New Law Amends California Tied-House Law

Governor Jerry Brown has signed AB 780, a law which helps clarify the rules that permit an alcohol beverage producer, importer, or wholesaler (collectively, a “supplier”) to list or mention on- and off- premise retailers in supplier-sponsored advertising, including supplier websites and social media channels.  As described in more detail below, the new law is fairly limited, and does not give suppliers carte blanche to begin mentioning retailers in their social media posts.

State alcohol beverage 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 ABC Act, however, also contains numerous exceptions to tied-house laws.  For example, ABC Act Sections 25500.1 and 25502.1 allow suppliers to list certain information such as the address, phone number, email address and website address of two or more unaffiliated retailers so long as the listing  (1) is made in response to a direct consumer inquiry, (2) does not contain the product’s retail price, and (3) is made by, produced by, or paid for exclusively by the supplier.

AB 780 amends these tied-house exceptions that pertain to on- and off-premise retailer listings.  Here are a few key things that AB 780 will do when it goes into effect on January 1, 2016.

  1. Creates one set of rules for producer’s listing of on- and off- premise retailers .  Previously, the ABC Act had two different rules that governed supplier listings of retailers:  on-premise retailer listings were governed by ABC Act Sec. 25500.1, and off-premise retailer listings were governed by Sec 25502.1.  AB 780 repeals 25502.1 and consolidates rules governing on- and off- premise retailer listings into Section 25500.1, meaning that there is now one set of rules that governs retailer listings.
    • Impact.  Under current law, a supplier listing of on-premise retailers could include the “names, addresses, telephone numbers, email addresses, or Internet Web site addresses, or other electronic media” of those retailers.  The law governing listings of off-premise retailers did not include the “other electronic media” language.  Thus, current law could be interpreted to prohibit a supplier from including the Twitter handle of an off-premise retailer in a listing because the handle may be considered “other electronic media” of the retailer.  Once AB 780 goes into effect, the listing of on- and off-premise retailers’ “other electronic media” is allowed so long as the other requirements of Sec 25500.1 are met.
  2. Deletes language requiring customer inquiry for retailer listing.  Under the ABC Act, any listing of a retailer could only be made “in response to a direct inquiry from a consumer.”  AB 780 eliminates this requirement.
    • Impact.  The current law could be interpreted as prohibiting a producer from issuing a social media post (such as a tweet) listing two or more twitter handles of on-premise retailers unless it was in direct response (and potentially in a direct message not viewable by the general public) to a consumer inquiry.  AB 780 would allow such a post, whether or not it was in direct response to a consumer, provided that all other requirements are met.
  3. Continues to restrict the type of listing allowed.  Once amended. Section 25500.1 will continue to prohibit any supplier sponsored listing from referring to only one retailer or listing the retail price of the product.  In addition, the listings must be made, produced, or paid for exclusively by the supplier.
    • Impact.  Suppliers should familiarize themselves with the limitations contained in Section 25500.1.
  4. Does not change rules governing events at retailer locations.  AB 780 does not alter the sections of the ABC Act that govern the promotion of producer events at retailer locations, such as ABC Act Sec. 25503.4 (regarding winegrower instructional events).
    • Impact.  Suppliers wishing to promote upcoming events at on-premise retailer must continue to follow the applicable rules for events, which may be more restrictive than the amended Sec. 25500.1.  For example, under ABC Act 25503.4, a winemaker instructional event held at a retailer cannot include  laudatory statements about the retailer, nor can they include pictures of the retailer.

Finally, suppliers should keep in mind that the adoption of AB 780 does not repeal state tied-house laws and that it is still generally impermissible for a producer to provide a “thing of value” (such as free advertising) to a retailer, absent an explicit exception in the ABC Act.  AB 780 simply clarifies one exception to the state’s tied-house laws by declaring that certain listings of retailers are not considered “things of value.”

For more information or assistance on alcohol beverage advertising, social media, and tied house laws, contact John Trinidad ([email protected]).

This post is made available for general informational purposes only and none of the information provided should be considered to constitute legal advice.