AB 359

This bill eliminates the prohibition on selling prescription drugs and certain

types of merchandise at below cost under the Unfair Sales Act.

This state's Unfair Sales Act, also known as the “minimum markup” law,

prohibits retailers and wholesalers from selling merchandise for less than the cost

of the merchandise to the seller, if the below-cost sale is intended to induce the

purchase of other merchandise or divert trade unfairly from a competitor. In

addition, current law requires a retailer or wholesaler of motor vehicle fuel, tobacco

products, fermented malt beverages, liquor, or wine to sell those items for a specified

amount more than the cost of the merchandise to the retailer or wholesaler to cover

a portion of the cost of doing business. Current law does not require such a minimum

markup for sales of prescription drugs. The prohibition on below-cost sales and the

minimum markup requirements do not apply to merchandise that is sold in

clearance sales, damaged merchandise, merchandise at risk of spoiling, and

merchandise that is priced in good faith to meet the existing price of a competitor.

This bill eliminates the prohibition on retailers and wholesalers selling

prescription drugs for less than the cost of those items to the seller. The bill also

eliminates the prohibition on retailers and wholesalers selling merchandise, other

than motor vehicle fuel, tobacco products, fermented malt beverages, liquor, or wine,

or groceries, for less than the cost of the merchandise to the seller. The bill does not

affect the prohibition on below-cost sales of motor vehicle fuel, tobacco products,

fermented malt beverages, liquor, or wine, or groceries. The bill also does not affect

the minimum markup requirements for sales of motor vehicle fuel, tobacco products,

fermented malt beverages, liquor, or wine.