04/03/1996 02:23 PM House JUD

 SB 312 - LICENSEE BUYING LIQUOR FROM PACKAGE STORE                          
                                                                               
 Number 636                                                                    
                                                                               
 JOE AMBROSE, Legislative Assistant to Robin Taylor testified on SB
.  He stated that this legislation encompassed the re-visitation           
 of an issue from last year.  He read the sponsor statement.                   
                                                                               
 "Senate Bill 312 was introduced to correct an error made in the               
 drafting of last year's SB 87, an omnibus bill dealing with the               
 Alcoholic Beverage Control Board and local option elections.                  
                                                                               
 One provision in SB 87 was intended to stop so-called 'gray market'           
 goods from entering Alaska without paying the state excise tax.               
 This language, known as the 'primary source' provision, appeared as           
 section 11 of last year's legislation.                                        
                                                                               
 While the language passed last year does address the gray market              
 issue, it also has the unintended effect of banning a practice                
 common among retailers.  Bars and restaurants often purchase                  
 alcohol from businesses such as Costco because of better pricing or           
 from a package store when wholesaler delivery is not on a daily               
 basis."                                                                       
                                                                               
 MR. AMBROSE used the example of someone operating a bar and they              
 run out of a particular brand of wine and they send someone out to            
 a package store to replenish.  The legislation passed last year               
 would prohibit this practice.  This was not intended.                         
                                                                               
 "SB 312 amends last year's bill to allow a person holding a                   
 dispensary, restaurant, club or package store license to purchase             
 from a package store, as long as the package store obtained its               
 product from a wholesaler.                                                    
                                                                               
 SB 312 retains the protections against gray market goods while                
 restoring the ability of bars and restaurants to purchase from                
 package stores and discount outlets."                                         
                                                                               
 Number 738                                                                    
                                                                               
 REPRESENTATIVE AL VEZEY stated that he thought they had addressed             
 this issue last year.                                                         
                                                                               
 MR. AMBROSE stated that along with the language adopted in the                
 Senate Judiciary Committee last year they were given assurances               
 that this would not have the affect as outlined, but essentially it           
 does.  The interpretation from the ABC Board is that this does                
 indeed prohibit a dispensary license from purchasing from a package           
 store.                                                                        
                                                                               
 Number 769                                                                    
                                                                               
 REPRESENTATIVE VEZEY recollected a discussion from last year that             
 it was illegal for a dispensary operator to go to a retail outlet             
 to buy alcohol and he thought this was changed last year.                     
                                                                               
 MR. AMBROSE stated that the provision adopted last year addressed             
 only the wholesale license, that they have to buy from a                      
 wholesaler, but it was never intended to restrict only to                     
 wholesalers as long as the product originally came into the state             
 through wholesale.  This would give Alaska their tax money.                   
                                                                               
 Number 850                                                                    
                                                                               
 REPRESENTATIVE BUNDE made a motion to move SB 312 from the House              
 Judiciary Committee with individual recommendations and zero fiscal           
 notes.  There being no objection, it was so moved.