With last month's passage of California Assembly Bill 780, breweries and other alcoholic beverage makers in California will be able to identify in their social media posts those bars, restaurants, and stores where their beverages are sold – subject, however, to certain key conditions discussed below. Another related bill passed the next day, AB 776. Among other things, AB 776 will allow producers to participate in and advertise an event that is sponsored by a retailer if the event is conducted by, and for the benefit of, a non-profit organization. Both laws become effective January 1, 2016.
As a practical matter, the ABC is not constantly scrutinizing and reviewing alcohol beverage maker’s social media accounts to find violations. The issue arose in 2014, however, in connection with the Save Mart Grape Escape, an annual food and beverage festival organized by the Sacramento Convention and Visitors Bureau and sponsored by the retail grocery chain Save Mart in recent years as the event's title sponsor. Apparently, a large producer (with the resources to hire people to look for violations) told the ABC that several wineries and a least one brewery had posted on their websites or social media accounts (re-tweeted a Tweet) that they were participating in the Save Mart Grape Escape. One retweet said simply: “Two days till @SaveMart Grape Escape in Downtown #Sacramento! Get tickets and info here: http://bit.ly/U7XFVq."
Although these wineries and brewery had done so innocently, this was an apparent violation of the tied house laws because the name of the title sponsor, Save Mart, was mentioned and Save Mart is a retailer of alcoholic beverages. The ABC filed accusations against those involved and most settled with the ABC, agreeing to a suspended sentence and one year’s probation. At least one winery, however, challenged the ABC on First Amendment grounds (which appeal is still pending).
In part because of this incident and the fear of possible violations, the 2015 Grape Escape was cancelled.
Existing Law and AB 780 Amendment
AB 780 was designed to address this, at least in part. Under existing California law, specifically Bus. & Prof. Code Section 25500.1, breweries, wineries, and distilleries were (and still are) allowed to provide a “listing” of on-premises retailers that sold their beverages, but only in response to a customer request. The same applied to a listing of off-premises retailers under Bus. & Prof. Code Section 25502.1, with minor differences. So a brewery, for example, could identify on its website those retailers that sold its beer, provided that the consumer had to click on a link to get to the listing. The act of ‘clicking’ on a link on a website was considered the “direct inquiry” by the consumer. In contrast, a Facebook post or a Tweet which identified a single retailer, or one which was not in response to a customer’s inquiry, was not allowed.
Under AB 780, Sections 25500.1 and 25502.1 are now combined into a single section, Section 25500.1 (effective January 2016, with 25502.1 being repealed), which applies to a listing of either on-premises or off-premises retailers. Most importantly, the revised Section 25500.1 will no longer require that a customer first make a “direct inquiry” before producers may identify retailers. Producers will generally be able to refer to retailers who sell their products, in their social media posts or website, or other listings, without having to wait for a consumer to ask.
Contrary to some popular accounts, however, AB 780 does not really create a new exception to tied house rules nor does it directly state that producers may identify retailers in social media; rather, it amends the existing law on producers' “listings” of retailers to clarify under which conditions such listings are exempted from the general tied house law prohibition. In fact, the actual text of the new law, AB 780, does not even mention social media, and the statutes which AB 780 amends, Bus. & Prof. Code Sections 25500. 1 and 25500.2, were created before Facebook and Twitter came into existence.
So any “listing,” whether it is in a social media post or on a website, must still identify at least two (2) unaffiliated retailers; it takes at least two items to make a list after all. This could lead to somewhat awkward posts such as “Our IPA is now on tap at Lauren's Eatery, and still at Jamie's Pub.” Also, producers are still prohibited from mentioning prices and are prohibited by tied house laws from praising a retailer in a post. And attaching a photo of a retailer’s place of business is not allowed under the statute. Furthermore, other tied-house law exemptions may be applicable such as Bus. & Prof. Code Section 25503.56 on instructional tasting events (which does expressly prohibit such photos). In short, AB 776 (new Bus. & Prof. Code Section 25500.1) will allow a brewery, winery or distillery to identify retailers where its products are sold so long as:
- The "listing" does not also contain the retail price of the product;
- The listing is the only reference to the on-sale or off-sale retailers in the direct communication (i.e., the post or Tweet);
- The listing does not refer only to one on-sale or off-sale retailer or only to on-sale or off-sale retail establishments controlled directly or indirectly by the same retailer (i.e., it must identify at least two unaffiliated retailers): and
- The listing is made, or produced, or paid for, exclusively by the nonretail industry member (e.g., the retailer(s) cannot pay the producer to post on social media)..
AB 776: Co-Sponsoring and Advertising Events for Non-Profits
The day after Governor Brown signed AB 780, he also signed AB 776 which makes various amendments to the California tied house laws. One of the amendments is to add a new Section 23355.3 to the California Business & Professions Code. This law will allow producers to sponsor and advertise an event that is also sponsored by a retailer, provided that the event is conducted by, or for the benefit of, a nonprofit organization, subject to certain limitations. A brewery, winery, or distillery can also advertise their participation or sponsorship of the event on social media, and even identify the retailer sponsor in such advertising, so long as the advertisement or communication does not contain retail product pricing or otherwise promote the retailer beyond identifying its participation or sponsorship of the event. There are other limitations affecting participation in such events, but the social media allowance is the most interesting development.
AB 780 and AB 776 are not cure-all laws for wineries and breweries using social media as one firm has pointed out in its blog (Booze Rules). Like other tied-house law exceptions, they represent a legislative compromise or fix rather than a complete overhaul. That's politics. Still, AB 780 and 776 are progress, While they may not be a comprehensive social media solution (such as a recent Illinois law), they do allow a winery, brewery, or distillery to post on Facebook, Twitter, or other social media, that its beverages are now available at a bar, restaurant, or other retailers - under the conditions described above - and to advertise their sponsorship or participation in events for non-profits that are also co-sponsored by retailers. And that is something to like . . . at least on Facebook.