Alcohol Beverage Industry

California Court of Appeal Rejects ABC Interpretation of “Single Beverage Condition”

By Daniel Hayes

The California Court of Appeal recently rejected the ABC’s reading of a “single beverage condition” it used in a license issued to a Sacramento gas station.  (Dept. of Alcoholic Beverage Control (ABC) v. ABC (Case No. C085199)).  The condition read: “Beer and/or malt beverages shall be sold in original factory packages of a six-pack or greater, except malt based coolers.  At no time, shall a single unit be sold individually, or in conjunction with another brand/size container of beer and/or malt beverage to constitute a six-pack or larger quantity.”  The ABC took the position this required any and all beer to be sold as six packs or greater.  The Court of Appeal disagreed, holding that the condition did not prohibit the sale of single beers that were not “originally packaged as six packs.”  Look for the ABC to be more explicit in its conditional licenses in the future.

Three Tiers for California

By Daniel Hayes and Aaron Wais

Last week, California’s tied-house law – the Alcoholic Beverages Control Act (Bus. & Prof. Code §§ 23000, et seq.) – withstood a hard-fought First Amendment challenge.  In Retail Digital Network v. Prieto, the Ninth Circuit Court of Appeals was asked to decide whether Business and Professions Code § 25503(h) – which prevents manufacturers and wholesalers from paying money or giving anything of value to a retailer for advertising their alcoholic beverages – is an unconstitutional restriction on commercial speech.  The Court decided 8-1 that it is not:  “Section 25503(h) serves the important and narrowly tailored function of preventing manufacturers and wholesalers from exerting undue and undetectable influence over retailers.  Without such a provision, retailers and wholesalers could side-step the triple-tiered distribution scheme by concealing illicit payments under the guise of ‘advertising’ payments.”  The bottom line?  The barriers between the three tiers of alcohol distribution (manufacture, wholesale, and retail) set by the Golden State remain firmly intact. If you have any questions on the decision or how it affects your business, please contact us.