Legislature(2001 - 2002)
05/05/2001 08:49 PM JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 152-BREWPUB LICENSES The committee took up HB 152. MR. KEVIN HAND, staff to Representative Halcro, sponsor of HB 152, explained that HB 152 is a stop gap measure to ensure the unencumbered operation of a relatively new, highly successful industry in Alaska. HB 152 provides a band-aid solution involving a one-year sunset clause that will enable brew pubs to continue their operation for a full year, rather than having to shut down their operation once they reached the production cap put in place. The bill has a sunset date is June 30, 2002; it raises the production cap on brew pubs to 150,000 gallons, of which no more than 75,000 gallons can be sold retail through their in-house establishments and no more than 75,000 gallons can be sold to a wholesaler. The brew pub industry has fostered employment in the state, it has made millions of dollars in capital investments, and it provides diversification of the economy. The idea behind the sunset clause is to allow a one year period for everyone to come to the table, including the industry groups to foster a long solution. He informed the committee that Representative Halcro has received thousands of contacts from patrons of these establishments statewide who would like to see the continued operation of them. He pointed out the net effect of this production cap in place is that it will leave the brew pub operator with a few choices: the operator can cease the operation upon reaching the production cap and no longer sell beer or bring in another brand until the end of the calendar year; contract brew to a brewery, which can be done without the cap, or contract brew to a company out-of-state; or move the entire facility to the Lower 48 where there is no production cap, but the operator will lose the moniker of a handcrafted Alaskan beer. In fact, the production cap is a disincentive for Alaskan employment and capital investment in Alaska. SENATOR COWDERY noted the downtown pub is an asset to the downtown area. He questioned whether any other establishments are limited to what they can sell, for example, imports. MR. HAND said regarding the alcohol industry, there is no limit to how much Anheuser-Bush or Coors can ship into Alaska and sell and there is no limit to how much a package store or brewery, such as the Alaskan Brewery, can sell of any product. SENATOR COWDERY asked when the limit was established whether it would be adjusted in the future. MR. HAND said that brings up a very valid point because when the brew pubs first came on to the scene in Alaska, for example the Moose's Tooth, the law allowed a brewery to also own a restaurant- eating place license. At that time, there was no limit on the amount that could be brewed. That law was changed and the cap was put in place while they were in operation in 1996. The Moose's Tooth's license became illegal and had to be grandfathered in. SENATOR DONLEY asked if the increase is temporary for one year. MR. HAND said that is correct; it is a temporary fix so that all parties have time to come up with a long term fix. MR. MATT JONES, co-owner of the Moose's Tooth Brewing Company, urged committee members to support HB 152. He informed the committee that when he and his partner planned their business in 1995, the Moose's Tooth legally obtained both a restaurant license and a brewery license. At that time, when they opened in 1996, they could produce and sell an unlimited amount of beer in both the wholesale and retail sectors, as well as own as many restaurant licenses as they desired. After less than six months of operation, the 1996 Legislature passed a statute prohibiting the simultaneous ownership of a restaurant and brewery license. His business was never contacted during that session as to the effect that statutory change would have on the business. The Moose's Tooth was told by the ABC Board that the law had changed and that their license was in a grandfather status. Right now, the Moose's Tooth is asking to be able to brew beer to meet the market demand for its product, as allowed in 1996. Bar owners often complain that the Moose's Tooth has an unfair market advantage, but he pointed out that bar owners can also add a brewing facility to their bar to become a brew pub. The only thing stopping them is the investment in that infrastructure. In many states brew pubs can wholesale and retail. The state of Oregon has a free market approach, in which brew pubs can wholesale, retail, own a distillery, winery or restaurant and bar and they can brew to meet the market demands. That approach is the reason Oregon is now internationally recognized as one of the most flourishing brewing industries in the world. His final point was that of the beer produced in Alaska, the microbrewed sector accounts for about 4 percent. Of that 4 percent, the Alaskan Brewery makes about 2 to 3 percent; the remainder is divvied up amongst 10 other breweries. He does not believe his business is about to monopolize the market. He noted that he would like to be able to brew to the demand that he built his brewery for in 1996. Doubling the production cap under HB 152 will allow him to get closer to that and to meet with other parties to find a permanent solution. MR. CHUCK FREESE, a principal in the Great Bear Brewing Company, stated support for HB 152. He said Mr. Jones summarized the benefits of HB 152. SENATOR COWDERY asked Mr. Freese if his primary business is a restaurant and, in a brew pub business, whether arrests of intoxicated people occur more often than with a restaurant. MR. FREESE said his business is just getting started and does about half restaurant business and half brew pub business. His business closes at 1:00 a.m. on Friday and Saturday nights. They have never had an incident with the police. He offered to forward a letter he has received from the Chamber of Commerce. He believes the community is very supportive of his business and families comprise a big part of his business. CHAIRMAN TAYLOR noted he would take up HB 132 again tomorrow. CHAIRMAN TAYLOR announced, regarding HB 152, that it is his intent to let the parties find a solution and insert it into the other bill. SENATOR ELLIS said that bill represents everything the legislature says it stands for, regarding economic development in Alaska so he hopes the Chairman can make that happen. CHAIRMAN TAYLOR announced that the committee would take up HB 106 and HB 184 the following day, and that he hopes to hold the meeting at 1:30 p.m. or while the full Senate takes a recess. He then adjourned the meeting at 11:13 p.m.