Legislature(2019 - 2020)ADAMS 519
03/28/2020 09:00 AM 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 28, 2020
9:09 a.m.
9:09:34 AM
CALL TO ORDER
Co-Chair Johnston called the House Finance Committee
meeting to order at 9:09 a.m.
MEMBERS PRESENT
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 (via teleconference)
Representative Colleen Sullivan-Leonard
Representative Cathy Tilton
Representative Adam Wool
MEMBERS ABSENT
Representative Neal Foster, Co-Chair
ALSO PRESENT
Senator Peter Micciche, Sponsor; Konrad Jackson, Staff,
Senator Peter Micciche; Senator Peter Micciche, Sponsor.
PRESENT VIA TELECONFERENCE
Doug Wooliver, Deputy Administrative Director, Alaska Court
System; Ryan Fitzpatrick, Temporary Legislative Liaison,
Department of Revenue; Glenn Klinkhart, Interim Director,
Alcohol and Marijuana Control Office, Department of
Commerce, Community and Economic Development.
SUMMARY
CSSB 52(FIN) am
ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG
CSSB 52(FIN) was REPORTED out of committee with
three "do pass" recommendations, five "no
recommendation" recommendations, and one "amend"
recommendation and with two previously published
fiscal impact notes: FN6 (CED) and FN8 (AJS); one
previously published indeterminate note: FN7
(REV); and one previously published zero note:
FN9 (SFIN/Combined).
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."
9:10:17 AM
Co-Chair Johnston communicated that the committee would be
hearing amendments during the meeting. She asked for a
review of the fiscal notes first.
DOUG WOOLIVER, DEPUTY DIRECTOR, ALASKA COURT SYSTEM (via
teleconference), reviewed the fiscal note from the Alaska
Court System [OMB Component Number 768] that included three
months of an attorney's time. He explained that the bill
would change approximately 63 misdemeanor offences to
violations or minor offences. Additionally, the court
system would adopt a bail schedule, change instructions,
and reprogram the computer system for the new offence
codes. The work would require a three-month position at a
one-time expense.
9:11:44 AM
RYAN FITZPATRICK, TEMPORARY LEGISLATIVE LIAISON, DEPARTMENT
OF REVENUE (via teleconference), reviewed the indeterminate
fiscal note [OMB Component Number 2476] by the Department
of Revenue (DOR). He detailed that Section 155 of the bill
would extend the existing alcohol tax of $2.50/gallon to
holders of a new winery direct shipment license. The change
would extend the tax to incoming out-of-state shipments,
which were not currently taxed. The department did not have
data on the volume of shipments coming in through out-of-
state direct shipments; therefore, DOR could not estimate
the revenue change amount. The change would result in an
increase in revenue collected. Additionally, there was a
small capital item that would take care of some
reprogramming changes in the Tax Division's Tax Revenue
Management System and the outward facing revenue online
portal, which allowed taxpayers to file tax returns online.
9:13:15 AM
GLENN KLINKHART, INTERIM DIRECTOR, ALCOHOL and MARIJUANA
CONTROL OFFICE, DEPARTMENT OF COMMERCE, COMMUNITY AND
ECONOMIC DEVELOPMENT, (via teleconference), reviewed the
fiscal impact note [OMB Component Number 3119] from the
Department of Commerce, Community and Economic Development.
The note showed a 4 percent increase over the past year. He
detailed that the Alcohol and Marijuana Control Office was
fully funded by incoming receipts. The fiscal note was
designed to follow the same process. The changes in the
bill would generate slightly more receipt revenue than the
resulting cost.
9:14:28 AM
Co-Chair Johnston noted that Amendments 1 and 2 would move
to the bottom of the list [note: Amendments 1 and 2 were
withdrawn at approximately 10:10 a.m.].
Representative Knopp WITHDREW Amendment 3,
31-LS00004\E.A.25 (Radford, 3/25/20)(copy on file).
9:15:08 AM
Representative Wool MOVED to ADOPT Amendment 4,
31-LS00004\E.A.10 (Radford, 3/23/20)(copy on file):
Page 70, line 13:
Delete "12,000"
Insert "9,000"
Page 70, line 29:
Delete "12,000"
Insert "9,000"
Page 71, line 14:
Delete "12,000"
Insert 119,000"
Vice-Chair Ortiz OBJECTED.
Representative Wool began to review the amendment [note: an
"at ease" was taken to fix the audio quality].
9:15:39 AM
AT EASE
9:16:21 AM
RECONVENED
Representative Wool explained the amendment. He detailed
that alcohol license limits were one per 3,000 [people]. He
was unclear whether the limit was one per 3,000 per type or
three per 9,000 per type related to manufacturing and
tasting rooms. He knew the number had been changed to
12,000, but he did not know what the previous number had
been. He was concerned the bill was developing an equity
situation for manufacturing and tasting room licenses,
which already existed for BDLs [beverage dispensary
licenses]. He explained that it was part of the problem
with the so called bar wars. He elaborated that some
[licenses], due to population limits and the quota system,
had significant value and people paid to get into the game.
He expounded that numerous new players had entered the
game.
Representative Wool understood that under the "bargain,"
the brewers would receive expanded hours but would give up
the population limit in order to reduce the number of
breweries. He noted it was a bargain the brewers did not
want to make. He asserted that the bargain would help
brewers. For example, if a town of 20,000 had a brewery, it
would not be possible for another brewery to open if the
limit was one per 12,000. He stated it would mean reduced
competition. He highlighted that the bill sponsor had
stated he loved competition at the previous bill hearing.
Representative Wool believed providing an expanded
population cap, which would mean fewer brewers and
distillery tasting rooms, would reduce competition and
increase the value of licenses. He believed it was the
wrong direction to take. He stated that as revolutionary as
the bill was being presented to be, he believed it was "the
same animal with a different haircut" in many areas. He
acknowledged that some of the changes were significant. He
was still unclear on the proposal to reduce the cap to
three per 9,000. He wondered if there could be a
distillery, brewery, and winery per 9,000. He stated it was
his understanding.
Representative Wool stated that reducing the number from
12,000 to 9,000 increased the ability for other people to
get into the business under the current law. He believed
the change was positive. He believed the change resisted
the trend towards overvaluing or adding equity. He
predicted the same problem would occur in the future when
the licenses became extremely valuable and someone wanted
to do another kind of similar business - those individuals
would be in the same situation as the BDLs. The amendment
would reduce the number from 12,000 to 9,000. He pointed
out that the 12,000 limit had only been in place for
approximately one month.
9:19:38 AM
Representative Sullivan-Leonard opposed the amendment. She
shared that her district was currently ripe for commerce
and there were many young people who found opening a
brewery to be enticing. She did not want to hinder young
entrepreneurials trying to start a business and make it
work in a small community. The population of her district
was currently slightly over 10,000. She stated that the
12,000 threshold was important to enable new breweries to
be established in Wasilla. She highlighted the substantial
work that had gone into the bill over a period of six to
eight years. She wanted to see how things would work over
the coming year to determine whether changes were needed
the following year. She did not want to make it difficult
for people wanting to invest.
Representative Knopp supported the amendment. He was still
trying to wrap his head around the entire bill. He
understood there could be multiple breweries, but they
could not have a tasting room. He believed the tasting room
concept went away under the bill and breweries would have a
retail license. His concern was about the possibility of a
brewery with a tasting room and a couple of breweries
without a tasting room or retail license. He highlighted
that when breweries started, one of the reasons for being
allowed to sell samples was the immediate need for cashflow
and revenue. He believed any new breweries would have the
same need for cashflow and revenue to sustain the
manufacturing. He could see a need for breweries to have
tasting rooms or a retail license to sell samples sooner
rather than later. He did not want to neglect the
opportunity for businesses to do so. He supported the
reduction back to the previous number.
9:22:29 AM
Representative LeBon supported the amendment. He
characterized the amendment as a compromise within the
compromise. He considered that perhaps a 3,000 population
cap was too low, and a 12,000 cap was too high. He thought
the 12,000 cap would discourage competition, the free
marketplace, and a new brewery from opening. He stated that
a 9,000 cap was a softening of the limit and would allow
for more opportunity for a new brewery to establish itself
in the marketplace. He recognized that the capital
investment to open a brewery or something similar was
considerable. He pointed out there was a barrier to entry
beyond a population cap. He reiterated his support for the
amendment.
Vice-Chair Ortiz appreciated the ideas and sound arguments,
but he opposed the amendment. He communicated his intention
to oppose all of the amendments. He had spoken to BDL
owners, the president of CHARR [Cabaret, Hotel, Restaurant
and Retailers Association] in his district, and brewery
owners. He relayed that the consistent message he received
was support for the passage of the bill during the current
session. Additionally, the stakeholders felt that any new
changes made to the bill could "upset the apple cart." He
referenced Representative Sullivan-Leonard's point that the
process leading to the current bill had been lengthy. He
reported that stakeholders had been concerned the previous
day when they had heard the bill may not pass during the
current session. He thought amending the bill could mean it
would get lost in the legislative process.
9:25:09 AM
Representative Josephson was told that BDL holders saw
advantage in the proposed change because they knew what the
lay of the land would look like in the out years (i.e. who
the other players were). He asked for the amendment
sponsor's impression.
Representative Wool did not know that he had an answer for
the question. He had heard from the brewers, the Brewers
Guild, and brewers' lobbyists who at one point had said
they liked the change. He referenced Representative
Sullivan-Leonard's comments that she did not want to change
the cap. He clarified that the amendment to increase the
cap [to 12,000] had happened four weeks earlier in the
Senate Finance Committee. He understood the time
consideration given that it may be the last day the
legislature met for some time. He thought the current law
may have a cap of 9,000, but he was uncertain. The existing
law allowed one license per 3,000 [people] per license
type. He explained that the cap of 12,000 meant there could
be one license for every 12,000 people. He reasoned that if
Wasilla had a population of 20,000, it could have one
brewery under the cap. However, if the cap was one per
9,000, Wasilla could have two breweries. He believed it was
the existing system.
Representative Wool thought one could argue that increasing
the number of breweries in a community would increase the
competition for breweries. He thought brewers wanted to
increase the cap, so there were fewer breweries to choose
from. He thought it was a win for the brewers to increase
the cap to [one license per] 12,000. However, he believed
it was a loss for competition. He highlighted that equity
in licenses was the hole the state needed to dig itself out
of. He did not know whether BDL holders believed there
would be less competition; however, the brewers did believe
there would be less competition. The amendment would
reverse the change made four weeks earlier in the Senate
Finance Committee.
9:28:35 AM
Co-Chair Johnston remarked that while the bill was not
perfect and could be amended, she had received the same
input from constituents as Vice-Chair Ortiz had voiced. Her
constituents wanted support for the current bill version
without additional amendments. She agreed with some changes
and would like to see the issue of equity in liquor
licensing; however, she agreed with the bill sponsor's past
statement that it was the system they were working with.
She looked forward to future discussions on the topic and
noted it was not currently the time for those discussions.
Vice-Chair Ortiz MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Wool, Knopp, LeBon
OPPOSED: Tilton, Carpenter, Merrick, Ortiz, Sullivan-
Leonard, Josephson, Johnston
The MOTION to adopt Amendment 3 FAILED (3/7).
Representative Wool WITHDREW Amendment 5 31-LS00004\E.A.11
(Radford, 3/23/20) (copy on file).
9:31:07 AM
Representative Wool MOVED to ADOPT Amendment 6
31-LS00004\E.A.9 (Radford, 3/23/20) (copy on file):
Page 22, line 21:
Delete "10:00 p.m."
Insert "9:00 p.m."
Page 23, line 30:
Delete "10:00 p.m."
Insert "9:00 p.m."
Page 25, line 5:
Delete "10:00 p.m."
Insert "9:00 p.m."
Page 50, line 20:
Delete "10:00 p.m."
Insert "9:00 p.m."
Page 87, line 13:
Delete "10:00 p.m."
Insert "9:00 p.m."
Vice-Chair Ortiz OBJECTED.
Representative Wool reviewed the amendment. He felt it was
his job as a legislator to try to amend legislation. He
shared that he received calls on both sides of the issue
and had his own feelings, which he tried to represent once
in a while as well. The amendment would change the proposed
new closing time for tasting rooms from 10:00 p.m. to 9:00
p.m. He detailed that tasting rooms had closed at 8:00
p.m., beginning around 2008 for breweries and 2014 for
distilleries. He had not noticed any problem with how they
were working, and he remarked that customers appeared to be
flocking to the businesses. He shared that he was a patron
of the businesses and believed they served a good purpose.
He had not heard from patrons that the businesses needed to
stay open a couple of hours longer. He understood that
owners wanted to stay open longer because it would bring in
more revenue.
Representative Wool referred to a bill that had allowed the
sale of samples in manufacturing tasting rooms. He detailed
that in 2006, Craig Johnson, a legislative staffer (who
later served as a legislator to former Senator Lesil
McGuire) stated in a Labor and Commerce Committee meeting,
"while there have been concerns regarding breweries acting
as taverns, this legislation includes restrictions such as
limited onsite sales, restricted hours of operation, and
well defined environment." He cited testimony from the same
meeting by Robert McCormick from the Glacier Brewhouse [in
Anchorage] and the Brewers Guild of Alaska who said, "the
concern is that the law may be misinterpreted and breweries
may turn into taverns; however, with restrictions in place,
this will not happen." Another testifier, Glen Brady of
Silver Gulch Brewing and chair of Alaska CHARR, who was
currently a member of the Alcoholic Beverage Control Board
stated, "to avoid the creation of taverns, would not allow
the sale of product after 8:00 p.m."
Representative Wool cited testimony by Representative Chris
Tuck in 2014 with relation to a distillery bill that had
passed, allowing distilleries to sell samples.
Representative Tuck stated, "similar to wineries and
breweries, HB 309 would prevent distilleries from acting as
a de facto bar by prohibiting bar-like amenities, such as
limited hours of operation." He stated that the whole thing
had been started with limits, specifying that tasting rooms
would not be taverns or bars and they would close at 8:00
p.m. Additionally, tasting rooms could not have live
entertainment and were required to limit the amount
individuals were allowed to consume. He stressed that SB 52
blew the requirements open by changing the closing time to
10:00 p.m. and allowing live entertainment. He thought the
businesses should just be called bars and taverns if the
initial rules were not followed. He was inclined to adhere
to the original intent. He thought crossing the line would
make it easier to continue adjusting the closing time later
and later. He thought it could lead to more entertainment
being hosted in the locations. He pointed out that public
safety and public health workers liked the businesses
because the number of drinks a person could consume was
limited. He highlighted that a 10:00 p.m. closure would
allow individuals to visit multiple places and gave more
time to increase alcohol consumption.
Representative Wool summarized that the current closure
time [for distilleries and breweries] was 8:00 p.m., the
same as it had been since inception. The bill proposed a
closure time of 10:00 p.m. Amendment 6 would change the
time to 9:00 p.m. He thought perhaps distilleries and
breweries may determine that they did not want patrons
after 9:00 p.m. because they may be too inebriated. He
thought 9:00 p.m. had been considered earlier in the bill
deliberations, but he believed breweries had pushed back.
He remarked that breweries and CHARR had a lobbyist and had
some muscle. He thought the amendment represented a good
compromise.
9:35:30 AM
Representative LeBon supported the amendment. He had hoped
the population limit would be decreased to 9,000 and the
closing hours would be dropped to 9:00 p.m. He noted that
the first had failed and he hoped the second passed.
Representative Knopp expressed uncertainty about the
amendment. He noted he did not have clarity on all aspects
of the bill. He asked if the existing three-drink limit
went away when tasting rooms were no longer referred to as
tasting rooms and they were replaced by retail licenses. He
referenced a concern that had arisen during discussion on
music festivals. There had been feedback that it was
unrealistic to think a business hosting a music festival
would have a three-drink limit. His support for the
amendment would depend on the answer to the question. He
asked if the three-drink limit would still exist.
SENATOR PETER MICCICHE, SPONSOR, answered that the three-
drink limit was not affected by the amendment. He reminded
the committee that there was currently a soft close of 8:00
p.m., which meant the business had to stop serving alcohol
at that time; however, patrons were allowed to stay to
finish their drinks and food past that time. The bill would
implement a 10:00 p.m. hard close, which was part of the
deal resulting in support letters from various entities. He
explained that a hard close meant that patrons had to be
out by 10:00 p.m. The bill would add time to the open hours
but did not change what could be served.
Representative Knopp asked for verification that the same
hard close and three-drink limit would apply to music
festivals and other entertainment events at breweries and
distilleries.
Senator Micciche agreed. He detailed that businesses would
be allowed to remain open until 10:00 p.m. Patrons would
have to be out no later than 10:00 p.m.
9:38:17 AM
Representative Wool provided wrap up on Amendment 6. He
stated that no one was trying to change the drink limit
yet. He speculated that someone would try to make the
change in the future, which would also include a 12:00 a.m.
closing time and weekly music events. He shared that he had
been in the bar business 25 years and knew all about hard
and soft close times. He highlighted changes in bar closing
times in Fairbanks over the years. He pointed out that it
was possible to buy a drink five minutes prior to bar
close. He noted that with a hard close at 10:00 p.m., a
person could purchase a beer at 9:45 p.m. and be out the
door 15 minutes later. Whereas, with a soft close, it was
possible for a person to purchase a beer five minutes prior
to close and sip it for 30 minutes. He did not have a
problem with the latter scenario. He thought all bars
should have a wind-down time, which would allow patrons
time to get a cab. He considered the question of live music
and reported that some of the venues he had been to held
hundreds of people. He planned to offer a related
amendment.
Representative Wool summarized that the amendment would
implement a 9:00 p.m. close and the drink limit would
remain the same. He stated that a 10:00 p.m. close could
take away time a person may have spent in another
establishment. He thought 9:00 p.m. was a fair compromise.
He thought patrons supported the earlier close and the
early family atmosphere. He understood that patrons
supporting the earlier close could leave when they chose,
but he thought the establishments would take on a different
tenure under the later close time. He highlighted that a
close time of 9:00 p.m. still reflected expanded hours.
Vice-Chair Ortiz MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Wool, LeBon
OPPOSED: Carpenter, Josephson, Knopp, Merrick, Ortiz,
Sullivan-Leonard, Tilton, Johnston
The MOTION to adopt Amendment 6 FAILED (2/8).
9:41:43 AM
Representative Wool MOVED to ADOPT Amendment 7,
31-LS0004\E.A.18 (Radford, 3/24/20) (copy on file):
Page 11, line 27:
Delete "AS 04.09.610,"
Insert "AS 04.09.530, 04.09.610,"
Page 31, line 24:
Delete "04.09.520"
Insert "04.09.530"
Page 32, line 1:
Delete "04.09.520"
Insert "04.09.530"
Page 44, following line 24:
Insert a new section to read:
"Sec. 04.09.530. Beverage dispensary repackaging
endorsement. (a) A beverage dispensary repackaging
endorsement authorizes the holder of a beverage
dispensary license to offer alcoholic beverages for
sale for consumption off the licensed premises and to
subdivide and sell alcoholic beverages from the
original packages to smaller containers with federally
compliant labels showing the standard federal
government warnings and the product name.
(b) The biennial fee for a beverage dispensary
repackaging endorsement is $200.
(c) A beverage dispensary licensee with a
beverage dispensary repackaging endorsement
(1) may repackage alcoholic beverages for
sale on the licensed premises for
consumption off the licensed premises by
opening the original package for the purpose
of subdividing the contents into smaller
packages.
(2) is authorized to sell, each day to a
person on the licensed premises for
consumption off the licensed premises, not
more than 5.167 gallons of beer;
(3) may pem1it an agent or employee to
repackage alcoholic beverages, but may not
permit a customer or another person who is
not an agent or employee of the licensee to
repackage alcoholic beverages
(4) is authorized to sell alcoholic
beverages for consumption off the licensed
premises during the time allowable under
local ordinance.
(d) The holder of a beverage dispensary license
who repackages alcoholic beverages without an
endorsement under this section commits the
offense of unendorsed beverage dispensary
repackaging.
(e) The holder of a beverage dispensary
repackaging endorsement who fails to comply with
the requirements of this section commits the
offense of beverage dispensary repackaging
endorsement noncompliance.
(f) Unendorsed beverage dispensary repackaging
is a violation and is punishable by a fine of
$500.
(g) Beverage dispensary repackaging endorsement
noncompliance is a violation."
Representative Carpenter OBJECTED.
Representative Wool reviewed the amendment. He noted that
the amendment topic was not addressed in Title IV and
therefore, the amendment did not constitute a deletion. The
amendment would allow the numerous BDL's to repackage and
sell off premises. He explained that BDL's were currently
closed; however, all of the other alcohol establishments
open to the public could sell alcohol. He detailed that
liquor stores could sell alcohol and were also able to sell
growlers. Additionally, brewery tasting rooms could sell
growlers. It was not currently possible to drink on
premise, but they could be taken offsite. The amendment
would allow BDLs to do the same. He stated that the tasting
rooms were encroaching on some of the things BDLs were
allowed to do, such as live entertainment. He noted that
tasting rooms had not yet had the ability to host live
music, but they wanted that to change. He explained there
were few things BDLs could do that manufacturers could not
do - entertainment was one of those things. He reiterated
that the amendment would enable BDLs to sell growlers for
consumption off premise, which was something that
manufacturers and other package stores could do. He stated
that during the current economic time, any revenue stream
would be positive.
Representative LeBon spoke in support of the amendment. He
stated it would allow for a customer of a BDL establishment
to make a one-stop shop - to purchase food and a growler to
go. He detailed that the amendment would expand a BDL's
business opportunity at a time with limited opportunity,
given that doors were currently locked.
Vice-Chair Ortiz requested to ask the bill sponsor a
question.
9:44:42 AM
Vice-Chair Ortiz asked if the issue in Amendment 7 had been
addressed in any way as a part of the "grand bargain" on
the bill.
Senator Micciche replied that the topic had not been
discussed in eight years of discussions, which was one of
the things he feared about changes on the fly. He
recognized that the issue may be worthy of discussion in
the future. He elaborated that it was not something that
anyone had asked for. He highlighted that he stopped
counting at 13,000 hours - many meetings had taken place
over the past interim since the last time the bill had
stalled. He reiterated that the subject had never come up
during that time.
Representative LeBon remarked that he had heard from a BDL
holder in Fairbanks that they would appreciate the
flexibility. He thought that up until recently, the sense
that a business would be closed for an extended period of
time had never entered into the mind of a restaurant or bar
operator. He stressed that businesses were closed, and a
reopening date was uncertain. He stated it had become a
sense of urgency. He acknowledged that the issue had not
been discussed in the past; however, times had changed.
Senator Micciche responded that the effective date of the
bill did not help the situation in the current year. He
agreed it was worthy of discussion in the future. He noted
there would be some cleanup on the bill needed the
following year and it could be discussed at that time. He
suggested that public safety could be brought into the
conversation as well.
9:47:16 AM
Representative Josephson relayed that he had driven by the
Alaskan Brewery warehouse near Costco in Juneau. He asked
if the amendment would allow a person to take a growler
into a bar in downtown Juneau to have it refilled.
Representative Wool answered affirmatively. He had spoken
to CHARR and brewers about the issue. He was surprised the
issue had not come up during past conversations on the
bill. He relayed that he had thought about the issue for
some time. He shared that when he had been in the business
in the past, people would come in and ask if he could fill
a growler, but it had not been allowed. He reported that it
was possible to go to the Moose's Tooth pizzeria in
Anchorage to buy a growler to go. He noted that the
restaurant did not brew beer, but it had a brewpub license.
He thought it was a great idea. He had sold pizza at a
restaurant in the past, but he could not sell any alcohol
to go. He highlighted that it was not a new concept - it
was allowed many places. He shared that CHARR and brewers
had told him they were amenable to the change. He would
prefer to deal with the issue at present instead of opening
a can of worms the following year. He had not heard any
opposition to the idea. He stated it was some "give" to the
BDL owners to participate in an activity that seemingly
everyone else could do.
Representative Carpenter MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Josephson, Knopp, LeBon, Ortiz, Wool
OPPOSED: Carpenter, Merrick, Sullivan-Leonard, Tilton,
Johnston
The MOTION to adopt Amendment 7 FAILED (5/5).
9:50:16 AM
Representative Wool MOVED to ADOPT Conceptual Amendment 1
(copy on file):
Prohibits breweries, distilleries, and wineries in
possession of a retail endorsement from providing free
samples.
Vice-Chair Ortiz OBJECTED.
Representative Wool reviewed the amendment that would
remove free samples at a manufacturing tasting room that
sold samples. He noted that it could be argued that 36
ounces of beer was not a sample. He shared his
understanding that sample sizes in tasting rooms needed
some clarification. He believed the free sample sizes for
liquor stores at 12 ounces of beer, 6 ounces of wine, and
1.5 ounces of liquor were the same amounts allowed for
tasting rooms. He questioned why a business needed to give
alcohol away for free if it had an endorsement to sell
alcohol. For example, he thought that breweries had the
ability to sell 36 ounces of beer and could legally give a
patron another 12 ounces "for the road." He did not see it
as necessary. He stated that breweries had the ability to
tell a customer if they bought three beers, they could get
a fourth for free. He stated that bars could not give out
12 ounces of beer or anything for free. He considered that
a small sip of something for a taste was one thing, but he
thought the allowable sample size in the bill was much
larger. He disagreed with the ability for a business to
sell alcohol and have the ability to give it away for free.
9:52:50 AM
Senator Micciche clarified that the law stated the total
allowable consumption was 36 ounces. He detailed that a
sample was included in the 36 ounces. A business could not
give a customer a drink to go or an amount above 36 ounces.
He stated that the bill provided significant enforcement.
He explained that if a compliance officer witnessed a
business giving out three beers and an additional tasting,
the business would be out of compliance and would be cited.
Co-Chair Johnston asked the sponsor and his staff to remain
at the testifier table.
Representative Josephson asked if the same limit on total
consumption applied to wineries and distilleries.
Senator Micciche replied that he was not certain a BDL
would have a scale to measure precise amounts, but the hard
cap applied to the sample amount at distilleries,
breweries, and wineries.
Representative Wool was familiar with the cap and he was
glad to hear the same cap applied whether a beverage was
for sale or free. He asked what the sample size limit was
for a retail tasting room.
Senator Micciche answered there was not a specific sample
size. The cap was 36 ounces. He explained that if a
compliance officer witnessed a business give out 39 ounces
including a sample, the business would be breaking the law.
Representative Wool knew the sample size for liquor stores
was established. He had thought there was a sample size for
tasting rooms. He had asked a manufacturer in the past
couple of years what they would be willing to give up. He
recalled that the manufacturer had told him they did not
really need the ability to give free samples because they
were selling product. He shared that he owned a bar and
could not give out free drinks. He wondered why they should
not take the ability to give out free drinks away if the
tasting rooms were also selling drinks. He wondered why
tasting rooms were allowed to do both. He reasoned that a
tasting room could tell patrons if they bought two drinks,
they could get a third for free. He stressed that the
option was not available to bars.
9:56:33 AM
Representative Josephson asked if the intent of the
amendment was to protect the BDL economic interest or to
avoid over intoxication. He thought there may be other
reasons. He referenced the disparity highlighted by the
amendment sponsor that BDLs were not allowed to give
samples. He asked if those were the issues at play.
Representative Wool answered that because the limit was the
limit it would not affect intoxication levels. He did not
see any enforcement officers in any of the businesses. He
believed there was one officer in Fairbanks, who had their
hands full. He noted the issue was about equity and about
cleanup. He thought the free samples had been established
prior to the ability to do retail sales. He noted that many
manufacturers provided samples. For example, Guinness
samples where given out on their factory tours. He stated
that legally businesses could offer a promotion by telling
customers they could get a third drink free if they bought
two between certain hours. He emphasized that he was not
claiming a business would offer a promotion, but they had
the ability to legally do so. He did not see the need. He
noted that a restaurant could not give out free wine. He
stressed that public safety workers were adamant about the
fact that it was not legal to give out free alcohol.
However, tasting rooms were able to do so. He thought the
law should be consistent across license types.
9:58:33 AM
Vice-Chair Ortiz MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: LeBon, Wool
OPPOSED: Josephson, Knopp, Merrick, Ortiz, Sullivan-
Leonard, Tilton, Carpenter, Johnston
The MOTION to adopt Conceptual Amendment 1 FAILED (2/8).
9:59:18 AM
Representative Wool MOVED to ADOPT Conceptual Amendment 2
(copy on file):
Requires breweries, distilleries, and wineries with a
tasting room to establish a standardized system of
tracking a customer's consumption of product. This
system must be reported to and approved by the Alcohol
Beverage Control Board or the Board may develop their
own methodology.
Representative Carpenter OBJECTED.
Representative Wool reviewed the amendment. The amendment
would establish a system to track a customer's consumption
of product. He had been to many places and had heard
anecdotally that it was difficult to track the number of
drinks customers consumed when there was a room of 200
people with three people pouring beer. He shared that he
had been places that stamped patrons' hands for each drink
consumed, while other places did not. He shared that some
places that used to stamp hands had stopped. He noted that
some places gave patrons a card to carry, but cards could
be moved around. He was not claiming people had bad
intentions, but he had heard stories that the limit was not
always adhered to.
Representative Wool asked how businesses tracked the number
of drinks its patrons consumed during a concert with 300 to
500 attendees. He pointed out that the businesses were now
open from 9:00 a.m. to 10:00 p.m. He believed there should
be a standardized system. The amendment would require a
business to develop and report a standardized system to the
Alcohol Beverage Control Board (ABC Board) or the ABC Board
could develop a uniform methodology. He reasoned a small
room holding 20 people was one thing, but he did not know
how places that could hold hundreds of people with outdoor
areas were able to adhere to the drink limit. He had been
asked by a server in the past whether he had consumed a
drink. He thought the servers should know. He reasoned it
was sometimes good to have rules. The amendment would
require establishing a system to track drink limits.
Representative Knopp could support the amendment if it was
limited to the music festivals and places with large
numbers of people, but he did not support it on a smaller
everyday business scale. He thought the amendment sponsor
had a valid point about the difficulty of tracking the
number of drinks a customer had consumed during a large
event.
10:02:19 AM
Representative Josephson addressed the bill sponsor and
asked why the requirement would be objectionable to the
brewing industry, for example.
Senator Micciche answered that he was not certain the
requirement would be objectionable after some discussion.
He shared that his office had taken the bill around the
building several times and the bill had been reviewed by
the House twice. He stated that the issue had not come up
previously. He shared there was a brewery he liked to go to
fairly regularly. He stated that he and his family did not
go to bars. He liked the Kenai River Brewing Co. because it
had a family setting, it had never had a police call, and
he had never seen anyone get drunk there.
Senator Micciche reported that brewery servers were trained
the same way bartenders were trained. He believed the
amendment topic should be discussed the following year. He
thought the discussion should extend to BDLs as well. He
highlighted that BDLs faced challenges with overserving. He
considered that perhaps the number of drinks a person
consumed should be counted; however, he believed it was a
longer discussion. He thought it may be worth talking
about, but he did not want it to be on the fly. He stated
that the bill did not represent the end all, be all of
alcohol laws. There would continue to be discussion about
many things that may be improvements in the future. He
stated that some places tracked consumption voluntarily. He
did not believe it was a problem currently. He reported
that he had seen no evidence of a problem in any of the
breweries he had been to around the state.
10:04:31 AM
Representative Josephson respected the hard work that had
gone into the legislation; however, he pointed out that the
game was not yet over.
Representative Knopp remarked that the bill sponsor had
stated that Amendments 2 and 7 contained great ideas, but
he was not supportive at the time because they had not been
discussed by all of the user groups. He highlighted that
the amendments passed in Senate Finance Committee were
substantial. He asked if those amendments had "made it
around the block" and been discussed. He pointed out that
those amendments were more substantial than any of the
amendments proposed during the current meeting. He wondered
about the situation with the amendments passed previously,
given the bill sponsor's opposition to any new amendments
because they had not been discussed by user groups.
Senator Micciche corrected that he had not stated that any
of the amendments [offered in the current meeting] were "a
great idea." He clarified that he had stated they were
worthy of discussion and there may be something of value
that came out of them. He had stated he did not want to
make changes on the fly without involving the professionals
including BDL license holders, manufacturers, and public
health and safety. He stated that the bill was not a lot of
work because something he had personally done, but because
of all of the different players involved. He reiterated
that some of the ideas were worthy of discussion. He stated
that the relatively large amendment that passed in the
Senate Finance Committee was the agreement between the
three entities. He elaborated on his resistance to see the
amendment changed because it had been agreed on by all of
the parties.
Representative Knopp asked for verification that all of the
amendments passed in the Senate Finance Committee had been
floated [to stakeholders] and had not been crafted on the
Senate Finance Committee floor. He remarked that the
amendments had not been included in the original bill. He
asked for detail.
Senator Micciche agreed. He referred to the only other
amendment added as the "chicken stock" amendment. He
reported that it had been in an earlier bill and he
believed it had been removed in the House Finance Committee
a couple of years back. He explained it had been discussed
with all of the user groups and he had not been opposed. He
explained that all of the amendments in the bill in the
Senate Finance Committee had gone through the process and
were agreed on by all of the entities.
10:07:10 AM
Representative Wool provided wrap up on the amendment. He
stated that the issue had come up in the past. He shared
that he had talked about the concept of enforcing drink
limits with CHARR in the past several years. He referenced
the idea of putting drink limits on BDLs [mentioned by
Senator Micciche] for public safety and stated, "I guess we
put french-fry limits too." He thought increasing the hours
to 10:00 p.m. would result in people with a higher blood
alcohol level because they could patron various places. He
had been to places with 200 people outside on regular days.
He was not certain people had envisioned large gathering
spots when the concept had been floated in the beginning.
He thought that if a limit existed, there should be some
way of tracking it. He understood that a limit may not be
necessary in a small facility with three tables; however,
some facilities were large and could use a system.
Representative Carpenter MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Wool, Josephson,
OPPOSED: Merrick, Sullivan-Leonard, Tilton, Carpenter,
Knopp, LeBon, Ortiz, Johnston
The MOTION to adopt Conceptual Amendment 2 FAILED (2/8).
10:09:37 AM
AT EASE
10:10:55 AM
RECONVENED
Representative Josephson WITHDREW Amendment 1, 31-
LS00004\E.A.6 (Radford, 3/20/20) (copy on file).
Co-Chair Johnston WITHDREW Amendment 2, 31-LS00004\E.A.19
(Radford, 3/24/20) and Amendment 8, 31-LS00004\E.A.20
(Radford, 3/24/20)(copy on file).
10:11:22 AM
Representative Wool thanked Co-Chair Johnston for allowing
him to present amendments on what he believed was the last
day the legislature would be in town. He was aware of the
"grand bargain" that had been made recently regarding the
changing of the hours and the live entertainment, which he
found to be fundamental in changing the definition of a
tasting room and differentiating it from a tavern or bar.
He believed "we've cracked that egg" and that it would be
forever changed. He understood that people liked going to
tasting rooms. He stated he was partial because he had been
a BDL owner in the past. He shared that he had friends who
owned package stores, distilleries, and other BDLs. He
stated many of the businesses would be impacted by the
bill. He elaborated that businesses would primarily be
impacted by being closed [due to COVID-19] and unable to
sell anything. He stressed there would be many
bankruptcies. He added that many of the businesses had been
teetering anyway.
Representative Wool noted that some businesses were
changing and adapting. He detailed that some BDL owners in
Fairbanks had opened what looked like brewery tasting rooms
with up to 40 types of beer offered. He described them as
clean, nice, and bright. He continued that people were
adapting in other ways; younger people were buying licenses
and adding their own twists, which he thought was good. He
was concerned there would be numerous bankruptcies and many
licenses for sale.
Representative Wool supported that the bill allowed
manufacturers to purchase BDLs, which would enable them to
sell drinks, have live entertainment, and stay open later.
He thought there would be numerous BDLs for sale at a cheap
cost. He stressed that the bill also gave manufacturers the
ability to do many of the aforementioned activities without
buying a license. He wished that manufacturers would
purchase BDL licenses if they wanted to stay open later and
have music. He continued that many of the places sold food
and were likely qualified in their sales ratios to get a
restaurant eating place license. He pointed out that
businesses could then sell wine as well. He knew there were
people who went to breweries and liked wine as well. He
emphasized that the bill provided a disincentive for
manufacturers to buy BDL licenses because it enabled
businesses to do the activities without one. He worried
about the industry and restaurant industry. He stated that
restaurants sold beer and wine because they made money off
of alcohol. He noted it was the reason everyone wanted to
sell alcohol including fairs, bowling alleys, ski areas,
nonprofits, races, and other. He elaborated that selling
alcohol was fairly easy and it did not spoil.
Representative Wool wanted to see more restaurants have the
ability to sell beer and wine. He did not like the
population limits on restaurant eating place licenses. He
thought it would add equity in the wrong direction. He
believed the bill contained numerous positive things
including cleanup and technical fixes pertaining to
registration and licensing. However, he believed expanding
the hours of operation from the original intent of the
legislation and allowing live entertainment for
manufacturers, essentially put them in the same category as
taverns and bars, which past legislators had worked to
avoid.
10:15:12 AM
Co-Chair Johnston asked if there were any objections to the
bill.
Vice-Chair Ortiz MOVED to REPORT CSSB 52(FIN) out of
committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CSSB 52(FIN) was REPORTED out of committee with three "do
pass" recommendations, five "no recommendation"
recommendations, and one "amend" recommendation and with
two previously published fiscal impact notes: FN6 (CED) and
FN8 (AJS); one previously published indeterminate note: FN7
(REV); and one previously published zero note: FN9
(SFIN/Combined).
10:16:20 AM
Co-Chair Johnston thanked committee staff for their work
during the session. She RECESSED the meeting to a call of
the chair [note: the meeting never reconvened].
RECESSED
10:17:10 AM
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 52 Public Testimony Rec'd by 032820.pdf |
HFIN 3/28/2020 9:00:00 AM |
SB 52 |
| SB 52 Amendments w Actions 032820.pdf |
HFIN 3/28/2020 9:00:00 AM |
SB 52 |
| SB 52 Testimony Rec'd by 051820.pdf |
HFIN 3/28/2020 9:00:00 AM |
SB 52 |