Legendary lobbyist Artie Samish, in his 1971 autobiography “Secret Boss of California,” describes how, many decades ago, he created a state-enforced monopoly for the liquor industry.
“Cutthroat competition would have been ruinous,” Samish wrote. “So I put through fair-trade laws to protect wholesalers, distributors and retailers. All of them make a profit in California, and they always have.”
Samish went to prison for income tax evasion and, eventually, most of his misnamed “fair-trade” liquor laws, particularly those fixing prices, were invalidated as blatantly monopolistic.
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But several Samish liquor laws survived, including a “tied-house” provision, which prohibits one level of the liquor trade (producer, distributor or retailer) from participating in another level – even advertising.
In theory, the tied-house law prevents monopolistic practices in the production and sales of alcoholic beverages, but it’s completely incompatible with modern business practices.
Therefore, the tied-house law spawns a brisk trade in exemptions for specific corporations or liquor trade sectors from its provisions. Virtually no legislative session occurs without at least one tied-house law exemption being proposed, and usually passed.
On Tuesday, the Senate Governmental Organization Committee approved two such exemptions, typifying the annual political drill.
One, Senate Bill 582, gives the new Los Angeles Rams stadium, now under construction in Inglewood, permission to allow in-stadium advertising by liquor producers as it also sells alcoholic beverages to its patrons. It’s similar to exemptions provided to other sports venues.
The other, Senate Bill 461, benefits the boutique hotel industry by expanding an earlier exemption allowing hotels owned by producers of alcoholic beverages to also sell them to hotel patrons. It drops the minimum size hotel qualifying for an exemption from 100 rooms to 50 rooms.
There’s no rational argument against either exemption, but wouldn’t it make more sense for the Legislature to either repeal the loophole-riddled law or at least streamline its provisions?
Of course it would. In fact, the 9th U.S. Circuit Court of Appeals, in a ruling last year on the law’s advertising prohibitions, took note of the many exemptions and suggested that the law violates constitutionally protected speech rights.
However, legislators apparently would prefer to keep this ridiculous law on the books and grant case-by-case exemptions rather than write a broader overhaul.
They want to continue forcing those who run afoul of the law to jump through the political hoops, such as hiring lobbyists and perhaps making campaign contributions.
After all, it makes political sense – if not common sense – to have wealthy corporate interests, such as the owners of sports arenas and other entertainment venues, beholden for favors.
Meanwhile, there’s some discussion of having a tied-house law of some kind for the marijuana trade as it becomes legal under a voter-passed ballot measure. Artie Samish would approve.