Legislature(2017 - 2018)BELTZ 105 (TSBldg)

03/20/2018 01:30 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB 157 MICROLOAN REVOLVING FUND & LOANS TELECONFERENCED
Moved SB 157 Out of Committee
-- Public Testimony --
+= SB 76 ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG TELECONFERENCED
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
         SB  76-ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG                                                                     
                                                                                                                                
1:48:49 PM                                                                                                                    
CHAIR  COSTELLO   reconvened  the   meeting  and   announced  the                                                               
continued consideration of SB 76, the Title 4 rewrite.                                                                          
                                                                                                                                
1:49:37 PM                                                                                                                    
ANNA  BRAWLEY,  Consultant,  Agnew  Beck  Consulting,  Anchorage,                                                               
Alaska, delivered  the sectional  analysis for  SB 76.  She began                                                               
with page two  of the sectional analysis dealing  with Section 9,                                                               
which is a  proposed new chapter in Title 4,  to replace sections                                                               
defining  license types  and permit  types.  These are  currently                                                               
defined in  Chapter 11. Many of  the sections are not  changes in                                                               
law; they are relocations or renumbering.                                                                                       
                                                                                                                                
        Chapter 09. Licenses, Endorsements, and Permits.                                                                      
                                                                                                                                
                           Pages 5-49                                                                                           
                                                                                                                                
                   Article 1. License Types.                                                                                  
                                                                                                                                
     AS 04.09.010.  Types of licenses. Gives  the definition                                                                  
     of license,  three tiers, and  limits license  types to                                                                    
     those listed in this chapter.                                                                                              
                                                                                                                                
               Article 2. Manufacturer Licenses.                                                                              
                                                                                                                                
     AS 04.09.020.  Brewery manufacturer  license. Relocates                                                                  
     the  brewery   license  from  04.11.130,   moves  other                                                                    
     provisions from current  brewery manufacturer's license                                                                    
     to endorsements,  sets the biennial  fee at  $1,500 and                                                                    
     requires  that at  least 80%  of the  final product  of                                                                    
     brewed  beverages  sold  be  manufactured  on  licensed                                                                    
     premises in Alaska.                                                                                                        
                                                                                                                                
     AS  04.09.030. Winery  manufacturer license.  Relocates                                                                  
     the   winery  license   from  04.11.140,   moves  other                                                                    
     provisions    from    current   winery    license    to                                                                    
     endorsements,  sets  the  biennial fee  at  $1,500  and                                                                    
     requires  that at  least 80%  of the  final product  of                                                                    
     wine  sold  be  manufactured on  licensed  premises  in                                                                    
     Alaska.                                                                                                                    
                                                                                                                                
     AS   04.09.040.    Distillery   manufacturer   license.                                                                  
     Relocates the distillery  license from 04.11.160, moves                                                                    
     other  provisions   from  current  winery   license  to                                                                    
     endorsements,  sets  the  biennial fee  at  $1,500  and                                                                    
     requires  that at  least 80%  of the  final product  of                                                                    
     distilled  spirits  sold  be manufactured  on  licensed                                                                    
     premises in Alaska.                                                                                                        
                                                                                                                                
1:51:56 PM                                                                                                                    
CHAIR COSTELLO asked if the bill had a definition of                                                                            
manufacturer.                                                                                                                   
                                                                                                                                
MS. BRAWLEY said no, but there is a definition of the                                                                           
individual product types.                                                                                                       
                                                                                                                                
     AS   04.09.050.   Authorized  sales.   Allows   smaller                                                                  
     manufacturers to self-distribute  to retail, wholesale,                                                                    
     permitted  and  out  of  state  or  country  licensees.                                                                    
     Requires  large manufacturers  to go  through wholesale                                                                    
     distributors.                                                                                                              
                                                                                                                                
     AS 04.09.060.  Unlicensed manufacturing.  Relocates the                                                                  
     existing  penalty   for  unlicensed   manufacture  from                                                                    
     04.11.010.                                                                                                                 
                                                                                                                                
     AS  04.09.070.  Unlicensed  manufacturing  in  a  local                                                                  
     option  area.   Relocates  the  existing   penalty  for                                                                    
     unlicensed  manufacture in  a  local  option area  from                                                                    
     04.11.010.                                                                                                                 
                                                                                                                                
     AS 04.09.080.  Unauthorized manufacturer  sale. Defines                                                                  
     unauthorized manufacturer  sale as  violating 04.09.050                                                                    
     and sets the penalty.                                                                                                      
                                                                                                                                
     AS 04.09.090. Definition.  Defines "packaging" which is                                                                  
     the  process  of   containing  alcoholic  beverages  in                                                                    
     bottles or other containers for sale.                                                                                      
                                                                                                                                
                 Article 3. Wholesale Licenses.                                                                               
                                                                                                                                
     AS 04.09.100. General  wholesale license. Relocates the                                                                  
     general wholesale  license from 04.11.160,  moves other                                                                    
     existing  components to  other places  in the  chapter,                                                                    
     maintains  $2,000   biennial  fee,   maintains  $10,000                                                                    
     maximum fee,  and reduces  annual transaction  fees for                                                                    
     smaller businesses.                                                                                                        
                                                                                                                                
     AS  04.09.110. Limited  wholesale  brewed beverage  and                                                                  
     wine license. Relocates  limited wholesale license from                                                                    
     previous  wholesale license  section (AS  04.11.160(b))                                                                    
     in  a separate  section, maintains  $400 biennial  fee,                                                                    
     maintains  maximum  $10,000  fee,  and  reduces  annual                                                                    
     transaction fees for smaller businesses.                                                                                   
                                                                                                                                
     AS  04.09.120.  Annual  fee  and  affidavit.  Relocates                                                                  
     existing affidavit requirement  from previous wholesale                                                                    
     licenses  section  (AS  04.11.160(c)-(d)),  requires  a                                                                    
     wholesale licensee to submit  an affidavit to the board                                                                    
     stating total value of annual sales, including tax.                                                                        
                                                                                                                                
     AS   04.09.130.    Wholesaler   supplier   declaration.                                                                  
     Relocates  the  wholesale   supplier  declaration  from                                                                    
     previous wholesale licenses  section (AS 04.11.160(e)),                                                                    
     maintains  current fee  structure,  and simplifies  the                                                                    
     required reporting process.                                                                                                
                                                                                                                                
     AS    04.09.140.   Unlicensed    wholesale.   Relocates                                                                  
     unlicensed  wholesale  provision   from  04.11.010  and                                                                    
     maintains penalty.                                                                                                         
                                                                                                                                
     AS 04.09.145.  Unlicensed wholesale  in a  local option                                                                  
     area.   Relocates  existing   penalty  for   unlicensed                                                                    
     wholesale in a local option area from 04.11.010.                                                                           
                                                                                                                                
     AS  04.09.150.  Failure  to  pay  annual  fee  or  file                                                                  
     affidavit.  States  that  failure   to  pay  an  annual                                                                    
     wholesale fee or  file an affidavit is  a violation and                                                                    
     sets the penalty.                                                                                                          
                                                                                                                                
     AS  04.09.160.  Failure to  pay  biennial  fee or  file                                                                  
     declaration. States that failure  to pay a biennial fee                                                                    
     and failure  to file  a declaration are  violations and                                                                    
     sets the penalty.                                                                                                          
                                                                                                                                
                  Article 4. Retail Licenses.                                                                                 
                                                                                                                                
     AS  04.09.200. Beverage  dispensary license.  Relocates                                                                  
     and   simplifies  the   BDL   license  language   from,                                                                    
     maintains  the  $2,500  biennial  fee,  references  the                                                                    
     multiple  fixed  counter   endorsement,  and  sets  the                                                                    
     penalty for unauthorized  beverage dispensary activity.                                                                    
     Sections  in current  BDL  (AS  04.11.090) for  bowling                                                                    
     alley and hotel licensees  relocated to become separate                                                                    
     endorsements.                                                                                                              
                                                                                                                                
     AS  04.09.210.  Restaurant  and eating  place  license.                                                                  
     Relocates license from 04.11.100,  sets biennial fee at                                                                    
     $1250,  maintains 1:1  food to  alcohol ratio,  strikes                                                                    
     1996  exemption, limits  the number  of annual  allowed                                                                    
     after-hours  entertainment  events  to  six,  and  sets                                                                    
     penalty for failure to comply with license terms.                                                                          
                                                                                                                                
SENATOR  GARDNER asked  how  the  ratio for  food  to alcohol  is                                                               
measured.                                                                                                                       
                                                                                                                                
MS. BRAWLEY said  it's not specific in current  law. The proposal                                                               
clearly defines  that it  should be food  served on  premises and                                                               
requires certification  to the  board that  the business  has met                                                               
this requirement prior to renewal.                                                                                              
                                                                                                                                
SENATOR  GARDNER asked  if that  means someone  has to  be eating                                                               
while drinking  or is it  ticket sales on  the food side  vs. the                                                               
alcohol side.                                                                                                                   
                                                                                                                                
MS. BRAWLEY  said it is  not requiring an individual  customer to                                                               
order food. It's total sales. The  intent is that the business is                                                               
a bona fide restaurant serving food, not primarily alcohol.                                                                     
                                                                                                                                
MS. BRAWLEY  said in both those  sections there is a  penalty for                                                               
not complying, which is different from current law.                                                                             
                                                                                                                                
2:00:00 PM                                                                                                                    
MS. BRAWLEY continued the sectional for SB 76.                                                                                  
                                                                                                                                
     AS  04.09.220.  Club  license. Relocates  license  from                                                                  
     04.11.110, sets  biennial fee at  $2,500, and  sets the                                                                    
     penalty for failure to comply with license terms.                                                                          
                                                                                                                                
     AS 04.09.230. Package  store license. Relocates license                                                                  
     from 04.11.150,  maintains biennial fee of  $1,500, and                                                                    
     sets  penalty  for  failure  to  comply  with  licenses                                                                    
     terms. Sections  in current AS 04.11.150  for delivery,                                                                    
     shipping  and  other  activities  relocated  to  become                                                                    
     separate endorsements                                                                                                      
                                                                                                                                
     AS  04.09.240.  Pub  license.  Relocates  license  from                                                                  
     04.11.220,  sets  biennial  fee  at  $1,250,  and  sets                                                                    
     penalty for failure to comply  with license terms. Adds                                                                    
     provision    allowing   designation    of   alternating                                                                    
     premises,  which   allows  a   second  location   on  a                                                                    
     university   campus  that   must  be   operated  during                                                                    
     mutually exclusive hours from existing license.                                                                            
                                                                                                                                
     AS 04.09.250.  Theatre license. Relocates  license from                                                                  
     regulation  (3  AAC  304.695),  sets  biennial  fee  at                                                                    
     $1,250,  and sets  the penalty  for  failure to  comply                                                                    
     with license terms.                                                                                                        
                                                                                                                                
     AS  04.09.260.   Common  carrier   dispensary  license.                                                                  
     Relocates  license  from 04.11.180,  maintains  current                                                                    
     fee  schedule,   removes  "vehicle"  as   a  qualifying                                                                    
     premises,  and sets  penalties for  unauthorized common                                                                    
     carrier   dispensary   activity  and   common   carrier                                                                    
     dispensary  noncompliance.   This  statute   refers  to                                                                    
     alcohol served on airlines, cruise ships                                                                                   
                                                                                                                                
MS.  BRAWLEY said  the proposal  removes vehicle  because to                                                                    
date  the ABC  [Alcoholic  Beverage Control  Board] has  not                                                                    
granted  a license  to anyone  who  has requested  it for  a                                                                    
vehicle.  It  is being  removed  because  of concerns  about                                                                    
having alcohol in a road vehicle.                                                                                               
                                                                                                                                
SENATOR GARDNER asked if someone  who rents a limo can drink                                                                    
while in the limo.                                                                                                              
                                                                                                                                
MS. BRAWLEY  said she  didn't know the  rules now,  but they                                                                    
wouldn't have this license type.                                                                                                
                                                                                                                                
SENATOR GARDNER said she imagines  vehicle was there because                                                                    
someone thought at some point that that could be the case.                                                                      
                                                                                                                                
MS. BRAWLEY continued the sectional for SB 76.                                                                                  
                                                                                                                                
     AS  04.09.270. Sporting  event  license. Relocates  and                                                                  
     renames  recreational site  license, sets  biennial fee                                                                    
     at  $1,250,  sets  penalty  for  unauthorized  sporting                                                                    
     event  activity, and  establishes  8-year sunset  dates                                                                    
     for licenses issued under former AS 04.11.210.                                                                             
                                                                                                                                
     AS   04.09.280.  Outdoor   recreation  lodge   license.                                                                  
     Relocates license from 04.11.225,  sets biennial fee at                                                                    
     $2,500,  and  sets  penalty  for  unauthorized  outdoor                                                                    
     recreation lodge activity.                                                                                                 
                                                                                                                                
     AS  04.09.290. Golf  course license.  Relocates license                                                                  
     from 04.11.115,  sets biennial fee at  $1,250, and sets                                                                    
     penalty for failure to comply with license terms.                                                                          
                                                                                                                                
     AS  04.09.300.  Destination resort  license.  Relocates                                                                  
     license from  04.11.255, sets  biennial fee  at $2,500,                                                                    
     and  sets penalty  for failure  to comply  with license                                                                    
     terms.                                                                                                                     
                                                                                                                                
     AS  04.09.310.  Brewery  retail  license.  Creates  new                                                                  
     license  type   based  on   existing  language   in  AS                                                                    
     04.11.130 for brewery  retail activities, sets biennial                                                                    
     fee at $1,250,  and sets penalty for  failure to comply                                                                    
     with  license terms.  Requires new  licensees to  limit                                                                    
     retail  sales to  20% of  total volume  sold in  Alaska                                                                    
     after  8  years;  exempts currently  operating  brewery                                                                    
     licensees    with   retail    operations   from    this                                                                    
     requirement.                                                                                                               
                                                                                                                                
2:05:26 PM                                                                                                                    
CHAIR COSTELLO  asked the  rationale for  a transition  period of                                                               
eight years.                                                                                                                    
                                                                                                                                
MS. BRAWLEY said a business needs  to build a market and make the                                                               
case to  a retailer to  carry the  product. This would  give time                                                               
for that. The three-tier system  says manufacturers should not be                                                               
selling  directly to  the public.  This recognizes  that after  a                                                               
certain  point,  manufacturers  should be  participating  in  the                                                               
three-tier system.                                                                                                              
                                                                                                                                
CHAIR COSTELLO asked if it's a permanent exemption.                                                                             
                                                                                                                                
MS. BRAWLEY explained that anybody  currently operating or in the                                                               
process of  applying for a  license as  of the effective  date of                                                               
the bill would  be exempt. They in theory could  sell 100 percent                                                               
of  the product  in the  retail  space, consistent  with what  is                                                               
allowed now.                                                                                                                    
                                                                                                                                
CHAIR COSTELLO said that seems to set up an unfair environment.                                                                 
                                                                                                                                
MS. BRAWLEY  said this  license type had  lots of  discussion and                                                               
different stakeholders  have different views.  Manufacturers want                                                               
to showcase  their product, but  it does undermine the  intent of                                                               
the three-tier  system to prevent  monopolies. The  rationale was                                                               
to find a  balance because some businesses are  operating now and                                                               
have set up their business model accordingly.                                                                                   
                                                                                                                                
2:08:18 PM                                                                                                                    
SENATOR GARDNER asked if the  eight years starts when sales start                                                               
or  when  businesses get  their  licenses  and start  brewing  or                                                               
distilling.                                                                                                                     
                                                                                                                                
MS. BRAWLEY said the clock  would start when they start operating                                                               
their license, either January 1  or whenever they were issued the                                                               
license.                                                                                                                        
                                                                                                                                
     AS  04.09.330. Distillery  retail license.  Creates new                                                                  
     license  type   based  on   existing  language   in  AS                                                                    
     04.11.170  for   distillery  retail   activities,  sets                                                                    
     biennial fee  at $1,250, and  sets penalty  for failure                                                                    
     to comply  with license  terms. Requires  new licensees                                                                    
     to limit  retail sales to  20% of total volume  sold in                                                                    
     Alaska  after  8  years;  exempts  currently  operating                                                                    
     distillery licensees  with retail operations  from this                                                                    
     requirement. It  defines per person per  day limits for                                                                    
     sale. That includes on and of site consumption.                                                                            
                                                                                                                                
MS. BRAWLEY  said each of the  license types has a  rough alcohol                                                               
equivalent of  the amount of  product they can sell  per customer                                                               
per day.                                                                                                                        
                                                                                                                                
CHAIR COSTELLO asked if she had that information in a chart.                                                                    
                                                                                                                                
MS. BRAWLEY said it's tab 4 in the report.                                                                                      
                                                                                                                                
2:11:01 PM                                                                                                                    
At ease.                                                                                                                        
                                                                                                                                
2:14:11 PM                                                                                                                    
CHAIR COSTELLO reconvened the meeting.                                                                                          
                                                                                                                                
MS.  BRAWLEY  said  it's  in  the  PowerPoint  presentation,  the                                                               
report, and  the bill. For  onsite consumption, a  brewery retail                                                               
license can  serve 36 ounces of  beer per customer per  day or 18                                                               
ounces of  sake. Alcohol  product types are  defined by  how they                                                               
are made  and what products they  are made from. Sake  is brewed.                                                               
Cider is considered a wine.  Rough alcohol equivalent amounts are                                                               
provided  to  recognize that  distilled  products  have a  higher                                                               
alcohol content than beer, for example.                                                                                         
                                                                                                                                
2:15:49 PM                                                                                                                    
SENATOR MICCICHE asked  her to talk about  how consumption limits                                                               
are different than current statute and regulations.                                                                             
                                                                                                                                
MS. BRAWLEY  said for on-site  consumption, the current  limit is                                                               
36 ounces  of beer, sake  is not stated in  law now, wine  has no                                                               
defined limit,  cider is not stated  but would be 36  ounces, the                                                               
same  as  beer, and  three  ounces  of  distilled spirits  is  in                                                               
current law.                                                                                                                    
                                                                                                                                
CHAIR COSTELLO asked how these amounts compare to other states.                                                                 
                                                                                                                                
MS. BRAWLEY offered to follow up with the information.                                                                          
                                                                                                                                
MS.  BRAWLEY  said  for off-site  consumption,  the  amounts  are                                                               
roughly the  same as  current law. For  the brewery  license, now                                                               
they can sell  5 gallons of beer, and 5.167  gallons is proposed,                                                               
which is  more of an  industry standard. Sake, wine,  and spirits                                                               
are  sold in  bottles defined  by the  liter. The  proposal is  9                                                               
liters  of sake,  wine,  or  mead, the  equivalent  of one  case.                                                               
Currently they are  allowed to sell 5 gallons, but  that is not a                                                               
typical amount. The  proposal is 5.167 gallons of  cider and 3.75                                                               
liters of spirits, which is consistent with current law.                                                                        
                                                                                                                                
     AS  04.09.340.  Beverage  dispensary  tourism  license.                                                                  
     Relocates  license  from   AS  04.11.400(d),  maintains                                                                    
     biennial   fee  at   $2,500,  and   sets  penalty   for                                                                    
     unauthorized   beverage   dispensary  activity.   Other                                                                    
     language  in  AS  04.11.400(d) relocated  to  Hotel  or                                                                    
     Motel Endorsement.                                                                                                         
                                                                                                                                
     AS  04.09.350.  Seasonal  restaurant  or  eating  place                                                                  
     license.  Creates  new   license  type,  sets  biennial                                                                    
     license fee  at $1,250,  defines which  communities can                                                                    
     qualify for having this license  type, sets out formula                                                                    
     for   determining  number   of  allowed   licenses  per                                                                    
     community, and sets penalty for  failure to comply with                                                                    
     license terms.                                                                                                             
                                                                                                                                
MS. BRAWLEY  said the seasonal  license would  be equivalent                                                                    
to the  regular restaurant  license, but it  would be  up to                                                                    
six months  of the  year and  available to  communities with                                                                    
populations under 20,000. This is  a response to interest in                                                                    
smaller  communities  in  providing more  opportunities  for                                                                    
tourists.  It  has  a  formula   for  determining  how  many                                                                    
licenses to allow per community.                                                                                                
                                                                                                                                
2:19:17 PM                                                                                                                    
CHAIR COSTELLO asked if there are limitations on the number of                                                                  
licenses for brewery, winery, and distillery retail licenses.                                                                   
                                                                                                                                
MS. BRAWLEY said those are known as population limits and they                                                                  
are in AS 4.11.400.                                                                                                             
                                                                                                                                
     AS 04.09.360.  Winery direct shipment  license. Creates                                                                  
     new  license   type  authorizing  direct   to  consumer                                                                    
     (including online)  sales of wine for  in-state or out-                                                                    
     of-state  winery, sets  biennial license  fee at  $200,                                                                    
     directs  the  board  to  develop  an  application  form                                                                    
     specifically  for this  license, and  sets penalty  for                                                                    
     failure to comply with license terms.                                                                                      
                                                                                                                                
     AS   04.09.370.  Unlicensed   retail  sale.   Relocates                                                                  
     existing  unlicensed  retail  sale from  04.11.010  and                                                                    
     maintains penalty.                                                                                                         
                                                                                                                                
     AS 04.09.380. Unlicensed retail  sale in a local option                                                                  
     area. Relocates  existing unlicensed  retail sale  in a                                                                    
     local   option  area   from  04.11.010   and  maintains                                                                    
     penalty.                                                                                                                   
                                                                                                                                
MS. BRAWLEY said that for  Article 4, endorsements are a new                                                                    
concept   in   Alaska   statutes   for   alcohol   licenses.                                                                    
Endorsements  are   seen  in   other  businesses,   such  as                                                                    
commercial driver's licenses. It is  an add-on to a license.                                                                    
It cannot  be exercised  by itself. It  allows for  a larger                                                                    
physical presence, things like  another room or golf course,                                                                    
or would  allow additional activities not  allowed under the                                                                    
base license.                                                                                                                   
                                                                                                                                
                    Article 5. Endorsements.                                                                                  
                                                                                                                                
     AS   04.09.400.   Types    of   endorsements.   Defines                                                                  
     endorsements,  clarifies  that   endorsements  must  be                                                                    
     exercised with a license.                                                                                                  
                                                                                                                                
     AS   04.09.410.   Manufacturer  sampling   endorsement.                                                                  
     Creates new  endorsement for  onsite sampling  based on                                                                    
     existing language from  manufacturing licenses, defines                                                                    
     per person per day volume  limits by product type, sets                                                                    
     biennial  fee at  $200, sets  penalties for  unendorsed                                                                    
     sampling and endorsement noncompliance.                                                                                    
                                                                                                                                
2:22:47 PM                                                                                                                    
SENATOR  GARDNER  said  she  would  think  brewery,  winery,  and                                                               
distillery are different kinds of manufacturers.                                                                                
                                                                                                                                
MS. BRAWLEY  said the bill  addresses the types of  license. This                                                               
takes care of them with one endorsement.                                                                                        
                                                                                                                                
SENATOR GARDNER clarified  that if someone paid  the biennial fee                                                               
for a license they would want  to pay the $200 for an endorsement                                                               
for retail, on-site sampling.                                                                                                   
                                                                                                                                
MS. BRAWLEY  agreed. Part  of the purpose  of endorsements  is to                                                               
offer  options  to  businesses.  It  also  gives  the  ABC  Board                                                               
flexibility   in   dealing   with  noncompliance.   Rather   than                                                               
suspending  the entire  license  if the  issue  is sampling,  the                                                               
board can choose to suspend the endorsement.                                                                                    
                                                                                                                                
     AS  04.09.420.  Multiple   fixed  counter  endorsement.                                                                  
     Creates  new endorsement  for  multiple fixed  counters                                                                    
     with language relocated  from duplicate license section                                                                    
     in  AS  04.11.090,  sets biennial  fee  at  $200,  sets                                                                    
     initial  application fee  per  counter, sets  penalties                                                                    
     for endorsement noncompliance and unendorsed service.                                                                      
                                                                                                                                
CHAIR COSTELLO commented  that it's defined by  the counter where                                                               
the product  is being sold,  not necessarily whether  someone has                                                               
to enter a new  room. She asked if an owner  currently has to buy                                                               
several licenses for the same property.                                                                                         
                                                                                                                                
MS.  BRAWLEY  said  yes.  For   example,  Chilkoot  Charlie's  in                                                               
Anchorage  has  one  building  with  multiple  rooms.  Each  room                                                               
designated as  licensed premises must  have a fixed  counter with                                                               
fixed plumbing.                                                                                                                 
                                                                                                                                
SENATOR GARDNER said when the  convention center in Juneau has an                                                               
event, it  has multiple places to  buy drinks. She asked  if they                                                               
need an endorsement for each location.                                                                                          
                                                                                                                                
MS. BRAWLEY  said she  cannot speak  to that  specific situation.                                                               
The duplicate  license system is specific  to beverage dispensary                                                               
licenses.                                                                                                                       
                                                                                                                                
2:27:12 PM                                                                                                                    
SENATOR MICCICHE explained it's a  catered event on an unlicensed                                                               
premise.                                                                                                                        
                                                                                                                                
CHAIR COSTELLO asked  if the response to  the endorsement concept                                                               
from the stakeholders was positive.                                                                                             
                                                                                                                                
MS. BRAWLEY said yes. She continued the sectional for SB 76.                                                                    
                                                                                                                                
2:28:19 PM                                                                                                                    
     AS 04.09.430.  Hotel or motel endorsement.  Creates new                                                                  
     endorsement  using  some  language  relocated  from  AS                                                                    
     04.11.090, sets  biennial fee  at $200,  sets penalties                                                                    
     for unendorsed  hotel or motel service  and endorsement                                                                    
     noncompliance.                                                                                                             
                                                                                                                                
     AS  04.09.440. Large  resort  endorsement. Creates  new                                                                  
     endorsement  using  some  language  relocated  from  AS                                                                    
     04.11.090, defines  a large  resort, sets  biennial fee                                                                    
     at  $200, sets  penalties for  unendorsed large  resort                                                                    
     service and endorsement noncompliance.                                                                                     
                                                                                                                                
     AS  04.09.450.  Restaurant   endorsement.  Creates  new                                                                  
     endorsement   using   language  from   the   Restaurant                                                                    
     Designation  Permit   currently  in   regulation,  sets                                                                    
     biennial  fee at  $200, sets  penalties for  unendorsed                                                                    
     restaurant service and endorsement noncompliance.                                                                          
                                                                                                                                
2:30:26 PM                                                                                                                    
SENATOR MICCICHE  asked her  to explain that  some of  these were                                                               
licenses  before  and are  now  endorsements.  Only a  couple  of                                                               
endorsements are new.                                                                                                           
                                                                                                                                
MS. BRAWLEY  explained that the  sampling endorsement is  part of                                                               
the current  manufacturers licenses. Multiple fixed  counters are                                                               
in  the  current  beverage  dispensary  statute  as  a  duplicate                                                               
license.  The language  from  hotel  and motel  and  part of  the                                                               
language from large  resort endorsement are both  in the beverage                                                               
dispensary  tourism   license.  The  restaurant   endorsement  is                                                               
currently in regulation. She continued the sectional.                                                                           
                                                                                                                                
     AS  04.09.460.  Package   store  shipping  endorsement.                                                                  
     Creates new endorsement by  relocating language from AS                                                                    
     04.11.150,  allows licensees  to accept  online orders,                                                                    
     sets  biennial   fee  at   $200,  sets   penalties  for                                                                    
     unendorsed  package  store   shipping  and  endorsement                                                                    
     noncompliance.                                                                                                             
                                                                                                                                
     AS  04.09.470.  Package   store  delivery  endorsement.                                                                  
     Creates new endorsement by  relocating language from AS                                                                    
     04.11.150, sets  biennial fee  at $200,  sets penalties                                                                    
     for unendorsed  package store delivery  and endorsement                                                                    
     noncompliance.                                                                                                             
                                                                                                                                
     AS  04.09.480. Package  store repackaging  endorsement.                                                                  
     Creates  new endorsement  by  relocating language  from                                                                    
     regulation, sets  biennial fee at $200,  sets penalties                                                                    
     for   unendorsed   package    store   repackaging   and                                                                    
     endorsement noncompliance.                                                                                                 
                                                                                                                                
     AS  04.09.490.  Package   store  sampling  endorsement.                                                                  
     Creates  new endorsement,  defines per  person per  day                                                                    
     volume  limits by  product type,  sets biennial  fee at                                                                    
     $200,  sets  penalties  for  unendorsed  package  store                                                                    
     sampling and endorsement noncompliance.                                                                                    
                                                                                                                                
     AS  04.09.500. Bowling  alley endorsement.  Creates new                                                                  
     endorsement  using  language  from AS  04.11.090,  sets                                                                    
     biennial  fee at  $200, sets  penalties for  unendorsed                                                                    
     bowling alley service and endorsement noncompliance.                                                                       
                                                                                                                                
     AS  04.09.510.  Golf  course endorsement.  Creates  new                                                                  
     endorsement  using  language  from AS  04.11.115,  sets                                                                    
     biennial  fee at  $200, sets  penalties for  unendorsed                                                                    
     golf course service and endorsement noncompliance.                                                                         
                                                                                                                                
     AS 04.09.520. Brewery  repackaging endorsement. Creates                                                                  
     new   endorsement  by   relocating  language   from  AS                                                                    
     04.11.135, limits  availability to  licensees currently                                                                    
     operating  brewpubs, sets  biennial fee  at $200,  sets                                                                    
     penalties  for  unendorsed   golf  course  service  and                                                                    
     endorsement noncompliance.                                                                                                 
                                                                                                                                
                      Article 6. Permits.                                                                                     
                                                                                                                                
     AS  04.09.600.  Types   of  permits.  Defines  permits,                                                                  
     establishes  application process,  requires servers  to                                                                    
     have an  alcohol server education card,  and sets daily                                                                    
     fee for all permit types at least $50 per event day.                                                                       
                                                                                                                                
     AS  04.09.610.  Beverage dispensary  caterer's  permit.                                                                  
     Relocates caterer's permit from 04.11.230 and renames.                                                                     
                                                                                                                                
     AS  04.09.620.  Restaurant   caterer's  dining  permit.                                                                  
     Relocates  permit from  regulations,  renames to  allow                                                                    
     service of  meals other than dinner,  and requires meal                                                                    
     services  as  part  of  food  to  alcohol  ratio  sales                                                                    
     requirement.                                                                                                               
                                                                                                                                
     AS 04.09.630.  Club caterer's permit.  Relocates permit                                                                  
     from regulations  and simplifies existing  language for                                                                    
     application process.                                                                                                       
                                                                                                                                
     AS  04.09.640.  Art  exhibit permit.  Relocates  permit                                                                  
     from regulations,  removes option for annual  $100 fee,                                                                    
     and simplifies existing language.                                                                                          
                                                                                                                                
     AS  04.09.650.  Nonprofit  organization  event  permit.                                                                  
     Relocates  special  events  permit from  04.11.240  and                                                                    
     renames, simplifies  existing language  for application                                                                    
     process.                                                                                                                   
                                                                                                                                
     AS  04.09.660.   Alcoholic  beverage   auction  permit.                                                                  
     Relocates  wine  auction  permit from  regulations  and                                                                    
     renames  to   allow  all  alcoholic  beverages   to  be                                                                    
     auctioned.                                                                                                                 
                                                                                                                                
     AS  04.09.670.   Tasting  event  permit.   Creates  new                                                                  
     permit, allows a beverage  dispensary license holder to                                                                    
     partner with a manufacturer  retail licensee or package                                                                    
     store  to  host  a  tasting   event  on  the  partner's                                                                    
     location and  serving the partner's  product inventory,                                                                    
     sets a time  limit and food requirement,  and limits to                                                                    
     six events per partnering license per year.                                                                                
                                                                                                                                
     AS  04.09.680.   Inventory  resale   permit.  Relocates                                                                  
     retail stock sale license from 04.11.200 and renames.                                                                      
                                                                                                                                
     AS    04.09.690.   Conditional    contractors   permit.                                                                  
     Relocates permit from 04.11.250.                                                                                           
                                                                                                                                
     AS  04.09.700.   Failure  to   comply  with   a  permit                                                                  
     requirement. Sets  the penalties for failure  to comply                                                                    
     with permit requirements.                                                                                                  
                                                                                                                                
2:39:51 PM                                                                                                                    
                     Chapter 11. Licensing.                                                                                   
                                                                                                                                
     Section 10    License  or permit  required; presumption                                                                
     concerning possession for sale.                                                                                            
                                                                                                                                
     AS  04.11.010(a)  relocates  penalties  for  unlicensed                                                                  
     manufacture,  sale and  offering  for sale.  Unlicensed                                                                    
     sale  is  addressed  in new  sections  in  proposed  AS                                                                    
     04.09.                                                                                                                     
                                                                                                                                
     Section  11  AS  04.11.010(b)  adds  reference  to  the                                                                  
     package store shipping license.                                                                                            
                                                                                                                                
     Section   12  AS   04.11.010(c)   adds  references   to                                                                  
     unlicensed  sale,  corrects  term "half-keg"  and  adds                                                                    
     barter to local option violation.                                                                                          
                                                                                                                                
     Section 13  Purchase from nonlicensee prohibited                                                                       
                                                                                                                                
     AS 04.11.015  prohibits barter for  alcoholic beverages                                                                  
     and adds penalty with $250 fine.                                                                                           
                                                                                                                                
     Section 14    Board  approval of transfer  AS 04.11.040                                                                  
     adds penalty                                                                                                             
                                                                                                                                
     Section  15    Reports  required  of limited  liability                                                                  
     organizations                                                                                                            
                                                                                                                                
     AS  04.11.045  adds penalty  for  failure  to report  a                                                                  
     change in member interest or manager with $250 fine.                                                                       
                                                                                                                                
     Section 16  Reports required of corporations                                                                             
                                                                                                                                
     AS  04.11.050  adds penalty  for  failure  to report  a                                                                  
     stock transfer  or change of officers  or board members                                                                    
     with $250 fine.                                                                                                            
                                                                                                                                
     Section 17  Reports required of partnerships                                                                             
                                                                                                                                
     AS  04.11.055  adds penalty  for  failure  to report  a                                                                  
     transfer of  partnership interest or change  of general                                                                    
     partner with $250 fine.                                                                                                    
                                                                                                                                
     Section 18   Nonresident  distiller, brewer, winery, or                                                                  
     wholesaler                                                                                                               
                                                                                                                                
     AS  04.11.060  amends  reference to  general  wholesale                                                                  
     license.                                                                                                                   
                                                                                                                                
     Section 19                                                                                                               
                                                                                                                                
     AS  04.11.060 maintains  current penalty  for violating                                                                  
     the section.                                                                                                               
                                                                                                                                
     Section 20   Application  for new license, endorsement,                                                                  
     or permit                                                                                                                
                                                                                                                                
     AS  04.11.260 adds  endorsement, requires  phone number                                                                  
     and  e-mail of  applicant, requires  annotated premises                                                                    
     drawing  and adds  license  references with  individual                                                                    
     application requirements.                                                                                                  
                                                                                                                                
     Section 21                                                                                                               
                                                                                                                                
     AS  04.11.260 exempts  winery  direct shipment  license                                                                  
     from application process for other license types.                                                                          
                                                                                                                                
     Section  22    Application  for renewal  of license  or                                                                  
     permit                                                                                                                   
                                                                                                                                
     AS  04.11.270   adds  endorsements,   adds  conditional                                                                  
     contractor's  permit,   edits  reference,   and  allows                                                                    
     renewal applications to be sent via electronic mail.                                                                       
                                                                                                                                
     Section 23                                                                                                               
                                                                                                                                
     AS  04.11.270 exempts  winery  direct shipment  license                                                                  
     from renewal process.                                                                                                      
                                                                                                                                
     Section 24    Application for transfer of  a license to                                                                  
     another person                                                                                                           
                                                                                                                              
     AS 04.11.280 adds endorsements  as transferrable with a                                                                  
     license.                                                                                                                   
                                                                                                                                
                                                                                                                                
2:43:27 PM                                                                                                                    
CHAIR COSTELLO said her constituents  are concerned that they can                                                               
no longer  have a  glass of wine  or beer with  their pizza  at a                                                               
certain restaurant  as they have in  the past. They were  told it                                                               
is because  the owner is  in the process of  transferring license                                                               
ownership. She asked if this  would make that process easier. She                                                               
noted that Erika McConnell, Division  Director of the Alcohol and                                                               
Marijuana Control Office, was available on line.                                                                                
                                                                                                                                
MS. BRAWLEY deferred to Ms. McConnell.                                                                                          
                                                                                                                                
MS. BRAWLEY continued the sectional for SB 76.                                                                                  
                                                                                                                                
      Section 25  Criminal justice information and records                                                                    
                                                                                                                                
     AS   04.11.295(a)  adds   issuance   and  renewal   for                                                                  
     conditional contractor's permit.                                                                                           
                                                                                                                                
     Section 26                                                                                                               
                                                                                                                                
     AS  04.11.295(b)(1)   adds  reference   to  conditional                                                                  
     contractor's permit.                                                                                                       
                                                                                                                                
     Section 27  Notice of application                                                                                        
                                                                                                                                
     AS  04.11.310 exempts  winery  direct shipment  license                                                                  
     from notice requirements.                                                                                                  
                                                                                                                                
     Section 28  False statement on application.                                                                              
                                                                                                                                
     AS 04.11.315  relocates AS 04.16.210 and  defines crime                                                                  
     of  making false  statements on  an  application to  as                                                                    
     perjury, defined in AS 11.56.200.                                                                                          
                                                                                                                                
     Section 29  Denial of new licenses and permits                                                                           
                                                                                                                                
     AS 04.11.320(a) adds references to endorsements.                                                                         
                                                                                                                                
     Section 30  Denial of license or permit renewal                                                                          
                                                                                                                                
     AS  04.11.330(a)  changes  30  eight-hour  day  minimum                                                                  
     operating   requirement  to   240  hours   and  removes                                                                    
     reference  to  public convenience  license.  [effective                                                                    
     immediately]                                                                                                               
                                                                                                                                
     AS 04.11.315  relocates AS 04.16.210 and  defines crime                                                                  
     of  making false  statements on  an  application to  as                                                                    
     perjury, defined in AS 11.56.200.                                                                                          
                                                                                                                                
     Section 31                                                                                                               
                                                                                                                                
     AS  04.11.330(a)  duplicate section  adds  endorsement,                                                                  
     adds reference to  beverage dispensary tourism license,                                                                    
     and  adds reference  to seasonal  restaurant or  eating                                                                    
     place tourism license.  [effective with other licensing                                                                    
     changes, 1/1/2020]                                                                                                         
                                                                                                                                
     Section 32                                                                                                               
                                                                                                                                
     AS  04.11.330(d)  exempts   common  carrier  dispensary                                                                  
     licenses  and renames  reference  to recreational  site                                                                    
     license.                                                                                                                   
                                                                                                                                
     Section 33                                                                                                               
                                                                                                                                
     AS 04.11.330 exempts winery direct shipment license.                                                                     
                                                                                                                                
     Section 34  Denial of request for relocation                                                                             
                                                                                                                                
     AS  04.11.340 removes  reference to  public convenience                                                                  
     license. [effective immediately]                                                                                           
                                                                                                                                
     Section 35                                                                                                               
                                                                                                                                
     AS  04.11.340  duplicate  section,  adds  reference  to                                                                  
     04.11.400(k)  and  removes reference  to  04.11.400(d).                                                                    
     [effective with other licensing changes, 1/1/2020]                                                                         
                                                                                                                              
     Section  36     Denial  of transfer  of  a  license  to                                                                  
     another person.                                                                                                          
                                                                                                                              
     AS   04.11.360  removes   public  convenience   license                                                                  
     reference. [effective immediately]                                                                                         
                                                                                                                                
     Section  37  AS  04.11.360  duplicate  section  removes                                                                  
     reference  to brewpub  license.  [effective with  other                                                                    
     licensing changes, 1/1/2020]                                                                                               
                                                                                                                                
     Section   38       Licensed  premises   in   multi-unit                                                                  
     residential housing  developments owned or  financed by                                                                  
     the Alaska Housing Finance Corporation                                                                                   
                                                                                                                                
     AS 04.11.365 adds  reference to restaurant endorsement.                                                                  
     Section 39   Suspension  and revocation of licenses and                                                                    
     permits                                                                                                                    
                                                                                                                                
     AS 04.11.370 adds endorsements.                                                                                          
                                                                                                                                
      Section 40  Board imposed conditions or restrictions                                                                    
                                                                                                                              
     AS 04.11.395  section title  change and  adds reference                                                                  
     to endorsements                                                                                                            
                                                                                                                                
2:47:20 PM                                                                                                                    
SENATOR GARDNER asked why page 10 of the sectional has different                                                                
effective dates.                                                                                                                
                                                                                                                                
MS.  BRAWLEY said  many of  the effective  immediately provisions                                                               
have to  do with  the removal of  the public  convenience license                                                               
process. She said she could speak to  that now or when it came up                                                               
later.                                                                                                                          
                                                                                                                                
SENATOR GARDNER said she would wait.                                                                                            
                                                                                                                                
     Section 41                                                                                                             
                                                                                                                                
     AS 04.11.395 allows the director to impose conditions                                                                    
     or restrictions on any permit other than a conditional                                                                     
     contractor's permit.                                                                                                       
                                                                                                                                
                                                                                                                                
     Section 42  Population limitations.                                                                                  
                                                                                                                                
    AS   04.11.400(a)   adds    reference   to   04.11.405.                                                                   
     [effective immediately]                                                                                                    
                                                                                                                                
MS.  BRAWLEY   said  several  sections   have  to   do  with                                                                    
population limits. This is where  the number of licenses per                                                                    
community  is defined.  Generally speaking,  a community  is                                                                    
allowed to have a certain  number of licenses based on their                                                                    
full-year, resident  population. There is a  formula for how                                                                    
that  population is  determined. Generally,  one license  is                                                                    
allowed for  every 3,000  residents. Some  licenses designed                                                                    
to serve tourists are not subject to this.                                                                                      
                                                                                                                                
CHAIR COSTELLO  asked how many  distilleries would be  allowed in                                                               
Anchorage.                                                                                                                      
                                                                                                                                
MS. BRAWLEY  said now there  are 92 or  93 of that  license type.                                                               
The population  limit is  not proposed  to change.  Most licenses                                                               
would  still be  1  to 3,000.  Restaurants are  1  to 1,500.  For                                                               
distilleries, part  of the proposal  is to remove  the population                                                               
limits on  licenses that do  not directly serve the  public. That                                                               
would  be wholesale  licenses  and  manufacturers licenses,  just                                                               
production licenses.  The proposal  for the  distillery, brewery,                                                               
and winery retail  licenses is that each would be  subject to a 1                                                               
to  9,000  population  limit.  The rationale  is  that  they  are                                                               
difference  license types,  but they  are functionally  the same.                                                               
They are producing  and selling on site. Taken  all together, the                                                               
limit is still 1 to 3,000.                                                                                                      
                                                                                                                                
MS. BRAWLEY continued the sectional for SB 76.                                                                                  
                                                                                                                                
     Section 43                                                                                                             
                                                                                                                                
     AS  04.11.400(a)  duplicate section,  edits  subsection                                                                  
     reference,  defines  five-mile radius  outside  cities,                                                                    
     adds  new  population  limit  for  manufacturer  retail                                                                    
     licenses, adds  licenses exempt from  population limits                                                                    
     and    exempts    local   option    populations    from                                                                    
     calculations. [effective with  other licensing changes,                                                                    
     1/1/2020]                                                                                                                  
                                                                                                                                
     Section 44                                                                                                             
                                                                                                                                
     AS 04.11.400(i)  lists licenses exempt  from population                                                                  
     limits.                                                                                                                    
                                                                                                                                
     Section 45                                                                                                             
                                                                                                                                
     AS 04.11.400(k) edits  reference to beverage dispensary                                                                  
     license, allows  relocation of a package  store, lowers                                                                    
     borough  threshold  population,   restricts  number  of                                                                    
     licenses  eligible  for  transfer  to  those  exceeding                                                                    
     population  limits   and  defines  number   of  allowed                                                                    
     transfers by city, not borough.                                                                                            
                                                                                                                                
     Section  46    Petition  for  additional restaurant  or                                                              
     eating  place  licenses  for  certain  local  governing                                                                  
     bodies                                                                                                                   
                                                                                                                              
     AS 04.11.405 adds new section  that gives certain local                                                                  
     governing bodies the ability  to petition the board for                                                                    
     additional   restaurant   or  eating   place   licenses                                                                    
     allocated    to    their    jurisdiction.    [effective                                                                    
     immediately]                                                                                                               
                                                                                                                                
MS. BRAWLEY said  Section 46 is a new  statute that proposes                                                                    
allowing  a city  to petition  for additional  restaurant or                                                                    
eating  place licenses.  This  is part  of  the proposal  to                                                                    
remove  public convenience.  Public  convenience in  statute                                                                    
says that someone  can create an appeal to  get a restaurant                                                                    
license. They go to residents in  their area and ask if they                                                                    
support  or do  not object  to the  license. When  they have                                                                    
enough signatures,  they can go  to the ABC Board  and apply                                                                    
for  a  restaurant license  and  the  board may  issue  that                                                                    
license  outside of  population limits  if it  is deemed  to                                                                    
support  public  convenience.  There is  no  definition  for                                                                    
public convenience. Some communities  have used this because                                                                    
it  is  helpful  for  economic   development  to  have  more                                                                    
restaurant licenses.                                                                                                            
                                                                                                                                
MS.   BRAWLEY  said   the  process   of  getting   a  public                                                                    
convenience license  and the process  for AMCO  [Alcohol and                                                                    
Marijuana  Control Office]  reviewing  those signatures  and                                                                    
determining whether they are valid  has been onerous and can                                                                    
result in inconsistent issuing  of licenses. The stakeholder                                                                    
group  talked in  great detail  about this  process and  the                                                                    
proposal is to repeal the  section on public convenience but                                                                    
have  some replacements.  All  current  licensees that  have                                                                    
public   convenience   licenses   will   be   converted   to                                                                    
restaurants.   Public    convenience   licenses    are   not                                                                    
transferable now,  and this would  give them the  ability to                                                                    
transfer  in  the future  by  selling  to another  owner  or                                                                    
moving to a  new location in that  community. The seasonable                                                                    
restaurant  tourism  license  is  a  replacement  for  those                                                                    
smaller  communities. Smaller  communities can  petition the                                                                    
ABC Board for more restaurant licenses.                                                                                         
                                                                                                                                
2:58:01 PM                                                                                                                    
SENATOR  GARDNER  said   currently,  if  she  wants   to  open  a                                                               
restaurant  and  serve   wine  and  beer,  she   can  survey  the                                                               
neighborhood, go to the assembly, and  if they approve it goes to                                                               
the board for a license. The  change is that the community or the                                                               
assembly asks for new licenses. Then  if she has a new restaurant                                                               
she petitions the assembly to get a license.                                                                                    
                                                                                                                                
MS.  BRAWLEY replied  you  would not  petition  the assembly  for                                                               
that. It would  just mean that five more  licenses are available,                                                               
for instance, in that community.  The applicant would not need to                                                               
petition the city. The applicant would just apply.                                                                              
                                                                                                                                
She  said  the  purpose  of  the  sections  that  look  like                                                                    
duplicates is that  unlike most of the bill  that would take                                                                    
a  fair  amount  of  time  and  regulation  development  and                                                                    
implementation, the  repeal of  public convenience  would be                                                                    
done  immediately because  this has  been an  implementation                                                                    
issue  over   several  years.  The  replacements   for  that                                                                    
mechanism would be put into place immediately.                                                                                  
                                                                                                                                
     Section 47  48                                                                                                         
                                                                                                                                
     AS 04.11.405(a)-(b) duplicate sections amending cross-                                                                     
       references to restaurant and eating place license.                                                                       
     [effective with other licensing changes, 1/1/2020]                                                                         
                                                                                                                                
     Section 49  Person and location                                                                                      
                                                                                                                                
       AS 04.11.430 updates definition of corporation to                                                                        
       match Title 10 and requires additional information                                                                       
     from licensees.                                                                                                            
                                                                                                                                
     Section 50  Prohibited financial interest                                                                            
                                                                                                                                
     AS  04.11.450(b)  retains  restrictions  for  wholesale                                                                  
     licensees from  owning a manufacturing tier  license or                                                                    
     retail  tier  license,  removes  restriction  on  small                                                                    
     manufacturers owning retail tier licenses.                                                                                 
                                                                                                                                
MS.  BRAWLEY said  Section  50 is  one  of the  foundational                                                                    
parts  of the  three-tier system,  but it  is becoming  more                                                                    
common  for manufacturers  to have  retail operations.  This                                                                    
removes  restrictions  on   small  manufacturers  so  anyone                                                                    
operating below  a certain production  limit defined  in the                                                                    
bill could own a retail license.                                                                                                
                                                                                                                                
     Section 51                                                                                                             
                                                                                                                                
     AS  04.11.450(e) adds  reference  to limited  wholesale                                                                  
     license  to restriction  on acting  as  an employee  or                                                                    
     agent  of a  manufacturer tier  license or  retail tier                                                                    
     license and adds the new statutory license references.                                                                     
                                                                                                                                
CHAIR COSTELLO suggested that since individuals were waiting to                                                                 
testify that Ms. Brawley find a place to stop today.                                                                            
                                                                                                                                
3:02:32 PM                                                                                                                    
SENATOR MICCICHE suggested it might make sense to get to Chapter                                                                
16.                                                                                                                             
                                                                                                                                
MS. BRAWLEY continued the sectional for SB 76.                                                                                  
                                                                                                                                
     Section 52                                                                                                             
                                                                                                                              
     AS   04.11.450   adds   new  section   that   restricts                                                                  
     manufacturers  above  certain  annual  production  from                                                                    
     owning  a   wholesale  tier  license  or   retail  tier                                                                    
     license.                                                                                                                   
                                                                                                                                
     Section  53     Prior   public  approval  AS  04.11.460                                                                  
     exempts winery direct shipment license.                                                                                  
                                                                                                                                
     Section 54  56                                                                                                           
     AS  04.11.470     AS  04.11.480  adds  endorsements  to                                                                  
     allowable objections and protest.                                                                                          
                                                                                                                                
     Section 58 - 60  Local options                                                                                           
                                                                                                                                
     AS 04.11.491 renumbers  statutory references to license                                                                  
     types  and  adds outdoor  recreation  lodge  as one  of                                                                    
     license types  that can  be exempted  from restrictions                                                                    
     on sale in local option elections.                                                                                         
                                                                                                                                
     Section 61                                                                                                               
                                                                                                                                
     AS  04.11.491(g)  edits   reference  to  package  store                                                                  
     license and removes the ability  for local option areas                                                                    
     to  opt out  of applying  C felonies  to furnishing  or                                                                    
     delivery of  alcoholic beverages  to persons  under the                                                                    
     age of  21 in a local  option area because the  need is                                                                    
     eliminated in section 92.                                                                                                  
                                                                                                                                
     Section 62  Notice to local governing body                                                                               
                                                                                                                                
     AS 04.11.520 clarifies language  for notice process and                                                                  
     adds endorsements.                                                                                                         
                                                                                                                                
     Section 63    Suspension  and revocation based  on acts                                                                  
     of employees                                                                                                             
                                                                                                                                
     AS   04.11.535(a)  adds   endorsements,  reference   to                                                                  
     permittee as applicable and clarifying language.                                                                           
                                                                                                                                
     Section 64 - 67                                                                                                          
                                                                                                                                
     AS  04.11.537     AS  04.11.570  adds  endorsements  or                                                                  
     conditional contractors permit  to application, renewal                                                                    
     and  expiration,  appeals,  refunds and  forfeiture  of                                                                    
     fees procedures.                                                                                                           
                                                                                                                                
     Section 68  Surrender or destruction of a license                                                                        
                                                                                                                                
     AS 04.11.580(b) changes language to "not later than".                                                                    
                                                                                                                                
     Section 69  Disposition of money                                                                                         
                                                                                                                                
     AS  04.11.590(a)  adds  reference to  endorsements  and                                                                  
     permits.                                                                                                                   
                                                                                                                                
     Section 70  Refund to municipalities                                                                                     
                                                                                                                                
     AS   04.11.610   changes   "refund"   to   "allocation"                                                                  
     throughout  and  specifies   content  of  reporting  by                                                                    
     municipalities for how license  fee funds were used for                                                                    
     alcohol-related education and enforcement.                                                                                 
                                                                                                                                
       Section 71  Accessibility of license and licensed                                                                    
     premises to inspection                                                                                                   
                                                                                                                                
         AS 04.11.630(b) adds endorsements, permits and                                                                       
     includes premises during a permitted event.                                                                                
                                                                                                                                
     Section 72  Duration of licenses and permits                                                                           
                                                                                                                                
     AS    04.11.680    adds    endorsements,    conditional                                                                  
     contractors permit, states that  permits must be issued                                                                    
     for  a specified  time, and  removes fee  reduction for                                                                    
     seasonal licenses.                                                                                                         
                                                                                                                                
3:06:07 PM                                                                                                                    
CHAIR  COSTELLO   thanked  Ms.  Brawley  and   turned  to  public                                                               
testimony.                                                                                                                      
                                                                                                                                
3:06:41 PM                                                                                                                    
RYAN  LINDSAY, Owner  and Brewer,  Devil's Club  Brewing, Juneau,                                                               
Alaska, suggested changes to SB 76.  He said he and Mr. Wood came                                                               
to talk about  how unrealistic the 80:20 production  split is. If                                                               
it were  a stipulation in  law today, Devil's Club  Brewing could                                                               
not  open.  He  said  that  is  about  a  50  percent  growth  in                                                               
production every year, which is  almost physically impossible for                                                               
a small craft brewer.                                                                                                           
                                                                                                                                
3:07:35 PM                                                                                                                    
EVAN  WOOD,  Owner  and Brewer,  Devil's  Club  Brewing,  Juneau,                                                               
Alaska, suggested  changes to SB 76.  He said he and  Mr. Lindsay                                                               
followed  their  dream  of  putting  a  small  brewery  in  their                                                               
hometown.  If  the  proposed  regulation   with  the  80  percent                                                               
distribution by  year eight  for the retail  license was  part of                                                               
Title  4, they  would not  have attempted  to open  a brewery  in                                                               
Alaska. It wouldn't  work. The only way that a  small brewery can                                                               
operate  is  through the  margin  of  retail sales.  Requiring  a                                                               
brewery,  even after  eight years,  to stop  that will  not allow                                                               
breweries to  operate. In  the state now,  he can  guarantee that                                                               
less than five  breweries would qualify under the  80:20 split as                                                               
currently drafted.                                                                                                              
                                                                                                                                
MR.  WOOD said  he realizes  that Devil's  Club Brewery  would be                                                               
exempt under the  current language, but he worries  that it would                                                               
be  a detriment  to a  booming national  industry in  this state.                                                               
Over the  past year, Amalga Distillery,  Barnaby Brewing Company,                                                               
and Devil's Club Brewing Company  have opened in Juneau. Together                                                               
these businesses  have invested over  $4 million in  the downtown                                                               
economy in  renovations. None of  those businesses would  be able                                                               
to  open  or operate  if  they  were  expected to  distribute  80                                                               
percent of their volume. It is impossible.                                                                                      
                                                                                                                                
CHAIR  COSTELLO  said the  members  were  told  that this  was  a                                                               
consensus  bill and  everyone was  on  board. She  asked if  that                                                               
wasn't the  case or were brewers  not a part of  that stakeholder                                                               
process.                                                                                                                        
                                                                                                                                
MR. WOOD said  he couldn't speak on behalf of  the Brewers Guild,                                                               
but he believes the guild opposes the 80 percent split.                                                                         
                                                                                                                                
3:09:51 PM                                                                                                                    
SENATOR GARDNER asked what a realistic adjustment would be.                                                                     
                                                                                                                                
MR.  LINDSAY  said  he  didn't believe  any  forcing  of  offsite                                                               
production is realistic.  There is already a long  list of things                                                               
that  separate craft  breweries  and distilleries  from bars  and                                                               
that alone  is a large  hurdle. Any mandatory  distribution would                                                               
be very detrimental to small craft breweries.                                                                                   
                                                                                                                                
SENATOR GARDNER asked  if it was never their plan  to wholesale a                                                               
significant portion of their product.                                                                                           
                                                                                                                                
MR.  WOOD said  they  do plan  to wholesale  a  portion of  their                                                               
sales.  He didn't  recall the  numbers  they planned  on by  year                                                               
five, but they did not plan  eight years ahead. Even at year five                                                               
it made  sense to focus  on on-premise sales in  downtown Juneau.                                                               
They would  not have opened in  downtown if they couldn't  do on-                                                               
premise sales because the rent is higher.                                                                                       
                                                                                                                                
CHAIR COSTELLO  asked anyone interested  to provide  testimony in                                                               
writing.                                                                                                                        
                                                                                                                                
3:12:15 PM                                                                                                                    
BRANDON  HOWARD, Cofounder,  Amalga  Distillery, Juneau,  Alaska,                                                               
suggested changes  to SB 76. He  said he supports SB  76 overall,                                                               
but  agrees  with  the  fellows from  the  Devil's  Club  Brewing                                                               
Company. The  80:20 split  is unachievable.  That limit  was shot                                                               
from  the hip.  There  is  no research  to  support  it and  will                                                               
deliver  the  craft  industry  dead on  arrival.  In  2017  craft                                                               
production was the biggest  manufacturing industry after plastics                                                               
and  ahead  of  manufacturing  from  mining  and  oil  extraction                                                               
equipment. In  the last five years  it has doubled the  number of                                                               
jobs  it  has  created.  Craft  breweries  and  distilleries  are                                                               
economic  powerhouses. Most  states are  choosing to  support and                                                               
stimulate this  growth. Aspects of  this bill would  stifle their                                                               
economic growth  and development and young  people from investing                                                               
in their communities and starting small businesses.                                                                             
                                                                                                                                
3:14:56 PM                                                                                                                    
RYAN  MAKINSTER, Executive  Director,  Brewers  Guild of  Alaska,                                                               
Anchorage,  Alaska, suggested  changes  to SB  76.  He said  they                                                               
support the bill overall but not  the 80:20 rule. They have never                                                               
agreed with  that rule and  have been  up front with  that during                                                               
the  process. They  have been  working with  the sponsor  to find                                                               
compromise, so they  have not come out in opposition  of the bill                                                               
as  an industry.  They had  hoped  for a  compromise before  this                                                               
time. It  would be  impossible to reach  that number.  Almost all                                                               
their members would  not be in operation if they  had to hit that                                                               
number.  If this  goes  through, the  current  membership is  not                                                               
affected.  They  all  feel  it  is more  important  to  grow  the                                                               
industry than protect their own  businesses. The bill is designed                                                               
to limit  breweries to those  existing today. The  retail tasting                                                               
room  is  an important  aspect  to  get  the businesses  off  the                                                               
ground.                                                                                                                         
                                                                                                                                
MR. MAKINSTER  said a wholesaler  is necessary to meet  the 80:20                                                               
rule. That basically says that  their brewers, after eight years,                                                               
will have to be at the  whim of another private businessowner who                                                               
could be  a competitor. Alaska  has only three  distributors. The                                                               
efforts  of  one or  two  distributors  may mean  that  someone's                                                               
product  may  not be  picked  up.  Wholesalers  have a  group  of                                                               
clients and  a new brewery may  not fit in the  product list. The                                                               
breweries  would  need  to  shut their  doors.  There  are  other                                                               
concerns along that  line. They operated in good faith  to get to                                                               
the  level of  compromise.  They  agreed with  the  one in  9,000                                                               
instead of  one in  3,000 with the  understanding that  the craft                                                               
brewing industry  would continue  to be able  to operate  as they                                                               
do.  They   have  prohibitions  that  BDL   [beverage  dispensary                                                               
license] owners  do not, no  entertainment, no gaming,  no stools                                                               
at the bar, and limited hours  and limited product they can sell.                                                               
They are not directly competing with BDL owners.                                                                                
                                                                                                                                
3:19:45 PM                                                                                                                    
JEREMY   PRICE,  State   Director,   Americans  for   Prosperity,                                                               
Anchorage,  Alaska,  suggested  changes  to SB  76.  He  said  he                                                               
applauds  the efforts  to streamline  the industry  and eliminate                                                               
redundancies  in  terms  of licensing  requirements.  Their  main                                                               
objection is the 80:20 rule. The  committee should get out of the                                                               
practice   of  limiting   entry.  Limiting   entry  is   bad  for                                                               
competition and  innovation. The 1  in 9,000 population  limit is                                                               
completely  arbitrary   and  unnecessary.  The  idea   that  more                                                               
licenses, more bars, more tasting  rooms, more manufacturers lead                                                               
to more  negative fallout is  untrue. Competition  creates better                                                               
products  and  services  to  the   customer.  They  have  serious                                                               
concerns with those two measures.                                                                                               
                                                                                                                                
3:21:36 PM                                                                                                                    
CHAIR COSTELLO found no further testimony.                                                                                      
                                                                                                                                
SENATOR MICCICHE  said it's  no surprise that  there is  an issue                                                               
with the  80:20 rule. He noted  that he referenced it  during the                                                               
first hearing.                                                                                                                  
                                                                                                                                
CHAIR  COSTELLO held  SB 76  in committee  with public  testimony                                                               
open.                                                                                                                           

Document Name Date/Time Subjects
SB 157 - Version A.PDF SL&C 3/20/2018 1:30:00 PM
SB 157
SB 157 - Transmittal Letter.pdf SL&C 3/20/2018 1:30:00 PM
SB 157
SB 157 - Sectional Analysis.pdf SL&C 3/20/2018 1:30:00 PM
SB 157
SB157-DCCED-INV-01-22-18.PDF SL&C 3/20/2018 1:30:00 PM
SB 157