CS FOR HOUSE BILL NO. 240(RLS) am "An Act relating to brewery and brewpub licensing and relating to sales of wine by a winery licensee." This was the first hearing for this bill in the Senate Finance Committee. Co-Chair Green moved to adopt committee substitute Version 24- LS0734\W as the working document. She objected for explanation. AT EASE 9:08:48 AM / 9:18:11 AM [NOTE: The FTR Recording issues were resolved and the meeting from this point forward was recorded.] CRAIG JOHNSON, Staff to Representative Lesil McGuire, the bill's sponsor, informed the Committee this bill was developed in conjunction with the Brewers Guild which represents six breweries and five brewpubs in the State. Brewpubs are currently restricted to selling their product for consumption on their premise and must contract with a distributor for off-premise sales. Breweries are currently limited to selling their product off-premise and can only provide free samples to brewery visitors. Mr. Johnson stressed that the bill, which is the result of compromises between the breweries and the brewpubs, would "level the playing field between" them in that brewpubs would be allowed to increase the amount of product they produce and would be allowed to self-distribute a limited amount of product. The increased production would assist in growing the industry as the small quantity currently produced by brewpubs was unattractive to distributors. In addition, the bill would allow breweries to charge for their on-premise samples, thereby allowing them to recoup some of their costs. Mr. Johnson stressed that both breweries and brewpubs support the bill. He pointed out that the provisions of the bill would be limited to the Anchorage and Fairbanks areas, as the determination was that breweries and brewpubs in less populated areas of the State would be better served by limited competition. 9:20:16 AM Senator Dyson asked the amount of product that could be sold for consumption on a premise. Mr. Johnson stated Version "W" would increase the amount of product a brewery could sell to a consumer "for consumption on premises" from 24 to 36 ounces. Senator Dyson asked whether the product would be sold by the bottle or by draft. Mr. Johnson stated that the distribution method would be at the discretion of the brewer. Typically, the product is sold in draft form as a matter of economics. Senator Dyson understood numerous discussions had occurred regarding the consumption limit during the bill's committee hearing process. Mr. Johnson affirmed. Senator Dyson asked for further information about the consumption limit discussions. Mr. Johnson reiterated the bill "represents a compromise". Brewpubs, being licensed premises, are obligated not to serve an intoxicated person. Thus, there is no limitation on the amount of product they could sell for on-site consumption. Breweries are currently prohibited from selling onsite samples. The bill is "a compromise between what a brewpub can do and what a brewery cannot do now. So this limitation of being able to sell basically three beers, allows the breweries to recoup some of their money". The bill is "a give and take" compromise between the two competing entities. 9:22:38 AM Senator Dyson ascertained therefore that the 36-ounce limit on on-site consumption was based on "commercial aspects" rather than public safety issues. Mr. Johnson concurred. 9:23:15 AM Senator Dyson asked whether Version "W" included the provisions pertaining to wineries that had been included in CS HB 240(RLS)am, Version 24-LS30734\B.A. Mr. Johnson explained that prior to HB 240 being transmitted to the Senate, the House of Representatives adopted an amendment which incorporated a separate bill pertaining to wineries. Those provisions would have allowed "an in-State winery to ship and distribute wine inside the State of Alaska". Those provisions were not included in the Version "W" committee substitute. Senator Dyson understood that the bill's sponsor was amiable to incorporating the winery language into the bill. Mr. Johnson communicated that the bill's sponsor was respectful of the committee process. Thus, the will of a committee or action taken during a floor session would be respected. The bill's sponsor has "particular respect" for this Committee in that regard. 9:25:27 AM Co-Chair Green affirmed that the winery language included in Version "B.A" had been incorporated from a separate bill. 9:26:20 AM MATT JONES, Representative, Moose's Tooth Pub and Pizzeria, testified via teleconference from Anchorage in support of the bill. 9:26:50 AM ROBERT MCCORMICK, Glacier BrewHouse, testified via teleconference from Anchorage in support of the bill. Co-Chair Wilken asked whether Glenn Brady, a representative of the Alaska Cabaret, Hotel, Restaurant & Retailers Association (CHARR) would be testifying, as he had recently spoken with him about this legislation. Co-Chair Green noted that only Mr. Jones and Mr. McCormick had signed up to testify. Co-Chair Wilken asked whether Mr. Brady had presented a position on the bill. Mr. Johnson understood Mr. Brady was in support of the bill. Co-Chair Wilken moved to report the bill from Committee with individual recommendations and accompanying fiscal notes. Senator Dyson objected. He supported Version "B.A" rather than Version "W". Co-Chair Green pointed out that Version "W" had been ADOPTED as the working document. Co-Chair Wilken moved and asked unanimous consent his motion to report the committee substitute from Committee be withdrawn. There being no objection, the motion to report the bill from Committee was WITHDRAWN. Conceptual Amendment #1: This amendment inserts the following language into Sec. 6(b)(1) page 4 following line 13 of the committee substitute. (A) to an individual who is present on the licensed premises; or (B) by shipping to an individual if the shipment is not to an area that has prohibited the importation or possession of alcoholic beverages under this chapter or to an area that has limited the importation or possession of alcoholic beverages unless the sales complies with the limitation; Senator Dyson moved the amendment. Senator Bunde and Co-Chair Green objected. Senator Olson asked the purpose of the language being proposed. Senator Dyson stated that this amendment would restore the language adopted on the House floor that would allow Alaskan wineries to ship to markets within the State. Currently, Alaska wineries are limited to exporting their products. Co-Chair Green shared she had a "different understanding of sponsor's desire" in this regard in that the sponsor was "delighted" that Version "W" did not include the language being proposed in the amendment. 9:31:20 AM A roll call was taken on the motion. IN FAVOR: Senator Dyson, Co-Chair Wilken and Senator Olson OPPOSED: Senator Stedman, Senator Bunde and Co-Chair Green ABSENT: Senator Hoffman The motion FAILED (3-3-1) Amendment #1 FAILED to be adopted. Co-Chair Wilken moved to report the bill from Committee with individual recommendations and accompanying fiscal notes. There being no objection, SCS CS HB 240(FIN) was REPORTED from Committee with previous zero fiscal note #1 dated March 21, 2006 from the Department of Public Safety. AT EASE 9:32:16 AM / 9:35:11 AM