On June 15, 2026, the California Department of Alcoholic Beverage Control (“ABC”) issued an Industry Advisory regarding the California tied-house laws, which broadly prohibit suppliers from providing things of value to retail licensees and from giving gifts or free goods in connection with the sale or distribution of alcohol. More specifically, the Advisory was issued as a reminder to supplier licensees that tied-house laws prohibit suppliers from paying retailers – whether they hold temporary or permanent licenses – to advertise the supplier’s products at the retail premises, unless otherwise specifically authorized.
The Advisory acknowledged that there are many statutory exceptions that expressly allow suppliers to contract with retail licensees for ad space/time or for paid sponsorships of the venue (see e.g., Cal. Bus. & Prof. Code § 25503.6 et seq.). But the Advisory cautioned licensees to bear in mind that even in those situations, certain tied-house restrictions still apply. For example, a retailer cannot condition its purchases of the supplier’s products on the supplier buying ad space/time or paying for sponsorship. Similarly, suppliers cannot condition their advertising or sponsorship payments on receiving exclusivity for their products from a retailer. These sorts of “pay-to-play” activities are prohibited even at venues where supplier-paid ads and sponsorships are statutorily allowed.
Notably, the Advisory specifically referenced special events like the FIFA World Cup and the Olympics as not being exempt from the prohibitions on “pay-to-play” activity, even if held at venues with statutory advertising exceptions. Licensees considering paid advertising and promotions at similar types of events in California would be well advised to bear the ABC’s Advisory in mind when evaluating potential sponsorships and structuring their advertising agreements with retailers. The Advisory “FAQs” flag that the Department is increasingly investigating and enforcing on unlawful “pay-to-play” activities, particularly where there are complaints that statutory exceptions are being used improperly.
The ABC also cautions licensees against relying on third-party marketing companies to circumvent tied-house laws, and reminds them that if they hire an unlicensed agent to handle advertising, marketing, or sponsorships on their behalf, they remain responsible for any third-party actions that violate the ABC Act. For information regarding the ABC’s Industry Advisory, or specific sponsorship or advertising questions, please contact one of the attorneys at Strike Kerr & Johns.
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