BILL ANALYSIS
SENATE RULES COMMITTEE SB 1923
Office of Senate Floor Analyses
1020 N Street, Suite 524
(916) 445-6614 Fax: (916) 327-4478
.
IN CONFERENCE
.
Bill No: SB 1923
Author: Thompson (D)
Amended: 7/3/96
Vote: 27 - Urgency
.
SENATE GOVERNMENTAL ORG. COMMITTEE: 9-0, 4/16/96
AYES: Alquist, Beverly, Calderon, Greene, Lewis, Mello,
Thompson, Maddy, Dills
NOT VOTING: Hughes, Rosenthal
SENATE FLOOR: 35-0, 4/25/96 (Note: Applies to Section 1
only)
AYES: Alquist, Ayala, Beverly, Calderon, Costa, Craven,
Greene, Haynes, Hurtt, Johannessen, Johnson, Johnston,
Kelley, Killea, Kopp, Leonard, Leslie, Lewis, Lockyer,
Maddy, Marks, Mello, Monteith, Mountjoy, O'Connell,
Peace, Petris, Polanco, Rogers, Rosenthal, Russell, Sher,
Solis, Thompson, Wright
NOT VOTING: Boatwright, Dills, Hayden, Hughes, Watson
ASSEMBLY FLOOR: 64-5, 7/11/96 - See last page for vote
.
SUBJECT: Alcoholic beverage licenses: retail off-sale
beer and wine
SOURCE: The author
.
DIGEST: This bill allows the application for, and the
?1
CONTINUED
SB 1923
Page
2
issuance of, a retail off-sale beer and wine license (Type
20) to a licensed beer and wine wholesaler, even though the
license would exceed current specified limits. The bill
sunsets January 1, 1998.
Assembly Amendments:
1. Extend the period in which the Department of Alcoholic
Beverage Control can issue a special license to a nonprofit
corporation for the sale of wine bought by, or donated to,
the licensee from a period not exceeding two days to a
period not exceeding 15 days. Limit special licenses
issued for more than two days to the sale of wine specially
labeled to identify a fundraising event.
2. Provide an exception to the general prohibition against
tied-house interests provisions of law for a winegrower
whose principal place of business is located in Napa
County.
ANALYSIS: Section 1:
Under current law, with specified exceptions, the
Department of Alcoholic Beverage Control (ABC) is
prohibited from issuing original retail off-sale beer and
wine licenses (Type 20), in specified areas of the state
where an "undue concentration" of certain alcoholic
licenses exists. This statutory moratorium presently in
effect will expire on January 1, 1998.
This bill allows the application for and the issuance of a
retail off-sale beer and wine license to a licensed beer
and wine wholesaler, even though the number of licenses
exceeds the specified limits, if th e following conditions
are met:
A. The off-sale beer and wine licenses are to be held at
the same location as the beer and wine wholesaler
license.
B. The off-sale beer and wine license is to be restricted
to sales selected and accepted by direct mail, telephone
or on-line computer. The off-sale beer and wine license
is not to be used for operations conducted from a retail
?2
?
SB 1923
Page
3
store open to the public.
The bill allows the ABC to impose reasonable conditions on
a licensee as may be needed in the interest of the public
health, safety or welfare regarding signing, training for
responsible beverage sales, hours and mode of sale.
Section 2:
Current law limits the sale of wine by nonprofit
corporations to two days.
This bill allows the ABC to issue a special license to a
nonprofit corporation for the sale of wine bought by or
donated to the licensee for a period not exceeding 15 days,
under the following conditions:
A. Limits special licenses issued for more than two days to
the sales of wine specially labeled identifying a
fundraising event.
B. Places a limit of only one license for a corporation in
any 12-month period.
The Assembly Governmental Organization analysis indicates
that while nonprofit corporations are limited in the amount
of time they may sell wine for fundraising, these sales are
often an important means of raising funds.
Section 3:
Existing law prohibits a winegrower from owning an on-sale
license, except in specified circumstances, such as a
restaurant owned by the winegrower and located on the
winegrower's premises.
This bill authorizes a winegrower, or one or more of its
direct or indirect subsidiaries which is at least 51
percent owned by the winegrower, to serve as an officer,
director, and may hold an ownership interests in, an
on-sale license, or the business conducted under that
license, under certain specified conditions:
?3
?
SB 1923
Page
4
A. Requires the winegrower to have its principal place of
business in Napa County, have been doing business
continuously for more than 25 years, and produce five
million gallons of wine in California annually.
B. Mandates that the on-sale licensee obtain all alcoholic
beverages it sells through California wholesale licenses
except for airplanes and duplicate on-sale general
licenses for air common carriers.
C. Limits the number of alcoholic beverage items for sale
by the on-sale licensee that are produced by the
winegrower to 15 percent of the total alcoholic beverage
items sold by the on-sale licensee.
D. Declares that the Legislature finds it necessary to
preserve the three-tier distribution system for the
protection of the public and that any exception created
by the bill is limited to its express terms.
The Assembly Governmental Organization Committee analysis
indicates that one Napa County winegrower, Robert Mondavi,
has an import subsidiary which has a director who has an
ownership interest in a restaurant with an on-sale beer and
wine license and another director with an interest in a
restaurant with an on-sale general retail license.
Another, Wine World, has three new members of its board of
directors, who hold ownership interests in airlines which
possess on-sale general airplane retail licenses.
The bill sunsets January 1, 1998.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No
Local: No
SUPPORT: (Verified 4/18/96)
Napa Valley Grape Growers Association
Sonoma County Grape Growers Association
OPPOSITION: (Verified 4/18/96)
Committee on Moral Concerns
?4
?
SB 1923
Page
5
ARGUMENTS IN SUPPORT: The author's office states that
this bill would authorize ABC to approve the application of
a beer and wine wholesaler licensee (Type 17) for a new
retail off-sale beer and wine license (Type 20), even
though the applicant's business will be located in an area
having an "undue concentration" of Type 20 licenses. There
is currently a moratorium that prevents ABC from issuing
additional Type 20 licenses in such defined areas. This
moratorium will be in effect until January 1, 1996.
An unintended consequence of the moratorium is that in some
of California's grape growing regions, under present
statutes, there is an "undue concentration" of existing
Type 20 licensees. This over-concentration is due to the
large number of growers and buyers of grapes who hold a
Type 17 license, have their grapes "custom crushed" into
wine by a bonded winery, and then sell their wine to
consumers through direct mail, computer and/or telephone
solicitations under the Type 20 license. Because these
regions produce a large quantity of grapes, there are many
more individuals who wish to directly sell their wines to
consumers than are allowed under the statutory formula for
determining "undue-concentration."
The author believes the moratorium inadvertently prevents
these additional growers from obtaining a Type 20 license
to directly sell their product to consumers. Supporters
believe that the exemption created in this legislation does
not violate the intent of the current moratorium, and that
the bill will stimulate sales as well as the "custom crush"
business for bonded wineries. Additionally, there will be
more of an economic incentive for growers and purchasers of
grapes to make and sell their wine.
Enabling nonprofit organizations to sell wine for
fundraising under the limitations of this bill would permit
these nonprofit organizations to more easily raise funds
and would aid the wine industry in expanding its market.
Lifting the restrictions on the winegrowers would enable
them to add sophisticated and knowledgeable businesspersons
to their boards who have expansive business interests and
experiences to aid these winegrowers to contribute more to
California's economy.
?5
?
SB 1923
Page
6
ARGUMENTS IN OPPOSITION: Opponents argue that there are
over 70,000 retail licenses in California and there is no
need to expand their number. Having the ABC set conditions
for the safe operation of these new licenses is contrary to
the public good, which would best be served by adhering to
the moratorium.
ASSEMBLY FLOOR:
AYES: Ackerman, Aguiar, Alby, Alpert, Archie-Hudson, Baca,
Battin, Baugh, Boland, Bordonaro, Bowler, Brewer, Brown,
Brulte, Burton, Bustamante, Campbell, Cannella, Conroy,
Cortese, Cunneen, Davis, Ducheny, Escutia, Figueroa,
Firestone, Frusetta, Gallegos, Goldsmith, Granlund,
Hannigan, Harvey, Hauser, Hawkins, Hoge, Knight, Knowles,
Knox, Kuehl, Kuykendall, Machado, Margett, Martinez,
Mazzoni, McPherson, Migden, Morrissey, Morrow, K. Murray,
W. Murray, Napolitano, Olberg, Poochigian, Rainey, Rogan,
Setencich, Speier, Takasugi, Tucker, Vasconcellos,
Villaraigosa, Weggeland, Woods, Pringle
NOES: Bates, Friedman, Isenberg, Kaloogian, Thompson
NOT VOTING: Baldwin, Bowen, Caldera, House, Katz, Lee,
Miller, Richter, Sweeney
DLW:ctl 8/13/96 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
?6
?