Legislature(2005 - 2006)SENATE FINANCE 532

05/06/2006 09:00 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Time Change --
Moved SCS CSHB 381(FIN) Out of Committee
Moved CSHB 266(FIN) Out of Committee
Moved SCS CSHB 403(TRA) Out of Committee
Moved CSHB 304(FIN) am Out of Committee
Moved CSHB 409(L&C) Out of Committee
Moved SCS CSHB 240(FIN) Out of Committee
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
     CS FOR HOUSE BILL NO. 240(RLS) am                                                                                          
     "An Act relating to brewery and brewpub licensing and                                                                      
     relating to sales of wine by a winery licensee."                                                                           
This was  the first hearing for  this bill in the  Senate Finance                                                               
Co-Chair Green  moved to adopt  committee substitute  Version 24-                                                               
LS0734\W as the working document. She objected for explanation.                                                                 
AT EASE 9:08:48 AM / 9:18:11 AM                                                                                             
[NOTE: The  FTR Recording  issues were  resolved and  the meeting                                                               
from this point forward was recorded.]                                                                                          
CRAIG JOHNSON, Staff to Representative  Lesil McGuire, the bill's                                                               
sponsor,  informed  the  Committee  this bill  was  developed  in                                                               
conjunction  with   the  Brewers   Guild  which   represents  six                                                               
breweries and five brewpubs in  the State. Brewpubs are currently                                                               
restricted  to selling  their product  for  consumption on  their                                                               
premise  and must  contract with  a  distributor for  off-premise                                                               
sales. Breweries  are currently limited to  selling their product                                                               
off-premise  and  can  only  provide   free  samples  to  brewery                                                               
Mr.  Johnson stressed  that  the  bill, which  is  the result  of                                                               
compromises between the breweries  and the brewpubs, would "level                                                               
the  playing  field  between"  them in  that  brewpubs  would  be                                                               
allowed to increase the amount  of product they produce and would                                                               
be allowed  to self-distribute a  limited amount of  product. The                                                               
increased production would assist in  growing the industry as the                                                               
small quantity  currently produced  by brewpubs  was unattractive                                                               
to distributors. In  addition, the bill would  allow breweries to                                                               
charge  for their  on-premise samples,  thereby allowing  them to                                                               
recoup some of their costs.                                                                                                     
Mr.  Johnson stressed  that both  breweries and  brewpubs support                                                               
the bill.  He pointed out that  the provisions of the  bill would                                                               
be  limited  to  the  Anchorage   and  Fairbanks  areas,  as  the                                                               
determination was  that breweries and brewpubs  in less populated                                                               
areas  of   the  State   would  be   better  served   by  limited                                                               
9:20:16 AM                                                                                                                    
Senator Dyson asked the amount of  product that could be sold for                                                               
consumption on a premise.                                                                                                       
Mr.  Johnson stated  Version  "W" would  increase  the amount  of                                                               
product a  brewery could sell  to a consumer "for  consumption on                                                               
premises" from 24 to 36 ounces.                                                                                                 
Senator  Dyson asked  whether the  product would  be sold  by the                                                               
bottle or by draft.                                                                                                             
Mr. Johnson stated  that the distribution method would  be at the                                                               
discretion  of the  brewer.  Typically, the  product  is sold  in                                                               
draft form as a matter of economics.                                                                                            
Senator  Dyson  understood   numerous  discussions  had  occurred                                                               
regarding  the  consumption  limit during  the  bill's  committee                                                               
hearing process.                                                                                                                
Mr. Johnson affirmed.                                                                                                           
Senator   Dyson  asked   for   further   information  about   the                                                               
consumption limit discussions.                                                                                                  
Mr.  Johnson  reiterated  the  bill  "represents  a  compromise".                                                               
Brewpubs, being licensed premises, are  obligated not to serve an                                                               
intoxicated person.  Thus, there is  no limitation on  the amount                                                               
of  product they  could sell  for on-site  consumption. Breweries                                                               
are currently  prohibited from selling  onsite samples.  The bill                                                               
is  "a compromise  between  what  a brewpub  can  do  and what  a                                                               
brewery cannot do  now. So this limitation of being  able to sell                                                               
basically three  beers, allows  the breweries  to recoup  some of                                                               
their money".  The bill is  "a give and take"  compromise between                                                               
the two competing entities.                                                                                                     
9:22:38 AM                                                                                                                    
Senator Dyson  ascertained therefore  that the 36-ounce  limit on                                                               
on-site  consumption was  based  on  "commercial aspects"  rather                                                               
than public safety issues.                                                                                                      
Mr. Johnson concurred.                                                                                                          
9:23:15 AM                                                                                                                    
Senator Dyson  asked whether Version "W"  included the provisions                                                               
pertaining  to  wineries   that  had  been  included   in  CS  HB
240(RLS)am, Version 24-LS30734\B.A.                                                                                             
Mr. Johnson explained  that prior to HB 240  being transmitted to                                                               
the  Senate, the  House of  Representatives adopted  an amendment                                                               
which incorporated a separate bill  pertaining to wineries. Those                                                               
provisions would  have allowed  "an in-State  winery to  ship and                                                               
distribute  wine inside  the State  of Alaska".  Those provisions                                                               
were not included in the Version "W" committee substitute.                                                                      
Senator Dyson understood  that the bill's sponsor  was amiable to                                                               
incorporating the winery language into the bill.                                                                                
Mr. Johnson  communicated that the bill's  sponsor was respectful                                                               
of  the committee  process.  Thus,  the will  of  a committee  or                                                               
action  taken during  a  floor session  would  be respected.  The                                                               
bill's  sponsor has  "particular respect"  for this  Committee in                                                               
that regard.                                                                                                                    
9:25:27 AM                                                                                                                    
Co-Chair  Green affirmed  that the  winery  language included  in                                                               
Version "B.A" had been incorporated from a separate bill.                                                                       
9:26:20 AM                                                                                                                    
MATT  JONES,  Representative,  Moose's Tooth  Pub  and  Pizzeria,                                                               
testified  via teleconference  from Anchorage  in support  of the                                                               
9:26:50 AM                                                                                                                    
ROBERT    MCCORMICK,    Glacier    BrewHouse,    testified    via                                                               
teleconference from Anchorage in support of the bill.                                                                           
Co-Chair Wilken  asked whether Glenn  Brady, a  representative of                                                               
the  Alaska Cabaret,  Hotel, Restaurant  & Retailers  Association                                                               
(CHARR) would be  testifying, as he had recently  spoken with him                                                               
about this legislation.                                                                                                         
Co-Chair Green  noted that only  Mr. Jones and Mr.  McCormick had                                                               
signed up to testify.                                                                                                           
Co-Chair Wilken asked whether Mr.  Brady had presented a position                                                               
on the bill.                                                                                                                    
Mr. Johnson understood Mr. Brady was in support of the bill.                                                                    
Co-Chair  Wilken moved  to report  the bill  from Committee  with                                                               
individual recommendations and accompanying fiscal notes.                                                                       
Senator Dyson  objected. He supported  Version "B.A"  rather than                                                               
Version "W".                                                                                                                    
Co-Chair Green pointed  out that Version "W" had  been ADOPTED as                                                               
the working document.                                                                                                           
Co-Chair Wilken moved  and asked unanimous consent  his motion to                                                               
report the committee substitute from Committee be withdrawn.                                                                    
There  being no  objection, the  motion to  report the  bill from                                                               
Committee was WITHDRAWN.                                                                                                        
Conceptual  Amendment #1:  This amendment  inserts the  following                                                               
language  into Sec.  6(b)(1)  page  4 following  line  13 of  the                                                               
committee substitute.                                                                                                           
               (A) to an individual who is present on the                                                                       
          licensed premises; or                                                                                                 
               (B) by shipping to an individual if the shipment                                                                 
          is not to an area that has prohibited the importation                                                                 
          or possession of alcoholic beverages under this                                                                       
          chapter or to an area that has limited the importation                                                                
          or possession of alcoholic beverages unless the sales                                                                 
          complies with the limitation;                                                                                         
Senator Dyson moved the amendment.                                                                                              
Senator Bunde and Co-Chair Green objected.                                                                                      
Senator Olson asked the purpose of the language being proposed.                                                                 
Senator  Dyson  stated  that this  amendment  would  restore  the                                                               
language  adopted on  the House  floor that  would allow  Alaskan                                                               
wineries to ship  to markets within the  State. Currently, Alaska                                                               
wineries are limited to exporting their products.                                                                               
Co-Chair  Green  shared she  had  a  "different understanding  of                                                               
sponsor's  desire"  in  this  regard  in  that  the  sponsor  was                                                               
"delighted" that Version  "W" did not include  the language being                                                               
proposed in the amendment.                                                                                                      
9:31:20 AM                                                                                                                    
A roll call was taken on the motion.                                                                                            
IN FAVOR: Senator Dyson, Co-Chair Wilken and Senator Olson                                                                      
OPPOSED: Senator Stedman, Senator Bunde and Co-Chair Green                                                                      
ABSENT: Senator Hoffman                                                                                                         
The motion FAILED (3-3-1)                                                                                                       
Amendment #1 FAILED to be adopted.                                                                                              
Co-Chair  Wilken moved  to report  the bill  from Committee  with                                                               
individual recommendations and accompanying fiscal notes.                                                                       
There being  no objection, SCS  CS HB 240(FIN) was  REPORTED from                                                               
Committee with previous zero fiscal  note #1 dated March 21, 2006                                                               
from the Department of Public Safety.                                                                                           
AT EASE 9:32:16 AM / 9:35:11 AM                                                                                             

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