03/18/1998 01:45 PM House FIN

HOUSE BILL NO. 411                                                             
                                                                               
"An Act relating to issuance of a winery license in a                          
local option area."                                                            
                                                                               
Representative Alan Austerman noted that a constituent in                      
Point Lyons on Kodiak Island requested the legislation.  The                   
constituent wants to start a winery using natural berries.                     
Winery licenses are not contained in the local option                          
section of the statutes.  The legislation would add a winery                   
license in statute.  He noted that the Alcohol Beverage                        
Control Board has the ability to restrict the retail sale of                   
wine by the winery.  The activity would be strictly                            
wholesale.                                                                     
                                                                               
Co-Chair Therriault clarified that the wine cannot be                          
produced in Point Lyons without the statute change.                            
                                                                               
Representative Austerman noted that the Alcohol Beverage                       
Control Board (ABC) supports the legislation.  The Board                       
indicated, to Representative Austerman, that the omission of                   
winery licenses was an oversight.  He stated the Point Lyons                   
winery would only be approved for wholesale operations.                        
Retail sales of alcohol are not allowed in Port Lyons.                         
Wineries are not currently covered under state statutes.                       
                                                                               
Co-Chair Therriault clarified that if the legislation is                       
enacted that Port Lyons would have to have another election                    
to allow the winery operation.                                                 
                                                                               
In response to a question by Representative Foster,                            
Representative Austerman explained that a winery could                         
produce wine a dry village without being allowed to sell the                   
wine retail.                                                                   
                                                                               
Co-Chair Hanley questioned if beer making was covered in                       
current statutes.                                                              
                                                                               
Representative Davies observed that the legislation does not                   
distinguish between wholesale and retail.  There is no                         
option for strictly wholesale operation.                                       
                                                                               
CLIFF STONE, STAFF, REPRESENTATIVE AUSTERMAN recalled that                     
conversations with the ABC Board and the Department of                         
Revenue indicated that the ABC Board would prohibit retail                     
sales in dry or wet areas.  He acknowledged that the                           
legislation does not specify that retail sales would be                        
limited.                                                                       
                                                                               
Representative Davies observed that the village would have                     
to trust that retail sales would not occur.                                    
                                                                               
Representative Moses did not think the legislation would                       
open up consumption in a dry community.  He thought that a                     
retail license would be needed.                                                
                                                                               
Representative Davies maintained that the vote would not                       
prohibit someone from seeking a retail license.                                
                                                                               
Representative Austerman thought that a retail license would                   
be needed.                                                                     
                                                                               
Co-Chair Therriault observed that "wholesale" could be                         
added.  Representative Austerman clarified that the intent                     
is to only allow wholesale operation.  Co-Chair Hanley                         
recommended that the intent be clarified in the legislation.                   
                                                                               
Representative Austerman suggested that "wholesale" be added                   
before "winery".  Co-Chair Therriault questioned if there                      
would be a special license for a wholesale winery versus a                     
retail winery or would it be a licensed winery that is                         
producing for wholesale only.                                                  
                                                                               
Representative Moses did not think that anything would                         
change except that the community would allow the production                    
of wine.  He reiterated his belief that a retail license                       
would be needed.                                                               
                                                                               
Co-Chair Therriault observed that the legislation would                        
leave the interpretation up to the ABC Board.                                  
                                                                               
Representative Austerman did not think that wine could be                      
dispensed in the village without a retail license.  He                         
thought that a retail license would have to be approved by a                   
vote of the residents.                                                         
                                                                               
Co-Chair Hanley referred to the definition of "winery" under                   
AS 04.11.140.  The license authorizes the holder to sell                       
wine in quantities of less then five gallons to individuals                    
on the licensed premise.  He summarized that the winery                        
license would allow retail sells on the premise.                               
                                                                               
Co-Chair Therriault noted that the Committee agrees with the                   
intent of the legislation.  He concluded that the winery                       
should be allowed to produce for wholesale purposes in a dry                   
area, but not engage in retail sales.                                          
                                                                               
Representative Davies observed that both operations could be                   
available in the legislation.  An additional subsection                        
could be added for wholesale only operations.                                  
                                                                               
HB 411 was HELD in Committee for further consideration.