Legislature(1995 - 1996)
04/27/1995 01:33 PM CRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 87 - ALCOHOLIC BEVERAGES: LOCAL OPTION & MISC. Number 232 CO-CHAIR IVAN noted that in the members' packets was a fiscal note, sectional analysis, sponsor statement, position paper and backup materials. He invited Mr. Ambrose to introduce the bill. He also indicated that the committee was on teleconference. Number 239 MR. AMBROSE, Legislative Assistant to Senator Taylor, presented CSSB 87(FIN) to the committee on behalf of Senator Taylor. At the request of the Alcoholic Beverage Control Board, this legislation was introduced to address concerns over the lack of clarity on how local option elections were conducted. This legislation simplified that process and addressed long needed technical and common sense amendments to Title 4. The bill addressed the concern that there is no provision to move from one type of local option to another. Under current law, a community must first vote to remove restrictions on sale and importation of alcoholic beverages and then conduct another vote on the new option. Number 280 PATRICK SHARROCK, Director, Alcoholic Beverage Control Board, Department of Revenue, testified that the board had requested the legislation over concerns for local option elections and the deficiency in those laws. He indicated that this legislation had almost made it through the system last session. Number 307 REPRESENTATIVE VEZEY asked for an explanation of Section 7 of the bill. MR. SHARROCK indicated that people familiar with the brew pub business had said that 75,000 gallons was the amount necessary to make an investment economically viable. He stated that a brew pub was the ability of a person who already has a bar license or beverage dispensary license to install a facility to produce beer on that licensed premises. He indicated there had been only two or three requests in the last year and they had indicated that 75,000 was the experienced production rate in other states. REPRESENTATIVE VEZEY asked if a brew pub license allowed them to wholesale their brew. MR. SHARROCK stated they could only retail it on their premises. There was no one with the brew pub license who had been in business long enough to know how their production was going to grow. Number 378 REPRESENTATIVE KOTT asked why 75,000 gallons was the figure selected. MR SHARROCK indicated it was based on what other states used. It also related to the use of containers and the frequency of rolling over the production of the beer. Number 394 REPRESENTATIVE KOTT inquired with regard to section 4 of the bill, why, in a dry community, was more that 12 gallons prohibited. MR. SHARROCK noted that under some of the provisions of the new section of the local option law, people could import alcohol but not for resale. REPRESENTATIVE KOTT asked if dry communities could make home brew. MR. SHARROCK stated they could not. Number 410 CO-CHAIR IVAN recognized Senator Dave Donley and invited him to join the members at the table. Number 420 CO-CHAIR AUSTERMAN indicated it was his understanding that villages could be dry, damp or wet. He asked if alcohol could be brought into a dry village. Number 434 MR. SHARROCK stated that the bill did not change the current provisions of local options for communities. It changed the language to allow elections to change between options and clarified language of elections. It did say that elections could not be held earlier than 12 months or more than once in 18 months. Number 455 MR. AMBROSE noted that the change to 12 gallons was only changing liters to gallons. The quantity had not changed. Those types of technical changes had been made throughout the legislation. Number 464 CO-CHAIR IVAN understood that the intent of the legislation was to clarify the confusion around elections. He indicated he was well aware that there was much confusion in this area and there was a great need for clarification. Number 486 CO-CHAIR AUSTERMAN asked for a clarification on whether the board had proposed the legislation. MR. SHARROCK stated that the legislation had been proposed last year. There were some amendments that the board had not seen but he felt confident that they would support them. He noted that the reason for the length of the bill was because the local option provisions had been renumbered causing changes to almost every page. Number 495 SENATOR DAVE DONLEY asked if Sections 11 and 12 were not proposed by the board, but by a Senate committee. MR. SHARROCK stated they had been added last year and the board had not taken a position either way. Number 512 CO-CHAIR IVAN indicated that Representative Nicholia had joined the committee. He then stated that the committee would be taking testimony via teleconference. Number 520 DAVID HARDING, Mayor's Office in Barrow, stated that he was faxing the mayor's testimony to the committee. Number 524 JIM WOOD, North Slope Borough Police Department, expressed a desire to have the legislation amended so that the punishment for possession of alcohol in a dry community would be a class A misdemeanor. Number 605 CO-CHAIR AUSTERMAN asked what specific amendment he was proposing. MR. WOOD indicated he wished to amend Section 39 (e) to add "or who possesses an alcoholic beverage," after "...sends, transports...in violation of AS 04.11.499 ,". Number 640 MARK HAMLIN of Barrow, testified that he was concerned that Title 4 was being distorted and was unfair to those opposed to prohibition. Number 680 TOM NICOLOS of Barrow, testified in opposition to government setting the limits of the local option laws. He feared citizens would become felons because they had too much beer in their homes. He felt felonies were for heinous crimes. He itemized several changes he wished to have made in the legislation. TAPE 95-17, SIDE B Number 130 CO-CHAIR IVAN asked Mr. Nicolos to provide the committee with his recommendations in writing. Number 143 PAT CARLSON, Kodiak Island Borough Assessor, speaking on behalf of the mayor, spoke in support of the legislation. There was a need for streamlining and the legislation allowed for the community to address those needs. Number 169 MARK GAGNIER of Anchorage, a felon under a DWI conviction, felt that the legislation should be directed at distributors as the problem, not the people consuming the alcohol. Number 216 REPRESENTATIVE ELTON asked regarding Section 12, if a person that owns a bar, restaurant, club or package liquor store may buy alcoholic beverages only from a wholesaler, brewer, winery or a distiller. He asked if this precluded a purveyor from going to Costco to shop for beverages for resale. MR. SHARROCK indicated that a person may not purchase alcohol for resale except for someone licensed under the title. He indicated it was difficult to ascertain the intent of a buyer. Number 264 RICK URION, Lobbyist for the Alaska Wine and Spirits Wholesalers Association, stated that it was illegal to have an interest in both wholesale and retail activities. Costco cannot make wholesale sales since they have a retail license. Number 290 REPRESENTATIVE VEZEY expressed concern about bootlegging liquor because of the lack of control. He thought the purpose of Sections 11 and 12 was to establish a chain of responsibility. Number 313 REPRESENTATIVE ELTON asked if it was true that Costco could not sell alcoholic beverages for retail and if so, why was there a need for Section 12. Number 320 MR. URION indicated that the people he represented had no problem with retailers buying from Costco. The retail buyers who buy in quantity buy it cheaper. The excise taxes are paid by the wholesaler and for that reason the retailer should buy from a wholesaler. It protects the revenue stream as they are the ones paying the tax. REPRESENTATIVE ELTON asked for clarification. He inquired as to whether a retailer could or could not shop at Costco and if that is so why is it being restated in the bill. He asked if this was adding another level of taxation. MR. URION stated that Section 12 was a continuation of Section 11 which was a brand registration law. It requires wholesalers to register their suppliers, brands and have certification that they are the primary source. The intent was to eliminate the gray market which is foreign or otherwise not controlled. At this time, there is no one selling gray market goods. Section 12 says if you are a retailer, you must buy from a primary source. He indicated that anyone could become a wholesaler and sell any product that is not already being sold in the state. He stated that Costco could not become a wholesaler because they were a retailer. The intent was to prevent monopolies. Number 447 MR. AMBROSE indicated that most people would buy from a wholesaler because it is more cost effective. The intent was to prevent gray markets. Section 11 was the revenue generating section of the bill. Number 460 REPRESENTATIVE IRENE NICHOLIA asked if it was possible to limit the amount of an item sold per day as an option. SENATOR DONLEY noted that the bill did ban Everclear. MR. SHARROCK indicated that a community that was under local option could, by ordinance, limit the amount sold as outlined under 4.11.491(a)1, (a)2, and (a)3. Number 524 CO-CHAIR AUSTERMAN indicated that previous testimony had raised a question regarding whether there was a disparity in who could ask for an election. MR. AMBROSE stated that the amendment had been added in the Senate Judiciary Committee. Senate Finance had proposed the 18 months as a compromise for time between elections. It was felt that there was a period of time needed to see if the option voted on was working. He indicated that both sides had the same options in calling for an election and didn't favor either side. He noted there were 24 communities in the state that banned alcohol. He stated the intent of the local governments was toward prevention, not punishment. Number 588 CO-CHAIR AUSTERMAN asked someone to address the concern regarding the amendment to make possession of alcohol a class A misdemeanor. MR. SHARROCK noted that there was already a considerable body of law defining the charges on possession of alcoholic beverages. The board doesn't see a need to change any of that at this time. The only changes in this legislation were to local options. Number 617 REPRESENTATIVE ELTON moved an amendment requiring two of the three public members on the Alcoholic Beverage Control Board to be as follows: One from the public health field and one from the law enforcement field. REPRESENTATIVE VEZEY objected and noted that he could not recall any complaints about the makeup of the board. Number 652 MR. AMBROSE expressed concern that restricting the membership in that way might not be positive. He indicated that these provisions were added in Senate Finance. He noted that another amendment had dealt with the makeup of a quorum to require two public members be present. REPRESENTATIVE VEZEY asked if the board had always had three public members and was informed that was true. He did not support the amendments made in Senate Finance. Number 678 REPRESENTATIVE ELTON stated that the people appointed under the amendment would remain public members and didn't feel it would create a quorum problem. TAPE 95-18, SIDE A Number 005 CO-CHAIR AUSTERMAN indicated that he did not support the amendment. CO-CHAIR IVAN asked that a roll call vote be taken. Voting in favor of the amendment was Representative Elton; voting against the amendment were Representatives Ivan, Austerman, Kott and Vezey. The amendment failed. Number 023 REPRESENTATIVE VEZEY moved to delete Sections 1 and 2 which were amendments made in the Senate and were not in the bill last year. MR. SHARROCK indicated that requiring two public members to be present did pose a potential problem for the board since the industry members of the board were the more willing and dedicated ones. Number 076 REPRESENTATIVE VEZEY stated that his main reason for making the motion was that they didn't do anything that wasn't already in existence. REPRESENTATIVE ELTON noted that the argument was probably true on Section 2; however, he opposed the amendment to Section 1. He felt that it clarified some things that may be problems in the future. He objected to the motion. Number 128 CO-CHAIR AUSTERMAN asked if the committee wished to divide the question. Hearing no objection, the motion was divided. He indicated the question before the committee was to delete Section 1. The roll was taken and the motion passed. Voting in favor of the motion were Representatives Vezey, Kott, Austerman. Voting against the motion was Representative Elton. Number 157 CO-CHAIR AUSTERMAN announced that since there was not a quorum present, the committee would stand in recess to a call of the Chair at 3:15 p.m. TAPE 95-19, SIDE A Number 000 CO-CHAIR IVAN called the House Community and Regional Affairs Committee meeting back to order at 9:57 p.m. Members present at the call to order were Representatives Austerman, Kott, Vezey and Ivan. He indicated that SB 87 was before the committee. CO-CHAIR AUSTERMAN stated that when the committee had recessed, Amendment No. 3 was before the committee. It was agreed that the amendment was to delete Section 2 of the bill. Number 017 TOM WRIGHT, legislative assistant to Representative Ivan, informed the committee that if they removed Sections 1 and 2 from the bill, they would need a concurrent resolution suspending the Uniform Rules for a title change. Number 020 REPRESENTATIVE VEZEY stated that the entire bill addressed the duties of the Alcoholic Beverage Control Board and he did not feel that was a technicality the committee needed to be concerned about. Number 038 C0-CHAIR IVAN indicated that he had not been present at the conclusion of the afternoon session and was therefore turning the meeting over to Co-Chair Austerman. CO-CHAIR AUSTERMAN stated that the amendment before the committee was to remove Section 2 from the bill. There was no objection and the amendment was adopted. MR. WRIGHT informed the committee that Section 78 needed to be deleted as it dealt with Sections 1 and 2 of the bill. REPRESENTATIVE KOTT moved to delete Section 78 and renumber accordingly. CO-CHAIR AUSTERMAN, hearing no objections, indicated the motion was adopted. REPRESENTATIVE VEZEY moved that the committee adopt a C&RA committee substitute for CSSB 87(FIN) incorporating the amendment passed by the committee. CO-CHAIR AUSTERMAN asked for objections; hearing none, the committee substitute was adopted. REPRESENTATIVE VEZEY moved that HCS CSSB 87(CRA) be passed from committee with individual recommendations. CO-CHAIR AUSTERMAN asked for objections. There were none, and the bill passed from committee.