Legislature(2021 - 2022)ADAMS 519
03/18/2022 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB149 | |
| HB289 |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 281 | TELECONFERENCED | |
| += | HB 282 | TELECONFERENCED | |
| += | HB 149 | TELECONFERENCED | |
| + | HB 289 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 9 | TELECONFERENCED | |
CS FOR SENATE BILL NO. 9(FIN)
"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."
1:33:32 PM
Co-Chair Merrick relayed that the bill was previously heard
in committee on March 10, 2022, and the PowerPoint
presentation would begin where it left off.
ANNA BRAWLEY, TITLE 4 REVIEW COORDINATOR, AGNEW BECK
CONSULTING, ANCHORAGE (via teleconference), continued with
slide 27 of the presentation titled "Alcohol and Beverage
Control (ABC) Board Title 4 Review Project," dated March
10, 2022 (copy on file). She presented Slide 27 titled
"Tracking Alcohol Orders in Local Option Areas: Current
Title 4." She reminded the committee that during the last
hearing she discussed the regulation of internet sales
[Slides 24 to 26] and noted that slide 27 portrayed the
current policy that was not proposed to change [Sections 10
to 12 and 16, AS 04.06.095; existing limits in AS
04.11.010]. She explained that currently in "Local Option"
communities there was a system in place that tracked the
limited amount of imported alcohol for personal use. The
slide depicted the monthly importation limit set in
statute. She detailed that an Alaska customer submitted an
order to the package store and the licensee verified the
customer's age and if the monthly order amount was met. The
licensee then records the order in the Alcohol Beverage
Control Board (ABC) database, called the "Written Order
Database." The database access was limited to the ABC
board, package stores, and law enforcement. She added that
the current system was separate from the proposal for
internet sales, which was primarily for areas that were not
local option areas.
1:36:37 PM
Ms. Brawley advanced to slide 28 titled "Proposed: Publish
Community-Level Data from Local Option Order Database." She
elaborated that in current Title 4, [Sections 10 to 12, AS
04.06.095] all data in the local option order database was
private and deleted after one year. She relayed that the
state needed to stop bootlegging therefore, the following
changes were proposed. The bill would keep individual order
information private but retain aggregate data for 10 years
and allowed the ABC Board to publish annual total sales
volume by region or community. The board would protect the
individual order data and publish an annual report
containing aggregate data by region.
1:38:23 PM
Ms. Brawley remarked that the following slides explained
the remaining policy provisions in SB 9. She turned to
slide 29 titled "Proposed: Revise Penalties for Lessor
Offenses," [Defined throughout: most prohibited acts
defined in chapters 11 and 16.] She conveyed that in
current law, almost all violations of Title 4 were Class A
misdemeanors. She delineated that the stakeholder group
examined every penalty section in Title 4 and discussed
what the appropriate penalty should be. When penalties were
set high across the board and perceived to be too strict
for most offenses, law enforcement was less likely to issue
citations and courts were less likely to pursue those
cases. The proposal was to clearly define the penalties for
each section as opposed to setting penalties "across the
board." The slide illustrated the penalties for minor
offenses (violation), Class A Misdemeanor, and Class C
Felony. She indicated that many penalties would become
minor offenses. Serious violations would remain
misdemeanors or felonies.
1:40:08 PM
Representative Josephson inquired whether serving alcohol
to a minor would remain a Class C felony. Ms. Brawley
answered that the penalty was a misdemeanor. She
exemplified an adult who purchased a drink in a bar for a
minor.
Representative Wool relayed the situation where minors used
fake identification (ID) to enter a bar. He wondered if it
was still a misdemeanor if someone purchased a drink for a
minor with a fake ID.
SENATOR PETER MICCICHE, SPONSOR, replied that the proof and
the standard used to charge someone was not changing; what
was changing was how an offense was classified: violation,
misdemeanor, or felony. He reiterated that if a person was
able to prove their innocence due to a fake ID that would
not change; the adjustment was to the level of the
offenses. Representative Wool supported lowering the
aforementioned situation to a misdemeanor. He shared from
his personal experience owning a bar a time security
personnel inadvertently missed an underage entrant and was
charged with a misdemeanor and was informed the next
violation would be a felony. The employee quit the job. He
asked if the same penalties were proposed in the bill.
Senator Micciche answered that the question was covered on
the next slide. He conveyed that, in current law, a
licensee or employee who knowingly overserves an
intoxicated adult or who serves alcohol to a minor was
guilty of a Class A Misdemeanor. The bill changed the
penalty for both to a minor offense, with a $500 fine. He
indicated that the offenses were rarely charged or
prosecuted mostly due to overbooked courts. He believed
that the violation would be more universally applied. He
added that when the server knowingly provided alcohol to a
minor, the licensee would also receive a $250
administrative fine from the ABC Board.
1:45:05 PM
Co-Chair Merrick acknowledged that Representative Johnson
had joined the meeting.
Representative Thompson asked if the courts still put a
mark on someone's driver's license if they repeatedly had
drunk driving offenses. Senator Micciche answered that the
bill did not change the system. Representative Thompson
wondered what the amount of the fine was for someone who
served alcohol to an individual with a marked license.
Senator Micciche was unsure, but he thought that the bill
did not change the offense. He reiterated that the slide
was only referring to the change from a Class A misdemeanor
to a minor offense for overserving an intoxicated adult or
a minor. He deferred the answer to Ms. Brawley.
Ms. Brawley confirmed the Senator's answer. She elaborated
that the stakeholders looked at all the penalties and
separated the serious crimes from the more "routine
issues."
Representative Thompson repeated his question and asked
what the penalty was for serving a person with a
restriction on their driver's license.
Senator Micciche deferred the question to the director of
the Alcohol and Marijuana Control Office (AMCO).
1:47:27 PM
GLEN KLINKHART, DIRECTOR, ALCOHOL AND MARIJUANA CONTROL
OFFICE, ANCHORAGE (via teleconference), replied that he had
not written the ticket in some time and would follow up
with an answer.
Representative Wool recalled from personal experience that
the onus was on the person with the restriction and not the
establishment because the person could enter a bar for
entertainment purposes, however they could not enter a
liquor store.
Ms. Brawley moved to slide 30 titled "Proposed: Licensee
Penalties for Overserving an Adult or Serving a Minor:"
In current Title 4, a licensee or employee who
knowingly overserves an intoxicated adult or who
serves alcohol to a minor is guilty of a Class A
Misdemeanor.
The bill would change the penalty for both statutes to
a Minor Offense, with a $500 fine.
In addition to the penalty to the person who commits
the violation, the owner of the license would receive
an administrative (non-criminal) penalty of $250. This
alerts the owner that a violation occurred, holds them
immediately accountable and encourages future
compliance.
Section 92, AS 04.16.030; Section 104, AS 04.16.052;
Sections 127 129, AS 04.16.180.
Ms. Brawley elaborated that the goal was not to reduce
penalties arbitrarily but to find the most effective way to
enforce the statutes and separate threats to life or safety
and serious crimes from more routine business compliance
issues. She expounded that the minor offense allowed the
ABC board to address the violations.
1:51:29 PM
Representative Wool asked about overserving an intoxicated
adult. He asked whether a definition for an intoxicated
adult (while not driving) was included in SB 9.
Senator Micciche answered that the bill did not change or
deal with the definition. He restated that the legislation
merely decreased the offense from a misdemeanor to a "more
effectively managed minor offense."
Ms. Brawley turned to slide 31 titled "Proposed: Require
Keg Registration:"
• Reduces adults' incentive to legally purchase alcohol
and supply an underage drinking party.
• Kegs tagged with the purchaser's contact information can
be t racked if confiscated at an underage party or other
situation where minors are given access to alcohol.
• A person, not a licensee, possessing an untagged keg
containing alcohol could be fined.
• Modeled on existing Anchorage and Juneau ordinances.
Section 134, AS 04.21.059
Ms. Brawley emphasized that the keg registration was
targeted at reducing underage drinking and was considered a
best practice in public health. She offered that the
enforcement was not at the point of sale; the licensee sold
the keg with a tag containing the purchaser's information,
if a keg was confiscated at a party with underage drinkers,
it would allow for tracing the purchaser as a way to hold
the purchaser accountable. The system would result in a
ticket to the purchaser not the store.
1:54:47 PM
Representative Josephson cautioned about the "criminality
element." He understood the sponsor and stakeholders
"wanted something that worked" regarding violations. He
cited a statute in Title 4, "AS 04.16.059. Aggravated
penalties for certain violations involving a person under
21 years of age and committed by a sex offender or child
kidnapper." He asked if the bill renumbered sections. He
considered that perhaps the bill did not rewrite all of
Title 4.
Senator Micciche replied that he did not recall where the
current statute cited by Representative Josephson was. He
indicated that most of the current sections would be
renumbered by SB 9. He deferred to Mr. Klinkhart.
Mr. Klinkhart answered that he did not believe that the
statute was covered in the rewrite. Representative
Josephson asked if it meant the section remained as
written. Mr. Klinkhart replied in the affirmative.
Representative Josephson relayed that a constituent
expressed concern regarding limiting homebrewing kegs. He
wondered if the registration applied to homebrewing.
Senator Micciche replied that the bill did not deal with
private homebrewing. Homebrewing rights were not changed.
Representative Edgmon cited slide 30 and wondered what
standards were used to establish an intoxicated adults in
bars and wondered why it was not defined in statute. He
guessed an eye test was used.
1:57:33 PM
Senator Micciche clarified that he did not state that a
threshold did not exist in law only that the standard did
not change. He contended that only the classification of
the offense changed. Representative Edgmon clarified that
he had not stated Senator Micciche had stated it. He noted
that SB 9 was an omnibus bill and wondered why an
intoxicated adult was not defined. He believed that his
question was "genuine." He deduced that it was likely not
practical to administer a test in the situation.
Representative Wool shared from personal experience that
what was monitored in a bar was people's behavior. He
believed that the .08 percent blood alcohol content was for
operating a motor vehicle and did not apply in a bar, nor
should it. He believed outward signs of intoxication was
the definition in statute and thought that was the reason
servers were mandated to take the Training for Alcohol
Professionals (TAP) or other approved courses. He pointed
out that his prior question was to ensure that the
definition was not being redefined with a blood alcohol
level. He wanted to avoid a situation where law enforcement
entered a bar and administered breath tests.
Senator Micciche stated that a Driving Under the Influence
(DUI) was a different standard. He shared that the
definition under discussion was AS.04.21.080 (b)(9)
regarding a "drunken person" read the following:
(9) "drunken person" means 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;
2:01:42 PM
Representative Edgmon agreed that a specific threshold was
difficult to enforce. He commented that the idea of
establishing a standard for intoxication "was just an
observation" and thought that it was a reasonable question.
Ms. Brawley noted that slide 32 contained contact
information and that the slide presentation was concluded.
Representative Wool referenced changes in the bill from
existing law regarding tasting rooms. He inquired whether
the presentation included increased hours, changes to the
population caps, and the ability to have live music in
tasting rooms.
2:03:03 PM
Ms. Brawley answered that she did not believe they outlined
the specifics in the presentation, but it was generally
covered in Slide 10. The changes proposed would extend the
hours to 10 pm with a hard close. The provision also
allowed limited amount of live entertainment via a permit
system. Representative Wool believed that it was a "noted
omission" that the specifics were not included in the
presentation. He remembered that there was an amendment
regarding the issue in the Senate Finance Committee. He
observed that as a former beverage dispensary license owner
the issue was intensely debated. He wondered what the
specifics of the statutes were regarding limited hours,
sales volume, and population caps. He wondered if any other
specifics were on a slide. Ms. Brawley did not recall if
the subject was specifically discussed and relayed that
over the years the number of slides had been narrowed to be
respectful of the committee time.
Co-Chair Merrick asked if the answers could be provided in
writing.
Ms. Brawley agreed to provide the information.
Representative Wool stated that the subject had been
brought before every legislature during his eight-year
tenure. The provisions did change from one legislature to
the next. He believed that it was important to include the
changes in the presentation. He mentioned that the
population caps had changed dramatically, and it was worthy
of discussion.
Senator Micciche interjected that the bill was 125 pages
long and the original presentation had been over 70 slides;
committees had requested a condensed presentation. He could
speak in detail to the specific tasting room changes. He
asked Co-Chair Merrick if it was presently a good time to
discuss the changes.
Co-Chair Merrick wanted to wait until after the committee
heard from invited testifiers.
2:07:23 PM
Representative Thompson looked at slide 12 related to
endorsements. He asked if a special endorsement was needed
for serving alcohol on a golf course. Senator Micciche
answered that a golf course would need a license. He
explained that an endorsement was an add on to a license
type. He cited AS 04.09.300 on page 21 of the bill that
addressed the individual license type necessary for a golf
course. Representative Thompson inquired if a golf course
had a restaurant and bar in a building and alcohol was
served outside on the golf course how the licensing worked.
Senator Micciche replied that a golf course license only
allowed alcohol to be served on the golf course.
Representative Thompson reiterated his question. Senator
Micciche replied if the owner of a golf course was a
Beverage Dispensary License (BDL) holder they could serve a
full bar on the whole course. The golf course license was
different, it only allowed serving beer and wine on the
course.
2:10:18 PM
Representative LeBon asked about the one license per 12
thousand population limit for breweries, distilleries, and
wineries. He wondered how the limit compared to other
states.
Senator Micciche deferred the question to an invited
testifier.
LEE ELLIS, BREWERS GUILD OF ALASKA, GIRDWOOD (via
teleconference), asked for a repeat of the question.
Representative LeBon complied. Mr. Ellis responded that the
Brewers Guild had spent a lot of time examining the
numbers. He detailed that by comparison, Alaska had a low
number of brew pubs and only 4 other states had the tasting
room model. He noted that most states allowed for full
retail licenses for breweries. The actual number of total
breweries was one per 7 thousand per population of
individuals over 21 years of age. He qualified that if the
state filled all the licenses available for tasting rooms
only, Alaska would have the densest brewing community in
the world. Switzerland has the most breweries per person at
1 to 9 thousand and Seattle allowed a ratio of one to 9.5
thousand population. He stated that Alaska could have "more
breweries than any place on Earth."
2:13:43 PM
Representative LeBon remarked that the person count was not
only adults and was based on total population. He asked how
many communities were limited out at the one per 12
thousand ratio proposed in the bill. Mr. Ellis answered
that for the retail license there were a number of
communities that already were capped out. He listed the
communities that would become capped out: Sitka, Juneau,
and Wasilla.
Co-Chair Merrick asked how many communities were already
capped out. Mr. Ellis replied Homer, Haines, Palmer, and
Skagway
2:15:16 PM
Representative Wool remarked that the state was broken into
municipalities, and it was not the same as taking the total
population of the state and dividing it by 12 thousand. He
commented that many states did not have a quota on liquor
licenses and the comparison was likely to quota states. He
ascertained that a state with 25 million people would have
a different ratio than a state with under 1 million people.
He asked how many breweries Anchorage currently had, were
allowed under law, and how many were allowed with passage
of the bill. Mr. Ellis responded that Anchorage could have
28 retail tasting rooms for breweries, 28 for distilleries
and 28 for wineries if SB 9 was enacted. Currently,
Anchorage allowed for 99 brewery tasting rooms, 99
distillery retail licenses, and 99 winery retail licenses.
Representative Wool asked how many breweries Anchorage
currently had. Mr. Ellis replied that currently 3 breweries
were planning on opening. He would double check the number.
He believed currently 7 or 8 breweries were operating
retail licenses.
Senator Micciche interjected that 25 would be allowed under
the bill and 8 or 9 were currently operating with a couple
planning on opening. He relayed that the bill allowed a
300 percent increase in current tasting room licenses. He
added that breweries, wineries, and distilleries were no
longer limited and only tasting rooms had proposed limits.
Co-Chair Merrick moved to invited testimony.
2:18:12 PM
TIFFANY HALL, EXECUTIVE DIRECTOR, RECOVER ALASKA, read from
a prepared statement. She spoke in support of the bill. She
shared that her organization was a statewide organization
comprised of leaders in the fields of health, safety, and
prevention that worked to reduce alcohol use. The
organization had been working collaboratively for many
years with all the stakeholders and community leaders on SB
9 and was not an abstinence only organization. She noted
that the state struggled with alcoholism and that Alaska's
alcohol related deaths were twice as high as the rest of
the nation. She emphasized that alcohol use cost the state
$2.4 billion annually and that the leading cause of
emergency room visits were alcohol related for those
between the ages of 18 to 64. She declared that SB 9 had
many provisions that could improve Alaska's statistics on
alcohol use. She delineated that the bill regulated the
number and types of alcohol outlets, which was the most
effective strategy for reducing the harms of alcohol. The
bill created regulations for internet sales of alcohol that
currently was unregulated. The legislation also
restructured enforcement and added licensee and social host
liabilities, both were proven to reduce underage drinking
and driving fatalities. The bill closed the loophole on
alcohol server education and increased license fees, which
provided more funding for AMCO to educate licensees and
perform underage compliance checks that halted when federal
funding was exhausted approximately 5 years ago. She
believed that the bill kept intact many ways to promote
business while maintaining health and safety regulations.
She reported that a considerable amount of work took place
over the prior 11 years among over 120 stakeholders to
craft SB 9. She thanked the sponsor and believed that the
bill was a "huge win" for the state. She urged for passage
of the bill.
Representative LeBon thanked Ms. Hall for her testimony. He
asked about a brewery tasting room. He asked if it
reflected the same safety concerns equal to bars and
package stores. Ms. Hall responded that one study suggested
that taverns, restaurants, and possibly breweries were
shown to have a higher connection to crime and violent
crime than a liquor store. She offered to send the proper
citation for the study. Representative LeBon questioned
whether a brewery tasting room was as problematic as a
traditional bar. Ms. Hall replied that Alaska was one of
the few states with a tasting room model. She suspected
there was not peer reviewed evidence specifically regarding
tasting rooms. She had reached out to the nations leading
expert on the number of alcohol outlets relating to
density, Dr. Pamela Trangenstein, [Scientist, Alcohol
Research Group; Doctor of Philosophy (PhD) Alcohol
Epidemiology and Policy; Master of Public Health (MPH). She
relayed that the doctor believed an [alcohol] outlet was an
outlet and alcohol was alcohol and the more of them the
more harm was observed in the community. She delineated
that the proliferation of alcohol outlets on every corner
sent a message to youth about the social normalization of
alcohol. She added that research supported that the more
access to alcohol that was observed by youth the more
likely they would drink at an earlier age.
Representative LeBon asked if a representative from the ABC
Board may want to answer the question.
2:24:41 PM
DANA WALUKIEWICZ, CHAIR, ALCOHOL BEVERAGE CONTROL BOARD,
DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT
(via teleconference), replied that he would like to
research whether there was a correlation of enforcement
between the operation of tasting rooms and BDL
establishments. He did not have the information on hand. He
would also check with local police departments.
Representative LeBon observed that the bill seemed to be
targeting brewery tasting rooms as a big concern by
limiting the number of licenses. He was wondering if
licenses should be limited to all places serving alcohol.
He thought there appeared to be a harsh focus on tasting
rooms.
Representative Wool believed that studying whether there
were more police interventions at bars or taverns than
tasting rooms would produce a "predictable" answer. He
noted that bars were open until 1:00 A.M. lacked drink
limits and were culturally different. He deduced that it
was easy to guess that bars would receive more police
intervention. He added that all alcohol outlets had
population limits. He summarized Recover Alaska's message
that alcohol had detrimental effects on society and the
more accessible the more it harms society. He recalled that
he had a prior conversation in 2014 regarding tasting rooms
with Ms. Hall who informed Representative Wool that the
addition of tasting rooms was not a Title 4 issue because
it happened independently in statute. He wondered if Ms.
Hall had changed her opinion based on her current comments.
He inquired if she believed whether expanding the hours of
tasting rooms contributed to alcohol's harmful effects on
society.
2:29:45 PM
Ms. Hall explained that in her prior opinion regarding the
addition of tasting rooms, she intended to convey that it
already existed in statute and her organization was not
trying to close bars or by their addition, tasting rooms.
She stood by what she stated about the proliferation of
alcohol in terms of public health and prevention outcomes.
She referenced the expanded hours of operation. She
wondered if only the hours were expanding or if serving was
expanded. She relayed research regarding multiple different
closing times at alcohol outlets so that not all people
poured out into the street at the same time. She offered to
research the effect of expanded hours for tasting rooms and
wanted to determine if sales were also expanding.
Representative Wool ascertained that in the current bill
version, tasting rooms would close at 10:00 P.M. and the
hours of service was expanding. He qualified that he was
not "anti-tasting room" and stated that competition and
leveling the playing field was his concern. He argued that
he did not oppose alcohol tasting rooms. He posed the
question of whether under-age drinking was bad for the
health of youth or because it was against the law. He
pointed to the fact that most other places in the world
allowed drinking at an earlier age of 18 or 19 years of
age. He noted that only 12 countries had the age limit of
21. He also asked whether the age limit was related to
mental and physiological health or about breaking the law.
Ms. Hall replied that the human brain continued to develop
until between the ages of 22 to 25 and it was easier to
create neural pathways that lead to addiction and misuse
under that age range. She reported that an individual that
began drinking at the age of 15 was 5 times more likely to
develop an alcohol use disorder. She added that
international policy organizations were attempting to
increase the drinking age in other countries to 21 or
older.
2:33:52 PM
Representative Wool asked if countries with the drinking
limit under 21 years of age had more problems with alcohol
than Alaska. He inquired whether other countries had worse
statistics than the United States (US). She did not have
the statistics, but informed Representative Wool that
culture was a factor; how alcohol was marketed and
normalized. Therefore, it was not strictly the age factor
that contributed to the harm that was evident with alcohol
use.
2:34:50 PM
SARAH OATES, PRESIDENT AND CEO, ALASKA CABARET, HOTEL,
RESTAURANT AND RETAILERS' ASSOCIATION (CHARR), ANCHORAGE
(via teleconference), thanked the committee for hearing the
bill. She shared that the legislation entered its eleventh
year of "robust stakeholder work toward meaningful and
sensible alcohol regulatory reform." She had been involved
since the beginning and believed that the bill represented
"challenging, yet thoughtful compromise" and consensus
reached in 2019. She implored the committee to pass the
"vital legislation." She maintained that the bill contained
long-term regulatory certainty and desperately needed
modernization." She added that after two years into the
pandemic, "liquor license holders had suffered devastating
blows." She elaborated that the industry contributed $2
billion of annual revenue into Alaska and employed over 32
thousand workers. In 2020, the industry experienced losses
of 75 percent and employed 40 percent of its prior
workforce. The industry was still in turmoil due to the
aftereffects of the pandemic from supply chain issues to
delays in the distribution of federal relief. She listed
the ways SB 9 benefitted the industry. The bill provided
funding and legal authority for online license applications
and created clear, consistent, and fair penalties for
violations. She furthered that the legislation mandated
proactive education on alcohol statutes through AMCO rather
than education via enforcement. She elaborated that many
licensees did not understand many of the provisions in
Title 4; it was confusing and often contradictory, and
licensees often learned through receiving violations. In
addition, the bill regulated internet sales and required
out of state sellers to pay state taxes like instate
sellers did. She noted that SB 9 allowed license stacking;
manufactures were able to purchase retail licenses and visa
versa. She delineated that the practice leveled the playing
field and enabled the expansion of innovation and brewery
business models while preserving the value of licenses held
by restaurants, bars, and package stores. She offered that
by limiting the tasting room model it helped preserve the
secondary market value of the 1.5 thousand retail licenses.
The bill created endorsements, which allowed for
flexibility in business operations without creating new
license types, which added a layer of protection to
businesses' liquor licenses. She referenced the Beverage
Dispensary Duplicate license model that was eliminated and
replaced with a simplified less expensive process to serve
at multiple bars and stations. She cited a business in
th
Anchorage called the 49Street Brewing Company on Third
Street, that held over 6 licenses to cover all their
serving stations and paid multiple biannual fees. The bill
reduced that to one license with an endorsement. The
legislation expanded opportunities for package stores
allowing them to showcase products through a sampling
endorsement and packing store tasting event permit. The
legislation streamlined the petition process and the
process for new restaurants to obtain beer and wine
licenses and converted the public convenience licenses to
regular transferrable licenses.
2:40:34 PM
Ms. Oates continued to speak to the legislation. She noted
that updated provisions enabled golf courses that hold BDL
licenses to serve a full bar across the entire golf course
and was no longer limited to beer and wine sales. Another
provision allowed three package store licenses per decade
to relocate to other cities or municipalities within a
borough. She exemplified that if Costco wanted to open a
package store in Wasilla it could purchase the license
anywhere in the Matanuska-Susitna borough and transfer it
to within the Wasilla city limits. She believed that the
bill offered the industry hope that it could overcome some
of the ongoing challenges, move forward with an improved
regulatory system, and thrive as Alaska's second largest
industry. She asked for passage of the bill.
Representative Wool asked if there was any requirement to
join CHARR. He inquired whether a retail or manufacturing
license was necessary. Ms. Oates answered that a member had
to own a restaurant, bar, hotel, or retail business that
operated in the state. A member did not need to hold a
liquor license. Representative Wool asked how many current
CHARR members were license holders. Ms. Oates believed it
was over 90 percent, but she did not know the exact number.
2:43:12 PM
LEE ELLIS, BREWERS GUILD OF ALASKA, GIRDWOOD (via
teleconference), shared that he was president of Midnight
Sun Brewing Company. He thanked the committee for hearing
the bill. He supported the legislation. He read from
prepared remarks. He provided context for why SB 9 was a
"significant improvement for breweries, wineries, and
distilleries" in the state. He explained that when the
craft beverage industry began, it had very little access to
retail markets and very few options to sell on premises. In
the late 2000's, statutes were passed that allowed the
industry to sell restricted quantity of product on the
premises. He qualified that although a manufacturer tasting
room was a popular model it was very uncommon retail
licensure nationally. Typically, manufacturers had access
to full liquor licenses as well as beer and wine license in
most other states. Manufacturers in the state could
currently operate a brew pub with a BDL or a Restaurant
Eating Place License (REPL) license but hey had strict
production, wholesale, and retail limitations. The guild
commissioned a study to better understand the craft
industry in the state in 2019. The study found that brewery
tasting rooms rarely sold over 500 barrels (one barrel
equaled 31 gallons) on premise, while brewers operating a
brew pub model sold 2000 barrels or more on premise. He
indicated that while popular, tap rooms only sold 3 percent
of the beer produced in Alaska was sold through a tap room,
89 percent was sold through wholesalers and retailers and
the remainder was sold on premise in a brew pub.
Nationally, brew pubs accounted for 40 percent of breweries
operating in the country, while in Alaska they accounted
for less than 20 percent. Currently, breweries had grown
despite operating in a highly restricted market but had
vastly more options in the future under the bill. He
furthered that although the number of tasting rooms would
be more limited, many manufacturers reported that they
would eventually purchase both an REPL and BDL licenses to
fully grow their businesses without restricting their
production and distribution. The bill eliminated caps on
manufacturing. He listed the following communities where
manufacturing was currently capped: Palmer, Valdez, Haines,
Homer, Cordova, Soldotna, Delta Junction, Craig, and
Skagway. He noted that many manufacturers were not
interested in retail operations, however trade barriers
limited manufacturers from getting their products to the
retail market. The legislation removed the unfair trade
practices to allow them to become economically viable. The
manufacturing industry historically, strove to be good
neighbors, promoted responsible consumption, and recognized
the benefits of a balanced regulatory environment for
everyone. The guild supported the compromises recommended
by the public health sector in an effort to reduce harms.
The guild recognized the position of the alcohol industry
members who created a limited entry system that resulted in
significant secondary value for license holders.
2:46:25 PM
Mr. Ellis continued to read from prepared remarks. The
guild was not particularly supportive of the system as
free market believers but acknowledged that undoing it
would rob Alaskans of their investment. The brewing
industry was built on the manufacturers' relationship with
their communities. The brewers were prepared to make
sacrifices to ensure equity for all and to do what was
right for Alaska while getting all it can for brewers. He
acknowledged that experienced manufacturers understood that
that increasing population caps would have limited effects
on the growth of their industry. He indicated that with the
passage of SB 9, Alaska could host the highest per capita
density of breweries and distilleries in the world. He
requested the committee pass the bill.
Representative Wool asked about the population cap. He
asked why Mr. Ellis supported raising the population cap on
brew pubs. Mr. Ellis asked Representative Wool to repeat
the question. Representative Wool repeated the question. He
asked why the Brewers Guild supported the increased cap for
tasting rooms.
2:49:30 PM
Mr. Ellis stated his understanding of the question.
Representative Wool replied affirmatively. Mr. Ellis
replied that the guild was not necessarily supportive of
raising caps so much as being in support of the compromise.
He relayed that what was originally considered was a retail
license for manufacturers with a lower population cap and a
brewery, winery, or distillery would apply for the same
license. The guild did not support the system out of
concern that breweries would take up all the licenses in a
community. They supported the bill because it allowed every
community to have a brewery, winery, and distillery. The
tasting room model was created for brewers to have a retail
outlet but since the bill provided access to other retail
license types, they would have a better access to the
retail market through the newer available retail models.
Representative Wool asked if many breweries did not have
tasting rooms or serve beer. Mr. Ellis responded there were
three breweries operating that did not do any on premise
retail activity. Representative Wool asked whether there
were approximately 70 breweries and brew pubs currently
operating. Mr. Ellis replied there were 41 breweries: 38
with taprooms and 12 more operating with a BDL license
totaling 53.
2:53:40 PM
GLEN KLINKHART, DIRECTOR, ALCOHOL AND MARIJUANA CONTROL
OFFICE, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC
DEVELOPMENT (via teleconference), answered an earlier
question by Representative Thompson regarding a restricted
license. He explained that it had to do with how and why a
person had the restriction on their license. The penalties
ranged from loss of the license, suspension, fine,
misdemeanor, to civil liability. He spoke to the
legislation. He pointed out that he supported both the ABC
board and the Marijuana Control Board (MCB). He was happy
to help work with the ABC board and stated that the board
had been very supportive of SB 9. He was impressed that the
bill gave law enforcement the ability to use tools that
were more appropriate for the situation. He often gave more
warnings than tickets because a warning was often more
appropriate than a fine to bring someone into compliance.
The AMCO office favored the idea of "progressive
discipline", and he felt it was very effective. He
indicated that when he became director the only compliance
tool was a "hammer" and the office worked to create a more
community based enforcement program. He felt the provisions
in the bill offered law enforcement the ability to use an
appropriate punishment along with the tools to enforce more
serious crimes. He thanked the committee.
Representative LeBon repeated his concern that SB 9 was
attempting to limit the number of breweries with tasting
rooms. He realized that population limits existed for all
types of alcohol licenses but felt that the extreme limit
set at 12 thousand was targeting breweries with tasting
rooms. He asked for comment.
2:58:14 PM
Senator Micciche appreciated the remarks. He shared that he
was a tasting room "guy." He enjoyed going to the Kenai
River Brewing Company. He did not think the same people
that went to tasting rooms went to bars. He thought
Representative LeBon's concern with the one in 12,000 cap
was misdirected. He explained how the cap was increased to
12 thousand. He recounted that tasting rooms as a business
model had only existed for approximately 20 years and the
concept was "hard fought" by other licensees "because they
did not want competition." The strict limits were set, and
a few years ago traditional license holders promoted more
restrictions by "trying to define not having fun" in a
tasting room. Eventually, the traditional license holders
and tasting room owners engaged in discussions until a
compromise was struck. The tasting room licensees agreed to
the population limits in lieu of easing other restrictions
placed on tasting rooms.
3:01:03 PM
Senator Micciche acknowledged that the caps appeared
restrictive. He shared his interpretation of the
provisions. He emphasized that the population limits would
go into effect in two years, allowing more tasting rooms to
open under the 3 thousand population cap. He stressed that
after the caps were in effect there would be many other
options for manufacturers with significant room to expand
by opportunities like BDL, REPL, or Brew Pub licenses. He
asserted that the tasting room license was a very limited
license type, if a manufacturer chose another option, it
opened the opportunity for another tasting room in the
community. He proposed that Representative LeBon view the
"big picture." He stated that he had heard a lot of "little
picture" comments and had shared the same reaction when he
was initially aware of the increased caps. He reminded the
committee that he withdrew a prior Title 4 bill when there
was an attempt to further restrict the tasting rooms. He
asked the stakeholder group to find a way to expand
opportunities for breweries, distilleries, and wineries so
they would succeed without a brewery on every corner. He
maintained that the provisions in SB 9 "was filled with all
kinds of brilliant solutions that do not exist" currently
and he characterized it as "a great compromise." His office
would provide information outlining all the options that
were significant.
3:03:43 PM
Vice-Chair Ortiz addressed the other options that tasting
room businesses had to expand. He asked if the financial
costs of the other options were a barrier to expansion.
3:04:31 PM
Senator Micciche answered that the bill was designed to
create a collaboration between the different license types
without significantly devaluing other expensive license
types. He commented that if an owner of a tasting room
wanted to turn it into a bar, she could purchase a BDL
under SB 9. The amount of alcohol served for tasting rooms
remained the same, but the bill expanded the hours until
10:00 p.m. and allowed other activities to occur. He noted
the expanded options came through compromise with the other
stakeholders, but it also increased the population limit to
one in 12,000. He furthered that some communities
protesting the cap were at the limit under the current one
to 3 thousand cap, which created a monopoly. Currently, the
law prohibited a brewery with a tasting room to purchase a
BDL and reiterated that would be possible under the bill.
He noted that the bill removed the cap on breweries,
distilleries, and wineries that did not have a tasting room
therefore, expanding that business model.
Representative Wool appreciated Senator Micciche' s answer.
He suggested that most new distilleries or breweries would
open a tasting room because it offered a big source of
revenue. He believed that without the retail option it
would be very difficult for the brewery or distillery to
operate. He informed the committee that the cost of a BDL
in Juneau and Anchorage was approximately $300 thousand,
were very limited in number, and not always available. He
supported the option for tasting rooms to purchase a BDL
but did not support expanding other options to tasting
rooms and thought it was "mission creep." He disagreed
that people either prefer tasting rooms or bars, he thought
there was a transition between one and the other. He
recounted that a BDL was very expensive and believed that
limiting tasting rooms favored current tasting rooms, but
it would become difficult for someone wanting to open a
tasting room in the future that could not afford nor want a
BDL.
3:08:36 PM
Senator Micciche stated that "it was not possible to have it
both ways." He commented that there was already mission
creep and tasting rooms; mission creep happened when the
legislature allowed them. He ascertained that licenses were
expensive and licensees worried about competition from a
business that did not have to buy an expensive license.
He had a dream of "expanding opportunities for Alaskans who
wanted to brew really good beer." He noted the
opportunities for brewers to purchase a Restaurant Eating
Place License (REPL). He related that provisions in the
bill allowed municipalities to apply for an REPL. He knew
of some businesses that had significant investments their
breweries and would be willing to purchase an expensive BDL
to improve it. He thought that focusing negatively on the
tasting room limits in the bill was a mistake. He believed
that the compromises and expanded options in the bill would
all workout in the future
CSSB 9(FIN) was HEARD and HELD in committee for further
consideration.
3:11:11 PM
AT EASE
3:16:24 PM
RECONVENED
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 289 - Research - ADN Article on Alaska Marijuana Industry - 11.07.2021.pdf |
HFIN 3/18/2022 1:30:00 PM |
HB 289 |
| HB 289 - Research - ADN Article on Alaska Marijuana Industry - 11.30.2021.pdf |
HFIN 3/18/2022 1:30:00 PM |
HB 289 |
| HB 289 - Sectional Analysis version I 2.17.2022.pdf |
HFIN 3/18/2022 1:30:00 PM |
HB 289 |
| HB 289 - Sponsor Statement version I 2.17.2022.pdf |
HFIN 3/18/2022 1:30:00 PM |
HB 289 |
| HB 289 Letter of Support AMIA 1.31.2022.pdf |
HFIN 3/18/2022 1:30:00 PM |
HB 289 |
| HB 149 Amendments 1 - 2 031622.pdf |
HFIN 3/18/2022 1:30:00 PM |
HB 149 |
| HB 149 Public Testimony Rec'd by 031722_.pdf |
HFIN 3/18/2022 1:30:00 PM |
HB 149 |
| HB 149 Supporting Document Letters of Support as of 3.18.2022.pdf |
HFIN 3/18/2022 1:30:00 PM |
HB 149 |
| HB 149 Supporting Document ADN Alaska Must Address Child Care Crisis 3.18.2022.pdf |
HFIN 3/18/2022 1:30:00 PM |
HB 149 |