Legislature(2019 - 2020)SENATE FINANCE 532
02/11/2020 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB52 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 52 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 52
"An Act relating to alcoholic beverages; relating to
the regulation of manufacturers, wholesalers, and
retailers of alcoholic beverages; relating to
licenses, endorsements, and permits involving
alcoholic beverages; relating to common carrier
approval to transport or deliver alcoholic beverages;
relating to the Alcoholic Beverage Control Board;
relating to offenses involving alcoholic beverages;
amending Rule 17(h), Alaska Rules of Minor Offense
Procedure; and providing for an effective date."
9:05:55 AM
Co-Chair von Imhof read the title of the bill. She reminded
that the committee would not be taking testimony or hearing
amendments for the bill during the meeting. She commented
on the length of the bill. The goal of the meeting was to
be swift and thorough.
9:07:21 AM
SENATOR PETER MICCICHE, SPONSOR, gave a brief introduction
of the bill. He thought the bill was important and
commented that there was a reason the bill had been around
for eight years. He reminded that alcohol was the leading
abused substance in the state and was responsible for many
social issues. He thought the industry was also a strong
economic driver in the state for those that drank
responsibly. He thought the bill had been compared to SB 91
[criminal justice reform legislation passed in 2016]
because of its size. He commented on the evolution of the
bill through the work of the committee over the years. He
cited 120 primary stakeholders and over 13,000 hours spent
on the bill. He referenced agreement and letters of support
from manufacturers and the Cabaret, Hotel, Restaurant and
Retailers Association (CHARR).
Senator Micciche recounted that a very similar bill had
passed unanimously in in 2018 (SB 76) but had not passed
the other body. He considered that the bill had become
imbalanced and worked against free market ideals that
impacted one stakeholder. He thought the bill was a balance
between public health, public safety, and industry. He
referenced amendments to the dates in the bill, and an 18-
month phase-in transition period.
Senator Micciche asserted that the bill was about balance,
reorganization, and fairness. The bill focused on public
safety and would modernize the "patchwork" of statutes that
dictated the way the industry operated. He thought the bill
required public safety and health accountability that had
been lacking in the past. He shared that with the
amendment, the bill carried the support of all the engaged
parties that had stalled the bill in the past.
Co-Chair von Imhof referenced the two letters from the
Brewer's Guild of Alaska as well as CHARR dated within the
previous weekend, and thought the support was a huge
accomplishment. She hoped not to see many amendments to the
bill.
9:11:38 AM
ANNA BRAWLEY, TITLE 4 PROJECT REVIEW COORDINATOR, AGNEW
BECK CONSULTING, discussed the presentation "Alcoholic
Beverage Control (ABC) Board - Title 4 Review Project -
Overview of Senate Bill 52" (copy on file). She conveyed
that the presentation would provide a brief overview of the
project and speak to highlights in the bill. She alleged
that the bill did not so much create new policy but made
Title IV work better through reorganization.
Ms. Brawley looked at slide 2, "Goals of Title 4 Review
Process":
Promote a fair business climate and protect public
health and safety.
1. Create rational regulation for all tiers of the
state's alcohol industry.
2. Limit youth access to alcohol, while ensuring youth
are not criminalized
3. Promote responsible alcohol use and reduce the
harms of overconsumption.
Make Title 4 a clear and consistent legal framework.
1. Increase swiftness, proportionality and consistency
of penalties.
2. Increase local law enforcement of Title 4.
3. Increase licensee accountability before the ABC
Board for Title 4 violations.
Ms. Brawley noted that the Title 4 review was initiated by
the Alcohol and Beverage Control (ABC) Board because of
issues in public health and public safety. The last time
Title IV was reviewed and updated was 1980.
Senator Micciche interjected that of the 120 pages of the
bill, there were few pages with substantive change and much
of the bill text reflected reorganization.
9:14:26 AM
Ms. Brawley spoke to slide 3, "Diverse Stakeholders":
Diverse Stakeholders
? ABC Board, AMCO (staff)
? Public Safety and Law Enforcement
? Industry
- Manufacturers
- Wholesalers
- Retailers
? Public Health
- Recover Alaska
- Department of Health and Social Services
- Alaska Mental Health Trust Authority
- Rasmuson Foundation
? Community Advocates
? Local Governments
Ms. Brawley noted that there had been several years of
stakeholder meetings that she had documented. There had
been a great deal of compromise and analysis of potential
unintended consequences.
Ms. Brawley referenced slide 4, "Eight Years of Work":
More than 120 stakeholders and staff spent over 13,000
hours (and counting) to craft Title 4 recommendations
for proposed legislation.
Ms. Brawley turned to slide 5, "Key Concepts in Title 4":
? The 3 tier system: separation of manufacturers,
wholesalers and retailers to prevent monopolies
? Licenses and permits:
License: allows a business to sell, serve,
distribute and/or manufacture alcohol for 2
years.
Permit: time-limited alcohol sales or service,
by a licensee or non-licensed organization.
? Population limits: regulates number of licenses
available in each community by type
? Proposed new concept: Endorsements on licenses to
expand premises or allowed activities
Ms. Brawley noted that the 3-tier system had been in place
in every state since prohibition. The following slide
included an illustrative graph.
Ms. Brawley considered slide 6, "The 3-Tier System":
Alcohol must be manufactured, distributed and sold to
the public by different businesses. This is designed
to prevent monopolies.
Ms. Brawley looked at a flow chart on the slide. She noted
that every state had a version of the 3-tier system
including manufacturing, wholesale, and retail. She
commented on the changes in the industry.
9:17:59 AM
Ms. Brawley displayed slide 7, "Categories of
Recommendations":
1. Alcohol Licenses, Permits and Trade Practices
2. Role and Functions of the ABC Board and Staff
3. Underage Drinking and Youth Access to Alcohol
4. Regulation of Internet Sales of Alcohol
5. Technical or Administrative Law Changes
6. Local Option Communities*
* Note: Local Option recommendations are documented in
the report, but not included in SB 52. More
comprehensive discussion of Local Option laws is
needed in the future.
Note: all section references current to CSSB 52 ver. C
4-29-19
Ms. Brawley noted that local option laws had been one of
the priorities identified by the stakeholder group.
Senator Micciche noted that there was two pieces of local
option improvements included in the bill that would be
discussed later in the presentation. The two options were
requested by municipalities.
Ms. Brawley highlighted slide 8, "Alaska's Liquor License
System: Proposed Changes," which showed a graphical flow
chart to illustrate the proposed changes in the bill. She
detailed that one of the major pieces of the bill was to
create a new chapter to relocate most of the licensing and
permitting in one place. The slide showed how each of the
licenses was organized into three tiers, as well as the
endorsements available to each license type. She added that
there was a proposal for the manufacturing and wholesale
tiers be exempt from population limits to allow for more
commerce without negatively impacting public health since
manufacturers did not distribute to the public.
9:21:37 AM
Ms. Brawley looked at slide 9, "Alaska's Liquor License
System: Proposed Changes," which showed a flow chart of
retail licenses. She elaborated that retail licenses were
currently subject to population limits and would remain so.
There were three that were new that made
brewery/winery/distillery licenses a separate retail
license. The rationale was that the retail access points
were of concern rather than manufacturers, and the change
would allow manufacturers more options with licenses.
Ms. Brawley addressed slide 10, "Alaska's Liquor License
System: Proposed Changes," which showed a flow chart. She
mentioned additional retail licenses, most of which already
existed and were exempt from population limits because of
primarily serving tourists. There were a few licenses
proposed for removal, and replacement proposed to
streamline the number and organization.
Co-Chair von Imhof asked if Ms. Brawley was describing a
section in the bill to remove existing statute.
Ms. Brawley answered in the affirmative. She continued that
there was a transition provision for conversion of existing
licenses to other license types. she used the example of
the brewpub license, which would be converted to be a
brewery license with either a beverage dispensary or a
restaurant license depending upon how the brewery operated.
Ms. Brawley advanced to slide 11, "Proposed: Conversion of
Brewpubs," which showed two pictorial flowcharts. She
explained that brewpubs were a license type that allowed
for operation of a restaurant or beverage dispensary to
produce beer. There was a limit on the amount that could be
produced. With a brewery license there was no limit on
manufacturing, but there was a limit on how much that could
be sold to the public.
Ms. Brawley looked at slide 12, "Proposed: More Retail
Options for Manufacturers," which had a flow chart. She
discussed a change in the way breweries operated. The
proposed changes would allow breweries to obtain a retail
license. She used the example of the Moose's Tooth
restaurant - a brewpub in Anchorage that had a strict limit
on the barrels of alcohol it could produce each year.
Co-Chair von Imhof noted that Moose's Tooth also had a
restaurant in which it could serve beer.
Ms. Brawley stated that the brewpub license had limited
manufacturing and a retail license.
Ms. Brawley continued to address slide 12, and informed
that the bill would allow manufacturers to own any other
type of retail license. It would not allow for ownership of
a wholesale license.
9:25:45 AM
Ms. Brawley spoke to slide 13, "Proposed: Manufacturer
Sales Limits by Product Type," which showed a graphical
chart illustrating how much each license type could sell
onsite. The purpose of the limits was to protect public
health. The higher the alcohol content of the product, the
lower the amount that could be sold. The statute would be
updated to reflect the amount of a keg.
Ms. Brawley referenced slide 14, "Proposed: Endorsements on
Licenses":
Add endorsements to existing licenses, giving
businesses more flexibility without creating more
situation specific license types.
Endorsements would allow sampling on premises,
multiple bar rooms, deliveries by package stores, etc.
Section 10, 04.09.400; endorsements defined in
04.09.410 - .520
Co-Chair von Imhof asked how one would go about applying
for an endorsement.
Ms. Brawley stated that the endorsement process would be
similar to that of applying for a license and would have a
$200 application fee. The endorsement would be attached to
and renewed with the license. Endorsements could be applied
for at any time.
Co-Chair von Imhof asked where one would apply for an
endorsement.
Ms. Brawley answered that one would apply to the Alcohol
and Marijuana Control Office (AMCO) and the Alcohol
Beverage Control Board.
Senator Micciche discussed the additions to Title 4 that
had happened with the advent of new business types. He
proposed that the new license types would fit with business
models.
Senator Bishop asked for clarification of what cider or
mead was.
Ms. Brawley stated that mead was considered a farm product
and was made from honey.
Senator Olson asked about the alcohol content of mead.
Ms. Brawley believed the alcohol content of mead was
similar to that of wine.
9:30:28 AM
Ms. Brawley turned to slide 15, "Proposed Endorsements":
? R-7A Bowling Alley Endorsement
? R-7B Package Store Shipping Endorsement
? R-7C Package Store Delivery Endorsement
? R-7D Package Store Re-Packaging Endorsement
? [R-1] Multiple Fixed Counter Endorsement
? [R-1] Hotel/Motel Endorsement
? [R-1] Large Resort Endorsement
[R-3] Package Store Sampling Endorsement
? [M-1] Brewery Repackaging Endorsement
Section 10, 04.09.410 - .520
Ms. Brawley thought the proposed endorsements put a more
logical framework on the way business was being done.
Ms. Brawley considered slide 16, "Proposed: Limited Free
Samples for Package Stores":
• In current Title 4, Package Stores cannot allow any
consumption on premises
• The bill would allow small free samples, with a
Package Store Sampling Endorsement
• Ounce limits defined as: "Any combination of products,
not to exceed the alcohol equivalent of any single
product type"
• Ex: Customer A chooses 12 oz. beer. Customer B chooses
6 oz. cider and 3 oz. wine. Customer C chooses 2 oz.
wine, 2 oz. sake, and 4 oz. beer.
*Cider and mead limits depend on alcohol content:
products below 8.5% ABV have a higher sales limit.
Ms. Brawley noted that many states allowed for free samples
but there were health concerns. She discussed the
compromise that was reached. She discussed suspension of an
endorsement without suspending a license.
Ms. Brawley displayed slide 17, "R-7 Standardize Permits":
? Unlike licenses, permits are typically issued for
single events, on or off licensed premises.
? Define all permit types in statute, not just in
regulation
? Fee for all permits is $50 per event day
? Most permits listed are already in statute or
regulation
? New permit: Tasting Event Permit, allowing a Package
Store to host an event on premises, in partnership
with a BDL
Ms. Brawley highlighted slide 18, "Proposed Permits":
R 7F | Beverage Dispensary Caterer's Permit (AS
04.11.230; 3 AAC 304.685)
R 7G | Restaurant Caterer's Dining Permit (3 AAC
R 7H | Club Caterer's Permit (3 AAC
R 7I | Nonprofit Event Permit (AS 04.11.240)
R 7J | Art Exhibit Permit (3 AAC 304.697)
R 7K | Alcoholic Beverage Auction Permit (3 AAC
R 7L | Inventory Resale Permit (Retail Stock Sale
License, AS 04.11.200)
R 7M | Package Store Tasting Event Permit (proposed)
Section 10, 04.09.600; permits defined in 04.09.610 -
.690
Ms. Brawley discussed the proposed package store tasting
event permit details. She asserted that the proposal was a
compromise that would expand what the businesses could do
without endangering public health.
9:34:00 AM
Ms. Brawley looked at slide 19, "Proposed: Package Store
Tasting Event Permit":
• Allows a package store or manufacturer to host a
special tasting event on its own premises, with
onside consumption of alcohol for those attending
the event.
• The event may be in the store or another area of the
property, such as a special event space.
• Licensees can only offer products in their
inventory.
Hosting license
• Event may last up to 4 hours, and must end by 9 p.m.
• Must also serve food
• Each license can host 6 events per year in the same
community as the license is located
Co-Chair von Imhof asked about slide 18. She asked if the
limits of slide 19 were applied to other permits.
Ms. Brawley stated that the limits on slide 19 did not
apply to all the other permits, most of which were
unchanged. She qualified that the limits on other permits
would be more tied to the venue or specific event rather
than being based on the permit itself.
Ms. Brawley addressed slide 20, "Population Limits: Current
Title 4":
Population limits determine how many of each license
type may be issues in each community.
Restaurants: 1 per 1,500 residents.
All other license types (bars, package stores, golf
courses, breweries, etc.): 1 per 3,000 residents.
Some licenses are exempt from population limits: bars
located in hotels or airports, restaurants issued for
public convenience, and licenses that serve tourists.
9:35:41 AM
Ms. Brawley advanced to slide 21, "Population Limits:
Current Title 4":
(AS 04.11.400)
• Some license types are exempt from population
limits: most exempt license types are designed to
serve tourists and travelers, such as hotels or
outdoor recreation lodges.
• They can be issued if other qualifications are met
(ex: minimum number of hotel rooms).
Senator Bishop looked at slide 20 and asked for an example
of a scenario in which a restaurant might not be able to
obtain a license.
Ms. Brawley could not think of an example in which a
restaurant would not be able to obtain a license, unless a
community did not have any available licenses, which was
true for any license type.
Ms. Brawley looked at slide 22, "Proposed: Convert Public
Convenience Licenses and Applications":
Existing public convenience licenses would be
converted to regular Restaurant or Eating Place
Licenses (REPLs).
Applications that have been completed as of the bill's
signing date would be converted to applications for
regular REPLs, and could be approved by the ABC Board
outside the existing population limits.
Ms. Brawley explained that the following slides illustrated
the issue of smaller cities that had trouble growing
commerce and economic development because of the limited
number of licenses. She discussed the idea of giving more
local control. She discussed the idea of "public
convenience" as related to licenses.
9:39:32 AM
Ms. Brawley spoke to slide 23, "Proposed Seasonal REPL
Tourism":
? Seasonal restaurant license
? Available in smaller communities (< 40,000 pop.)
? Same operating requirements and privileges as full-
year restaurants (REPL)
? Number of licenses per community determined by
formula:
5-year average of annual visitors/months in season =
Average monthly visitor population
(Residents + average monthly visitors)/1,500 =
Available Seasonal REP Tourism licenses
? Season defined as up to 6 months per year, in any
combination
Example: May through September + 1 winter month
Section 10, 04.09.350
Ms. Brawley discussed the seasonal restaurant license and
noted that population limits negatively affected smaller
communities more than larger communities because of the
ratio. She noted that there were several restaurants in the
state that operated on a seasonal basis and would find the
change attractive.
Ms. Brawley referenced slide 24, "Proposed: Local
Government Petition for Additional Restaurant Licenses,"
which showed a flow chart depicting the process for
petitioning. She discussed the application requirements. A
city could petition the ABC Board, which would decide how
many licenses to grant.
9:42:45 AM
Senator Bishop asked if it was up to a community how to
decide how the awarded licenses would be granted.
Ms. Brawly answered in the affirmative.
Senator Wielechowski asked what standard the ABC Board
would use to consider the petitions.
Ms. Brawley thought the outcome would depend upon the
quality of the petition. There were basic parameters in the
bill that would guide the decision making. She thought a
city would need to show the current number of licenses and
the number of non-residents that were expected. She thought
each situation would be unique.
Senator Micciche addressed Senator Wielechowski's question.
He considered Soldotna, which had a large influx of
visitors for dip netting. An application would consider the
number of visitors and there would be consultation with
public safety regarding capacity of services. He stated the
idea was not to flood the market but rather give local
control. He thought the petition would require local
planning with multiple stakeholders and was not easily
awarded.
Senator Wielechowski was curious if the decision was
appealable to the Superior Court of Alaska. He asked if the
bill would create a new standard to follow as to whether to
grant the petition. He liked the proposal and was curious
how it would work.
Senator Micciche thought the petition application process
was much like that of other licenses. There were processes
to determine if the applications were appropriate. He did
not know how the appeal process worked. He discussed an
example of applying for an event license and amending the
application for approval.
9:47:08 AM
Co-Chair von Imhof stated that there were representatives
from the ABC Board available to comment on the petition for
additional restaurant licenses. She asked about the factors
that would go into the decision-making process.
BOB KLEIN, CHAIRMAN, ALASKA ALCOHOL AND BEVERAGE CONTROL
BOARD (via teleconference), stated that all board decisions
were appealable to the court system. He thought one of the
nice things about the proposed system was that the
municipality would bring the need to the ABC Board, the
board would hold public hearings and could welcome input
from many sources. He thought the system would serve the
public. He stated that the board would consider each group
separately and reiterated that there was a public process.
Senator Bishop asked if there was a time frame for approval
or denial for a local government petition.
Ms. Brawley stated there would not be a time limit.
Communities that had more licenses than populations allowed
would be grandfathered in.
Senator Bishop pondered the timing of decisions when
considering things like a salmon opener.
Senator Micciche clarified that there would be a longer-
term planning process rather than a quick decision just
before an event.
Senator Bishop thought the question was still relevant. He
wondered if there should be time parameters.
Co-Chair von Imhof thought that if there was a public
process, she hoped that there would be lots of feedback and
public deliberation which would require advance planning.
She asked for the sponsor to get back to the committee
about the timeframe for turnaround considering applications
for endorsements.
Senator Micciche assumed that Mr. Klein could answer the
question but was willing to provide the answer at a later
time.
Co-Chair von Imhof asked to get the information on paper.
9:52:33 AM
Ms. Brawley continued to address slide 24. She reminded
that the proposed process was long term. She thought the
process encouraged cities to look ahead. She clarified that
the petition process and seasonal restaurant licenses were
not mutually exclusive. She thought that some licenses in
Homer were public convenience licenses and operated year-
round, while others were seasonal. The intent of the
structure was to accommodate different business models.
Ms. Brawley turned to slide 25, "Proposed: Option to
Relocate Some Licenses from a Borough to a City":
• Current Title 4 allows relocation of a bar (BDL)
from a borough to a city within that borough.
• The bill proposes also allowing relocation of
package stores.
Ms. Brawley stated that the option listed on the slide was
not used often. The proposal in the bill was to allow for
transfers of licenses for package stores in addition to
bars. She discussed package stores and noted that public
health stakeholders did not want to see a proliferation of
licenses. She mentioned the potential for market disruption
with a proliferation of licenses.
9:55:28 AM
Ms. Brawley considered slide 26, "Proposed: Regulate Trade
Practices":
Some trade practices are illegal in federal law:
practices of alcohol manufacturers and wholesalers to
compel retailers' buying decisions, or stopping them
from buying competitors' product.
Proposed: add equivalent sections to Title 4, protect
retailers and allow for state enforcement.
• Tied house - Partial ownership of retail license
by a manufacturer, to control what products are
sold or exclude competitors. Does not apply to
100% manufacturer-owned licenses.
• Exclusive outlet - Agreement between supplier and
retailer to exclude other retailers or suppliers.
• Commercial bribery - Supplier pays bonus or
provides merchandise in exchange for exclusive
arrangement or agreement not to purchase other
products.
• Consignment sales - Supplier and retailer make
deals to take back unsold products.
Ms. Brawley stated that the wholesaler and manufacturer
industry had brought up the topic of regulating trade
practices. Part of federal law considered how businesses
interacted. Many of the laws in place dealt with not
allowing one part of a sector to have undue influence and
power over others, and not creating monopolies. She
referenced illegal trade practices in which manufactures
and wholesalers compelled retailers to buy products and not
work with competitors or using other influence over
retailers. Part of the bill would put existing federal law
into state law and allow for enforcement.
Co-Chair Stedman asked if what Ms. Brawley had described
was current practice in the industry.
Ms. Brawley was not familiar how common the situation was.
In federal law it was not legal for a wholesaler to install
an expensive tap system to compel/pressure purchasing. She
deferred to the industry to speak to how common the
practice was.
Co-Chair von Imhof asked if the bill aligned state law with
federal law.
Ms. Brawley answered in the affirmative.
Co-Chair von Imhof asked if most states had made the same
change.
Ms. Brawley answered in the affirmative.
Senator Bishop asked if the goal was prevention of
monopolies.
Ms. Brawley answered in the affirmative.
9:58:48 AM
Ms. Brawley displayed slide 27, "F-1. Adjust License Fees
to Reflect Current ABC Budgetary Needs":
? Update license fees according to privileges and
administrative costs of each, and collect sufficient
revenue to cover the ABC Board's required activities:
Administration of licenses & permits
Education about Title 4 and related regulations
Enforcement of Title 4 and related regulations
? ABC Board required to review license fees at least
every 5 years.
? See Appendix, Table 2 of the Title 4 Review report
for current license fees and proposed changes.
Section 6, 04.06.090; License fees throughout Section
10
Ms. Brawley noted that AMCO was a receipts-funded agency,
and license fees were set in statute. The proposal was not
to tie the fees to inflation, but rather to set fees in
accordance with the resources that were needed to
accomplish the work of the board. She asserted that the
change would also make license fees more equitable and
reasonable. She stated that the sponsor had worked with
licensees to determine an appropriate amount.
Co-Chair von Imhof asked about how the license fees were
spent.
Ms. Brawley deferred the question to AMCO staff. She
understood that the fees were deposited into the general
fund and the AMCO budget was based on that amount.
10:02:00 AM
Ms. Brawley advanced to slide 28, "Proposed: More
Accountability for License Fees Allocated to Local
Governments":
• Current Title 4 allows for local governments to
receive an allocation equal to the license fees
collected in their area, intended for enforcement of
Title 4 and related ordinances.
• Reporting on these activities is required, but not
defined in statute. Some jurisdictions report
regularly, while others do not.
• The bill includes better reporting and prevention
about use of these funds and requiring reports about
education activities as well as enforcement.
Ms. Brawley continued to address Co-Chair von Imhof's
question. A portion of the fees were allocated to local
governments. The proposed change was to aid in enforcement,
administration, and local government functions in aid of
regulating licenses. The bill would not change the system
beyond adding a requirement to report activities related to
Title 4 enforcement. She explained that the language in
current statute was not strong enough and the reporting had
not been happening. The bill also proposed a template for
data that would be collected. She discussed items that
might be in the report.
Ms. Brawley looked at slide 29, "RB-4. ABC Board as Key
Partner for Alcohol Education Efforts":
The ABC Board and AMCO, subject matter experts on
Title 4, would work with other agencies and
organizations to develop a coordinated education plan
about responsible alcohol use and applicable laws.
? Coordinate with Department of Health and Social
Services and other agencies tasked with alcohol-
related education.
Section 2, 04.06.075; Section 6, 04.06.090
Ms. Brawley discussed AMCO coordinating with other entities
to create an education plan, and used the example of
working with police on education relating to overserving.
Ms. Brawley addressed slide 30, "Internet Sales in Alaska:
Few Rules":
? Alaska is one of the only states with no rules for
Internet sales of alcohol.
? Alaska Package Stores cannot sell alcohol online,
only via (paper) written orders.
? Alaska Wineries and Package Stores can ship wine to
customers in some circumstances.
? Without state laws restricting online sales, there
are currently no limits on purchases of alcohol online
from out-of-state sellers.
? Alaska consumers also do not pay state excise tax on
online purchases, as they do on products sold and
purchased in state.
Ms. Brawley used the example of an underage person buying
from an online seller without oversight or excise tax
payment. The bill proposed to close loopholes and bring
Alaska in line with other states.
10:05:44 AM
Ms. Brawley highlighted slide 31, "Proposed: Regulate
Internet Alcohol Sales":
INT-1. Winery Direct Shipment License
? Create a license available to all U.S. (including
Alaska) wineries to ship orders of wine to Alaska
customers.
? Prohibit other online sales of alcohol not under
this license or the Package Store Shipping
endorsement.
INT-2. Collect Alaska Excise Tax for Internet Sales
? Require all out-of-state holders of a Winery Direct
Shipment license to pay the same excise tax on Alaska
orders.
INT-3. Board Approval of Common Carriers for Alcohol
Delivery
Require all common carriers who transport deliver
alcohol directly to consumers in Alaska to be approved
by ABC Board.
Section 10, 04.09.360; section 87, 04.16.022
Ms. Brawley noted that the State of Idaho had 600 or 700
permit holders for winery shipments. She reiterated that
the proposal was not to restrict what people do but rather
to ensure the purchasing was done legally.
Senator Hoffman relayed that there were many dry
communities in rural Alaska. He asked how the provision
would be monitored to keep people in dry communities from
ordering wine online.
Ms. Brawley advanced to slide 32, "Proposed: Regulate
Internet Alcohol Sales":
• Alaska does not limit online sales of alcohol.
Orders from out of state businesses are not subject
to Alaska's alcohol excise tax, and the state cannot
track how much alcohol is ordered each year.
• The bill would create a Winery Direct Shipment
License and allow online alcohol sales only from
U.S. wineries and Alaska package stores.
Alaska customer orders wine online from winery - wine
only: no beer or spirits
Winery Direct Shipment Licensee verifies:
• Is customer 21 or older?
• Is customer in a non-Local Option area?
• Is order within limit for personal use?
6 cases per sale
12 cases per year
Common carrier receives, transports and delivers order
Carrier verifies customer is 21+, delivers package in
person
Ms. Brawley explained that one of the key provisions of the
proposed winery direct shipment license was that one would
not be able to sell to a local option area. There was a
database that all package stores in the state were
connected to, which was not feasible for out of state
businesses.
Senator Hoffman asked about the first bullet on slide 31,
which referenced "a license available to all U.S.
(including Alaska) wineries to ship orders of wine to
Alaska customers." He was concerned how the orders would be
monitored. He thought educating all U.S. wineries on
Alaska's dry communities was a large task.
10:09:14 AM
Senator Micciche stated that currently there was no
regulation of internet alcohol sales in the state. He went
back to slide 31 and considered the three issues listed. He
looked at slide 32, which showed the ordering and age
verification during shipment. The bill would require that
the seller would determine that the purchaser was 21 years
or older and not in a local option area. The proposal would
also require the common carrier to be trained and licensed
and following the law.
Senator Hoffman still did not see how the proposed
legislation would monitor how alcohol sales would be
available to dry communities. He asked about the
enforcement mechanism.
Ms. Brawley stated that by creating the license, AMCO would
be able to identify if someone was illegally shipping to
anywhere in the state. The license would not allow sales in
a local option area. The license would not allow for sales
to specific areas listed by zip code. She furthered that
the Wine Institute had a database of state laws and a list
of dry counties. She added that the following slide also
discussed the regulations on carriers.
Senator Hoffman asked how the law would be enforced and
about penalties.
Ms. Brawley stated one penalty would be that AMCO could go
after a seller that was selling illegally.
10:13:02 AM
Ms. Brawley advanced to slide 33, "Proposed: Regulate
Internet Alcohol Sales":
Common carriers must be approved by the ABC board to
transport and deliver alcohol to consumers throughout
the state.
Carriers must demonstrate that they have policies and
train employees to properly handle shipments of
alcohol.
Carrier maintains policies:
• Safe alcohol handling
• Delivery to adult, age 21+
• Delivery in-person only
ABC board reviews and approves carrier for alcohol
transport and deliver
ABC board publishes list of approved carriers
Ms. Brawley addressed Senator Hoffman's question about
transport and delivery. She stated the sponsor had worked
closely with UPS and FedEx on the regulation concept.
Commercial contracts with UPS and FedEx only allowed
shipment of wine and only did in-person deliveries. The
carrier companies would be liable if the seller shipped to
a dry community or if the delivery got into the hands of an
underage person.
Senator Hoffman understood Ms. Brawley's comments, but did
not see how the provisions would be enforced. He stated
there were many dry communities in his own and Senator
Olson's districts. He asked what the mechanism was to make
sure the law was being enforced.
Senator Micciche restated that there was currently no
system of regulating online alcohol sales. The proposal
would include a tracking system. He thought Mr. Klein would
be equipped to further answer the question about a person
being caught shipping illegally to a local option area.
Co-Chair von Imhof asked Mr. Klein to address how the bill
would prohibit carriers from shipping to dry communities.
Mr. Klein asserted that there was a "choke point" in the
system at the point of delivery carriers, which were
limited. He mentioned FedEx, UPS, and Alaska Airlines. He
thought he fact that the ABC Board could license the
carriers, request information about what was shipped, and
dictate which communities to ship to would provide
tremendous information on how to enforce the regulations.
He pointed out that once the bill was passed, the board had
the tremendous chore of coming up with regulations to
enforce and implement the law. He was comfortable in saying
that the board had the tools and would implement a level of
control that did not currently exist.
10:17:24 AM
Senator Olson considered the issue related to common
carriers and noted that the carriers referenced did not go
to rural Alaska, but went to hub communities that were not
considered dry. He asked if there was a plan to penalize
smaller carriers that were delivering to smaller
communities that had opted to be dry.
Ms. Brawley stated that the intent would be to work with
all carriers in the state, especially smaller carriers. She
emphasized that the first part of enforcement was ensuring
knowledge and familiarity with the law.
Co-Chair von Imhof thought Mr. Klein had asserted that the
carriers would have to determine the legal age of
customers. She thought the proposal put the onus on the
pilot.
Ms. Brawley answered in the affirmative and stated that the
responsibility of age verification would be on the original
seller. Sellers would have a list of dry communities, and
sales to such communities could be traced back to the
seller.
10:20:02 AM
Senator Olson thought it was absurd to request a federally
regulated pilot or carrier to enforce the proposed
regulations. He had been in the air taxi business for the
previous 50 or 60 years. He hoped there was no penalties
for the common carriers, and he did not think the issue was
the responsibility of the pilots or carriers. He did not
think the issue was clear. He would not support the bill if
there would be penalties for common carriers, particularly
135 operators.
Senator Micciche stated that the online sale of alcohol was
not currently regulated. With passage of the bill, sellers
would have to be registered and common carriers would be
approved and would know the rules. He emphasized that there
was no existing system for tracking alcohol sales and
shipment into dry communities. He acknowledged that the
proposed system would not be perfect but would provide a
system that tracked the sales. The ABC Board would have the
authority to retract a license for alcohol transport and
delivery if there was delivery to a local option area.
Senator Olson mentioned his own business in air carriers
and suggested that the proposed mandates would create an
added expense to businesses.
Co-Chair von Imhof stated that if the carriers did not want
to accept the responsibility of selling and delivering
alcohol, it could choose not to. She repeated Senator
Micciche's point that there was currently not a tracking
system in place. She thought the proposal, although
imperfect, was a step in the right direction. She thought
there were areas that could be modified.
Senator Olson agreed with Co-Chair von Imhof's remarks. He
mentioned the alcohol problem in rural Alaska. He applauded
the sponsor for trying to mitigate the situation. He
reiterated his concerns about unintended consequences. He
discussed the carrier's obligation to move mail.
10:25:02 AM
Senator Bishop thought the regulatory package for
implementation was important and noted that there were
carriers that served wet as well as dry communities in his
district. He was concerned that a carrier could lose a
plane over a glitch from a lack of clarity in the law.
Senator Micciche did not think the bill would cure the
smuggling of alcohol into local option areas. He reiterated
that the U.S. mail did not ship alcohol. He stated that he
understood Senator Bishop's concern. He reiterated that
carriers would not carry alcohol into local option areas
and would know the registered contents of packages
containing alcohol. He thought the proposed system would be
a dramatic improvement over the current unregulated online
sale of alcohol to local option areas.
Co-Chair von Imhof thought Senator Micciche summed up the
situation well. She thought the discussion was important.
Senator Olson asked about regulations regarding sale of
alcohol outside of city limits of a local option area.
Senator Micciche stated that the bill did not address the
topic. He thought the ABC Board would be the best resource
for answering the question.
Senator Olson stated he would address the question to the
board at another time.
Ms. Brawley noted that despite the long-standing policy,
there was no indication that people were not illegally
shipping alcohol via the postal service. She mentioned that
there was an existing law that pertained to transportation
of alcohol into local option areas and included specific
regulations around labelling of packages containing
alcohol.
Ms. Brawley referenced slide 34, "Tracking Alcohol Orders
in Local Option Areas: Current Title 4":
Residents in Local Option communities that allow
importation of alcohol may order a limited amount of
alcohol each month for personal and non-commercial
use.
Monthly Importation Limit
12 gal. Beer - Or 1 half-barrel (15.5 gal) keg
24 L wine (32 bottles)
105 L spirits (14 bottles)
Alaska customer sends order to package store
Licensee verifies:
• Is customer 21 or older?
• Has customer met monthly order limit?
• Is new order within monthly limit?
Licensee records new order in ABC Board database
Access limited to:
• ABC Board
• Package stores
• Law enforcement
Carrier delivers package
Common carrier receives, transports and delivers order
Ms. Brawley discussed local option areas, or dry and damp
communities.
10:30:56 AM
Ms. Brawley turned to slide 35, "Proposed: Publish
Community-Level Data from Local Option Order Database":
• In current Title 4, all data in the Local Option
order database is private, and deleted after 1
year.
• the bill would keep individual order information
private, but retain aggregate data for 10 years
and allow the ABC Board to publish annual total
sales volume by region or community.
• This valuable information would be available to
communities and law enforcement to understand the
flow of alcohol into Local Option communities via
legal sales.
Ms. Brawley reiterated that the Local Option Order database
was not available to the public. Law enforcement had access
to the database, which would purge individual data and give
communities more information to plan and deal with
community issues.
Senator Hoffman noted there were wet, dry, and damp
communities. He shared that Bethel was a damp community,
and it was critical to monitor importation of alcohol. He
explained that many people in Bethel felt that the
shipments were not being monitoring adequately. He
mentioned the problem of bootlegging. He thought there
needed to be additional monitoring for damp communities to
ensure that the monthly importation limits were strictly
enforced.
Ms. Brawley stated that the subject was part of the
discussion of the bill proposal. She asserted that the bill
would provide communities with the information to address
the issue.
Ms. Brawley considered slide 36, "RB-6. Revise Title 4
Penalties":
? Review penalties for all Title 4 sections, and
revise as needed to make penalties proportionate to
the offense, and more consistently enforced.
? Retain existing Misdemeanor and Felony charges for
serious offenses, particularly those causing harm to
children.
? Ensure that the ABC Board, and licensee, is informed
about Title 4 convictions: require court to send
records to AMCO, and AMCO to send to the licensee.
? ABC Board retains authority to impose conditions or
additional penalties, including suspending or revoking
license.
? See Appendix, Table 3 in Title 4 Review Report for
table of all current penalties and proposed changes.
Defined throughout; most prohibited acts defined in
chapters 11 + 16
Ms. Brawley stated that most penalties in the bill would
clarify the level of offense. She mentioned the importance
of ensuring the board was informed about Title 4
convictions. There were provisions in the bill that
required notification to AMCO and licensees.
10:35:29 AM
Ms. Brawley displayed slide 37, "Proposed: Revise Penalties
for Lesser Offenses":
• In current law, almost all violations of Title 4 are
Class A misdemeanors.
• When penalties are set high across the board and
perceived to be to strict for most offenses, law
enforcement is less likely to issue citations and
courts are less likely to pursue those cases.
• In the bill, many penalties would become minor
offenses. Serious violations, such as selling alcohol
without a license, allowing gambling on the premises,
or perjury on a license application would remain
misdemeanors or felonies, as they are today.
Minor Offense (Violation)
• Up to $500 fine (most are $250)
• Community work service
• Does not require court appearance
Example: Failure to post required warning signs,
noncompliance with a permit requirement
Class A Misdemeanor
• Up to $10,000 fine
• Up to 1 year in prison
• 10 years probation
• Requires court appearance
Example: Selling alcohol without a license, knowingly
allowing underage sales by employees
Class C Felony
• Up to $50,000 fine
• Up to 5 years in prison
• 10 years probation
• Requires court appearance
Example: Perjury on state license application (Class B),
importing large amount of alcohol into local option area.
Ms. Brawley explained that the proposal was to make clear
the penalty for each section. The stakeholder group had
spent time considering the penalties for each section. The
bill would ensure that penalties were enforced. She
mentioned that the misdemeanors or felonies would remain
the same. The intent of the bill was not to lessen
enforcement of serious crimes, but rather to rebalance so
that crimes could be addressed at the appropriate level.
Co-Chair Stedman asked for discussion of any changes
pertaining to bartenders and serving minors.
Ms. Brawley explained that currently selling to a minor was
a Class A misdemeanor. The goal of the proposal had been to
ensure enforcement. The proposal was to change the penalty
to a minor offense with a $500 fine. In addition to what
the court would issue, the owner of a license would be
immediately liable for an administrative penalty of $250,
which would let owners know of employee behavior and reduce
the issue in the future. The penalty would apply to both
serving a minor and overserving an adult, which were
identified as key public health priorities to reduce the
harms of alcohol.
10:39:26 AM
Ms. Brawley highlighted slide 38, "Proposed: Licensee
Penalties for Overserving an Adult or Serving a Minor":
• In current Title 4, a licensee or employee who
knowingly overserves an intoxicated adult or who
serves alcohol to a minor is guilty of a Class A
Misdemeanor.
• The bill would change the penalty for both
statutes to a Minor Offense, with a $500 fine.
• In addition to the penalty to the person who
commits the violation, the owner of the license
would receive an administrative (non-criminal)
penalty of $250. This alerts the owner that a
violation occurred, holds them immediately
accountable and encourages future compliance.
Co-Chair Stedman wanted to clearly understand the current
structure versus the proposed structure with regard to
underage sales of alcohol. He was concerned about
unfairness to bartenders. He thought the bill proposed a
$500 fine per occurrence. He asked about the process for
repeat offenses.
Co-Chair von Imhof referenced page 77 of the book "Alaska
Title 4 Review" (copy on file) and stated it contained all
the proposed penalties. She asked if cumulative offenses
would escalate to a misdemeanor.
Senator Micciche stated the currently serving an underage
person was a Class A misdemeanor, which was not enforced.
With the bill came funding for additional enforcement. If
there was a record of infractions when an owner applied for
license renewal, there was a risk of denial. He stated that
the ABC Board regularly reviewed those that were not
following the law. Local communities could also comment on
the process of license renewal.
Co-Chair Stedman had spoken with bartenders over the years
who had inadvertently sold alcohol to minors. He thought
the current structure might be overly aggressive. He asked
about bartenders and repeat offenses.
Senator Micciche relayed that the stakeholder group had
considered that the $500 fine was significant but that
there was not a connection to the owner of the
establishment. He thought involving the owner of an
establishment would ensure bartenders were trained and not
serving underage patrons.
10:44:51 AM
Co-Chair von Imhof thought selling to a minor was a very
serious offense and pointed out that there were several
changes to offenses listed on page 77 of the aforementioned
booklet, many of which made sense. She thought it made
sense to notify owners if bartenders were serving underage
patrons. She was not keen on starting to amend the bill.
She suggested not including the change being discussed.
Senator Micciche thought it might be worth considering how
many people in the industry that had been charged with a
class A misdemeanor. He wanted to improve the long-term
outcome and thought existing law was not effective.
Co-Chair Stedman was concerned that the sponsor was
claiming that the current system was not working well. He
thought the current system might be overly harsh. He
thought the proposed $500 fine for workers was significant.
He suggested that a $200 fine for an establishment was not
significant, but any effect on licensure was significant.
10:47:33 AM
Ms. Brawley looked at slide 39, "Proposed: Require Keg
Registration":
Proposed: Require Keg Registration
• Reduces adults' incentive to legally purchase
alcohol and supply an underage drinking party.
• Kegs tagged with the purchaser's contact
information can be tracked if confiscated at an
underage party or other situation where minors
are given access to alcohol.
• A person, not a licensee, possessing an untagged
keg containing alcohol could be fined.
• Modeled on existing Anchorage and Juneau
ordinances.
Ms. Brawley stated that keg registration was a best
practice to ensure that kegs were not sold to minors. She
cited that a significant number of youths had accessed
alcohol through legal purchases. She thought there were
many pieces to reducing underage drinking. She described
the keg registration as a best practice tracking system to
make sure those providing alcohol to minors would be held
accountable. The slide showed a graphic illustrating the
scenarios of legal and illegal consumption of a keg. The
bill would provide a way for law enforcement to track a keg
that had been provided to minors.
Co-Chair von Imhof stated the committee would set the bill
aside. She wanted to revisit the bill soon to address the
fiscal notes and review a sectional analysis.
Senator Wielechowski asked if keg registration required
home brewers to register kegs.
Ms. Brawley stated that the proposal only applied to kegs
sold by licensees.
Senator Wielechowski thought further discussion was needed
and would discuss the matter with Ms. Brawley at a later
time.
Co-Chair Stedman was concerned about potential revenue and
fiscal impacts of the bill.
Co-Chair von Imhof thought when the bill was next
considered, the committee would consider the fiscal notes
and funding required to carry out some of the proposed
changes.
SB 52 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 52 Explanation of Changes v. K 5.2.2019.pdf |
SFIN 2/11/2020 9:00:00 AM |
SB 52 |
| SB 52 Sectional Analysis v. K 5.2.2019.pdf |
SFIN 2/11/2020 9:00:00 AM |
SB 52 |
| SB 52 Sponsor Statement.pdf |
SFIN 2/11/2020 9:00:00 AM SJUD 4/22/2019 6:00:00 PM SL&C 3/26/2019 1:30:00 PM |
SB 52 |
| SB 52 Summary of Goals.pdf |
HL&C 3/9/2020 3:15:00 PM SFIN 2/11/2020 9:00:00 AM SJUD 4/22/2019 6:00:00 PM SL&C 3/26/2019 1:30:00 PM |
SB 52 |
| SB 52 Title 4 Review Report.pdf |
HFIN 3/24/2020 9:00:00 AM SFIN 2/11/2020 9:00:00 AM SL&C 3/26/2019 1:30:00 PM |
SB 52 |
| SB 52 Presentation - Senate Finance 2.10.2020.pdf |
SFIN 2/11/2020 9:00:00 AM |
SB 52 |
| SB 52 Support Testimony - Tasting Room Amendments - 2.10.2020 (002).pdf |
SFIN 2/11/2020 9:00:00 AM |
SB 52 |
| SB 52 Public Testimony Skagway Brewing.pdf |
SFIN 2/11/2020 9:00:00 AM |
SB 52 |