AB 780 - Social Media and the ABC: The California Legislative “Fix” that Fails

By John Hinman & Rebecca Stamey-White

The recent news about California’s AB 780 being signed into law tells an inspiring story about freedom on social media for alcohol suppliers, but is it really true?  Unfortunately… not really. (Cue the bursting bubble that usually trails lawyers).

AB 780, intended to address the Save-Mart Grape Escape ABC accusations, was signed into law by Governor Brown on Monday. 

AB 780 doesn't even pretend to be a method of solving the social media issues currently bedeviling the industry. Rather, the bill was an attempt by well-meaning politicians to address constituent issues while not interfering with the stranglehold that the wholesalers lobby has on Sacramento.  A more robust solution that would have actually accomplished the goal of freeing social media was supported by senior ABC officials as well as every supplier trade association in the state but was blocked by the wholesalers.  

Here is what AB 780 does NOT do:

  • It does NOT allow wineries, breweries or distillers to post on social media that they will be pouring at retailer title-sponsored charity-licensed event such as the "Save-Mart Grape Escape" put on and licensed by the Sacramento Convention & Visitors Bureau.  That still remains a crime and at least one Grape Escape accusation is still in the process of being adjudicated. The existing laws still prevent suppliers from legally promoting retail title sponsors of charitable festivals and events, an entirely separate form of harm to communities and organizations doing good work.
  • It does NOT permit wineries, breweries or distillers to sponsor events where there are any "tied house" relationships (including the payment of a rental fee to a retail account) between an event organizer and the winery, brewery or distiller. For example, the BottleRock 2013 accusations (now at the ABC Appeals board) are not affected by this bill.
     
  • It does NOT affect the existing exceptions that allow some suppliers to promote their involvement in and location of legal tasting events occurring on retail premises. (Disclaimer: these exceptions are event and statute specific and do not apply to all events nor to all supplier license types.) 

Here is what AB 780 DOES do:

  • It DOES require suppliers to observe current law (combining two existing statutes into one statute with truly minor changes to existing law).

Under current law, some supplier licensees may list two or more unaffiliated on-sale retailers selling their product (like bars and restaurants) under Business and Professions Code Section 25500.1 and may list two or more unaffiliated off-sale retailers selling their product (like liquor stores, wine shops, etc.) under Business and Professions Code Section 25502.1. These restrictions (which include other limitations--such as no pricing information, the listing is the only reference to the retailer and the retailer can’t jointly pay for the listing) are basically unchanged under AB 780 (which combines 25500.1 and 25502.1 into 25500.1 and eliminates 25502.1) except that now the furnishing of the information does NOT have to be in response to a “direct inquiry from a consumer,” a provision that has never (to our knowledge) even been enforced by the ABC.

What does this mean for the industry?  More confusion, more complaints, and more difficulty in threading the tied house needles that currently are scattered throughout the ABC Act.

This bill does, however, update the current locator service exemption that exists in the ABC Act for suppliers to list on their websites, social media or other publications where their products may be found, as long as at least two unaffiliated retailers are mentioned.

This of course prevents announcing new account placements unless other accounts are also mentioned.  Designing ways to use that new exemption will be fun for all.  For example, think about this:

"Jack's Restaurant in San Francisco now carries our wines, but  don't forget to find our wine at Jill's Wine Bar across the street!"

Despite the lack of meaningful change, let's all remember to have fun with social media and perhaps think of the ABC restrictions as a creative challenge for marketers, while encouraging those suppliers with one retail account to pick up another so they can advertise where to find their product.

We still need real reform and if it doesn't come from the legislature maybe it will come from the cases that are working their way through the system.