Legislature(1999 - 2000)
03/17/1999 01:40 PM House FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 69
"An Act relating to the Alcoholic Beverage Control
Board; and providing for an effective date."
REPRESENTATIVE NORMAN ROKEBERG, SPONSOR testified in support
of HB 69. He observed that HB 69 would extend the
termination date of the Alcoholic Beverage Control Board
(ABC) until June 30, 2003. He explained that the date was
chosen by the House Labor and Commerce Committee to conform
to the recommendation of a 1997 Legislative Budget and Audit
Committee audit. During the last Legislature, the
termination date was extended to June 30, 1999. Without the
passage of this legislation the board would be in its wind
down year.
Representative Rokeberg maintained that the bulk of the
legislation adds limited liability organizations, such as
limited liability companies and limited liability
partnerships, under the licensing authority of the Board.
The Board requested this addition.
Representative Rokeberg noted that sections 4 and 5 speak to
a problem that arose in 1995, regarding the establishment of
an exempt license for restaurant or eating-place
establishments in combination with a brewery. He maintained
that this allowed combined restaurant and brewery
establishments to essentially create a tavern/brewpub
without a dispensary license. Prior to this brewpubs were
required to have a beverage dispensary liquor license. He
asserted that this change created an unfair playing field.
Tavern exempt licenses were allowed to compete with beverage
dispensary licenses, which cost at that time, upwards of
$200 thousand dollars. He noted that HB 372 was passed in
1996. This category of license was deleted under HB 372 and
the five existing licenses were grandfathered in. Since that
time, one business has gone out of business and another
business only produces about 100 kegs of beer a year. The
three main establishments are in the Anchorage area. House
Bill 69 would allow these businesses to buy a beverage
dispensary license and permit the holder of a beverage
dispensary/brewpub license to sell their beer at another
licensed premises of the same licensee. They would buy a
beverage dispensary license and become brewpubs and give up
their exempt brewery/restaurant license. Two of the three
existing license holders support the measure the other will
remain grandfathered into the exempt license by the
legislation. There would be two less licenses when the
exempt licenses are replaced by beverage dispensary
licenses.
Representative Rokeberg noted that the legislation also
permits a package store licensee to deliver not more than
two bottles of wine or champagne in a gift basket with a
floral arrangement to a cruise ship passenger or hotel
guest. It also permits a package store licensee to deliver
alcoholic beverages to a responsible adult at a social
event, such as a wedding reception.
Representative Rokeberg added that the legislation permits a
"corkage" policy to be adopted by the licensee. "Corkage" is
where a person is permitted to bring a bottle or bottles of
fine wine into a restaurant, with the permission of the
licensee. The wine is then turned over and served by
employees of a licensee and a "corkage fee" is charged.
In response to a question by Co-Chair Therriault,
Representative Rokeberg discussed businesses in Anchorage
that would be affected by the legislation. Moose's Tooth and
the Glacier Brewhouse would be the main parties affected.
The legislation would allow these businesses to purchase
another premise and deliver beer from the existing brewery
to the new establishment. This is currently prohibited. The
previous statute prohibited joint ownership of a brewery or
a restaurant license.
Representative Rokeberg noted that the March 12, 1999,
letter of support by the Moose's Tooth provides a good
explanation of the legislation (copy on file).
Representative Rokeberg maintained that the Cabaret, Hotel,
and Restaurant Retail (CHARR) and the Anchorage Restaurant
and Beverage (ARBA) associations support the legislation. He
stressed that the legislation is a compromise of competitors
doing business with each other. He maintained that without
the legislation business competition is not level.
DOUGLAS B. GRIFFIN, DIRECTOR, ALCOHOL BEVERAGE CONTROL BOARD
testified via teleconference in support of the continuation
of the sunset date and the limited liability organization
language (LLO). He observed that the Board does not object
to the other issues added by the House Labor and Commerce
Committee.
Co-Chair Therriault questioned if the LLO reporting
provisions are identical to requirements for other
businesses. Mr. Griffin stated that they are identical to
what is required for corporations. Mr. Griffin noted that
the corporation or entity would have to be in existence for
one year. There is a residency requirement for the
corporation.
Vice-Chair Bunde referred to section 7, which allows
delivery to social events. Mr. Griffin stated that the
provision needs to be explained in regulation. He observed
that there are restrictions on deliveries. Deliveries must
be made to a responsible adult, between the hours of 8:00
a.m. and 5:00 p.m. He stressed that a balance must be struck
between commercial interest and public protection.
Co-Chair Therriault asked how the delivery provision in
section 7 would impact their enforcement budget. Mr. Griffin
estimated that there would only be 10 - 20 businesses
statewide that would take advantage of the provision. He did
not expect the provision to greatly impact enforcement.
Co-Chair Therriault questioned if "wine" on page 6, line 29
would cover champagne. Mr. Griffin stated that champagne
would be included.
CHRIS ANDERSON, GLACIER BREW HOUSE, ANCHORAGE testified via
teleconference in support of the legislation. He observed
that the bill represents a compromise. It would allow them
to expand their businesses.
Representative J. Davies questioned why the cost of the
beverage dispensary licenses is so high. Mr. Anderson
explained that there are approximately 10 licenses available
in Anchorage at the current time. The number will not
increase with population.
Representative Moses felt that it is unfair to require a
beverage dispensary license. He stated that it would make
more sense to require them to get a restaurant or eating-
place license. He stressed that the microbrewery industry is
new and growing. He felt that the legislation would be
restrictive.
Representative Rokeberg spoke against Representative Moses'
suggestion. He referred to HB 372, passed in 1996. He
maintained that the goal of the industry is to repeal the
grandfathered licenses. He stated that nothing prohibits
breweries from selling their beer independently or becoming
a brewpub.
Representative J. Davies expressed support for comments by
Representative Moses. He questioned why a brewery that wants
to sell beer on the premises should have a beverage
dispensary license. Any form of alcohol can be sold under a
beverage dispensary license. He stated that it would make
more sense for them to have a restrictive license.
Representative Rokeberg observed that his office compiled a
legislative history of the issue (copy on file). He
reviewed the legislative history. He maintained that the
1995 legislation provided an unfair advantage. He noted that
there are approximately 12 inexpensive restaurant or eating-
place licenses available, while beverage dispensary licenses
(required to be a brewpub) cost between $125 - $175 thousand
dollars and must be bought on the secondary market.
Anchorage is over licensed in terms of beverage dispensary
licenses. Legislation in 1988 required that brewpubs have a
beverage dispensary license. He maintained that unfair
competition was created when this was changed in 1995.
Representative Moses pointed out that it would be similar to
requiring restaurants to have a beverage dispensary license
before they can sell wine and beer. He observed that a
beverage dispensary license allows the sale of any alcoholic
beverage. The cost of a beverage dispensary license is
similar to the cost of the equipment needed to begin a
brewery. He did not think that the legislation leveled the
playing field.
Representative Rokeberg asserted that there is not a big
market for brewpubs in Alaska. Mr. Griffin noted that there
are four brewpub licenses in the state of Alaska. He
reiterated that a beverage dispensary license allows the
sale of any alcoholic beverage. The brewpub license allows
the holder, who formerly held a brewery license and a
restaurant or eating-place license, to manufacture limited
quantities for sale on the licensed premises and to remove
not more than five gallons a day from the premises.
Representative J. Davies observed that in 1988, the
Legislature required brewpubs to have a beverage dispensary
license.
In response to a question by Co-Chair Therriault, Mr.
Griffin explained that a restaurant or eating-place license
is required to sell beer and wine with food. There is only
one beverage dispensary license for every 3,000 population.
There can be one restaurant or eating-place license for
every 1,500 population. Food sales must be at least 50
percent.
(Tape Change, HFC 99 - 46, Side 2)
Representative Rokeberg reiterated support by CHARR and
ARBA. He emphasized that the rules of the game need to be
consistent.
In response to a question by Representative J. Davies,
Representative Rokeberg clarified that the exempt licenses
were allowed between the adoption of SB 87 in 1995 and HB
372 in 1996.
Representative J. Davies observed that a restaurant or
eating-place license allows the sale of beer and wine. He
questioned the difference between a restaurant that wants to
sell beer and a restaurant that wants to sell beer that it
makes on the premises. Representative Rokeberg responded
that it has to do with the changing patterns of alcohol
consumption and the greater popularity of microbreweries.
Representative J. Davies suggested that the 1988 law should
be reversed to level the playing field. He did not
understand why a brewpub that wants to sell beer is being
treated substantially different from a restaurant that sells
beer and wine.
Representative Rokeberg observed that the brewpubs had
limited menu options.
Mr. Anderson clarified he was originally licensed with a
brewery and a restaurant or eating-place license. This
allowed them to brew unlimited beer and sell beer and wine
in the restaurant. He clarified that their food sales are 77
percent of their total sales. Beer accounts for only 12
percent of their total sales. They are asking to be able to
expand. He observed that they would need to brew 200,000
barrels of beer a year to be profitable without the sale of
beer.
RON HANCOCK, MOOSE'S TOOTH BREWING COMPANY, ANCHORAGE
testified via teleconference in support of HB 69. He stated
that their food sales are over 70 percent of the total. Beer
sales account for 10 - 20 percent of the total. He stressed
that they need the opportunity to grow as other restaurants
do. He stressed that it is not logical that the brewery,
which is a small part of their business, should hold them
back from growth.
Co-Chair Therriault clarified that if they expanded to
another location that the brewery would not be duplicated.
Mr. Hancock stated that at the time they created their
business that the statutes allowed them to open multiple
locations. That right was taken away. Their intention at
inception was to open multiple restaurants.
Representative Rokeberg clarified that the restriction is
under AS 04.11.450. Senator Halford introduced this language
in 1996.
"A person who is a representative or owner of a
wholesale business, brewery, winery, bottling works, or
distillery may not be issued, solely or together with
others, a beverage dispensary license, a restaurant or
eating-place license, or package store license. A
holder of a beverage dispensary license may be issued a
brewpub license, subject to the provisions of AS
04.11.135. The prohibition against issuance of a
restaurant or eating-place license imposed under this
subsection does not apply to a restaurant or eating-
place license issued on or before October 1, 1996 or a
restaurant or eating-place license issued under an
application for a restaurant or eating-place license
approved on or before October 1, 1996."
Co-Chair Therriault observed that Mr. Larry Hackenmiller,
CHARR indicated that CHARR supports the bill, but that they
have some concerns over whether or not the brewhouse
operators are satisfied with the language. Representative
Rokeberg pointed out that the legislation is a negotiated
compromise between CHARR and the brewhouse operators.
Mr. Hancock emphasized that the legislation allows them to
grow. Mr. Anderson added that it is a compromise that can
work.
Representative G. Davis asked for more information regarding
section 12, corkage fee. Representative Rokeberg noted that
the provision would be at the discretion of the licensee.
DON DAPCEVICH, ADVISORY BOARD ON ALCOHOL AND DRUG ABUSE
testified in support of the original legislation. He
observed that the Board has not reviewed the House Labor and
Commerce Committee amendments. He noted that the Advisory
Board on Alcohol and Drug Abuse and the Alcohol Beverage
Control Board work together. He stated that if beverage
dispensary licenses were calculated only by population that
there would need to be a population of 1.6 million people to
accommodate the existing number of licenses.
Representative J. Davies questioned if comparisons have been
made between restaurants and taverns. Mr. Dapcevich observed
that the number of alcohol related instances are less when
food is sold in addition to alcohol. He observed that the
concern in 1995 was that a new tavern industry was being
created. He stressed that there is a difference between
having a primary emphasis of alcohol and entertainment or
food service.
Representative J. Davies pointed out that businesses that
sell more than 70 percent food are being required to get
beverage dispensary licenses that would allow them to sell
more forms of alcohol. He thought that the legislation moves
in the wrong direction as a matter of public policy. He
stressed that allowing these establishments to be a
restaurant with a beer and wine license should solve the
problem.
Co-Chair Therriault asked if a second location could be
opened and the beer purchased from the first establishment.
Representative Rokeberg replied that they would not be
allowed to sell their beer at the second location.
Representative Rokeberg acknowledged that the fears of
competitors in regards to the alcohol/food ratio have proven
in practical application not to be justified. He pointed out
that if a new type of license were created that they would
be in competition with existing beverage dispensary
licensees.
Representative J. Davies asked if Mr. Anderson and Mr.
Hancock would support the ability to operate under a
restaurant or eating-place license and a brewery license.
Mr. Anderson stated that he would support such a scenario.
He observed that CHARR and ARBA rejected similar
legislation, which was introduced at the request of the
Alcohol Beverage Control Board. He acknowledged that HB 69
is a compromise. Mr. Hancock pointed out that after they
purchase a beverage dispensary license and convert their
original license they would only have to buy restaurant or
eating-place licenses for additional locations.
Mr. Griffin clarified, in response to a question by
Representative Rokeberg, that there are two brewpubs that
have beverage dispensary licenses. He noted that the first
brewpub was established in 1994. He noted that the Alcohol
Beverage Control Board was asked to present a recommendation
for the issue in 1996. The Alcohol Beverage Control Board
introduced SB 138 during the 1997 session. They recommended
that a restaurant or eating-place establishment be allowed
to purchase a brewpub license. The Board expanded what a
brewpub could do through marketing. The reason the
legislation did not move was that the beverage dispensary
licensees objected. He observed that the legislation by the
Alcohol Beverage Control Board tried to push the industry
toward beverage moderation. The Senate Finance Committee
introduced the legislation on behalf of the Alcohol Beverage
Control Board.
SENATOR DAVE DONLEY provided information regarding the
extension of the Alcohol Beverage Control Board's sunset
date. He observed that the Legislative Budget and Audit
Committee made recommendations in their sunset audit
(September 8, 1997, copy on file). The Senate adopted some
of the audit's recommendations. He discussed concerns and
recommendations of the audit. The House only adopted one of
the audit's recommendations. The Senate limited the sunset
to a one-year extension. Members of the Senate felt that it
was important that the audit's recommendations be addressed.
He suggested that the title be broad enough to consider the
recommendations of the Legislative Budget and Audit
Committee's audit. He noted that the current title would not
allow the Senate to address concerns raised by the audit
without a title change.
(Tape Change, HFC 99 -47, Side 1)
HB 69 was HELD in Committee for further consideration.
| Document Name | Date/Time | Subjects |
|---|