a fixed seating capacity of at least 68,000 seats located in the City of Santa Clara.

(ii)A beer manufacturer, the holder of a winegrower’s license, a rectifier, a craft distiller, a distilled spirits manufacturer, or distilled spirits manufacturer’s agent may purchase advertising space and time from, or on behalf of, a major tenant of an outdoor stadium described in clause (i), provided the major tenant does not hold a retail license, and the advertising may include the placement of advertising in an on-sale licensed premises operated at the outdoor stadium.

(O)A complex of not more than 50 acres located on the campus of, and owned by, Sonoma State University dedicated to presenting live artistic, musical, sports, food, beverage, culinary, lifestyle, or other cultural and entertainment events and performances with venues that include a concert hall with a seating capacity of approximately 1,500 seats, a second concert hall with a seating capacity of up to 300 seats, an outdoor area with a seating capacity of up to 5,000 seats, and a further outdoor area with a seating capacity of up to 10,000 seats. With respect to this complex, advertising space and time may also be purchased from or on behalf of the owner of the complex, a long-term tenant or licensee of the venue, whether or not the owner, long-term tenant, or licensee holds an on-sale license.

(P)A fairgrounds with a horse racetrack and equestrian and sports facilities located in San Diego County.

(Q)(i)A stadium with a fixed seating capacity of at least 70,000 seats located in the City of Inglewood and a performance venue with a seating capacity of at least 5,000 seats adjacent to the stadium.

(ii)Advertising authorized by this subparagraph may be placed in areas within the retail, entertainment, commercial, and mixed-use development which includes the stadium and performance venue, provided that the advertising shall not be placed on or in, or otherwise promote, any permanently licensed retail premises other than the stadium or performance venue.

(R)An outdoor stadium with a fixed seating capacity of at least 40,000 seats located in the City and County of San Francisco.

(S)An indoor arena with a fixed seating capacity of at least 13,000 seats located in the City and County of San Francisco.

(T)An outdoor stadium with a fixed seating capacity in excess of 20,000 seats located in the City of Los Angeles.

(U)An outdoor stadium with a fixed seating capacity of at least 43,000 seats located in the City of San Diego.

(V)An outdoor professional sports stadium with a fixed seating capacity of at least 3,000 seats located in the City of San Jose.

(W)An outdoor professional sports stadium with a fixed seating capacity of at least 15,000 seats located in the City of San Jose.

(X)A fully enclosed arena with a fixed seating capacity in excess of 15,000 seats located in the City of San Jose.

(Y)A for-profit theater located within the City and County of San Francisco, configured with theatrical seating of at least 2,100 seats, where the licensee in the theater is holding an on-sale general license pursuant to Section 24045.75 and the theater is devoted primarily to live theatrical performances. With respect to these theaters, advertising space and time may also be purchased from, or on behalf of, the owner of the theater and a long-term tenant or licensee of the theater, whether or not the owner, long-term tenant, or licensee holds an on-sale license.

(2)The outdoor stadium or fully enclosed arena described in paragraph (1) is not owned by a community college district.

(3)The advertising space or time is purchased only in connection with the events to be held on the premises of the exposition park, stadium, or arena owned by the on-sale licensee. With respect to an exposition park as described in subparagraph (J) of paragraph (1) that includes at least one hotel, the advertising space or time shall not be displayed on or in any hotel located in the exposition park, or purchased in connection with the operation of any hotel located in the exposition park. With respect to the complex described in subparagraph (O) of paragraph (1), the advertising space or time shall be purchased only in connection with live artistic, musical, sports, food, beverage, culinary, lifestyle, or other cultural and entertainment events and performances to be held on the premises of the complex. With respect to a fully enclosed arena described in subparagraph (X) of paragraph (1), advertising space or time shall be purchased only for interior advertising in connection with events conducted within the arena.

(4)The on-sale licensee serves other brands of beer distributed by a competing beer wholesaler in addition to the brand manufactured or marketed by the beer manufacturer, other brands of wine distributed by a competing wine wholesaler in addition to the brand produced by the winegrower, and other brands of distilled spirits distributed by a competing distilled spirits wholesaler in addition to the brand manufactured or marketed by the rectifier, the craft distiller, the distilled spirits manufacturer, or the distilled spirits manufacturer’s agent that purchased the advertising space or time.

(b)Any purchase of advertising space or time pursuant to subdivision (a) shall be conducted pursuant to a written contract entered into by the beer manufacturer, the holder of the winegrower’s license, the rectifier, the craft distiller, the distilled spirits manufacturer, or the distilled spirits manufacturer’s agent and any of the following:

(1)The on-sale licensee.

(2)With respect to clause (ii) of subparagraph (N) of paragraph (1) of subdivision (a), the major tenant of the outdoor stadium.

(3)With respect to subparagraphs (O), (Q), (R), (T), and (Y) of paragraph (1) of subdivision (a), the owner, a long-term tenant of the theater or complex, or licensee of the theater or complex, whether or not the owner, long-term tenant, or licensee holds an on-sale license.

(c)Any beer manufacturer or holder of a winegrower’s license, any rectifier, any craft distiller, any distilled spirits manufacturer, or any distilled spirits manufacturer’s agent who, through coercion or other illegal means, induces, directly or indirectly, a holder of a wholesaler’s license to fulfill all or part of those contractual obligations entered into pursuant to subdivision (a) or (b) shall be guilty of a misdemeanor and shall be punished by imprisonment in the county jail not exceeding six months, or by a fine in an amount equal to the entire value of the advertising space, time, or costs involved in the contract, whichever is greater, plus ten thousand dollars ($10,000), or by both imprisonment and fine. The person shall also be subject to license revocation pursuant to Section 24200.

(d)Any on-sale retail licensee, as described in subdivision (a), who, directly or indirectly, solicits or coerces a holder of a wholesaler’s license to solicit a beer manufacturer, a holder of a winegrower’s license, a rectifier, a craft distiller, a distilled spirits manufacturer, or a distilled spirits manufacturer’s agent to purchase advertising space or time pursuant to subdivision (a) or (b) shall be guilty of a misdemeanor and shall be punished by imprisonment in the county jail not exceeding six months, or by a fine in an amount equal to the entire value of the advertising space or time involved in the contract, whichever is greater, plus ten thousand dollars ($10,000), or by both imprisonment and fine. The person shall also be subject to license revocation pursuant to Section 24200.

(e)For the purposes of this section, “beer manufacturer” includes any holder of a beer manufacturer’s license, any holder of an out-of-state beer manufacturer’s certificate, or any holder of a beer and wine importer’s general license.

(f)The Legislature finds that it is necessary and proper to require a separation among manufacturing interests, wholesale interests, and retail interests in the production and distribution of alcoholic beverages in order to prevent suppliers from dominating local markets through vertical integration and to prevent excessive sales of alcoholic beverages produced by overly aggressive marketing techniques. The Legislature further finds that the exceptions established by this section to the general prohibition against tied interests shall be limited to their express terms so as not to undermine the general prohibition and intends that this section be construed accordingly.

SEC. 3.

 Section 25503.35 is added to the Business and Professions Code, to read:

25503.35.

 (a) Notwithstanding Sections 25500 and 25503, a beer manufacturer, winegrower, rectifier, distilled spirits manufacturer, craft distiller, or a distilled spirits manufacturer’s agent may purchase advertising space and time in connection with a special on-sale retail licensed premises, if all of the following conditions are met:

(1) The on-sale retail licensed premises is a for-profit theater licensed with a special on-sale general license pursuant to Section 24045.75.

(2) The on-sale retail licensed premises is configured with theatrical seating of at least 2,100 seats but no more than 2,400 seats.

(3) The on-sale retail licensed premises is a historic theater that is located in the City and County of San Francisco, that was built prior to 1927, and that is either within a historic district as designated by the National Register of Historic Places or is designated as a Landmark by the San Francisco Historic Preservation Commission.

(4) All payments for the purchase of advertising space and time shall be made pursuant to a written contract with the owner of the theater, the licensee, or the long-term tenant, as appropriate.

(5) No agreement for advertising authorized by this section shall be contingent upon or otherwise require, directly or indirectly, implicitly or explicitly, the retail licensee to purchase or sell any alcoholic beverages or other products produced, manufactured, imported, distributed, or otherwise represented by the purchaser of the advertising space and time. The special on-sale general licensee shall offer for sale, in a bona fide manner, alcoholic beverages manufactured, produced, or distributed by competing licensed beer manufacturers, winegrowers, rectifiers, distilled spirits manufacturers, craft distillers, or distilled spirits manufacturer’s agents.

(6) Advertising space and time purchased pursuant to this section may be included in printed programs for specific theatrical performances and in announcements made during the theatrical performances, as well as any internet, social media, or other media promotion of the specific theatrical performance. The advertising may also be placed on or in the special on-sale general licensed premises.

(b) The Legislature finds that it is necessary and proper to require a separation between manufacturing interests, wholesale interests, and retail interests in the production and distribution of alcoholic beverages in order to prevent suppliers from dominating local markets through vertical integration and to prevent excessive sales of alcoholic beverages produced by overly aggressive marketing techniques. The Legislature further finds that the exceptions established by this section to the general prohibition against tied interests must be limited to their express terms so as not to undermine the general prohibition, and intends that this section be construed accordingly.

SEC. 4.

 The Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the conditions unique to the City of Modesto and the City and County of San Francisco.

SEC. 5.

No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.

SEC. 6.SEC. 5.

 This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:

In order to protect businesses affected by fires, natural disasters, or other forces beyond control of the business owner, it is necessary that this act take effect immediately.