SENATE FINANCE COMMITTEE April 17, 2018 1:35 p.m. 1:35:43 PM CALL TO ORDER Co-Chair MacKinnon called the Senate Finance Committee meeting to order at 1:35 p.m. MEMBERS PRESENT Senator Lyman Hoffman, Co-Chair Senator Anna MacKinnon, Co-Chair Senator Click Bishop, Vice-Chair Senator Peter Micciche Senator Donny Olson Senator Gary Stevens Senator Natasha von Imhof MEMBERS ABSENT None ALSO PRESENT Rachel Hanke, Staff, Senator Peter Micciche; Tiffany Hall, Executive Director, Recover Alaska, Juneau; Dale Fox, Alaska Cabaret, Hotel, Restaurant and Retailers Association (CHARR), Juneau. PRESENT VIA TELECONFERENCE Anna Brawley, Title 4 Review Project Coordinator, Anchorage; Erika McConnell, Alcohol and Marijuana Control Board, Anchorage; Ryan Makinster, Brewers Guild of Alaska, Anchorage; Joel Kadarauch, Alaska Beer, Wine, and Spirits Wholesalers Association, Anchorage; Micheal Baldwin, Alaska Mental Health Trust Authority, Anchorage; Stephanie Queen, City Manager, City of Soldotna, Soldotna; Robin Minard, Public Affairs Director, Matsu Health Foundation, Wasilla. SUMMARY SB 76 ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG SB 76 was HEARD and HELD in committee for further consideration. SENATE BILL NO. 76 "An Act relating to alcoholic beverages; relating to the regulation of manufacturers, wholesalers, retailers, and common carriers of alcoholic beverages; relating to licenses, endorsements, and permits involving alcoholic beverages; relating to the Alcoholic Beverage Control Board; relating to offenses involving alcoholic beverages; amending Rule 17, Alaska Rules of Minor Offense Procedure; and providing for an effective date." 1:37:15 PM SENATOR PETER MICCICHE, SPONSOR, introduced the legislation. He stated that the bill was largely a reorganization. He shared that the legislation modernized the over 35-year-old Title IX statutes that governed Alcoholic Beverage Control Board. He stated that it allowed the bill to function in a way that the industry actually operated. He noted that it promoted public safety and health, while supporting the alcohol industry's continued growth and viability in the current climate. He shared that he was someone who responsibly, periodically enjoyed alcohol. He felt that it was a healthy industry, but noted the aspects of public and safety that needed to be taken into account. He shared that a stakeholder group had worked together for six years to develop legislation. The groups goals were to promote a fair business climate; protect public health and safety; create a rational regulation for all three tiers of the state's alcohol industry; limiting youth access to alcohol; promoting responsible alcohol use and reducing the harms of overconsumption; and implementing without negative impacts on businesses and responsible operators. 1:39:46 PM RACHEL HANKE, STAFF, SENATOR PETER MICCICHE, presented a Summary of the Sectional Analysis (copy on file): Chapter 06. Alcoholic Beverage Control Board Pages 1-5 Section 1 Authority of the director AS 04.06.075 new subsection provides that the director of the ABC Board shall prepare the budgets for admin, enforcement, education, training, and prevention activities under Title 4. Section 2 Delegation of authority AS 04.06.080 adds endorsements to delegated powers, also edits cross reference. Section 3 Powers and duties AS 04.06.090(b) relocation of language from existing AS 04.11.070 which limits the power to issue, revoke, transfer, or renew a license to the board and references endorsements. Section 4 AS 04.06.090(e) references endorsements. Section 5 AS 04.06.090 adds new subsection that directs the board to prepare Title 4 education plan for public safety, industry, youth, municipalities, and the public with annual revision. Adds new subsections which direct the board to review fees every 10 years, allow opinions on legislation amending this title, requires the board to provide notice of violations to licensees and to post FASD information online for package store and winery licensees to include with shipped orders. Section 6 Statewide database AS 04.06.095 allows for certain information from the statewide database to be retained up to 10 years, only identifying information will be purged annually. Adds reference to endorsement. Section 7 AS 04.06.095(c) adds new subsection which directs the board to produce a report of aggregate regional sales of alcohol in local option areas, based on information retained in database and not including identifying data about an individual purchaser or seller. Section 8 Regulations AS 04.06.100(b) adds endorsements, removes the board's power to create additional licenses and permits in regulation, and adds the power to restrict manufacturing, packaging, sale, and distribution or products containing alcohol for consumption. Section 9 Proposed new chapter AS 04.09 to replace sections defining license types and permit types currently in AS 04.11 and regulation. Chapter 09. Licenses, Endorsements, and Permits. Pages 5-50 Article 1. License Types. AS 04.09.010. Types of licenses. Gives the definition of license, three tiers, and limits license types to those listed in this chapter. Article 2. Manufacturer Licenses. AS 04.09.020. Brewery manufacturer license. Relocates the brewery license from 04.11.130, moves other provisions from current brewery manufacturer's license to endorsements and new license types, sets the biennial fee at $1,500 and requires that at least 80% of the final product of brewed beverages sold be manufactured on licensed premises in Alaska. AS 04.09.030. Winery manufacturer license. Relocates the winery license from 04.11.140, moves other provisions from current winery license to endorsements and new license types, sets the biennial fee at $1,500 and requires that at least 80% of the final product of wine sold be manufactured on licensed premises in Alaska. AS 04.09.040. Distillery manufacturer license. Relocates the distillery license from 04.11.160, moves other provisions from current winery license to endorsements and new license types, sets the biennial fee at $1,500 and requires that at least 80% of the final product of distilled spirits sold be manufactured on licensed premises in Alaska. AS 04.09.050. Authorized sales. Allows smaller manufacturers to self-distribute to retail, wholesale, permitted and out of state or country licensees. Requires large manufacturers to go through wholesale distributors. AS 04.09.060. Unlicensed manufacturing. Relocates the existing class A misdemeanor for unlicensed manufacture from 04.11.010. AS 04.09.070. Unlicensed manufacturing in a local option area. Relocates the existing class C felony for unlicensed manufacture in a local option area from 04.11.010. AS 04.09.080. Unauthorized manufacturer sale. Defines unauthorized manufacturer sale as violating 04.09.050, which is a $250 fine. AS 04.09.090. Definition. Defines "packaging" which is the process of containing alcoholic beverages in bottles or other containers for sale. Co-Chair MacKinnon asked that the sections be highlighted within the comments. Ms. Hanke continued with the summary: Article 3. Wholesale Licenses. AS 04.09.100. General wholesale license. Relocates the general wholesale license from 04.11.160, moves other existing components to other places in the chapter, maintains $2,000 biennial fee, maintains $10,000 maximum fee, and reduces annual transaction fees for smaller businesses. AS 04.09.110. Limited wholesale brewed beverage and wine license. Relocates limited wholesale license from previous wholesale license section (AS 04.11.160(b)) in a separate section, maintains $400 biennial fee, maintains maximum $10,000 annual fee, and reduces annual transaction fees for smaller businesses. AS 04.09.120. Annual fee and affidavit. Relocates existing affidavit requirement from previous wholesale licenses section (AS 04.11.160(c)-(d)), requires a wholesale licensee to submit an affidavit to the board stating total value of annual sales, including tax. AS 04.09.130. Wholesaler supplier declaration. Relocates the wholesale supplier declaration from previous wholesale licenses section (AS 04.11.160(e)), maintains current fee structure, and simplifies the required reporting process. AS 04.09.140. Unlicensed wholesale. Relocates unlicensed wholesale provision from 04.11.010 and maintains existing class A misdemeanor. AS 04.09.145. Unlicensed wholesale in a local option area. Relocates existing penalty for unlicensed wholesale in a local option area from 04.11.010 and maintains existing class C felony. AS 04.09.150. Failure to pay annual fee or file affidavit. States that failure to pay an annual wholesale fee or file an affidavit is a violation and lowers the penalty from a misdemeanor to a $250 fine. AS 04.09.160. Failure to pay biennial fee or file declaration. States that failure to pay a biennial fee and failure to file a declaration are violations. Lowers the penalty from a misdemeanor to a $250 fine. 1:42:41 PM AT EASE 1:43:44 PM RECONVENED 1:43:50 PM Ms. Hanke continued with the summary: Article 4. Retail Licenses. AS 04.09.200. Beverage dispensary license. Relocates and simplifies the BDL license language from, maintains the $2,500 biennial fee, references the multiple fixed counter endorsement, and lowers the penalty for unauthorized beverage dispensary activity from a misdemeanor to a violation. Sections in current BDL (AS 04.11.090) for bowling alley and hotel licensees relocated to become separate endorsements. AS 04.09.210. Restaurant and eating place license. Relocates license from 04.11.100, raises biennial fee to $1,250, maintains 1:1 food to alcohol ratio, strikes 1996 exemption, limits the number of annual allowed after-hours entertainment events to six, and lowers the penalty for failure to comply with license terms from a misdemeanor to a violation. AS 04.09.220. Club license. Relocates license from 04.11.110, raises biennial fee to $1,500, and lowers the penalty for failure to comply with license terms from a misdemeanor to a violation. AS 04.09.230. Package store license. Relocates license from 04.11.150, maintains biennial fee of $1,500, and lowers penalty for failure to comply with licenses terms from a misdemeanor to a violation. Sections in current AS 04.11.150 for delivery, shipping and other activities relocated to become separate endorsements. AS 04.09.240. Pub license. Relocates license from 04.11.220, raises biennial fee to $1,250, and lowers penalty for failure to comply with license terms from a misdemeanor to a violation. Adds provision allowing designation of alternating premises, which allows a second location on a university campus that must be operated during mutually exclusive hours from existing license. AS 04.09.250. Theatre license. Relocates license from regulation (3 AAC 304.695), raises biennial fee to $1,250, and lowers the penalty for failure to comply with license terms from a misdemeanor to a violation. AS 04.09.260. Common carrier dispensary license. Relocates license from 04.11.180, maintains current fee schedule, removes "vehicle" as a qualifying premises, maintains current class A misdemeanor for unauthorized common carrier dispensary activity and lowers the penalty for common carrier dispensary noncompliance from a misdemeanor to a violation. Co-Chair MacKinnon noted that the subject began on page 11, line 20 of the bill. Ms. Hanke continued: AS 04.09.270. Sporting event license. Relocates and renames recreational site license, raises biennial fee to $1,250, allows for service and multiple noncontiguous locations, lowers penalty for unauthorized sporting event activity from a misdemeanor to a violation, and establishes 8-year sunset dates for licenses issued under former AS 04.11.210. AS 04.09.280. Outdoor recreation lodge license. Relocates license from 04.11.225, raises biennial fee to $2,500, and lowers penalty for unauthorized outdoor recreation lodge activity from a misdemeanor to a violation. AS 04.09.290. Golf course license. Relocates license from 04.11.115, raises biennial fee to $1,250, and lowers penalty for failure to comply with license terms from a misdemeanor to a violation. AS 04.09.300. Destination resort license. Relocates license from 04.11.255, raises biennial fee to $2,500, allows for service at multiple noncontiguous locations, and lowers penalty for failure to comply with license terms from a misdemeanor to a violation. AS 04.09.310. Brewery retail license. Creates new license type based on existing language in AS 04.11.130 for brewery retail activities, sets biennial fee at $1,250, and sets penalty for failure to comply with license terms. AS 04.09.320. Winery retail license. Creates new license type based on existing language in AS 04.11.140 for winery retail activities, sets biennial fee at $1,250, and sets penalty for failure to comply with license terms. AS 04.09.330. Distillery retail license. Creates new license type based on existing language in AS 04.11.170 for distillery retail activities, sets biennial fee at $1,250, and sets penalty for failure to comply with license terms. AS 04.09.340. Beverage dispensary tourism license. Relocates license from AS 04.11.400(d), maintains biennial fee at $2,500, and lowers penalty for unauthorized beverage dispensary activity from a misdemeanor to a violation. Other language in AS 04.11.400(d) relocated to Hotel or Motel Endorsement. AS 04.09.350. Seasonal restaurant or eating place license. Creates new license type, sets biennial license fee at $1,250, defines which communities can qualify for having this license type, directs the board to create a formula for determining number of allowed licenses per community, and sets penalty for failure to comply with license terms. Co-Chair MacKinnon noted that the subject was located on page 13, line 12 of the bill. 1:45:30 PM Ms. Hanke continued with the summary: AS 04.09.230. Package store license. Relocates license from 04.11.150, maintains biennial fee of $1,500, and lowers penalty for failure to comply with licenses terms from a misdemeanor to a violation. Sections in current AS 04.11.150 for delivery, shipping and other activities relocated to become separate endorsements. AS 04.09.240. Pub license. Relocates license from 04.11.220, raises biennial fee to $1,250, and lowers penalty for failure to comply with license terms from a misdemeanor to a violation. Adds provision allowing designation of alternating premises, which allows a second location on a university campus that must be operated during mutually exclusive hours from existing license. AS 04.09.250. Theatre license. Relocates license from regulation (3 AAC 304.695), raises biennial fee to $1,250, and lowers the penalty for failure to comply with license terms from a misdemeanor to a violation. AS 04.09.260. Common carrier dispensary license. Relocates license from 04.11.180, maintains current fee schedule, removes "vehicle" as a qualifying premises, maintains current class A misdemeanor for unauthorized common carrier dispensary activity and lowers the penalty for common carrier dispensary noncompliance from a misdemeanor to a violation. Co-Chair MacKinnon queried the bill reference. Ms. Hanke stated that she could reference the bill. Co-Chair MacKinnon stated that the location in the bill was page 14, line 30. 1:46:24 PM Ms. Hanke continued: AS 04.09.270. Sporting event license. Relocates and renames recreational site license, raises biennial fee to $1,250, allows for service and multiple noncontiguous locations, lowers penalty for unauthorized sporting event activity from a misdemeanor to a violation, and establishes 8-year sunset dates for licenses issued under former AS 04.11.210. AS 04.09.280. Outdoor recreation lodge license. Relocates license from 04.11.225, raises biennial fee to $2,500, and lowers penalty for unauthorized outdoor recreation lodge activity from a misdemeanor to a violation. AS 04.09.290. Golf course license. Relocates license from 04.11.115, raises biennial fee to $1,250, and lowers penalty for failure to comply with license terms from a misdemeanor to a violation. AS 04.09.300. Destination resort license. Relocates license from 04.11.255, raises biennial fee to $2,500, allows for service at multiple noncontiguous locations, and lowers penalty for failure to comply with license terms from a misdemeanor to a violation. AS 04.09.310. Brewery retail license. Creates new license type based on existing language in AS 04.11.130 for brewery retail activities, sets biennial fee at $1,250, and sets penalty for failure to comply with license terms. Co-Chair MacKinnon noted that the subject was located on page 5, line 17. Ms. Hanke continued with the summary: AS 04.09.360. Winery direct shipment license. Creates new license type authorizing direct to consumer (including online) sales of wine for in-state or out- of-state winery, sets biennial license fee at $200, directs the board to develop an application form specifically for this license, and sets penalty for failure to comply with license terms. 6 AS 04.09.370. Unlicensed retail sale. Relocates existing unlicensed retail sale from 04.11.010 and maintains current misdemeanor. AS 04.09.380. Unlicensed retail sale in a local option area. Relocates existing unlicensed retail sale in a local option area from 04.11.010 and maintains current class C felony. Co-Chair MacKinnon noted that the subject was on page 27, line 7 of the bill. Ms. Hanke looked at page 6 of the summary: Article 5. Endorsements. AS 04.09.400. Types of endorsements. Defines endorsements, clarifies that endorsements must be exercised with a license. AS 04.09.410. Manufacturer sampling endorsement. Creates new endorsement for onsite sampling based on existing language from manufacturing licenses, defines per person per day volume limits by product type, sets biennial fee at $200, sets penalties for unendorsed sampling and endorsement noncompliance. AS 04.09.420. Multiple fixed counter endorsement. Creates new endorsement for multiple fixed counters with language relocated from duplicate license section in AS 04.11.090, sets biennial fee at $200, sets initial application fee per counter, sets penalties for endorsement noncompliance and unendorsed service. AS 04.09.430. Hotel or motel endorsement. Creates new endorsement using some language relocated from AS 04.11.090, sets biennial fee at $200, sets penalties for unendorsed hotel or motel service and endorsement noncompliance. AS 04.09.440. Large resort endorsement. Creates new endorsement using some language relocated from AS 04.11.090, defines a large resort, sets biennial fee at $200, sets penalties for unendorsed large resort service and endorsement noncompliance. AS 04.09.450. Restaurant endorsement. Creates new endorsement using language from the Restaurant Designation Permit currently in regulation, sets biennial fee at $200, sets penalties for unendorsed restaurant service and endorsement noncompliance. Co-Chair Hoffman queried the activities of the other states. Ms. Hanke deferred to Ms. Brawley. 1:49:21 PM ANNA BRAWLEY, TITLE 4 REVIEW PROJECT COORDINATOR, ANCHORAGE (via teleconference), introduced herself. Co-Chair Hoffman queried the behavior of other state related to alcoholic beverages that did not include wine. Ms. Brawley replied that she believed that most states had limited online sales to wine. Co-Chair Hoffman asked about the states near Kentucky. Ms. Brawley responded that she needed to research the other states' policies. Co-Chair MacKinnon outlined the color coding of the Sectional Analysis. Senator Micciche remarked that the limitation to wine shipping was that there was an alcohol distribution problem in the state. He stated that a wine shipment must be received by someone who is over 21, and able to pay the excise tax. Co-Chair MacKinnon noted that some of the smaller communities had their own alcohol distribution outlet. She wondered whether it would affect their distribution. Senator Micciche replied that he did not know the exact purchase locations for those outfits. He assumed that all the purchases were through an instate distributor. Co-Chair MacKinnon wanted to know whether there was involvement with rural communities. 1:53:44 PM Ms. Hanke continued with the summary: AS 04.09.460. Package store shipping endorsement. Creates new endorsement by relocating language from AS 04.11.150, allows licensees to accept online orders, sets biennial fee at $200, sets penalties for unendorsed package store shipping and endorsement noncompliance. AS 04.09.470. Package store delivery endorsement. Creates new endorsement by relocating language from AS 04.11.150, sets biennial fee at $200, sets penalties for unendorsed package store delivery and endorsement noncompliance. AS 04.09.480. Package store repackaging endorsement. Creates new endorsement by relocating language from regulation, sets biennial fee at $200, sets penalties for unendorsed package store repackaging and endorsement noncompliance. AS 04.09.490. Package store sampling endorsement. Creates new endorsement, defines per person per day volume limits by product type, sets biennial fee at $200, sets penalties for unendorsed package store sampling and endorsement noncompliance. AS 04.09.500. Bowling alley endorsement. Creates new endorsement using language from AS 04.11.090, sets biennial fee at $200, sets penalties for unendorsed bowling alley service and endorsement noncompliance. AS 04.09.510. Golf course endorsement. Creates new endorsement using language from AS 04.11.115, sets biennial fee at $200, sets penalties for unendorsed golf course service and endorsement noncompliance. AS 04.09.520. Brewery repackaging endorsement. Creates new endorsement by relocating language from AS 04.11.135, limits availability to licensees currently operating brewpubs, sets biennial fee at $200, sets penalties for unendorsed brewery repackaging and endorsement noncompliance. Senator Stevens queried the size limits of samples. Ms. Hanke deferred to Ms. Brawley. 1:54:38 PM Ms. Hanke continued with the summary: Article 6. Permits. AS 04.09.600. Types of permits. Defines permits, establishes application process, requires servers to have an alcohol server education card, and sets daily fee for all permit types at least $50 per event day. AS 04.09.610. Beverage dispensary caterer's permit. Relocates caterer's permit from 04.11.230 and renames. AS 04.09.620. Restaurant caterer's dining permit. Relocates permit from regulations, renames to allow service of meals other than dinner, and requires meal services as part of food to alcohol ratio sales requirement. AS 04.09.630. Club caterer's permit. Relocates permit from regulations and simplifies existing language for application process. AS 04.09.640. Art exhibit permit. Relocates permit from regulations, removes option for annual $100 fee, and simplifies existing language. AS 04.09.650. Nonprofit organization event permit. Relocates special events permit from 04.11.240 and renames, simplifies existing language for application process. AS 04.09.660. Alcoholic beverage auction permit. Relocates wine auction permit from regulations and renames to allow all alcoholic beverages to be auctioned. AS 04.09.670. Tasting event permit. Creates new permit, allows a beverage dispensary license holder to partner with a manufacturer retail licensee or package store to host a tasting event on the partner's location and serving the partner's product inventory, sets a time limit and food requirement, and limits to six events per partnering license per year. AS 04.09.680. Inventory resale permit. Relocates retail stock sale license from 04.11.200 and renames. AS 04.09.690. Conditional contractors permit. Relocates permit from 04.11.250. AS 04.09.700. Failure to comply with a permit requirement. Lowers the penalties for failure to comply with permit requirements from misdemeanors to violations. Co-Chair MacKinnon noted that the subject was on page 46, line 22. Senator von Imhof wondered whether the fee issue addressed distilleries. Ms. Hanke replied that she would like more detail about the question. Senator von Imhof stated that there was an assertion that the Title IX rewrite included distilleries. She wondered whether there was pushback by bars and restaurants about competition. She wondered whether the statute limited food, time, and number of events. She asked how the statute was determined. Senator Micciche replied that the bill did not change the current law related to distilleries. He stated that the original bill included an 80/20, but that provision had been removed. The amount served in a distillery will remain the same. Co-Chair MacKinnon shared the concerns of Senator von Imhof, but those concerns were not addressed in the legislation. She noted that there was activities that were negative to individual neighborhoods. 1:58:40 PM Ms. Hanke continued with the summary: Article 7. Common Carrier Approval AS 04.09.750. Common carrier approval. Requires board approval in order to deliver alcoholic beverages to a person in the state. Common carriers delivering alcoholic beverages must deliver to a person at least 21 years of age who presents identification and must obtain a signature. They will be required to keep record of alcohol shipments available for audit by the board. The board shall keep a public list of approved carriers. Sets penalties for unapproved common carrier transport or delivery and common carrier noncompliance and violations. Chapter 11. Licensing. Pages 50-79 Section 10 License or permit required; presumption concerning possession for sale. AS 04.11.010(a) relocates penalties for unlicensed manufacture, sale and offering for sale. Unlicensed sale is addressed in new sections in proposed AS 04.09. Section 11 AS 04.11.010(b) adds reference to the package store shipping license. Section 12 AS 04.11.010(c) adds references to unlicensed sale, corrects term "half-keg" and adds barter to local option violation. Section 13 Purchase from nonlicensee prohibited AS 04.11.015 prohibits barter for alcoholic beverages and adds penalty with $250 fine. Section 14 Board approval of transfer AS 04.11.040 adds penalty for unauthorized transfer of an alcoholic beverage license or permit with $250 fine. Section 15 Reports required of limited liability organizations AS 04.11.045 adds penalty for failure to report a change in member interest or manager with $250 fine. Section 16 Reports required of corporations AS 04.11.050 adds penalty for failure to report a stock transfer or change of officers or board members with $250 fine. Section 17 Reports required of partnerships AS 04.11.055 adds penalty for failure to report a transfer of partnership interest or change of general partner with $250 fine. Section 18 Nonresident distiller, brewer, winery, or wholesaler AS 04.11.060 amends reference to general wholesale license. Section 19 AS 04.11.060 maintains current penalty for violating the section. Section 20 Application for new license, endorsement, or permit AS 04.11.260 adds endorsement, requires phone number and e-mail of applicant, requires annotated premises drawing and adds license references with individual application requirements. Section 21 AS 04.11.260 exempts winery direct shipment license from application process for other license types. Section 22 Application for renewal of license or permit AS 04.11.270 adds endorsements, adds conditional contractor's permit, edits reference, and allows renewal applications to be sent via electronic mail. Section 23 AS 04.11.270 exempts winery direct shipment license from renewal process. Section 24 Application for transfer of a license to another person AS 04.11.280 adds endorsements as transferrable with a license. Section 25 Criminal justice information and records AS 04.11.295(a) adds issuance and renewal for conditional contractor's permit. Section 26 AS 04.11.295(b)(1) adds reference to conditional contractor's permit. Section 27 Notice of application AS 04.11.310 exempts winery direct shipment license from notice requirements. Section 28 False statement on application. AS 04.11.315 relocates AS 04.16.210 and defines crime of making false statements on an application to as perjury, defined in AS 11.56.200. Section 29 Denial of new licenses and permits AS 04.11.320(a) adds references to endorsements. Section 30 Denial of license or permit renewal AS 04.11.330(a) changes 30 eight-hour day minimum operating requirement to 240 hours and removes reference to public convenience license. [effective immediately] Section 31 AS 04.11.330(a) duplicate section adds endorsement, adds reference to beverage dispensary tourism license, and adds reference to seasonal restaurant or eating place tourism license. [effective with other licensing changes, 1/1/2020] Section 32 AS 04.11.330(d) exempts common carrier dispensary licenses and renames reference to recreational site license. Section 33 AS 04.11.330 exempts winery direct shipment license. Section 34 Denial of request for relocation AS 04.11.340 removes reference to public convenience license. [effective immediately] Section 35 AS 04.11.340 duplicate section, adds reference to 04.11.400(k) and removes reference to 04.11.400(d). [effective with other licensing changes, 1/1/2020] Section 36 Denial of transfer of a license to another person. AS 04.11.360 removes public convenience license reference. [effective immediately] Section 37 AS 04.11.360 duplicate section removes reference to brewpub license. [effective with other licensing changes, 1/1/2020] Section 38 Licensed premises in multi-unit residential housing developments owned or financed by the Alaska Housing Finance Corporation AS 04.11.365 adds reference to restaurant endorsement. Section 39 Suspension and revocation of licenses and permits AS 04.11.370 adds endorsements. Section 40 Board imposed conditions or restrictions AS 04.11.395 section title change and adds reference to endorsements. Section 41 AS 04.11.395 allows the director to impose conditions or restrictions on any permit other than a conditional contractor's permit. Section 42 Population limitations. AS 04.11.400(a) adds reference to 04.11.405. [effective immediately] Section 43 AS 04.11.400(a) duplicate section, edits subsection reference, defines five-mile radius outside cities, adds new population limit for manufacturer retail licenses, adds licenses exempt from population limits and exempts local option populations from calculations. [effective with other licensing changes, 1/1/2020] Section 44 AS 04.11.400(i) lists licenses exempt from population limits. Section 45 AS 04.11.400(k) edits reference to beverage dispensary license, allows relocation of a package store, lowers borough threshold population, restricts number of licenses eligible for transfer to those exceeding population limits and defines number of allowed transfers by city, not borough. Section 46 Petition for additional restaurant or eating place licenses for certain local governing bodies AS 04.11.405 adds new section that gives certain local governing bodies the ability to petition the board for additional restaurant or eating place licenses allocated to their jurisdiction. [effective immediately] Section 47 48 AS 04.11.405(a)-(b) duplicate sections amending cross- references to restaurant and eating place license. [effective with other licensing changes, 1/1/2020] Section 49 Person and location AS 04.11.430 updates definition of corporation to match Title 10 and requires additional information from licensees. Section 50 Prohibited financial interest AS 04.11.450(b) retains restrictions for wholesale licensees from owning a manufacturing tier license or retail tier license, removes restriction on small manufacturers owning retail tier licenses. Section 51 AS 04.11.450(e) adds reference to limited wholesale license to restriction on acting as an employee or agent of a manufacturer tier license or retail tier license and adds the new statutory license references. Section 52 AS 04.11.450 adds new section that restricts manufacturers above certain annual production from owning a wholesale tier license or retail tier license. Section 53 Prior public approval AS 04.11.460 exempts winery direct shipment license. Section 54 56 AS 04.11.470 AS 04.11.480 adds endorsements to allowable objections and protest. Section 58 - 60 Local options AS 04.11.491 renumbers statutory references to license types and adds outdoor recreation lodge as one of license types that can be exempted from restrictions on sale in local option elections Section 61 AS 04.11.491(g) edits reference to package store license. Section 62 Notice to local governing body AS 04.11.520 clarifies language for notice process and adds endorsements. Section 63 Suspension and revocation based on acts of employees AS 04.11.535(a) adds endorsements, reference to permittee as applicable and clarifying language. Section 64 - 67 AS 04.11.537 AS 04.11.570 adds endorsements or conditional contractors permit to application, renewal and expiration, appeals, refunds and forfeiture of fees procedures. Section 68 Surrender or destruction of a license AS 04.11.580(b) changes language to "not later than". Section 69 Disposition of money AS 04.11.590(a) adds reference to endorsements and permits. Co-Chair Hoffman queried the justification. Ms. Hanke replied that, in some of the local option communities, that the license types were elected when unable. Those businesses were having issues renewing their licenses. Co-Chair Hoffman stressed that the issue was about the people that lived in the region year-round. He asserted that many of the people operating the licenses may only be in the communities for a few months. He felt that that deferring the decisions to the lodge owners against the wishes of the residents was not the right thing to do. He stressed that those residents should decide what happens within their boundaries. Senator Micciche replied that it was only in support of the local decision process. Co-Chair MacKinnon looked at line 10, page 74, Section 58: if a majority of the persons voting on the question vote to approve the option a municipality shall adopt a local option to prohibit the sale of alcohol beverages. Co-Chair MacKinnon stated that section (g) was added to include local control over an outdoor recreational lodge. Senator Micciche agreed. Senator Olson echoed Co-Chair Hoffman's concerns. He remarked that is his district was similar to what was described. Senator von Imhof read that a majority could prohibit an outdoor recreation lodge. Co-Chair MacKinnon replied that Department of Law would speak on the issue. 2:05:47 PM AT EASE 2:05:53 PM RECONVENED 2:05:55 PM Senator Olson welcomed children from Salmon Bay. Ms. Hanke continued with the summary: Section 70 Refund to municipalities AS 04.11.610 changes "refund" to "allocation" throughout and specifies content of reporting by municipalities for how license fee funds were used for alcohol-related education and enforcement. Section 71 Accessibility of license and licensed premises to inspection AS 04.11.630(b) adds endorsements, permits and includes premises during a permitted event. Section 72 Duration of licenses and permits AS 04.11.680 adds endorsements, conditional contractors permit, states that permits must be issued for a specified time, and removes fee reduction for seasonal licenses. Chapter 16. Regulation of Sales and Distribution. Pages 79-96 Section 73 Hours of sale and presence on licensed premises (standard closing hours) AS 04.16.010(c) allows a person to be on the licensed premises outside of the hours of sale to conduct business with the licensee, maintenance or improvements, common carrier licensees and adds restaurant endorsement reference. Section 74 AS 04.16.010 lowers penalty from a misdemeanor to a violation. Section 75 Pricing and marketing of alcoholic beverages AS 04.16.015(a) exempts sampling endorsements and defines week as seven days. Section 76 AS 04.16.015 lowers penalty from a misdemeanor to a violation. Section 77 Trade practices AS 04.16.017 new section specifying illegal practices by manufacturers and directs the board to adopt regulations defining exceptions to these rules and administrative penalties for violations. Section 78 Solicitation of alcoholic beverages; purchase on behalf of another AS 04.16.020 lowers penalty for unauthorized solicitation or purchase of alcoholic beverages from a misdemeanor to a violation. Section 79 Online sale and purchase of alcoholic beverages AS04.16.022 new section prohibiting online purchase and sale unless the licensee has a winery direct shipment license or package store shipping endorsement and sets penalties. Section 80 Illegal presence on premises involving alcoholic beverages AS 04.16.025(a) adds statutory references to all penalties involving sale without a license. Section 81 Prohibited conduct relating to drunken persons AS 04.16.030 lowers penalty for prohibited conduct relating to a drunken person, adds administrative penalty to licensee if employee is convicted of a violation of this section, and relocates misdemeanor penalty for licensee who knowingly allows employees to violate this section. Section 82 Possession of ingredients for homebrew in certain areas AS 04.16.035 changes statutory reference to all local option areas, consistent with AS 04.21.025 restricting private manufacture of alcohol in all local option areas. Section 83 AS 04.16.035 maintains current penalty for possession of ingredients for homebrew. Section 84 Access of drunken persons to licensed premises AS 04.16.040 rewords licensed premises language. Section 85 AS 04.16.040 relocates and lowers penalty for prohibited access by a drunken person. Section 86 Obligation to enforce restrictions in licensed premises AS 04.16.045 relocates and lowers penalty for permitting consumption not authorized under a license. Section 87 Access of persons with restriction on purchasing alcohol AS 04.16.047 adds reference to penalty for entering and remaining on licensed premises defined in AS 04.16.160. Section 88 Access to persons under the age of 21 to licensed premises AS 04.16.049(a) amends reference to restaurant endorsement and club license. Section 89 AS 04.16.049(c) adds additional license types allowed to have underage persons on premises as employees, ages 16 and 17, provided they are not serving alcohol. Section 90 AS 04.16.049(d) adds additional license types allowed to have underage persons on premises as employees, ages 18-20, provided they are not serving alcohol. Section 91 AS 04.16.049 adds additional license types allowed to have underage persons on premises if traveling, provided they are not served or consume alcohol. Section 92 Furnishing of alcoholic beverages to person under the age of 21 by licensees AS 04.16.052 lowers penalty for furnishing or delivering to a minor by a licensee or employee, adds administrative penalty to licensee if employee is convicted of a violation of this section and shifts misdemeanor penalty in AS 04.16.150 to licensee who knowingly allows employees to violate this section. Section 93 Room rental for purposes of consuming alcoholic beverages AS 04.16.055 maintains class A misdemeanor for renting a room for the purpose of providing alcoholic beverages to a person under 21 years of age. Section 94 Permitting minor to illegally possess liquor in a dwelling AS 04.16.057(b) maintains current violation and adds $500 fine. Section 95 Purchase by or delivery to persons under the age of 21 AS 04.16.060(e) relocates requirement for persons under the age of 16 to be accompanied by a person 21 years of age and have parental consent to remain in a restaurant that serves alcohol, now in proposed AS 04.09.450 in Section 9. Section 96 AS 04.16.060 defines penalties for purchase by a person under 21 years of age and delivery to a person under 21 years of age. For persons under 21, adds similar penalty structure as those in AS 04.16.049 and AS 04.16.050, $500 fine for violation with option to reduce fine to $50 if youth completes treatment or community diversion panel. Section 97 Sales or consumption at school events AS 04.16.080 edits title for the section and specifies that the section applies to a person 21 years of age and older. Section 98 AS 04.16.080 specifies that this section applies to a person 21 years of age and older and lowers the penalty from a class A misdemeanor to a $100 fine. Section 99 Prohibition of bottle clubs AS 04.16.090(c) makes list exclusive and adds cover charge and other services or products provided on the premises. Section 100 AS 04.16.090 defines the crime of maintaining a bottle club, relocates and maintains current penalty. Section 101 Sale of certain alcoholic beverages prohibited AS 04.16.110 defines sale of a prohibited alcoholic beverage, relocates and maintains current penalty. Section 102 Removal or introduction of alcoholic beverages AS 04.16.120 defines removal or introduction of alcoholic beverages, reduces penalty to a violation and defines exemptions. Section 103 Alcoholic beverages transported by common carrier AS 04.16.125(a) references board approval of a common carrier added in AS 04.09.750(b) and clarifies existing language. Section 104 AS 04.16.125(b) clarifies existing transport volumes by alcohol type. Section 105 AS 04.16.125 adds new subsections defining the crime of unauthorized transportation of alcoholic beverages by common carrier into a local option area and maintains current class A misdemeanor. Section 106 Stock confined to licensed premises AS 04.16.130 lowers the penalty for unauthorized storage of alcoholic beverages from a misdemeanor to a violation. Section 107 - Sale or consumption of alcoholic beverages in a warehouse AS 04.16.140 lowers the penalty for consumption or sale of alcoholic beverages in a warehouse from a misdemeanor to a violation. Section 108 Licensee responsible for violations AS 04.16.150 lowers the penalty for failure to ensure compliance from a misdemeanor to a violation. Section 109 Restriction on purchasing alcoholic beverages AS 04.16.160 maintains current penalty for failure to comply with a restriction on purchasing alcoholic beverages. Section 110 - 111 Source of alcoholic beverages AS 04.16.170 exempts winery direct shipment license and maintains current penalty for sale of alcoholic beverages from or to an unlicensed person. Section 112 - 113 Restrictions on purchase and sale of alcoholic beverages AS 04.16.172 renumbers cross-references to license types and maintains current penalty for licensee obtaining alcoholic beverages from an unlicensed seller. Section 114 Furnishing alcoholic beverages in aid of gambling enterprise AS 04.16.175 maintains current penalty for the crime of furnishing an alcoholic beverage in aid of a gambling enterprise. Section 115 Penalties for violation AS 04.16.180(b) adds statutory references to prohibited conduct related to drunken persons and furnishing alcoholic beverages to persons under the age of 21 by licensees. Section 116 AS 04.16.080(e) adds definition for "conviction". Section 117 AS 04.16.180 adds clarification that licensees are subject to administrative penalties imposed by the board for violations of AS 04.16.030 (Section 81) and AS 04.16.052 (Section 92) and adds mitigating circumstances for licensees. Section 118 - 121 Forfeitures and seizures AS 04.16.220(a) renumbers cross-references. 2:10:34 PM Co-Chair MacKinnon looked at line 28. She wondered whether prohibited conduct relating to a drunken person was a violation punishable by $500. Ms. Hanke replied in the affirmative, and stated that it would trigger the $250 administrative penalty to the licensee. Co-Chair Hoffman queried the definition of "inebriate" on a licensed premises. Ms. Hanke deferred to Ms. McConnell 2:11:41 PM ERIKA MCCONNELL, ALCOHOL AND MARIJUANA CONTROL BOARD, ANCHORAGE (via teleconference), introduced herself Co-Chair Hoffman queried the definition of "inebriate" on a licensed premises, as referenced in Section 84. Ms. McConnell replied that "drunken person" was defined in Title 4 as "a person whose physical or mental conduct is substantially impaired as a result of the introduction of an alcoholic beverage into the person's body; and who exhibits those plain and easily observed or discovered outward manifestations of behavior commonly known to be produced by the overconsumption of alcoholic beverages." She stated that a drunken person was identified more by the behaviors rather than a specific blood-alcohol level. Ms. Hanke continued with the summary: Chapter 21. General Provisions. Pages 96-103 Section 122 Keg registration AS 04.21.012 adds new section establishing a keg registration process including proof of age, registration form requirements, identification tags, and establishes the penalty for possession and sale of alcoholic beverages in an unregistered keg. Section 123 - 124 Civil liability of persons providing alcoholic beverages AS 04.21.020(a) renumbers cross-references. Section 125 Alcohol server education course AS 04.21.025(a) repeal and reenact section to list license types that do not require server education training: only licenses not serving the public are exempt from requirement. Section 126 AS 04.21.025(b) adds reference to permit holders and individuals listed on an application as servers for a permitted event. Section 127 AS 04.21.025(c) adds reference to permit holders and requires servers listed on the permit application to have a current alcohol servers card by the first event day. Section 128 AS 04.21.025 provides exceptions to alcohol server education and defines the offense of failure to comply with alcohol server education requirements. Lowers the existing class A misdemeanor to a violation. Section 129 Proof of age and of not being restricted from purchasing alcoholic beverages AS 04.21.050(a) renumbers cross-reference. Section 130 Warehousing of alcoholic beverages AS 04.21.060 defines the offense of unauthorized warehousing and lowers penalty from a misdemeanor to a violation. Section 131 Posting of warning signs AS 04.21.065(a) updates list of license types that require warning signs. Section 132 AS 04.21.072. Fines and other criminal penalties. New section which provides that, unless otherwise stated, a violation of this title is a $250 fine. AS 04.21.074. Bail forfeiture schedule. Directs the supreme court to set a bail schedule for Title 4 violations. AS 04.21.076. Suspension of fine or sentence. Prevents the court from suspending fines or sentences for minor offenses. Section 133 Court records of persons under 21 years of age AS 04.21.078 adds additional statutory reference to violations of AS 04.16.060. Section 134 Definitions AS 04.21.080(b)(6) adds reference to permit holders and license holders. Section 135 AS 04.21.080(b)(15) adds endorsements. Section 136 AS 04.21.080(b) adds definitions. Amendments to Various Other Titles. Pages 103-108 Section 137 Definitions AS 05.15.690(48) renumber beverage dispensary license reference and update "bar" definition. Section 138 143 Amends references to Title 4 in Titles 9, 11, 12 and 18. Section 144 - Unlawful practices in places of public accommodation AS 18.80.230(b) amends reference to chapter 04.11. Section 145 Definitions AS 39.50.200(b) adds the marijuana control board to list of state commissions or boards. Section 146 Winery direct shipment tax; statement; audit AS 43.60.060 establishes tax collection on direct wine shipments from out of state businesses holding this license and outlines requirements for the Department of Revenue. Section 147 - 148 AS 43.70.105(a) amends references to chapter 04.11 in Titles 43 and 45. Repealers, Transitions, Applicability, Court Rule Amendment, and Effective Dates. Pages 108-112 Section 149 Amends court rule 17 by adding statutory reference. Section 150 Repealing section with effective date of January 1, 2020. Section 151 Immediate repeal section. Section 152 Repealing section with effective date of January 1, 2028. Section 153 Repealing section with effective date of January 1, 2020. Section 154 Uncodified law Applicability. States that changes apply to offenses committed on, or after the effective date. Section 155 Transition Conversion of applications and licenses. Provides that the board shall convert all necessary licenses and applications within 90 days after the effective date of the section which is January 1, 2020. Section 156 Transition Seasonal restaurant or eating place license. Converts applications for restaurant or eating place licenses to seasonal restaurant or eating place license application if the establishment serves beer and wine for a period not exceeding six months. This section has an immediate effective date. Section 157 Transition Regulations. Directs the Department and the Board to adopt necessary regulations with an immediate effective date. Section 158 Immediate effective date clause. Section 159 January 1, 2020 effective date for the remainder of the act. 2:16:06 PM Senator Micciche noted that the package store sampling quantities. He stated that between the hours of 12am and 8am were the hours that samples could not be offered, and the holder of the package store sampling endorsement may serve a total volume of samples to a person on licensed premises each day that did not exceed 12 ounces of beer, 6 ounces of wine, 1.5 ounces of distilled spirits, or the alcoholic equivalent of one, two, or three of the subsection. Co-Chair MacKinnon asked for a restatement. Senator Micciche restated his comment. Senator Stevens wondered whether it was limited to 1.5 ounces a day, and noted that it was unlike behavior in Dublin. Senator Micciche replied in the affirmative. Co-Chair MacKinnon looked at page 39, line 10 that was related to the subject. Co-Chair Hoffman looked at Section 92. He queried the justifications and details of the changes in that section. Senator Micciche deferred to Ms. Brawley, who was the well- versed on the conclusions. Ms. Brawley stated that the current penalty for a licensee or their employee serving a minor on licensed premises was a Class A misdemeanor. She stated that there was an examination of many penalties in Title IX. She noted that many cases were either dismissed or not prosecuted, because the penalty was applied to a wide range of offences. She noted that businesses wanted economic incentives to follow the law, so the proposed change was for more effective enforcement. She stated that the additional administrative penalty on that licensee for one of the employees serving a minor was supposed to be a notification. She noted that there would be an affect on the license. 2:20:52 PM Co-Chair Hoffman felt that the largest economic incentive would be a provision that said that providing an alcohol to a minor over a period of time that their license would be revoked. He queried a similar provision. Ms. Brawley replied that deferred to Ms. McConnell. She remarked that the violation system did not mean that there was application of penalties. Co-Chair Hoffman felt that was the reason for ignoring the penalties. Ms. McConnell looked at Section 4.11.370 was related to suspension or revocation of licenses and permits. It stated that a license or permit shall be suspended or revoked if the board finds conviction of an agent or employee of a licensee of a violation of this title, a regulation adopted under this title, a regulation adopted under this title, or an ordinance adopted under AS 04.21.010. She furthered that if the licensee was found by the board to either knowingly violate or to have recklessly or with criminal negligence failed to act in accordance with the duty prescribed under AS 4.21.030 with the result that the agent or employee violated a law, regulation, or ordinance. She stressed that the title authorized the board to revoke a license for many fewer offenses than ten offenses of selling to a minor. She remarked that there would be action against a licensed for fewer violations. Co-Chair Hoffman wondered how many licenses had been revoked in the last year under the current provision. He queried whether it was a smaller number, when those were not following the law by selling alcohol to a minor. Ms. McConnell replied that licenses had not be revoked in the last year under the provision. She noted that the compliance check program was stopped in 2015, and was only now bringing back the program. Co-Chair Hoffman queried the reason for halting the program. Ms. McConnell replied that there were a number of factors to halt the program including resources. The program was previously funded under a federal grant, and that grant ended shortly before the program ceased. She also stated that there were issues related to the ability to hire underage persons who needed compensation. 2:25:31 PM Co-Chair Hoffman felt that it was a major problem in the state. He felt that the license fee should be increased, so the licensees paid for the program. Ms. McConnell did not disagree, and noted that the passage of the bill would increase revenues. Co-Chair Hoffman queried the timeframes and numbers of violations that must occur for revocation of a license. Ms. McConnell replied that there was not a standard in statute. She stated that there were procedures for a director to propose to the board that a license be suspended or revoked, so it was at the discretion of the director for the time of proposition. She stressed that selling to underage individuals was one of the most egregious violations of the alcohol laws. Co-Chair Hoffman reiterated that it continued to be a large problem, and it seemed as though someone may be "looking the other way." He felt that there should be an overall fix. He wanted to make all licensees see that they had to follow the same rules as their competitors. Ms. McConnell agreed. Co-Chair Hoffman stressed that no licenses had been revoked, so he was extremely concerned. Co-Chair MacKinnon queried the distinctions between the revoked licenses and those revoked licenses under the section. Ms. McConnell replied that there was a distinction. She shared that no licenses had been revoked in her tenure of almost one year. She furthered that some licenses had not been renewed. Co-Chair MacKinnon felt that Section 92 should be examined further. Senator Micciche stressed that the issue put the responsibility that they previously did not have responsibility. 2:31:10 PM Co-Chair MacKinnon wondered whether municipalities were in the working group. Senator Micciche replied in the affirmative. Senator Stevens queried the proof that someone knowingly sold to a minor. He felt that it was a high bar. Co-Chair Hoffman asserted that it was not a high bar, because state law could demand for a mandatory check of licenses. Co-Chair MacKinnon wondered whether there was a mandatory check in the bill. Senator Micciche replied that the state already had a mandatory check in the entire state. Ms. Hanke stated that the default mental state for Title IX was "knowingly." Co-Chair MacKinnon OPENED public testimony. 2:33:55 PM TIFFANY HALL, EXECUTIVE DIRECTOR, RECOVER ALASKA, JUNEAU, spoke in support of the legislation. She remarked that the process was long and thorough with overconsumption of alcohol. Co-Chair MacKinnon wanted to capture all the points. 2:36:55 PM DALE FOX, ALASKA CABARET, HOTEL, RESTAURANT AND RETAILERS ASSOCIATION (CHARR), JUNEAU, felt that a well regulated alcohol industry was healthy. He spoke in support of the bill. Co-Chair Hoffman remarked that alcohol abuse and crime was directly related to alcohol. He felt that it was a ludicrous assumption to focus on the cost of court fees. He stressed that there should be a challenge to the licensees. He stressed that there was a major public safety and public health issue. Ms. Fox replied that he was attempting to explain how the board was currently addressing the issue. Senator Stevens noted that there was opposition by the Brewer's Guild, and queried whether the guild had been satisfied by the current version of the bill. Ms. Fox believed that they were in support of the bill. Senator Stevens asked to hear from the Brewers Guild. 2:42:18 PM RYAN MAKINSTER, BREWERS GUILD OF ALASKA, ANCHORAGE (via teleconference), spoke in support of the bill. Co-Chair MacKinnon asked whether the controversial sections had been removed. Ms. Makinster replied in the affirmative. 2:44:52 PM JOEL KADARAUCH, ALASKA BEER, WINE, AND SPIRITS WHOLESALERS ASSOCIATION, ANCHORAGE (via teleconference), testified in support of the bill. 2:45:30 PM MICHEAL BALDWIN, ALASKA MENTAL HEALTH TRUST AUTHORITY, ANCHORAGE (via teleconference), spoke in support of the bill. 2:46:17 PM STEPHANIE QUEEN, CITY MANAGER, CITY OF SOLDOTNA, SOLDOTNA (via teleconference), spoke in support of the bill. 2:47:45 PM ROBIN MINARD, PUBLIC AFFAIRS DIRECTOR, MATSU HEALTH FOUNDATION, WASILLA (via teleconference), spoke in support of the bill. Co-Chair MacKinnon CLOSED public testimony. Co-Chair MacKinnon discussed the following day's agenda. Senator Micciche remarked that there were many resources to address and submit questions. SB 76 was HEARD and HELD in committee for further consideration. ADJOURNMENT 2:50:58 PM The meeting was adjourned at 2:50 p.m.