October 11, 2004

New Legislation Authorizes Fine for Second Strike Sale to Minor

Michael Brill Newman

In August, 2004, Governor Schwarzenegger signed legislation amending the ABC Act to allow payment of a fine in lieu of suspension for a “second strike” sale to a minor. As “urgency” legislation, the new law went into effect immediately, affecting pending and future ABC disciplinary actions for sales to minors.

Prior to the new law, a vendor could pay a fine on its first offense, but automatically had to serve a twenty-five-day suspension of its license for a second offense within any thirty-six-month period. Now, a licensee may petition the ABC to make an offer in compromise and pay a fine instead. (The “three strikes” law for sales to minors provides for a fifteen-day suspension on a first offense, a twenty-five-day suspension of the license on a second offense, and revocation of a license on a third offense within any thirty-six-month period.) Of course, the ABC retains discretion on accepting an offer in compromise in lieu of the 25-day suspension. It now, however, must follow newly-adopted and recently published penalty guidelines established by emergency rulemaking in April, 2004. (See my column in the June 2004 issue of CBN.)

Previously, for any violation of the ABC Act, a licensee could petition the ABC for an offer in compromise and fine only for suspensions of 15 days or less. The new legislation creates a special exception for the sale to minor offense only. The amount of the fine for a second offense will be determined by law by a calculation of fifty percent of the daily gross sales of alcoholic beverages multiplied by the number of days of suspension, subject to a minimum of $2,500 and a maximum of $20,000. The result of a “third strike” offense, however, remains unchanged: revocation.

The new law appears to be a win-win for both the industry and the ABC. For affected licensees, it will allow greater flexibility in giving licensees the option of staying open and paying potentially a steep fine or closing its doors for 25 days. For the ABC, the changes will likely reduce challenges to sales to minors violations but at the same time significantly increase fine revenues without lessening the deterrent effect of the “three strikes” law.

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