Legislature(2019 - 2020)BELTZ 105 (TSBldg)
04/09/2019 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing | |
| 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 | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
April 9, 2019
1:32 p.m.
MEMBERS PRESENT
Senator Lora Reinbold, Chair
Senator Mia Costello, Vice Chair
Senator Click Bishop
Senator Chris Birch
Senator Elvi Gray-Jackson
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
CONFIRMATION HEARING:
Board of Social Work Examiners
Mindy Swisher - Fairbanks
-CONFIRMATION ADVANCED
SENATE BILL NO. 52
"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."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 52
SHORT TITLE: ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG
SPONSOR(s): SENATOR(s) MICCICHE
02/11/19 (S) READ THE FIRST TIME - REFERRALS
02/11/19 (S) L&C, JUD, FIN
03/26/19 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/26/19 (S) Heard & Held
03/26/19 (S) MINUTE(L&C)
03/28/19 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/28/19 (S) Heard & Held
03/28/19 (S) MINUTE(L&C)
04/02/19 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
04/02/19 (S) Heard & Held
04/02/19 (S) MINUTE(L&C)
04/04/19 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
04/04/19 (S) -- MEETING CANCELED --
04/09/19 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
MINDY SWISHER, Appointee
Board of Social Work Examiners
Fairbanks, Alaska
POSITION STATEMENT: Testified as appointee to the Board of
Social Work Examiners.
KRIS CURTIS, Legislative Auditor
Legislative Audit Division
Legislative Agencies and Offices
Juneau, Alaska
POSITION STATEMENT: Testified and answered questions on SB 52.
ERIKA MCCONNELL, Director
Alcohol and Marijuana Control Office (AMCO)
Anchorage, Alaska
POSITION STATEMENT: Testified and answered questions on SB 52.
MICHAEL DUXBURY, Deputy Commissioner
Department of Public Safety (DPS)
Anchorage, Alaska
POSITION STATEMENT: Testified during the hearing on SB 52.
SARAH OATES, President & Chief Executive Director
Alaska Cabaret, Hotel, Restaurant, and Retailers Association
Anchorage, Alaska
POSITION STATEMENT: Testified during the hearing on SB 52.
JOHN SKIDMORE, Director
Criminal Division
Central Office
Department of Law
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the discussion of
SB 52.
BILL HOWELL, representing himself
Sterling, Alaska
POSITION STATEMENT: Testified in support of SB 52.
AMUND RONGSTAD, Co-Owner
Amalga Distillery
Juneau, Alaska
POSITION STATEMENT: Testified in support of SB 52.
BEVERLY SCHOONOVER, Acting Director
Advisory Board of Alcoholism & Drug Abuse
Alaska Mental Health Board
Juneau, Alaska
POSITION STATEMENT: Testified in support of SB 52.
GALEN JONES, Co-owner
Double Shovel Cider Company
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 52.
ELIZABETH RIPLEY, Chief Executive Officer
Mat-Su Health Foundation
Wasilla, Alaska
POSITION STATEMENT: Testified in support of SB 52.
DOUG HOGUE
Kenai River Brewing Company
Soldotna, Alaska
POSITION STATEMENT: Testified in support of SB 52.
JAN HILL, Member
Title IV Steering Committee
Haines, Alaska
POSITION STATEMENT: Testified in support of SB 52.
DIANE DISTANTO, representing herself
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 52.
MEL STRYDOM, President
MSA, Inc.
Homer, Alaska
POSITION STATEMENT: Testified with concerns about SB 52.
ROBERTA BROOKS, Administrator
Juvenile Alcohol Safety Program
Member, Healthy Voices, Healthy Choices Coalition
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 52.
LOGAN DANIELS, Member
Healthy Voices, Healthy Choices Coalition
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 52.
CHARLIE DANIELS, Director
Healthy Voices, Healthy Choices Coalition
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 52.
ANDI TAYLOR, Member
Healthy Voices, Member
Healthy Voices, Healthy Choices Coalition
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 52.
BRYAN SAYLOR, Member
Healthy Voices, Healthy Choices Coalition
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 52.
BRANDON SPANOS, Deputy Director
Tax Division
Department of Revenue (DOR)
Anchorage, Alaska
POSITION STATEMENT: Presented the DOR's fiscal note for SB 52.
MATT DAVIDSON, Social Service Program Officer
Division of Juvenile Justice
Department of Health and Social Services (DHSS)
Juneau, Alaska
POSITION STATEMENT: Presented the DHSS's fiscal note for SB 52.
ACTION NARRATIVE
1:32:47 PM
CHAIR LORA REINBOLD called the Senate Labor and Commerce
Standing Committee meeting to order at 1:32 p.m. Present at the
call to order were Senators Costello, Birch, Gray-Jackson,
Bishop, and Chair Reinbold.
^CONFIRMATION HEARING
CONFIRMATION HEARING
Board of Social Work Examiners
1:33:30 PM
CHAIR REINBOLD announced that the first order of business would
be a confirmation hearing for Mindy Swisher, appointee to the
Board of Social Work Examiners.
1:34:18 PM
MINDY SWISHER, Appointee, Board of Social Work Examiners,
Fairbanks, stated that she has worked for the state's Office of
Children's Services (OCS) for the last 12 years. She currently
works as a manager in the Fairbanks field office. She is
currently a licensed clinical social worker, she said. She
expressed her interest in serving on the board because she
believes that the profession serves a valuable role. In order to
uphold the value and serve Alaskans ethically, it is important
to have laws, regulations, and practices in place that hold
social workers accountable. She offered her belief that this is
an opportunity for her to give back to her profession and to
enhance the field of social work.
SENATOR BISHOP thanked her for putting her name forward.
1:35:56 PM
CHAIR REINBOLD opened public testimony, and after determining
that no one wished to testify, closed public testimony on the
confirmation hearing.
1:36:19 PM
CHAIR REINBOLD stated that in accordance with AS 39.05.080, the
Senate Labor and Commerce Standing Committee reviewed the
following and recommends the appointment be forwarded to a joint
session for consideration:
Board of Social Work Examiners
Mindy Swisher - Fairbanks
[Signing the reports regarding appointments to boards and
commissions in no way reflects individual members' approval or
disapproval of the appointees; the nominations are merely
forwarded to the full legislature for confirmation or
rejection.]
1:37:03 PM
At-ease.
SB 52-ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG
1:37:09 PM
CHAIR REINBOLD announced that the final order of business would
be SENATE BILL NO. 52, "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."
1:38:34 PM
KRIS CURTIS, Legislative Auditor, Legislative Audit Division,
Legislative Agencies and Offices, Juneau, stated that she would
review the Division of Legislative Audit's sunset audit for the
Alcoholic Beverage Control Board dated November 2017 [Audit
Control Number 08-20099-17]. The audit found that in all areas
the board was serving the public's interest except for
licensing. The division recommended a four-year extension of the
potential eight-year extension to recognize the eight
recommendations as part of the sunset audit. The audit concluded
that the board should improve its procedures for renewing
licenses, issuing recreational site licenses, and for issuing
beverage dispensary licenses that encourage tourism. Testing
found that these licenses were not consistently issued in
accordance with statute. The auditors also found that
operational improvements were needed in enforcing laws,
monitoring board-related law enforcement activity, and for
processing refunds to municipalities.
1:39:52 PM
MS. CURTIS offered to provide a high-level overview of the
legislative audit. She reviewed audit recommendation 1:
The authority to renew licenses should be limited to
the board.
She explained that the statutes in place were very specific that
only the board may issue a renewal license. The statutes allow
the board to temporarily delegate its authority to the executive
director. However, the audit found that the board had delegated
its authority, but it was not temporary.
1:40:12 PM
MS. CURTIS reviewed audit recommendation 2:
The board should issue recreational site licenses in
accordance with statutory requirements.
She reported that auditors tested 10 of 29 recreational site
licenses that were active during the period and found all ten
were non-compliant with statutes. She said that statutes were
very specific as to what qualified as a recreational site, which
includes baseball games, car races, hockey games, dog sled
racing events, and curling matches held during a season. The
non-compliant entities were travel tour companies, bowling
alleys, an art council, a movie theater, a pool hall and a spa.
The auditors found the same issue when the division conducted
the prior sunset audit. In 2017, the board was aware that it was
issuing licenses in violation of statute. However, the board
believed it was in the public's best interest to do so. The
board anticipated that the licenses would be dealt with in the
future rewrite of Title 4.
1:41:13 PM
MS. CURTIS reviewed audit recommendation 3:
The board should issue beverage dispensary licenses in
accordance with statutory requirements.
She reported that auditors sampled 16 of 126 beverage dispensary
licenses and found that five licenses were transferred, and six
licenses were issued non-compliant with statutes. She explained
that statutes give the board the authority to renew or issue a
beverage dispensary license if it appears the license encourages
tourism without regard to population limits. Further, the
statutes provide a minimum number of rental rooms for an entity
to qualify as a business that encourages tourism. The auditors
found the errors were with entities that did not meet the
minimum number of rooms. The board believed that it was
appropriate to continue to issue these licenses because the
original licenses were issued prior to 1985. This law went into
effect on that date, she said. However, the statutes did not
provide for any grandfathering provisions.
1:42:23 PM
MS. CURTIS reviewed audit recommendation 4:
The board, AMCO director, and enforcement supervisor
should work together to formally establish an
enforcement plan to direct AMCO's limited enforcement
resources.
She said the Alcohol & Marijuana Control Office (AMCO) provides
support for the Marijuana Control Board and the Alcoholic
Beverage Control Board (ABC Board). She explained that the
office has limited resources, but it did not have a plan to
prioritize the use of the resources.
1:42:54 PM
MS. CURTIS reviewed audit recommendation 5:
The board and AMCO director should implement a process
to monitor and track complaints to ensure they are
assessed for follow up action and investigated in a
timely manner.
1:43:04 PM
MS. CURTIS reviewed audit recommendation 6:
The board and AMCO director should develop written
procedures for updating the statewide database with
restricted purchasers.
She explained that the statewide database of written orders is
used to control the sale of alcohol to restricted areas of the
state. It is also used to provide package store licensees with a
list of individuals who have been convicted of illegally
manufacturing or selling alcohol. The stores are prohibited from
selling alcohol to these restricted purchasers. The auditor
found that the restricted purchasers were not being entered into
the database. The auditors also found that the court system was
not consistently providing the reports of convictions to the
office.
1:43:49 PM
MS. CURTIS reviewed audit recommendation 7:
The board and AMCO director should improve procedures
to ensure municipalities report violations of
alcoholic beverage laws.
She explained that current statute requires municipalities to
provide this information as a condition of receiving half of the
biennial license fees. The auditors found that four of 40
locations had been submitting the information, yet the fees were
being routinely refunded to the municipalities.
1:44:13 PM
MS. CURTIS reviewed audit recommendation 8:
The AMCO director should develop and implement
procedures to ensure refunds to municipalities are
appropriately reviewed.
She reported that auditors found only one staff person was
calculating and approving the amount of the refunds and
approving the payments to the municipalities. Those duties
should be segregated, she said.
1:44:35 PM
SENATOR BIRCH directed attention to recommendation 6. He asked
for further clarification on restricted purchasers and if these
purchasers were a limited pool. He said he was familiar that
Anchorage liquor stores were required check drivers' licenses
for a red stripe [that indicates the licensee cannot purchase
alcohol].
MS. CURTIS answered that restricted purchasers were individuals
who were convicted of illegally selling or manufacturing
alcohol. The court system has been providing that information to
the Alcohol & Marijuana Control Office and staff enters the
information into the database. The stores check that information
to ensure that alcohol is not being sold to restricted
purchasers, she said.
SENATOR BIRCH asked for further clarification on the mechanics.
He said it was not as simple as looking for a red stripe.
1:46:08 PM
ERIKA MCCONNELL, Director, Alcohol and Marijuana Control Office
(AMCO), Anchorage, answered that AMCO maintains a statewide
database as required by statute. She related her understanding
that stores check the database at the time written orders, but
stores check walk in customers by evaluating the red stripes on
the licenses.
MS. MCCONNELL offered to provide information on the process and
number of restricted purchasers in the database to the
committee.
1:47:17 PM
SENATOR COSTELLO thanked Ms. McConnell for providing her office
with information on the number of licenses in the process of
being transferred to a new owner. She explained that some
restaurants in her district have operated in the same location
for years, but after being sold, the new owner could not serve
alcoholic beverages until the liquor license transfer was
completed. She said that these owners were reluctant to ask
about the transfer for fear that it might slow down the process.
She reported that 46 liquor licenses were in the process of
being transferred. The AMCO website indicates that owners should
plan for a three to six month delay for processing the license
transfer. However, several businesses on the list have waited
longer. She reported that at least one restaurant has waited
since last June. She acknowledged that the ABC Board's work is
important. However, she also thought the processing time for
liquor license transfers was excessive and bordered on punitive.
She indicated that she has an amendment to the Title 4 rewrite
bill [SB 52] to address this situation. She said that people
purchase a restaurant and expect that the same food and alcohol
could be served. She asked whether the license transfers could
happen in a timelier manner.
MS. CURTIS offered to respond in generic terms that would apply
to all occupational boards. She said that when the Division of
Legislative Audit conducts an audit and identifies a problem
such as delays, it sometimes is due to limited resources. For
example, an occupation or board may receive a big influx of
applications and the board may not enough staff to process them.
Other times delays are caused by applicants submitting
inaccurate or incomplete applications. Delays may also be
related to how often a board meets to conduct its business. Some
boards allow electronic applications with edit checks or staff
has revised the applications to help reduce errors or omissions.
She was unsure what the specific problem was with the ABC Board,
but during the survey portion of the audit, the division did not
identify timeliness as an issue. She offered to consider
timeliness during the next sunset audit.
SENATOR COSTELLO asked whether anything prevents the board from
holding telephonic meetings.
MS. CURTIS said she was unsure.
MS. MCCONNELL responded that the ABC Board does not require a
business to stop selling alcohol while a transfer process is
underway. She recalled a situation that arose with a restaurant
in Senator Costello's district. She said she was unsure why the
business stopped serving and selling alcohol because it was not
at the direction of her office. As Ms. Curtis mentioned certain
elements of the transfer process fall under the ABC Board
office's control and other elements fall under the applicant's
control. She referred to the first two licensees listed on the
chart that she provided in her presentation, which used a
transfer with a security interest. The applicants are required
to provide the ABC Board with the final recorded security
documents after board approval, before the transfer can be
effectuated, she said. In those situations, the division must
await information from the licensees before the process can be
finalized. She offered her belief that if the board could
modernize its online license application to a more user friendly
system, one that reduced errors, the process could be improved.
For example, an applicant could be directed on specific
information to enter for each field.
MS. MCCONNELL said the division requested funding to update and
modernize its licensing system. In terms of telephonic meetings,
a provision in AS 04.06.050 that states, "The board shall also
meet at least once each year in each judicial district of the
state to study this title and modify existing board regulations
in light of statewide and local problems. She related her
understanding that this provision is in statute because it
recognizes that communities have different issues related to
alcohol. It also allows licenses to have some access to their
regulatory body.
1:54:36 PM
SENATOR COSTELLO suggested that there must be some
miscommunication. She said that the license transfer issue has
occurred with several restaurants. She asked the record to
reflect that the board should communicate to an applicant that
the business can continue to serve alcohol while its transfer
application is being processed. She said that these businesses
can suffer an economic downturn.
1:56:22 PM
MICHAEL DUXBURY, Deputy Commissioner, Department of Public
Safety, Anchorage, said he has been in consultation with the
Department of Law and the departments' special assistants on the
bill. He related his understanding some issues were being
addressed. He said that he looks forward to ways to help the
sponsor of SB 52.
1:58:14 PM
SARAH OATES, President & Chief Executive Director, Alaska
Cabaret, Hotel, Restaurant, and Retailers Association (CHARR),
Anchorage, stated that CHARR does not support the current
version of the bill. She said she previously worked for the
Alcohol & Marijuana Control Office for seven and one-half years.
She said that the legislature has considered a number of
versions of a comprehensive bill in the past five years. Each
session only very small changes have passed the legislature
because of ongoing debates by the three tiers of the alcohol
industry about current and proposed privileges and prohibitions
of manufacturing license types. During this time members of the
three tiers have attempted to come to a compromise on
manufacturing operations with mild success. Unfortunately, most
of the proposed changes that would add clarity and significantly
benefit the public have yet to pass through the legislature.
She explained that SB 52 is largely identical to the version of
Senate Bill 76 that passed the Senate during the last
legislative session. In its final form, Senate Bill 76 removed a
section of the original bill that represented a crucial
component of the industry compromise, but it left other pieces
of the compromise in the bill. Consequently, Alaska CHARR cannot
support SB 52 in its current form.
MS. OATES recommended that the contentious pieces of the bill be
removed. This refers to nearly all of the manufacturing
provisions in the bill, except for the revised penalty
provisions for manufacturing. Alaska CHARR supports downgrading
class A misdemeanors for manufacturing to violations. She
supported increasing license fees for manufacturing licenses to
$2,500 per license type to be on par with retail and wholesale
license fee increases.
She said that Alaska CHARR proposes including in the bill at
least 80 percent of alcohol products offered for sale must be
manufactured on the licensed premises. She said that the
prohibitions for large manufacturers, which are substantially
larger than any currently in Alaska, would be limited to selling
their products to licensed wholesalers or to entities in other
states and countries. This would prevent someone from coming in
and monopolizing Alaska's current alcohol industry businesses.
MS. OATES recommended a couple of other small changes, including
that the tasting event permit language be amended. In 2018, one
licensee recommended changes to the tasting event permit
section, but those changes were not agreeable to the rest of
CHARR's alcohol industry members. She said that those changes
were included in SB 52. She directed attention to Attachment A,
in members' packets. This would revert the language back to what
the industry has agreed upon during the last five years.
She referred to Section 145, which would specifically amend the
gaming statutes. The current language would disqualify about
one-third of existing vendor locations that many non-profit
industries use for gaming revenue. She expressed concern that
this language could adversely affect many nonprofit
organizations.
2:03:42 PM
MS. OATES stated that she has been communicating with
wholesalers and working together to consider proposed changes.
2:04:09 PM
SENATOR BIRCH expressed his concern that some issues were
outstanding because he thought the legislature was almost to the
finish line last year. He said he understood she represents a
large number of organizations. He asked whether she would prefer
the status quo.
MS. OATES clarified that the Alaska CHARR, as a whole, has
supported existing manufacturing operations. However, as more
manufacturers come on board it substantially cutting into the
revenues of retailers across the state. She said that removing
most of the manufacturing sections of the bill would allow
existing manufacturers to continue operating in their current
form. She expressed an interest in retaining all of the "good
portions" of the bill. She suggested that industry could settle
those smaller pieces that address manufacturing privileges and
prohibitions in a separate bill. She was not aware of any
proposed legislation to do so, but the goal would be to "battle
out" those things in the future.
2:06:53 PM
SENATOR BIRCH related his understanding that the goal is not to
disrupt current operations for manufacturers. He asked whether
Alaska CHARR would support moving forward with SB 52 and coming
up with some modifications to address manufacturers later.
MS. OATES related that CHARR would support the bill with changes
as outlined in the document sent on Saturday [Summary of
Proposed Changes and Sectional Analysis of SB 52 prepared by
Sarah Oates, March 26, 2019] and work out the issues and
disputes in separate legislation.
CHAIR REINBOLD remarked that she looked into the class A
misdemeanor. She said Section 145 was an important provision.
However, it almost seemed as though she was trying to
micromanage wineries, distilleries, and breweries by forcing
restrictions, she said. She offered her belief that breweries in
her area were struggling with increased fees. She agreed that
Alaska Grown local products is important, noting that the
committee would consider her comments and suggestions. However,
she indicated that everyone needed to compromise and CHARR may
need to do so. She recalled that the bill stalled last year
because of restrictions to onsite tasting quantities, which she
said she thought was outrageous. She asked whether those limits
were being sought again.
MS. OATES answered that CHARR was not proposing restrictions to
any Title 4 bills to the ways in which manufacturers currently
can operate.
CHAIR REINBOLD remarked that she supports local businesses and
not ones that fly up products.
2:10:19 PM
JOHN SKIDMORE, Director, Criminal Division, Central Office,
Department of Law, Anchorage, said that SB 52 was designed to
address industry regulation. However, the DOL does not take a
position on how the industry is regulated. Instead, it focuses
on the prosecution of crimes in local option areas, such as the
manufacture of alcohol. Some areas have opted to not have
alcohol in their local communities, he said. He highlighted four
things the department has noticed in SB 52, which have been
discussed with the sponsor. He offered his belief that the
issues will be resolved.
2:11:42 PM
MR. SKIDMORE said the first area related to manufacturing
provisions in the bill. These seemed to focus on the industry,
he said. The department encounters "home brew" in some rural
communities. For example, some people take a five-gallon bucket,
add sugar and yeast to make an alcoholic concoction. He said it
was unclear if the definitions found in Section 144 on page 107
would cover that type of manufacturing, such as home brew. He
read the terms, "brewed beverages, distilled spirits, kombucha,
mead, sake, wine," and wondered whether the terms were broad
enough to include the manufacturing conduct he just described.
He clarified that he was not talking about an activity such as
brewing beer at home for personal consumption.
2:12:47 PM
MR. SKIDMORE said the second concern is the importation of
alcohol into the local option areas. The bill seemed to be
focused on the industry, but the department does not find
industry actively trying to send alcohol into these communities.
However, some of the sections appear to remove statutes related
to possessing with the intent to import alcohol. The department
uses that significant phrase in interdiction of alcohol or
drugs. Although someone may not have completed the importation,
the attempted conduct still needs to be addressed. For example,
there is a presumption to sell when someone possesses quantities
of alcohol and is at an airport or on a snow machine heading
into a village. However, if a person has not crossed the
jurisdictional boundary, the department still needs to have the
ability to prosecute the attempts. He suggested greater clarity
would be helpful to protect the communities.
MR. SKIDMORE said that the bill requires licenses for breweries,
distilleries, or wineries or for retail sales on premises. The
department is concerned about people putting a number of bottles
of alcohol into their luggage and selling it out of a backpack
or luggage. This activity is different than a premise-based
sale, but it was not clear that this activity could be addressed
as currently drafted.
2:15:02 PM
MR. SKIDMORE raised a third concern, related to penalties. He
characterized this as an oversight
AS 04.16.200 is not listed in the bill and relates to mandatory
minimum penalties for importation or other activities in local
option communities. Since the penalty provision refers back to
the statute that originally criminalized it, AS 04.11.010 has
now been broken up since the conduct has been placed in other
statutes. He suggested that AS 04.16.200 needed to be amended if
the sponsor's intent is to apply mandatory minimum penalties.
MR. SKIDMORE raised a fourth concern related to common carriers
and transportation of alcohol into communities. He stated
ambiguity exists, as to whether labeling requirements or
restrictions apply to small amounts of alcohol going into local
option communities. Packages have to be labeled for common
carriers, but the provisions don't apply under a certain amount
of alcohol. He clarified that smaller referred to amounts under
a felony level, such as three or four bottles, not 20-30 bottles
of alcohol. In closing, he stated that the department identified
areas of unintended consequences. He said that the department is
working with sponsor to clarify those items.
2:17:06 PM
SENATOR BIRCH asked whether the department performs any periodic
assessments or purges outdated statutes.
MR. SKIDMORE said he could speak to the efforts the criminal
division makes. The criminal division solicits suggestions for
revisions from its prosecutors each year, which are discussed,
and ultimately shared this with the administration to address.
He clarified that the department does not maintain a list, but
it works on a continuous review.
2:21:32 PM
CHAIR REINBOLD opened public testimony on SB 52.
2:21:39 PM
BILL HOWELL, representing himself, Sterling, spoke in support of
SB 52 as written without restrictions on manufacturers. He said
he does not manufacture, distribute or sell any alcohol, but he
writes about beer and consumes it. He offered his belief that
the bill is a good idea since the system is complex and
difficult to navigate. The bill would clarify many things. He
acknowledged that CHARR indicated some opposition to the bill
because bars and restaurants purchase liquor licenses. He
offered his belief that Alaskans are supportive of a more open
way to purchase alcohol and he supports the economic development
that the [manufacturers] bring to the state.
2:24:10 PM
AMUND RONGSTAD, Co-Owner, Amalga Distillery, Juneau, spoke in
support of SB 52. He said that he thinks SB 52 is a good step
forward in terms of alcohol laws in the state. He offered his
belief that the bill provides clarity and increases enforcement
funding, which would be good for public safety. He pointed out
that the bill does not directly benefit the distillery, but it
does clarify certain laws that may help his or other distillery
businesses in the future. He related his understanding that
license fees would double, but he supported the increased fees
since he hopes it would go towards enforcement.
2:25:30 PM
BEVERLY SCHOONOVER, Acting Director, Advisory Board of
Alcoholism & Drug Abuse, Alaska Mental Health Board, Juneau,
stated that these agencies are statutorily charged with planning
and coordinating behavioral health services funded by the state.
The boards support SB 52 that provides a much needed update to
the Title 4 provisions. This bill includes prevention measures
to reduce underage drinking. According to the annual youth risk
behavioral survey (YRBS), there have been declines in the number
of youth starting to drink under the age of 13. However,
underage drinking in Alaska happens and teens binge drink. In
2017, nearly 14 percent of students surveyed admitted to binge
drinking within the last 30 days. Binge drinking is four or more
drinks for females and five or more drinks for males, she said.
Underage drinking, especially binge drinking, is harmful to
adolescent brain development. It's important that teens are not
driving while under the influence or engaging in other risky
behaviors. The boards believe that that the preventative
measures outlined in SB 52 will reduce underage drinking because
the bill holds adults accountable, by maintaining current
penalties for furnishing alcohol to a minor. This bill would
ensure that everyone who sells alcohol at a licensed business or
permanent event is properly trained to check identification. The
bill also would provide much needed resources for enforcement of
title 4 by increasing license fees, many which have not been
increased in decades and limits the ABC Board's ability to do
its job. For example, compliance checks at licensed businesses
have not been funded for the last three years. Compliance checks
are a nationwide best practice and when all licensees know their
businesses will be regularly inspected, it provides a clear
incentive for properly training their staff. She thanked the
sponsor and the stakeholders and to Recover Alaska for its work
on this bill.
2:27:52 PM
GALEN JONES, Co-owner, Double Shovel Cider Company, Anchorage,
said he has attended numerous steering committee meetings in the
past three years. He said that most of the suggested revisions
were incorporated into the bill. These revisions will benefit
Alaska's economy since it promotes an atmosphere that is
friendly and conducive to new manufacturing investments and
startups in Alaska. He said that this progressive legislation
would create additional tax revenue, vibrant hospitality that
can attract tourism and create skilled jobs. Most of all, it
enables growth of manufacturers wholesale capacity so these
businesses can export products and bring money back to Alaska.
He suggested that local manufacturers have the ability to create
tax revenue. He urged the state to strive to create regulations
that promote this bright spot in Alaska's economy. Other states,
like Colorado and Washington have booming manufacturing and
export massive volumes of craft beverages. He cautioned against
moving the state backwards by restricting manufacturing or
hospitality companies, which includes bars and restaurants. He
said that Alaskans have shown an overwhelming desire to support
local companies and consume locally made products. He said that
his company could live with the higher license fees, but it will
cut into the small margins due to shipping costs for
ingredients. However, he also understands that the license fees
will better serve Alaskans with consistent enforcement and
faster customer service.
2:30:26 PM
SENATOR BIRCH thanked him for his leadership in this process. He
said he was struck by the parallels with Uber and Lyft. He has
clearly demonstrated that the craft beverage, breweries, and
cideries have expanded the market in Alaska. He said, "Keep up
the good work and I appreciate your testimony this afternoon."
MR. JONES thanked Senator Birch.
2:31:18 PM
ELIZABETH RIPLEY, Chief Executive Officer, Mat-Su Health
Foundation, Wasilla, said that the foundation shares ownership
in the Mat-Su Regional Medical Center and reinvests the profits
back into the community in the form of grants and scholarships
to measurably improve the health of the Mat-Su population. In
2013, the foundation conducted a community health needs
assessment, reviewed data analysis, conducted polling, and held
24 community forums. Residents voted and identified alcohol as
the number one health issue in the Mat-Su, followed by substance
abuse. The foundation spoke to many people in the community,
including police captains and chiefs, who identified the number
one substance abuse issue as alcohol. Further, alcohol was the
number one reason that people ages 19-64 to visit the Mat-Su
Regional Medical Center emergency room and it is a major factor
for many crimes committed in Alaska, including domestic violence
and child maltreatment.
She said that having a well-regulated alcohol industry that
understands and follows the laws is part of the solution. She
said that alcohol is not an ordinary commodity. According to the
Alaska Mental Health Trust 2015 report, alcohol generates $1.84
billion in costs annually, due to loss of productivity, traffic
collisions, criminal justice, and costs for health care.
MS. RIPLEY said that Alaska needs this systemic redraft of Title
4, which would help the ABC Board carry out its mission, benefit
organizations and individuals whose work is affected by
alcoholic beverage laws and regulations. The health foundation
is particularly interested in the public health aspects, she
said. She characterized SB 52 as a bill with wins and takeaways
for each stakeholder group. She thanked Recover Alaska, as a
large stakeholder group that participated for many years in this
process. The Mat-Su Health Foundation is also part of Recover
Alaska, she said. She also thanked CHARR for its help to create
this revised compromise document.
She said she appreciated Senator Micciche's leadership in
bringing SB 52 forward. She offered her belief that CHARR has
been using this bill to fight competition due to changes on the
competitive landscape, similar to ones taxis faced with
ridesharing. However, this bill needs to move forward, even if
it is without CHARR's support, she said.
2:34:32 PM
At-ease.
2:36:34 PM
CHAIR REINBOLD reconvened the meeting and continued to take
public testimony.
DOUG HOGUE, Kenai River Brewing Company, Soldotna, spoke in
support of SB 52, as written. He stated that the brewery has
been operating for about 13 years. He currently employs 22
fulltime employees and recently expanded by building a brand new
facility. His business contributes to many local nonprofit and
charitable events. He echoed previous testimony, that the bill
has taken years of work by many stakeholders. He offered his
belief that passing the bill would bring fairness, a clear
understanding of licensure, and easy compliance for all license
holders. He thanked the sponsor.
2:38:14 PM
JAN HILL, Member, Title IV Steering Committee, Haines, spoke in
support of SB 52. She stated that she has been involved
throughout the stakeholder process, including serving as co-
chair of the local option subcommittee. She has multiple
perspectives on alcohol policy. As a former member of the Alaska
Native Health Board, she is acutely aware of the impacts of
alcohol on Native Alaskans and the health of Alaska's Native
people. While she was not speaking on behalf of the Haines
Borough. In her role as mayor, she supports economic development
in her community. She also understands the importance of the
hospitality industry for Southeast communities. She cares about
health and safety and crime reduction in her Haines community.
As a member of the Alaska Municipal League and the Conference of
Mayors, she has gained an appreciation for the diversity of
challenges local governments face throughout Alaska and the need
to balance economic development with the real costs of alcohol
to Alaska and its cities.
She offered her belief that Title 4 needed to be modernized and
SB 52 is a huge step forward. She said that the stakeholders
have worked on this issue for seven years to get to this point.
The local option subcommittee talked extensively about the
impacts of alcohol in dry and damp communities, alcohol related
crimes and the need to improve Title 4 to increase enforcement.
While there is still much work to be done with local option
laws, SB 52 makes some important changes. One change is that it
gives rural communities access to existing data about legal
alcohol sales and delivery so communities and law enforcement
can understand the flow of alcohol into rural Alaska. Another
change is to regulate internet sales to ensure that a person in
a dry community cannot use this loophole to get around the
monthly order limit. She said that she supports this bill. She
urged members to pass SB 52 this year.
2:41:16 PM
DIANE DISTANTO, representing herself, Anchorage, spoke in
support of SB 52. She said that she has seen the destructive
effects of alcohol on families, communities, and public health.
She said that she was sorry to hear CHARR say that the
organization is not happy with the bill. She said that efforts
have been ongoing since 2012. She echoed the other testifiers
with the importance of the bill. She urged members to get this
bill passed.
2:42:28 PM
MEL STRYDOM, President, MSA, Inc., Homer, said that he holds six
package store licenses in the City of Homer. He expressed
concern that Section 48 would allow a borough package store
license to be transferred into the city. He offered his belief
that most cities in Alaska are over the statutory limit for the
number of allowable package stores based on the population
limits. Using the population limit, the city would only have two
licenses, but it has grandfather privileges, so the city has
eight package stores. His main concern is the financial concern
that SB 52 will have on his business. He said that borough
liquor licenses are typically less expensive because of
population density. The bill would greatly devalue his six
liquor licenses and cause him significant financial losses. He
said he does not understand the need for the provision since the
sponsor statement states the bill would not have any negative
impacts. He said that he related his concerns to Senator
Micciche, but he has not yet heard from him.
2:44:30 PM
CHAIR REINBOLD said she would speak to the sponsor about his
concerns.
2:44:55 PM
ROBERTA BROOKS, Administrator, Juvenile Alcohol Safety Program,
Member, Healthy Voices, Healthy Choices Coalition, Anchorage,
spoke in support of SB 52. She stated that she works with
children ages 13-18, dealing with the harmful effects of
alcohol, underage drinking, and high-risk choices. She said that
these youth are uneducated and unaware of the risks for these
choices and the permanent effects it can have on their lives.
She urged members to pass the bill to empower those who are
working to keep kids from underage drinking.
2:46:19 PM
LOGAN DANIELS, Member, Healthy Voices, Healthy Choices
Coalition, Anchorage, spoke in support of SB 52. He said he
works with Ms. Brooks. He offered his support for SB 52 since it
would modernize the language and to curb underage drinking.
CHARLIE DANIELS, Director, Healthy Voices, Healthy Choices
Coalition, Anchorage, spoke in support of SB 52.
2:47:38 PM
ANDI TAYLOR, Member, Healthy Voices, Member, Healthy Voices,
Healthy Choices Coalition, Anchorage, spoke in support of SB 52.
She said she provides evaluations for this coalition and other
coalitions throughout the state to address underage drinking and
adult alcohol abuse.
2:47:55 PM
BRYAN SAYLOR, Member, Healthy Voices, Healthy Choices Coalition,
Anchorage, spoke in support of SB 52. He said he works
throughout the state to help communities address these issues.
2:48:22 PM
CHAIR REINBOLD, after first determining no one wished to
testify, closed public testimony on SB 52.
2:49:01 PM
BRANDON SPANOS, Deputy Director, Tax Division, Department of
Revenue, Anchorage, reviewed the DOR's fiscal note for SB 52. He
said the current alcohol tax applies to sales within Alaska.
Section 155 of SB 52 would broaden the base would expand the
current tax collection on shipments of wine into the state.
Since the state does not have data on online sales, the bill has
an indeterminate fiscal note. The tax division requests a
capital budget request of $50,000 to update the tax revenue
management system. to include shipments into Alaska. This would
require businesses who sell alcohol into the state to register
with the tax division and file tax returns using an online
registration. The additional taxes collected would have a
positive revenue effect, he said.
2:51:01 PM
SENATOR BISHOP said the state will find out how much online
sales occur.
2:51:14 PM
MS. MCCONNELL reviewed the fiscal note for the Alcoholic
Beverage Control Board (ABC Board), Department of Commerce,
Community and Economic Development (DCCED) dated 4/17/2019. She
anticipated that the needs expressed in the fiscal note could be
fully funded through program receipts and licensing fees. The
department would not need any additional funding from
unrestricted general funds (UGF). She reported the fiscal note
requests an increased appropriation, in thousands, of $230.8 in
FY 2020, $570.8 in FY 2021, and $55.6 in out years beginning in
FY 2022.
She said that the department anticipates the changes in fees
will provide $518.0 [in thousands] in 2021 and $435.0 in the out
years. She explained the reason for higher costs in FY 2021 was
because shifting the duplicate beverage dispensary licenses into
endorsements will require a $200 biennial endorsement year,
except for the first year. In FY 2021, the one-time endorsement
fee would be $1,250. The four-fold purpose would include a two
year long-term project assistant to manage the transition for a
total cost of $98.2 in FY 2020 and $88.2 in FY 2021, split
between personnel services and services and commodities. Second,
the bill would require a rewrite of regulations that would
entail additional board meetings to review and take public
comment. It would also cover costs for the Department of Law
review, educational materials, printing and public notice fees,
and postage for a total cost of $27.0 in FY 2020 and FY 2021.
MS. MCCONNELL said the third cost would cover travel for the
local government specialist for increased education and outreach
for $5.6 per year. The fourth item would cover anticipated costs
of new licensing software database of $500.0 spread over FY 2020
and FY 2021, based on anticipated revenue, with a $50.0
maintenance fee.
She highlighted fee increases for biennial license fees,
including a new license for direct shipment of wine from
wineries. She described the assumptions, noting that as Mr.
Spanos mentioned, the number of online sales is unknown, so the
Alcohol & Marijuana Control Office is unsure of the number of
new licensees. The figures are based on an average of one
endorsement per license, although some will have multiple
endorsements and others will have none, she said. The permit
fees are based on $50 per day, which is negligible and not
reflected in the fiscal note.
2:56:52 PM
SENATOR BISHOP suggested that the office may need a higher range
than a range 16 to implement the complexities required.
MS. MCCONNELL noted his comment.
CHAIR REINBOLD cautioned her to use every penny wisely.
2:57:59 PM
MATT DAVIDSON, Social Service Program Officer, Division of
Juvenile Justice, Department of Health and Social Services
(DHSS), Juneau, presented the DHSS's fiscal note for SB 52. He
stated that the bill has a zero fiscal note from the department.
He pointed out that the fiscal note analysis was inaccurate
since it reflected an earlier bill version. He offered to
resubmit another zero fiscal note. The division does not handle
underage drinking, that it is primarily covered by the district
courts. In 2016, the penalties for underage drinking were
decriminalized, payable by a fine, and a referral to an alcohol
education program, administered by the Department of Health and
Social Services (DHSS).
CHAIR REINBOLD said that the 2016 bill was a concern to her. She
suggested that the department provide information on the
effectiveness of decriminalizing some behaviors and how it has
affected the incidence of underage drinking. She noted that some
other countries, such as Norway, have effective penalties for
drunk driving.
[SB 52 was held in committee.]
3:01:20 PM
There being no further business to come before the committee,
Chair Reinbold adjourned the Senate Labor and Commerce Standing
Committee meeting at 3:01 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Board of Social Work Examiners Resume - Mindy Swisher.pdf |
SL&C 4/9/2019 1:30:00 PM |
|
| SB 52 Senate Labor and Commerce - Questions Response 2019-04-03.pdf |
SL&C 4/9/2019 1:30:00 PM |
SB 52 |
| SB 52 - DCCED Response to Questions regarding license Transfer 2019-04-01.pdf |
SL&C 4/9/2019 1:30:00 PM |
SB 52 |
| SB052-DOR-TAX-3-21-2019.pdf |
SL&C 4/9/2019 1:30:00 PM |
SB 52 |
| SB 52 Responses to AK Wild Berries Concerns.pdf |
SL&C 4/9/2019 1:30:00 PM |
SB 52 |
| CHARR - Summary of Changes & Sectional Breakdown for SB 52.pdf |
SL&C 4/9/2019 1:30:00 PM |
SB 52 |
| CHARR - Attachment A to Sectional Summary of SB 52.pdf |
SL&C 4/9/2019 1:30:00 PM |
SB 52 |
| SB 52 - Support Letters 04.09.19.pdf |
SL&C 4/9/2019 1:30:00 PM |
SB 52 |
| SB 52 - Opposition Letters 04.09.19.pdf |
SL&C 4/9/2019 1:30:00 PM |
SB 52 |
| SB 52 Support Doc July 15 2018 - Legislative Research Report Alcohol Use & Policies to Restrict the Availabilty of Alcohol.pdf |
SL&C 4/9/2019 1:30:00 PM |
SB 52 |