Legislature(2019 - 2020)ADAMS 519
03/25/2020 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB52 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SB 52 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
March 25, 2020
1:35 p.m.
1:35:26 PM
CALL TO ORDER
Co-Chair Johnston called the House Finance Committee
meeting to order at 1:35 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Jennifer Johnston, Co-Chair
Representative Dan Ortiz, Vice-Chair
Representative Ben Carpenter
Representative Andy Josephson
Representative Gary Knopp
Representative Bart LeBon
Representative Kelly Merrick
Representative Colleen Sullivan-Leonard
Representative Cathy Tilton
Representative Adam Wool
MEMBERS ABSENT
None
ALSO PRESENT
Senator Peter Micciche, Sponsor; Konrad Jackson, Staff,
Senator Peter Micciche.
PRESENT VIA TELECONFERENCE
Anna Brawley, Title Four Review Coordinator, Agnew Beck
SUMMARY
CSSB 52(FIN) am
ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG
CSSB 52(FIN) am was HEARD and HELD in committee
for further consideration.
Co-Chair Johnston reviewed the meeting agenda.
CS FOR SENATE BILL NO. 52(FIN) am
"An Act relating to alcoholic beverages; relating to
the regulation of manufacturers, wholesalers, and
retailers of alcoholic beverages; relating to
licenses, endorsements, and permits involving
alcoholic beverages; relating to common carrier
approval to transport or deliver alcoholic beverages;
relating to the Alcoholic Beverage Control Board;
relating to offenses involving alcoholic beverages;
amending Rule 17(h), Alaska Rules of Minor Offense
Procedure; and providing for an effective date."
1:37:32 PM
Co-Chair Johnston invited the bill sponsor and staff to
address the committee. She asked members to hold questions
until the end of the presentation. She announced an
amendment deadline of noon the following day.
SENATOR PETER MICCICHE, SPONSOR, relayed that Anna Brawley
was online to continue the presentation.
ANNA BRAWLEY, TITLE FOUR REVIEW COORDINATOR, AGNEW BECK
(via teleconference), resumed a PowerPoint presentation
titled "Alcoholic Beverage Control (ABC) Board Title 4
Review Project: Overview of Senate Bill 52," dated March
20, 2020 (copy on file) on slide 13 titled Proposed:
Conversion of Brewpubs. [Continued from the March 23, 2020
meeting.] She recounted that the discussion highlighted
licensing related changes, specifically the manufacturing
and retail licenses for brewpub licenses on slide 13. She
expounded that currently, a bar or restaurant license may
have an attached brewpub license and produce beer. The bill
would streamline and separate the two licenses making them
available for breweries, wineries, and distilleries. She
moved to slide 14 titled "Proposed: Manufacturer Sales
Limits by Product Type and explained that the proposed
limits were in current law. The limits pertained to onsite
and offsite sales and clarified the amount of alcohol that
could be sold by product type that roughly equated to
Alcohol by Volume (ABV). The higher or more potency lowered
the amount allowed for sale.
1:39:44 PM
Ms. Brawley turned to slide 15 titled Proposed:
Endorsements on Licenses
Endorsements
Expand activities and/or premises to fit business
model
Add endorsements to existing licenses, giving
businesses more flexibility without creating more
situation-specific license types.
Endorsements would allow sampling on premises,
multiple bar rooms, deliveries by package stores,
etc.
Section 10, 04.09.400; endorsements defined in
04.09.410 - .520
Ms. Brawley spoke to the concept of endorsements. She
specified that the proposed endorsements were for
activities currently allowable. She highlighted slide 16
titled "Proposed: Endorsements
R-7A | Bowling Alley Endorsement
R-7B | Package Store Shipping Endorsement
R-7C | Package Store Delivery Endorsement
R-7D | Package Store Re-Packaging Endorsement
[R-1] Multiple Fixed Counter Endorsement
[R-1] Hotel/Motel Endorsement
[R-1] Large Resort Endorsement
[R-3] Package Store Sampling Endorsement
[M-1] Brewery Repackaging Endorsement
16 Section 10, 04.09.410 - .520
Ms. Brawley related that the endorsements existed in
current law, however, some were removed from licensing and
converted to an endorsement such as the last three package
store listings. She detailed that each endorsement had a
biannual fee and was renewed with the base license.
1:41:01 PM
Ms. Brawley addressed slide 17 titled "Proposed: Limited
Free Samples for Package Stores:
In current Title 4 Package Stores cannot allow any
consumption on premises
The bill would allow free samples, with a Package
Store Sampling Endorsement
Ounce limits defined as: Any combination of
products, not to exceed the alcohol equivalent of any
single product type"
Ex: Customer A chooses 12 oz. beer. Customer B
chooses 6 oz. cider and 3 oz. wine.
• 12 ounce Beer and Cider*
• 6 ounce Wine, Sake, and Mead*
• 1.5 ounce Spirits
* Cider and mead limits depend on alcohol content:
products below 8.5% ABV have a higher sales limit.
Section 10, 04.09.490
Ms. Brawley remarked that free samples in package stores
was not currently allowed in Alaska but was common in other
states. The Package Store Sampling Endorsement was an
example of a compromise between industry and regulators.
The endorsement allowed producers customers free samples
and a try before you buy opportunity especially for high
value products but with cumulative limits by product type.
The statute left it up to the business to determine how to
handle tracking the cumulative limits. Ms. Brawley moved to
slide 18 titled R-7 Standardize Permits:
• Unlike licenses, permits are typically issued for
single events, on or off licensed premises.
• Define all permit types in statute, not just in
regulation
• Fee for all permits is $50 per event day
• Most permits listed are already in statute or
regulation
• New permit: Tasting Event Permit, allowing a
Package Store to host an event on premises
18 Section 10, 04.09.600; permits defined in 04.09.610
- .690
Ms. Brawley indicated that most of the proposed permits
existed in current statute with a few exceptions. She
discussed Slide 19 titled Proposed Permits:
R-7F | Beverage Dispensary Caterer's Permit
(AS 04.11.230; 3 AAC 304.685)
R-7G | Restaurant Caterer's Dining Permit
(3 AAC 304.680)
R-7H | Club Caterer's Permit (3 AAC 304.690)
R-7I | Nonprofit Event Permit (AS 04.11.240)
R-7J | Art Exhibit Permit (3 AAC 304.697)
R-7K | Alcoholic Beverage Auction Permit
(3 AAC 304.699)
R-7L | Inventory Resale Permit (Retail Stock Sale
License, AS 04.11.200)
R-7M | Package Store Tasting Event Permit (proposed)
[amended ver. E] | Music Festival Permit (proposed)
[amended ver. E] | Live Music & Entertainment Permit
(proposed)
Section 10, 04.09.600; permits defined in 04.09.610 -
.690
Ms. Brawley noted that most of the existing permits were
simply being relocated and renumbered in statute except for
the last three listing. She noted that The Music Festival
Permit and the Live Music & Entertainment Permit were
recently amended in a prior committee. She added that the
Music Festival Permit pertained only to existing music
festivals in an unorganized borough. The Live Music and
Entertainment Permit regulated live entertainment in
manufacturer or retail premises and was a new proposal that
created consistency with all other license types with event
permits.
1:44:10 PM
Ms. Brawley moved to slide 20 titled Proposed Package
Store Tasting Event Permits:
Licensees can only offer products in their inventory.
Allows a package store to host a special tasting
event on its own premises, with onsite consumption of
alcohol for those attending event.
The event may be in the store or another area of the
property, such as a special event space. It may not be
held in an offsite location.
Licensees can only offer products in their inventory.
Event may last up to 4 hours, and must end by 9
p.m.
Must also serve food
Each license can host 6 events per year in the
same community as the license is located
Ms. Brawley elucidated that if a package store held
multiple licenses it could hold up to 6 events at each
license but not cumulatively. She pointed to slide 21
titled Population Limits: Current Title 4 (AS 04.11.400):
Population limits determine how many of each license
type may be issued in each community.
Restaurants: 1 per 1,500 residents.
All other license types (bars, package stores,
golf courses, breweries, etc.): 1 per 3,000
residents.
Some licenses are exempt from population limits: bars
located in hotels or airports, restaurants issued for
public convenience, and licenses that serve tourists.
Ms. Brawley elaborated that the population limits were set
in statute and regulated under local government
jurisdiction. Cities within a borough would have separate
population limits based on its number of residents. The
statute contained a formula regarding how to calculate
residents. The Alcohol Beverage Control Board (ABC) would
publish a list of available licenses. Currently, most
communities had more bar and package store licenses than
the limits would allow.
1:46:16 PM
Ms. Brawley turned to slide 22 titled Population Limits:
Current Title 4 (AS 04.11.400). and reviewed population
limits under the current Title 4. She recounted that the
population limits were separately defined for each local
government. She exemplified that a borough would subtract
the population of its cities and set its population limits.
She pointed out that some license types were exempt from
population limits: most exempt license types were designed
to serve tourists and travelers, such as hotels or outdoor
recreation lodges. In addition, population limits were set
by license types and not as a whole.
Ms. Brawley explained that much discussion took place
regarding population limits. Limiting the number of retail
access points for alcohol was associated with better public
health and safety outcomes. However, it limited the number
of licenses available to businesses in each community. She
noted that much of the discussion focused on local control
and enhanced economic development opportunities. The
following slides illustrated three separate proposals that
responded to the interest of local control. She presented
Slide 23 titled Proposed Seasonal REPL Tourism:
[Restaurant Eating Place License (REPL)]
Seasonal restaurant license
Available in smaller communities (< 40,000 pop.)
Same operating requirements and privileges as
full-year restaurants (REPL)
Number of licenses per community determined by
formula:
Five-year average of annual visitors/months in
season = Average monthly visitor population
(Residents + average monthly visitors)/ 1,500 +
Available Seasonal REP Tourism licenses
Season defined as up to 6 months per year, in any
combination
Example: May through September + 1 winter month
Section 10,04.09.350
1:48:32 PM
Ms. Brawley advanced to slide 24 titled Proposed: Convert
Public Convenience Licenses and Applications. She related
that currently public convenience licenses were issued by
ABC, were not subject to population limits, and not
transferrable to a new location. The proposal eliminated
public convenience licenses and converted them into
Restaurant Eating Place Licenses (REPL). She reviewed
Slide 25 titled Proposed: Local Government Petition for
Additional Restaurant Licenses (Proposed AS 04.11.405).
She offered that a local government could petition ABC for
additional restaurant licenses. She delineated that the
municipality needed to provide a rationale for the petition
and the application must include: the number of licenses
requested; total population served in addition to year-
round residents in the city; evidence of local authority
for public safety and planning; number of existing
restaurant licenses in the city. If the ABC granted
additional licenses, new restaurant licenses would be
available in the municipality, and could not petition again
for more licenses for one year. She suggested that it would
be in the city's interest to think in the long term and
consider how much it wanted the sector to grow.
1:51:06 PM
Ms. Brawley commented that the following was in response to
local governments concerns regarding package store
licenses. She moved to slide 26 titled Proposed Option to
Relocate Some Licenses from a Borough to a City. She
indicated that currently, Title 4 allowed relocation of a
bar [Beverage Dispensary License (BDL)] from a borough to a
city within that borough. The measure expanded the
provision to package stores. She moved to Slide 27 titled
Proposal: Regulate Trade Practices:
Some trade practices are illegal in federal law:
practices of alcohol manufacturers and wholesalers to
compel retailers buying decisions or stopping them
from buying competitors' products.
Proposed: add equivalent sections to Title 4, protect
retailers and allow for state enforcement.
Ms. Brawley commented that the purpose was to remove any
kind of restrictions or market pressure from a manufacturer
or wholesaler. Ms. Brawley turned to slide 28 titled: F-1.
Adjust License Fees to Reflect Current ABC Budgetary
Needs:
Update license fees according to privileges and
administrative costs of each, and collect sufficient
revenue to cover the ABC Board's required activities:
Administration of licenses & permits
Education about Title 4 and related regulations
Enforcement of Title 4 and related regulations
ABC Board required to review license fees at least
every 5 years.
See Appendix, Table 2 of the Title 4 Review report for
current license fees and proposed changes.
Section 6, 04.06.090; License fees throughout Section
10
Ms. Brawley reported that the proposal also updated the fee
structure ensuring similar license types paid similar fees.
Many fees were not updated since 1980. She referred to the
title 4 review report titled Alaska Title 4 Review for the
Alaska Alcoholic Beverage Control Board Recommendations for
Statutory Change (Updated February 2019) (copy on file)
included in members' packets. She recommended that members
examine Table 2 in the appendix [page 75] that included the
proposed changes to license fees.
Ms. Brawley reviewed slide 29 titled Proposed: More
Accountability for License Fees Allocated to Local
Governments:
• Current Title 4 allows for local governments to
receive an allocation equal to the license fees
collected in their area, intended for
enforcement of Title 4 and related ordinances.
• Reporting on these activities is required, but
not defined in statute. Some jurisdictions
report regularly, while others do not.
• The bill includes better reporting and prevention
about use of these funds and requiring reports
about education activities as well as
enforcement.
Ms. Brawley voiced that the proposal required the Alcohol
and Marijuana Control Office (AMCO) to create a
standardized form to collect the information. The form
ensured the information would flow back to AMCO.
1:54:47 PM
Ms. Brawley advanced to slide 30 titled RB-4. ABC Board as
Key Partner for Alcohol Education Efforts:
The ABC Board and AMCO, subject matter experts on
Title 4, would work with other agencies and
organizations to develop a coordinated education plan
about responsible alcohol use and applicable laws.
Coordinate with Department of Health and Social
Services and other agencies tasked with alcohol-
related education.
Section 2, 04.06.075; Section 6, 04.06.090
Ms. Brawley stated that the proposal ensured that ABC and
AMCO was coordinating with other agencies and organizations
to avoid duplicating alcohol education efforts. She moved
to slide 31 titled Internet Sales in Alaska: Few Rules:
Alaska is one of the only states with no rules for
Internet sales of alcohol.
Alaska Package Stores cannot sell alcohol online, only
via (paper) written orders.
Alaska Wineries and Package Stores can ship wine to
customers in some circumstances.
Without state laws restricting online sales, there are
currently no limits on purchases of alcohol online
from out-of-state sellers.
Alaska consumers also do not pay state excise tax on
online purchases, as they do on products sold and
purchased in state.
Ms. Brawley indicated many in-state businesses had brought
up the lack of sales limits and excise tax issues for
internet sales characterizing them as unfair. Slide 32
titled Proposed: Regulate Internet Alcohol Sales:
• Alaska does not limit online sales of alcohol. Orders
from out of state businesses are not subject to
Alaska's alcohol excise tax, and the state cannot
track how much alcohol is ordered each year.
• The bill would create a Winery Direct Shipment License
and allow online alcohol sales only from U.S. wineries
and package stores.
Ms. Brawley indicated that the proposal was consistent with
actions by most other states regarding the regulation of
internet alcohol sales. She noted that the proposal
pertained only to the purchase of wine and had similar
requirements as package stores; limiting sales to 21 years
or older, prohibit sales to someone in a local option area,
and limit amount for personal use.
1:57:11 PM
Ms. Brawley turned to slide 33 titled Proposed: Regulate
Internet Alcohol Sales:
• Common carriers must be approved by the ABC
board to transport and deliver alcohol to
consumers throughout the state...,
• Carriers must demonstrate that they have policies
and train employees to properly handle shipments
of alcohol ...,
Ms. Brawley relayed that regulating internet alcohol sales
included regulating the transport and delivery carriers.
She disclosed that UPS and FedEx maintained internal
policies that only allowed the shipment of wine but not
every carrier had regulations for shipping alcohol. The ABC
board reviews and approves carriers for alcohol transport
and delivery and publishes the list of approved carriers.
The proposal would close the largest loophole regarding
online sales; not knowing what carriers are shipping
alcohol. She addressed Slide 34 titled: Tracking Alcohol
Orders in Local Option Areas: Current Title 4. She related
that existing statutes were in place for local option
communities to allow importation of alcohol for personal
and non-commercial use. Currently the customer sends an
order to a package store and the licensee records the new
order in the ABC database and verified that the customer
did not exceed the monthly order limit. The store
coordinated deliver with the carrier. The bill did not
change the system. She moved to slide 35 titled Proposed:
Publish Community-Level Data from Local Option Order
Database:
In current Title 4, all data in the Local Option
order database is private and deleted after 1 year.
The bill would keep individual order information
private but retain aggregate data for 10 years and
allow the ABC Board to publish annual total sales
volume by region or community.
This valuable information would be available to
communities and law enforcement to understand the flow
of alcohol into Local Option communities via legal
sales.
Sections 7-8, 04.06.095
1:59:32 PM
Ms. Brawley moved to slide 36 titled RB-6. Revise Title 4
Penalties:
Review penalties for all Title 4 sections and revise
as needed to make penalties proportionate to the
offense, and more consistently enforced.
Retain existing Misdemeanor and Felony charges for
serious offenses, particularly those causing harm to
children.
Ensure that the ABC Board, and licensee, is informed
about Title 4 convictions: require court to send
records to AMCO, and AMCO to send to the licensee.
ABC Board retains authority to impose conditions or
additional penalties, including suspending or revoking
license.
See Appendix, Table 3 in Title 4 Review Report for
table of all current penalties and proposed changes.
Defined throughout; most prohibited acts defined in
chapters 11 + 16
Ms. Brawley highlighted Slide 37 titled Proposed: Revise
Penalties for Lesser Offenses:
In current law, almost all violations of Title 4 are
Class A misdemeanors.
When penalties are set high across the board and
perceived to be too strict for most offenses, law
enforcement is less likely to issue citations and
courts are less likely to pursue those cases.
In the bill, many penalties would become minor
offenses. Seri o us violations, such as selling
alcohol without a license, allowing gambling on the
premises, or perjury on a license application would
remain misdemeanors or felonies, as they are today.
Ms. Brawley related that currently almost every offense in
Title 4 was a Class A misdemeanor and did not provide a
sense of proportionality to offenses. The proposal was to
downgrade any of the minor offenses from misdemeanors and
retain the serious penalties for serious violations. She
discussed Slide 38 titled Proposed: Licensee Penalties for
Overserving an Adult or Serving a Minor (AS 04.16.030 and
AS 04.16.052):
In current Title 4, a licensee or employee who
knowingly overserves an intoxicated adult or who
serves alcohol to a minor is guilty of a Class A
Misdemeanor.
The bill would change the penalty for both statutes
to a Minor Offense, with a $500 fine.
In addition to the penalty to the person who commits
the violation, the owner of the license would receive
an administrative (non-criminal) penalty of $250.
This alerts the owner that a violation occurred,
holds them immediately accountable and encourages
future compliance.
Section 89, 04.16.030; section 101, 04.16.052;
sections 124 - 126, 04.16.180
Ms. Brawley concluded the presentation on slide 39 titled
Proposed: Require Keg Registration:
Reduces adults' incentive to legally purchase
alcohol and supply an underage drinking party.
Kegs tagged with the purchaser's contact information
can be tracked and if confiscated at an underage
party or other situation where minors are given access
to alcohol.
A person, not a licensee, possessing an untagged keg
containing alcohol could be fined.
Modeled on existing Anchorage and Juneau ordinances.
2:02:39 PM
Co-Chair Johnston asked to hear an explanation of the
changes since the original version of the bill.
Senator Micciche reviewed the summary of changes (copy on
file). He reported that the legislation was amended in the
Senate Finance Committee where three amendments were
adopted. He read the following from the summary of changes
document:
Amendment 1: Adds new section 04.09.645 to add a Music
Festival Permit (page 47, version \E.A) and allows a
non-profit organization to hold 10 permitted beer and
wine events instead of 5 (page 48, version \E.A).
Amendment 2: Amends AS 04.09.440 to more clearly
define the Large Resort endorsement (page 35, version
\E.A)
Amendment 3: Amends the Brewery, Winery and Distillery
Retail Licenses to more clearly define the
permissible activities which can be held on site
during business hours (pages 22-24 version \E.A);
Allows for up to four live entertainment events per
year, subject to approval by ABC (pages 50 version
\E.A); Changes the closing time for the premises of
manufacturing retail license holders from 8:00pm to
10:00pm (pages 22-23 and 25 version \E.A); Adds new
subsection limiting who may be on site between the
hours of 10:00pm and 9:00am (pages 87 version \E.A);
Changes the population limits for Brewery, Winery and
Distillery Retail Licenses from 1:9,000 to 1:12,000
(pages 70-71 ver. \E.A); Adds three transition
language paragraphs (pages 120-121 ver.\E.A).
SB 52 was amended on the Senate Floor by one amendment
Amendment 1: Amended the "cooling off period" from
three years to one year following the approval by the
ABC of a municipal request for additional licenses.
Senator Micciche explained that Amendment 3 represented
the deal that was crafted by the three entities working
collaboratively after numerous public meetings over the
past several years. He furthered that one amendment had
passed on the Senate floor related to the cooling period.
He reminded the committee of the new proposal to allow
local governments to petition for additional restaurant
licenses. The original bill allowed the local government to
petition for additional restaurant licenses once every
three years, which was changed to once every year.
2:05:31 PM
Representative Wool asked if there was a limit set for the
additional restaurant licenses. Senator Micciche replied in
the negative. He indicated that it was a very specific type
of license. He offered that a local government could either
have an interested business that would likely apply for the
license or use the license to draw a business to their
community. He deduced that communities would only want one
or two additional licenses. He elucidated that the decision
rested with the ABC board via its process. The board would
hear from current license holders and the public before
issuing additional licenses. He believed that a community
with a good case for additional licenses would prevail.
Representative Wool looked at slide 13 and stated he had
never heard of a mini brewpub. He asked whether a brewery
could apply for an REPL from a local government that was
granted an additional license. Senator Micciche deferred
the answer to Ms. Brawley.
2:08:20 PM
Ms. Brawley asked Representative Wool to restate the
question. Representative Wool complied. Ms. Brawley
answered that currently a Brewpub was able to obtain a REPL
subject to population limits and would be able to apply for
a REPL under SB 52.
Representative Wool understood the conversion from a
brewpub to a mini brewpub. He restated his question
regarding whether a brewpub selling food could apply for a
REPL from a municipality that obtained an additional
license. Ms. Brawley replied in the affirmative. She
clarified that the even though the brewpub was seeking the
additional license granted to the municipality, it applied
directly to the state. Representative Wool referenced the
statement that a business would have to give up their
brewery license for an REPL. Ms. Brawley answered that the
business could retain both licenses but had to operate each
license in separate locations. She related that whether to
retain both licenses depended on the business decisions
made by the licensee.
2:11:35 PM
Representative LeBon made a reference to the grand
bargain for the population ceilings. He noted that the
population ceiling had gone from 9,000 to 12,000 and
requested more information regarding the change. Senator
Micciche answered that the bill was all about people
wanting certain things related to the alcohol industry. He
acknowledged that compromises had to be made among the over
120 stakeholder groups. He referenced the Title 4 Review
Report and urged members to read it. He shared that in the
prior year a collision occurred between different
industry groups that wanted to control the industry and
could not find a compromise. He characterized the
population limit compromise as a rising tide floating all
boats. He noted that a new industry business model was
successfully operating evidenced by customer support. He
thought that other license holders represented by the
Alaska Cabaret, Hotel, Restaurant and Retailers Association
(CHARR) recognized that the rising tide was floating all
boats and decided that middle ground could be found. He
described the compromise between breweries and tasting
rooms and the more traditional licensees as a measured
approach; not allowing the new industry to initially grow
too rapidly but loosening restrictions like extending hours
and allowing music events by permit. He added that the
compromise was talked about in public meetings, stakeholder
meetings, publicly discussed in individual board meetings
for both organizations [Brewers Guild of Alaska (BGA) and
CHARR] and supported by both organization as evidenced by
letters of support from both board chairs (copy on file).
2:14:19 PM
Representative LeBon surmised that the fallout would be
from the point of view of free enterprise by restricting
future entry into the marketplace. The population would
allow for two breweries in Fairbanks and unless the
population grew the population limits would be a barrier to
entry. He wondered if there had been discussion regarding
the economics or potential lost revenue from alcohol taxes
collected by communities. Senator Micciche responded in the
affirmative. He voiced that there were many ways to answer
the question. He remarked that population limits were how
the alcohol industry works. He suggested that there may be
a longer term project where the legislature eliminated
population requirements. He was a supporter of free
enterprise, but there were always population limits in
statute. He reiterated the support from CHARR and BGA. He
noted that the compromise did not adversely affect public
health. He stated that there were some people who wanted
to deal out alcohol licenses like a deck of cards, but
public health and safety did not support it. He believed
that the compromise struck a balance. There were
communities already over the limit but were grandfathered
in the legislation. He believed that there would be more
future conversations regarding population limits.
Co-Chair Johnston stated that one of the issues with the
current liquor licenses was they had built-in equity. She
asked if the producer licenses were exchangeable. She
wondered if the provision was fostering another system like
the medallion system for taxis or alcohol. Senator Micciche
answered in the affirmative and added that due to the
population limits the licenses would have a secondary
market value.
2:17:30 PM
Co-Chair Johnston stated the whole discussion had occurred
with the marijuana industry and the legislature had not
imposed population limits with it. Senator Micciche
responded that he had been contacted by many marijuana
industry participants stating that they favored a limited
entry system because many of the businesses were failing at
extraordinary rates. The customer bases could not support
all the businesses. He felt that there were some economic
benefits to population controls and the legislature's job
was to find a balance.
Vice-Chair Ortiz thanked Senator Micciche for bringing the
bill forward. He asked whether all three amendments were
part of the grand bargain. Senator Micciche replied in the
negative and recounted that only amendment 3 was
applicable. Vice-Chair Ortiz asked for verification that
amendment 3 related to extending the closure time. Senator
Micciche replied in the affirmative and clarified that
breweries were not under the population limit, but the
tasting rooms were. Vice-Chair Ortiz had a letter of
support from the CHARR chapter in Ketchikan that supported
the bill with the request for passage of the bill
unamended. He asked if all the stakeholders involved in
amendment 3 were part of the discussion. Senator Micciche
assured Vice-Chair Ortiz that if he were to call the
individual, he would be told that he was aware of the
agreement and thought amendment 3 was part of the bill.
2:21:02 PM
Representative Knopp wanted to focus his questions on the
population limits related to breweries, wineries, and
distilleries. He asked whether the limit was one in 1,500.
Senator Micciche deferred the answer to Ms. Brawley. He
emphasized that the limit was for tasting rooms only.
Ms. Brawley referenced Slide 9 and responded that the slide
portrayed the three tiered system of alcohol regulation
licensing [manufacture, distribute, and sales]. She
indicated that the wholesalers and manufacturers: brewery,
winery, and distillery were exempt from population limits.
She cited Slide 10 that illustrated the retail tier of the
license system would remain under population limits. She
pointed out that restaurants were under a one to 1,500
limit and all others were subject to a one to 3,000 limit.
Three new licenses were created under the bill: Brewery
Retail, Winery Retail, and Distillery Retail that were
subject to a one to 12,000 limit for new licenses with
existing businesses grandfathered. She mentioned that Slide
11 depicted other retail licenses that were exempt from
population limits, such as beverage, dispensary, and
tourism. Representative Knopp needed more clarification. He
asked whether breweries were subject to the population
limit. Ms. Brawley replied that breweries were not subject
to the population limit if they were not selling it to the
public. However, if the brewery had a tasting room or sold
its beer to the public, they would need a retail license
that were under population limits. Representative Knopp
surmised that if a brewery only manufactured its product it
was not subject to population limits. He asked if a brewery
with a tasting room required a retail license. Ms. Brawley
answered that the brewery would require some type of retail
license for the tasting room. Representative Knopp inquired
whether one brewery, one winery, and one distillery with a
retail license per population limit was allowable.
2:25:11 PM
Ms. Brawley replied in the affirmative.
Representative Knopp asked for verification that the bill
increased the population limit from 9,000 to 12,000. She
restated that currently manufacturers had a population
limit of one to 3,000 residents. The bill subjected the
tasting room license to one to 12,000. She clarified that
SB 52 separated the tasting room from the manufacturing
license and created its own license that was subject to one
to 12,000. One business could hold both licenses if
operating two businesses. Representative Knopp wondered
whether in a community with three breweries operating only
one would be allowed to offer a tasting room or would all
three be allowed under the population limits. Ms. Brawley
answered that if they currently had the license, they could
keep it but with passage of the bill, the new population
limit would apply. Representative Knopp surmised only one
tasting room would be allowed with a population of 12,000.
2:26:40 PM
In response to a question by, Senator Micciche, Ms. Brawley
replied that the population limit applied to one of each
type of manufacturer.
Representative Wool voiced his concerns. He reported that
he was a stakeholder in the industry for twenty five years.
He related that he had heard from many in the industry that
they were unaware of the Senate Finance Committee version
of the bill. There were many license holders that were not
members of CHARR. He declared that brewers were also
members of CHARR regarding the statement that Amendment 3
came from an agreement between brewers and CHARR. He
maintained that the amendments added in the Senate Finance
committee were monumental. He remembered that when
breweries and subsequently distilleries had legislation for
creating tasting rooms, the question whether they would
become de facto bars was answered negatively by
testifiers. The reasons given were they would have strict
limits on hours of service, limits on amount of alcohol
sold, and they would not provide any type of entertainment.
The businesses had blossomed into a gathering place where
people drink and socialize. He believed that the tasting
rooms had become competitors with beverage dispensary
licensees and had been the case since 2008 for brewery
tasting rooms and 2014 for distillery tasting rooms, even
with the imposed limits. He had talked to the bill sponsor
of the 2014 legislation for distillery tasting rooms who
stated he was unaware of the change and it was not the
intention. He reiterated that he recently discussed the
changes with Beverage Dispensary License (DBL) holders who
did not know about the proposed changes and they were
unhappy with them. He stated that many businesses felt
threatened by the increased competition. He thought that
the expanded provisions felt like mission creep to many
businesses. He understood that people enjoyed the tasting
rooms. He supported the concept, but he also supported BDL
holders who thought they were purchasing a certain share of
the market via their license. He acknowledged that the
compromise had been endorsed by CHARR, but he did not
believe all people in the industry supported it. He
questioned why the agreement was struck recently and not
four years prior.
2:33:32 PM
Representative Knopp asked if Representative Wool had a
substantive question.
Representative Wool asked whether the change was a
necessary component of the legislation. He emphasized that
had not heard from customers regarding the changes but only
from brewers. He thought that manufacturers were pushing
for the changes.
Senator Micciche answered that competition was scary in any
industry. He expounded that it was very frightening in the
taxi industry where owners invested heavily in the license.
He reiterated that a rising tide floats all boats and made
other options available. He did not remember ever saying on
the record that every BDL owner in Alaska was in favor of
the compromise or that every brewery was in favor as well.
He contended that breweries did not want the limit on new
entrants into the brewery industry. The limit came from
the other side knowing what the end result would look
like. They did not want any more mission creep and wanted
limited growth in the future. He stressed that he was
honoring the agreement. He maintained that had continually
heard from customers [of tasting rooms] who were in favor
of tasting rooms and voted with their feet. He offered to
provide a large volume of letters from the customers to
Representative Wool. He spoke from personal experience
regarding his enjoyment frequenting a local brewery tasting
room. He related that a legislator had stalled the
compromise by trying to further restrict the conditions on
tasting rooms because of fear of competition. He believed
that the compromise was a fair balance and good for both
sides of the industry. He understood the worry over the
value of BDLs. He relayed that the two entities with
intimate knowledge of the industry and the issues decided
they could live with the compromise. He included the
change in the bill. He acknowledged that most stakeholders,
but not all were in favor of the change.
2:37:32 PM
Representative Knopp cited page 16 of the bill and inquired
whether the bowling alley endorsement was a separate liquor
license or a contracted service to a bowling alley. Senator
Micciche replied that the bill attempted to take the
current hodge podge of licensing and refine it into three
systems: license, endorsement, and permit. He pointed out
that the systems avoided the necessity to create another
statute every few years for new businesses in the future.
He deferred to Ms. Brawley to further answer the question.
Ms. Brawley responded that the bowling alley endorsement
would be part of a bar license, which was currently in
statute but converted to an endorsement. She understood
that some bowling alleys currently use a recreational site
license for beer and wine only. Representative Knopp
recounted that the Juneau bowling alley had lost its
alcohol license in the prior year and did not regain it. He
deduced that population limits could prevent the bowling
alley from regaining its license but wondered if it could
contract with a BDL owner under an endorsement. Ms. Brawley
replied in the negative and added that the bowling alley
would need a different license type.
Representative Knopp asked Senator Micciche how the bowling
alley could get a license.
2:40:30 PM
Senator Micciche replied that he was unaware of a license
or endorsement a bowling alley could obtain in the bill
unless it could purchase a BDL for sale in the private
market. Representative Knopp deduced that the Juneau
bowling alley would need to purchase a BDL. He asked
whether he was correct. Senator Micciche answered that the
goal of the bill was not to end up with a new large batch
of BDLs to swamp the market. He explained that the bowling
alley endorsement allowed the drink to be taken to the
lanes and the drinker did not have to remain in the bar.
Representative Knopp wondered whether Taku Lanes in Juneau
could acquire a REPL because they served some food.
Representative Wool interjected that Taku Lanes had been
previously operating under a Recreational Site License
until it was determined that bowling alleys did not fall
under the definition of a recreational site. He indicated
that a bowling alley needed a BDL. He recounted that in
the previous year a bill to save the State Fair [SB 16 -
Alcohol Lic: Recreational Sites; Bonds - Chapter 10 SLA 19
- 07/05/2019] was amended on the House floor to include
bowling alleys under recreational sites. He believed that
Taku Lanes was likely in the application process.
Representative Knopp asked if the recreational site
licenses were retained in the bill.
KONRAD JACKSON, STAFF, SENATOR PETER MICCICHE, replied in
the affirmative. He directed members to page 19 beginning
on line 29 and page 20, lines 1 through 5 of the bill
related to the former recreational site licenses and
reported that the licenses were grandfathered and would
transition to a sporting activity or event license.
2:44:44 PM
Representative Knopp requested clarification regarding the
package store daily sampling permit. Ms. Brawley replied
that that there were two proposals related to package
stores: an endorsement and a permit. She delineated that
the package store sampling endorsement allowed for limited
free samples daily and the permit would allow the package
store to occasionally host events on its premises.
Representative Knopp asked for further clarification
regarding what was allowable on a daily basis. Ms. Brawley
responded that the endorsement would be similar to how the
Costco stores provided free food samples daily. The store
would still be required to check ID and samples were
limited. The event permit was for occasional use only; one
package store could hold both the endorsement and the
permit but could not use them at the same time.
Representative Knopp asked if an endorsement would allow a
tasting room where the customer could taste the product.
2:47:09 PM
Ms. Brawley answered in the affirmative and added that the
samples were free, the store could not sell the samples.
Representative Knopp considered the local government
petition process for additional licenses. He asked whether
the process was subject to population limits. Ms. Brawley
answered that the petition process would be initiated by a
city or local government and if approved, add restaurant
licenses in addition to the limit associated with the
population.
Representative Wool had been to package stores to sample,
but 12 ounces seemed like a very large amount of beer. He
thought that the free sample volumes were large. He asked
whether the sample amounts were vetted.
2:49:14 PM
Senator Micciche recalled that the conversation regarding
sample size had taken place three years ago. He had the
same opinion when he had first heard of the amount at that
time. He offered that the 12 ounce limit was a total, which
included samples of other varieties of beer. Representative
Wool knew that when tasting rooms had first started, they
could not sell product. Currently, it was possible to do
both, sell and buy samples. He wondered why.
Ms. Brawley answered that the free sampling was typically
related to brewery or winery tours.
2:51:27 PM
Representative Wool stated that if he went into a tasting
room, he could purchase the limited amount and it was
lawful to be given a free sample as well. Ms. Brawley
replied that there was also a manufacturer sampling
endorsement. Representative Wool thought it seemed
strange they would be able to sample and sell.
Senator Micciche clarified that the bill did not create the
ability to sample - that was existing law. The topic under
discussion regarded package stores. Representative Wool
reiterated his statement regarding tasting rooms sampling
practices.
Vice-Chair Ortiz communicated the amendment deadline was
for the following day at noon.
Vice-Chair Ortiz reviewed the schedule for the following
day.
Senator Micciche shared that he was available for any
questions.
CSSB 52(FIN) am was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
2:54:01 PM
The meeting was adjourned at 2:54 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 52 Public Testimony Rec'd by 032520.pdf |
HFIN 3/25/2020 1:30:00 PM |
SB 52 |