Legislature(2007 - 2008)BELTZ 211

03/06/2007 03:30 PM Senate COMMUNITY & REGIONAL AFFAIRS


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03:34:29 PM Start
03:34:49 PM HB34
04:02:57 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 34 SALES BY WINERY LICENSEE TELECONFERENCED
Moved HB 34 Out of Committee
Bills Previously Heard/Scheduled
                HB  34-SALES BY WINERY LICENSEE                                                                             
                                                                                                                                
3:34:49 PM                                                                                                                    
CHAIR OLSON announced the consideration of HB 34.                                                                               
                                                                                                                                
REPRESENTATIVE GABRIELLE  LEDOUX, Sponsor, said HB  34 levels the                                                               
playing field  for in-state  wineries. Currently  an out-of-state                                                               
winery can  ship wine  into Alaska, but  an Alaska  winery cannot                                                               
ship wine within the state.                                                                                                     
                                                                                                                                
3:36:22 PM                                                                                                                    
SENATOR  STEVENS asked  how this  would help  the small  business                                                               
person to be more successful.                                                                                                   
                                                                                                                                
REPRESENTATIVE  LEDOUX  said  now  they cannot  ship  within  the                                                               
state. If  people from  Homer want  to buy  wine from  the Kodiak                                                               
winery it is against the law to send it to them.                                                                                
                                                                                                                                
SENATOR STEVENS asked how many wineries are in the state.                                                                       
                                                                                                                                
REPRESENTATIVE LEDOUX said there are  about six. She noted two in                                                               
Kodiak, one in Homer, and one in Haines.                                                                                        
                                                                                                                                
CHAIR OLSON  asked if there is  a winery size distinction  in the                                                               
bill.                                                                                                                           
                                                                                                                                
REPRESENTATIVE  LEDOUX said  the  bill limits  shipments to  five                                                               
gallons at one time. All Alaska wineries are small, she added.                                                                  
                                                                                                                                
CHAIR OLSON  said it is hard  to believe any law  in Alaska would                                                               
inhibit business,  "since we are  a business-oriented  state." He                                                               
asked about the history of the law.                                                                                             
                                                                                                                                
3:39:20 PM                                                                                                                    
CHRISTINE  MARASIGAN, Staff  to Representative  Gabrielle LeDoux,                                                               
said many  state laws restrict shipping  alcoholic beverages, but                                                               
there were no wineries in the state when they were made.                                                                        
                                                                                                                                
CHAIR OLSON asked about private vintners.                                                                                       
                                                                                                                                
MS. MARASIGAN  said this is  only for licensed wineries,  and she                                                               
believes it  would be illegal for  others to ship wine  unless it                                                               
was  a non-commercial  transaction. In  response to  Chair Olson,                                                               
she said the bill will not cover other kinds of alcohol.                                                                        
                                                                                                                                
SENATOR  STEVENS asked  if  an  Alaskan winery  can  ship out  of                                                               
state, and Ms. Marasigan said yes.                                                                                              
                                                                                                                                
3:42:50 PM                                                                                                                    
SENATOR THOMAS asked if the bill makes that change.                                                                             
                                                                                                                                
MS. MARASIGAN said wineries can already ship out of state.                                                                      
                                                                                                                                
CHAIR OLSON  said that  is covered  under the  federal interstate                                                               
commerce laws.                                                                                                                  
                                                                                                                                
3:43:31 PM                                                                                                                    
STEVE  THOMSEN,  Alaska Wilderness  Wine,  said  he supports  the                                                               
bill, and he  clarified that he cannot now ship  out of state. He                                                               
said the state has written  letters stating it won't enforce that                                                               
law, but it is still illegal.                                                                                                   
                                                                                                                                
CHAIR OLSON asked  how long he has been in  business and why this                                                               
is coming forward now.                                                                                                          
                                                                                                                                
MR. THOMSEN  said since 1999, and  he has been working  to change                                                               
the laws  since 1997. Currently  there are eight wineries,  so it                                                               
is becoming  an industry, but it  is hindered. He said  he is one                                                               
of the original Alaskan vintners.                                                                                               
                                                                                                                                
CHAIR OLSON asked why hasn't there been more uproar.                                                                            
                                                                                                                                
MR.  THOMSEN  said that  is  a  good  question. He  knows  others                                                               
support the change "but they don't ever show up to testify."                                                                    
                                                                                                                                
3:46:07 PM                                                                                                                    
SENATOR  THOMAS asked  if he  wants the  bill to  include out-of-                                                               
state sales.                                                                                                                    
                                                                                                                                
MR. THOMSEN  said yes, but  he is not sure  how much he  would do                                                               
that. It is frustrating that the laws are not fair, he said.                                                                    
                                                                                                                                
SENATOR THOMAS asked if Mr. Thomsen could use a distributor.                                                                    
                                                                                                                                
MR.  THOMSEN  said that  is  possible,  but distributors  require                                                               
volume that he doesn't have, and they take a huge cut.                                                                          
                                                                                                                                
3:47:53 PM                                                                                                                    
DOUG  GRIFFIN,  Chair,  Alcohol Beverage  Control  Board,  stated                                                               
support  for the  bill. This  is  a catch-up  to accommodate  the                                                               
growing  number of  small wineries.  The bill  will bring  Alaska                                                               
             st                                                                                                                 
into  the  21   century allowing  the  use  of the  internet  for                                                               
marketing.  The bill  will clarify  the  ability to  sell out  of                                                               
state,  too. Current  law requires  buyers to  be present  at the                                                               
winery. HB  34 will not allow  sales to dry communities.  "I know                                                               
wineries will take  a lot of care in making  sure that they don't                                                               
ship to areas  where alcohol is prohibited." It  is a low-alcohol                                                               
product,  he  said, and  probably  not  a  good candidate  to  be                                                               
shipped into a dry community. He said  HB 34 is a good change for                                                               
an important  value-added industry in  Alaska. It will  also take                                                               
care of the confusion about selling  out of state. The board does                                                               
not regulate private shipments of alcohol, he noted.                                                                            
                                                                                                                                
3:52:03 PM                                                                                                                    
SENATOR STEVENS  asked him  if the bill  would allow  wineries to                                                               
ship both in state and out of state.                                                                                            
                                                                                                                                
MR. GRIFFIN  said the law  is now unclear  regarding out-of-state                                                               
shipment.  AS 04.11.140  refers to  shipments over  five gallons,                                                               
which indicates that  wine should only be sent  to a distributor.                                                               
It is unclear  and the wineries have been told  they would not be                                                               
prosecuted  for  shipping  out  of state.  The  bill  allows  the                                                               
shipment of  up to five gallons  of wine to an  individual, so it                                                               
covers anywhere out of Alaska or in, except dry communities.                                                                    
                                                                                                                                
SENATOR THOMAS asked about shipping to minors.                                                                                  
                                                                                                                                
MR.  GRIFFIN  said  that  is a  universal  prohibition,  and  the                                                               
shipping companies are  pretty good at dealing with  it. The 21st                                                               
Amendment  ending prohibition  and  allowing  states to  regulate                                                               
alcohol  ran  head-on  into   a  constitutional  commerce  clause                                                               
prohibiting trade  barriers between  states. The  commerce clause                                                               
won,  so states  can't block  out-of-state wineries  in order  to                                                               
favor their  in-state wineries. He  noted that Alaska  is unique,                                                               
because "dry" in  other states means "damp" in  Alaska. The board                                                               
provides a list  of all dry communities  and it is up  to date on                                                               
the internet.                                                                                                                   
                                                                                                                                
CHAIR OLSON asked if HB 34 impacts beer sales.                                                                                  
                                                                                                                                
MR. GRIFFIN said  breweries don't tend to  use internet marketing                                                               
and haven't asked to jump on  board this legislation. He said the                                                               
board  would not  have  a problem  with  breweries introducing  a                                                               
similar bill.                                                                                                                   
                                                                                                                                
CHAIR OLSON asked why beer and spirits are not covered in HB 34.                                                                
                                                                                                                                
MS.  MARASIGAN said  there are  niche markets  for the  different                                                               
types  of  alcohol.  Also,  breweries  are  allowed  to  get  pub                                                               
licenses, so their focus is selling beer on the premises.                                                                       
                                                                                                                                
CHAIR OLSON asked if this will affect people making homebrew.                                                                   
                                                                                                                                
MR. GRIFFIN  said that  is a separate  issue. Making  homebrew in                                                               
rural Alaska is a problem.  Increased homebrew activity may be an                                                               
indication  that commercial  alcohol  is being  kept  out of  dry                                                               
communities.                                                                                                                    
                                                                                                                                
4:02:21 PM                                                                                                                    
SENATOR  STEVENS  moved  to  report HB  34  from  committee  with                                                               
individual recommendations  and attached fiscal  note(s). Hearing                                                               
no objection, HB 34 moved from committee.                                                                                       

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