Legislature(2021 - 2022)BARNES 124
02/11/2022 09:00 AM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB9 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 9 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 9-ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG
9:00:42 AM
CO-CHAIR FIELDS announced that the only order of business would
be 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."
9:01:09 AM
SENATOR PETER MICCICHE, Alaska State Legislature, as the prime
sponsor, introduced CSSB 9(FIN). He explained that about 10
years ago people came together about Title 4, a hodgepodge of
single bills that have been added in as the alcohol industry has
changed over the last 40 years. Title 4 is confusing and not
well organized, creating issues and making it difficult for the
Alcoholic Beverage Control Board, public safety, and licensees.
The old Title 4 does not reflect how the alcohol industry occurs
in Alaska today. This rewrite, SB 9, tries to bring back order,
recognizing the differences in how people operate and working to
make the ABC Board more responsive and more effective in how it
manages alcohol in Alaska.
SENATOR MICCICHE stressed that alcohol is a very important
industry in Alaska. For those with a healthy relationship with
alcohol the problems aren't so apparent. However, alcohol also
destroys many lives in Alaska; it is by far the number one
substance that is abused. The bill tries to rebalance the way
that the industry currently operates through the lens of a group
of people who came together many years ago on a steering team;
[the legislature] came in a couple years after they started.
These are very diverse interests of public safety, public
health, traditional license holders, and brewers and distillers
and these people did not agree. There were worries about
competition, people in public safety and public health were
worried about increases in alcohol, but they were able to come
together on this bill.
9:04:15 AM
SENATOR MICCICHE cautioned that [legislators] are going to hear
about tasting rooms as though that is a key issue in the bill.
But, he continued, that is approximately five lines in a 125-
page bill. The bill tries to balance this new way that some
Alaskans are voting with their feet into tasting rooms, the bill
gives them some additional latitude to operate. There was a
give and take by all parties to arrive at what is in this bill -
along with the limitation came some real benefits. If they want
to be a bar, they can now purchase a "BDL" and be a bar, they
can have some events, they can stay open a little later
instead of a soft close at 8:00 p.m. they can stay open until a
10:00 p.m. hard close. While people are going to focus on that,
the Senate had these same discussions and it passed unanimously
once people realized the many beneficial things.
SENATOR MICCICHE stated that regardless of whether one's focus
is on public safety and health or on industry, SB 9 resets how
alcohol is regulated in Alaska. The series of licenses,
endorsements, and permits allows someone to dial in exactly the
way they want to operate; a bill won't have to be dropped next
year because someone wants to do something that is a little
different. The bill allows funding for additional enforcement
and allows funding for a database that will make licensing much
more efficient. He said members can discuss and ask questions
about the five lines, but he urged that members try not to focus
on those five lines because there are so many good things in the
bill. The bill will change how the industry operates moving
forward, he continued, and readjustments through future bills
can be made as understanding develops on how all these pieces
work together in this ever-changing industry.
9:07:50 AM
ANNA BRAWLEY, AICP, Title 4 Review Coordinator, Consultant,
Agnew::Beck Consulting, provided a PowerPoint presentation
titled "Alcoholic Beverage Control (ABC) Board, Title 4 Review
Project, Overview of Senate Bill 9." She turned to slide 2,
"Why Alcohol Control? Why Title 4?" and stated that alcohol is
not like other commodities such as shoes. Alcohol has social
costs, so it is important to recognize that every state since
Prohibition has put in place alcohol laws, and it is important
to look at alcohol as a regulated product.
MS. BRAWLEY moved to slide 3, "Goals of Title 4 Review Process."
She said the process began in 2012, well before there was a
legislative bill, to look at the problems in the statutes and to
find common ground to fix them. The goals are: 1) promote a
fair business climate while protecting public health and safety;
and 2) make Title 4 clear, consistent legal framework for the
ABC Board, licensees, law enforcement, and local governments so
that everyone using these statutes on a daily basis understands
how they work.
MS. BRAWLEY addressed slide 4, "Over 120 Diverse Stakeholders."
She noted that the many different stakeholders included the
public health sector, the public safety and law enforcement
sector, all three tiers of the industry, community advocates,
local governments, the ABC Board, and the Alcohol and Marijuana
Control Office (AMCO).
9:09:47 AM
MS. BRAWLEY discussed slide 5, "Categories of Recommendations."
She outlined the five categories of recommendations or policies
within the bill. First is the business piece of the bill -
alcohol licenses, permits, and trade practices. Second is the
role and functions of the ABC Board and staff. Third is
underage drinking and youth access to alcohol a main reason
for why the public health folks came to the table. Fourth is
regulation of internet sales of alcohol. Fifth, the bulk of the
bill, is the technical and administrative law changes. While
the bill is many pages, much of it is reorganizing, renumbering,
and making the statutes work together.
MS. BRAWLEY displayed slide 6, "The 3-Tier System." She stated
that the general theory of alcohol regulation is the 3-tier
system to prevent a monopoly where one company makes,
wholesales, and retails a product, thereby controlling the
market. The traditional view of the 3-tier system is to have
separate businesses doing manufacturing, distributing and
wholesaling, and retailing. That has changed over time in
Alaska and across the US with the advent of brewpubs and tasting
rooms, so the intent is to keep the spirit of the 3-tier system
in place but allow it to have some give and flexibility.
9:11:19 AM
MS. BRAWLEY stated that slides 7, 8, and 9, all titled "Alaska's
Liquor License System: Proposed Changes," illustrate generally
how the different license types fit together. Almost all the
licenses shown on these slides already exist, she explained, and
they are either renumbered, or renamed, or organized so that all
the manufacturing licenses are together in the statute.
Speaking to slide 7, she said the manufacturing tier includes
brewery manufacturers, winery manufacturers, and distillery
manufacturers. The wholesale tier includes the two license
types of general and limited beer-wine for selling different
types of products. Ms. Brawley explained that slide 8 depicts
the various retail licenses: beverage dispensaries, bars,
package or liquor stores, restaurants or eating places, theater
licenses, and so forth. Most of these already exist [outlined
in green box] and there aren't significant changes to the
licenses. New ones are outlined in yellow boxes brewery
retail, winery retail, and distillery retail which take
functions that already exist in the existing brewery, winery,
and distillery statutes and make them a separate license so that
a business can choose to make the product, sell it at a limited
retail space, or purchase a full retail license, which cannot
currently be purchased. Ms. Brawley said slide 9 depicts
additional retail licenses that are considered serving the
tourist industry, so are not part of the population limits and
are available to communities that have a lot more visitors than
residents essentially. Most of those already exist or the bill
is just clarifying their definitions in statute. Other proposed
new license types are the fair license that deals with the
nonprofit state fair and the manufacturer direct shipment
license. Some licenses are being removed from statute, but that
type of business isn't being removed, she continued. It is
converting that license to something else that already exists,
thereby streamlining and not having different types of licenses
that do the same thing.
9:14:00 AM
MS. BRAWLEY highlighted the bill's proposed changes for
businesses. She moved to slide 10, "Proposed: More Retail
Options for Manufacturers," and qualified that while brewery is
the type of manufacturer depicted on the slide, this applies for
all three types of manufacturers. She explained that currently
under a brewery license as much product can be made as wanted,
but the brewery has very limited rules through the tasting room,
so the brewery is limited on the retail side. Or, under a brew
pub license, there can be a full bar or a full restaurant but
only so much beer can be made per year. The proposal is to
combine those two tracks, keep limits on the retail side, don't
put production limits on the licenses, and a brewery could
either choose to continue to operate on a tasting room model
with those limited hours, limited sales volume, and so on. Or,
a brewery could now purchase a full retail license, and make its
own beer and have a full restaurant. That is common in other
states, but [in Alaska] that is currently only allowed in a very
specific situation. So, this allows those manufacturers to have
more choices.
MS. BRAWLEY proceeded to slide 11, "Proposed: Endorsements on
Licenses." She noted that adding endorsements is not a new
concept, an example being a driver's license endorsement for
commercial driving. In the context of alcohol licenses, she
continued, it would give more flexibility to either allow more
activities than would normally be had, or to allow a larger
premise, such as more than one room or being able to serve in a
larger area like a resort. It would solve these issues that
have come up with the ABC Board and puts in place a streamlined
and consistent process.
MS. BRAWLEY displayed slide 12, "Proposed Endorsements," which
read (original punctuation provided):
â?¢ R-7A|Bowling Alley Endorsement
â?¢ R-7B|Package Store Shipping Endorsement
â?¢ R-7C|Package Store Delivery Endorsement
â?¢ R-7D|Package Store Re-Packaging Endorsement
â?¢ [R-1]Multiple Fixed Counter Endorsement
â?¢ [R-1]Hotel/Motel Endorsement
â?¢ [R-1]Large Resort Endorsement
â?¢ [R-3]Package Store Sampling Endorsement
â?¢ [M-1]Brewery Repackaging Endorsement
MS. BRAWLEY said most of these proposed endorsements in the bill
already exist - some are part of existing licenses; some are in
regulation. The bill takes all these concepts that are all over
the place in the statute and puts them in one place so that it
is clear to businesses what options they have.
MS. BRAWLEY reviewed slide 13, "Proposed: Limited Free Samples
for Package Stores." While not currently allowed in Alaska,
sampling is common in other states, she said. If the bill
passes, limited sampling would be allowed at package stores
[with a Package Store Sampling Endorsement]. Samples and hours
would be limited to ensure that the health and safety aspects
are cared for. Neighborhoods don't want to see unlimited
drinking at a package store, so that's an example of a
compromise.
MS. BRAWLEY turned to the list of permit types on slide 14,
"Standardize Permits." She explained that a permit is time
limited for a special event, such as catering of a fundraiser,
versus a license where a business is serving year-round full
time. She noted that most of these permits already exist under
regulation and the bill is just reorganizing what is already
there. The bill proposes [three] new permits to address issues
that have come up. For example, the Music Festival Permit
addresses the situation where an event in a rural area with few
options for bar catering can continue doing what they do today.
9:17:24 AM
MS. BRAWLEY proceeded to slide 15, "Proposed: Package Store
Tasting Event Permit." This is new for package stores, she
noted, and is different than the sampling permit. This permit
would allow a package store to hold a tasting event, such as a
wine tasting, with a dinner on its premises and the ability to
showcase the store's products. The hours would be limited, and
food must be served. As well, the number of permits that a
package store can use per year would be limited. It opens more
opportunities for businesses to showcase their products safely.
MS. BRAWLEY addressed slide 16, "Population Limits: Current
Title 4." She explained that population limits are a ratio of
the number of licenses to the number of residents and are set by
community. A borough has a set number of licenses and a city
within that borough has a different number of licenses. For
locations not in a borough or city, there is a separate process
for determining receipt of a license. There are different
limits for restaurants, there can be relatively more restaurants
than other types. Licenses that are still exempt from
population limits are depicted in green on this slide, she
continued. For example, tourism licenses for a hotel or in an
airport do not have to follow these population limits, so there
are already ways to work outside of those limits.
MS. BRAWLEY spoke to slide 17, "Proposed Seasonal REPL
[Restaurant or Eating Place License] Tourism." She stated that
this proposed license would be a way to provide more flexibility
for communities that want to expand and have economic growth
without throwing away the system of limits. It would be
available in smaller communities [less than 40,000] and would
have the same privileges as a year-round restaurant but would
only operate half the year. Many businesses already operate
this way only through the summer season, so it is anticipated
that some folks would switch to this license. A formula based
on the number of visitors, not the resident population, would
determine how many licenses a community could get.
MS. BRAWLEY moved to slide 18, "Proposed: Convert Public
Convenience Licenses and Applications." This is an example of
something in statute that is intended to give flexibility, she
said, but is cumbersome for everybody to use. Only available
for restaurants, [existing Public Convenience Licenses, which
are not transferable,] would be converted to regular Restaurant
or Eating Place Licenses (REPLs), which are transferable [to a
new owner or location]. This proposal would discontinue the
current system in which an applicant, a business wanting to get
a license, must get signatures in the community, and then that
process goes to the ABC Board. Cities have said it is difficult
to use, it can be arbitrary, and it is up to the individual
business to do all the work. So, this proposal would make sure
that there are ways for communities to see more licenses.
9:20:53 AM
MS. BRAWLEY proceeded to slide 19, "Proposed: Local Government
Petition for Additional Alcohol Licenses," and reviewed the
proposed process for cities and boroughs to request from the ABC
Board that they should have more licenses. Under this proposal,
she said, the city would petition the ABC Board and make its
case not for an individual business but for multiple licenses in
the city or borough - for example, one more bar and two more
restaurants over the next ten years. Then, if the ABC Board
says yes, these licenses would be permanently available [to
apply for] in that community and they could be transferred like
any other license. If the ABC Board says no or that the number
requested is excessive, the city can petition again.
SENATOR MICCICHE interjected that this is an important aspect in
replacement of the petition signature type of license, which
isn't working. He stressed that the numbers used by Ms. Brawley
are purely an example and not representative of what might be
asked for. Some communities are lagging right now and might,
for example, apply for ten rather than two restaurants and the
ABC Board might approve only three additional restaurant
licenses and a bar. The belief is that this proposed system is
the best way for the board and the municipality to work together
for additional local control on future licensing.
9:23:00 AM
MS. BRAWLEY continued to slide 20, "Proposed: Option to Relocate
Some Licenses from a Borough to a City." This already exists in
statute, she stated, but the proposal would allow for transfer
of a license. This is a specific situation for a borough that
has cities within it that have different population limits,
different numbers of licenses. If, for example, someone wants
to operate a package store in a city and looks for one that is
in the borough and available, this section of statute would
allow that license to be permanently moved or relocated from a
borough license to the city. This would be another way to
concentrate that economic activity in commercial centers without
necessarily creating new licenses.
MS. BRAWLEY reviewed slide 21, "Proposed: Regulate Trade
Practices." She noted that [some trade practices] are illegal
in federal law but that there are ways some businesses, such as
a manufacturer or wholesaler, could hold a fair amount of power
over a retailer. For example, a distributor could tell a bar
that it will give the bar a great discount on all the products
the distributor carries if the bar agrees to not carry the
products of the distributor's competitor. That is considered
illegal under federal law, she continued, but these are not in
state law so there is no enforcement of those practices in
Alaska. This proposal would take what is already not allowed in
federal law and move it into Alaska state law so AMCO could
address someone who is leaning on retailers and promoting unfair
trade practices.
MS. BRAWLEY next discussed the policy pieces of the bill. She
displayed slide 22, "Adjust License Fees to Reflect Current ABC
Budgetary Needs," and stated that enforcement is currently
limited. This proposal, she explained, would update license
fees so that they are fair across different license types and
provide sufficient revenue to the ABC Board, which is a receipt
funded agency. This would allow for enforcement, education of
businesses and local governments about Title 4, and enough staff
to do the administrative work. A specific need is an electronic
database to allow for non-paper renewals of licenses.
MS. BRAWLEY spoke to slide 23, "Proposed: More Accountability
for License Fees Allocated to Local Governments." License fees
are relevant to local governments as well as to the agency, she
explained. Under current statute, a portion of the fees for
licenses and renewals goes back to the local government with the
idea that the local government is also doing administration and
law enforcement at the local level. Language in the bill is
clarification calling it a matching allocation, not a refund.
9:26:58 AM
MS. BRAWLEY moved to slide 24, "Internet Sales: No Rules +
Loopholes." She said Alaska is one of the only states with no
rules for internet sales of alcohol, which means internet sales
are legal, but it is unknown how much is being ordered in state.
None of those sales coming from out of state are paying Alaska
excise taxes and there is no enforcement. There is possible use
by folks under 21 who get a parent's credit card and order
online and the alcohol is shipped to the door with no questions
asked. Businesses and public health folks have agreed that
these rules are needed.
MS. BRAWLEY reviewed slides 25 and 26, "Proposed: Regulate
Internet Alcohol Sales." Speaking to slide 25, she said the
proposal is basically in line with most other states now.
Alaska would have a Direct Shipment License that an in-state
winery, distillery, or brewery could get or that an out-of-state
manufacturer could get. This license would allow them to sell
to Alaska customers. A customer would order a product online
and there would be sales limits per transaction as well as per
year to ensure that folks are ordering for personal use, not a
bootlegging operation. The business would be responsible for
checking whether the customer is age 21; making sure that the
customer is within their limits for personal use; and [checking]
that the customer doesn't live in a Local Option area because
there is a different system for ordering in Local Option areas.
It would also be regulated through common carriers such as UPS,
FedEx, and airlines it must be delivered in person, not just
left on the doorstep, and the person receiving it must be of
age. Licensees would be responsible for collecting excise tax
on their sales to Alaska customers. Speaking to slide 26, Ms.
Brawley stated that the ABC Board would maintain a list of
approved carriers. These carries must demonstrate to the ABC
Board that they have policies and training for employees to
ensure that they handle alcohol responsibly. The ABC Board
would provide its list of approved carriers on an ongoing basis
to the businesses that are selling the alcohol, thereby closing
loopholes that are potentially causing issues today.
9:30:27 AM
MS. BRAWLEY moved to slide 27, "Tracking Alcohol Orders in Local
Option Areas: Current Title 4." She explained that for damp
communities within Local Option areas, a system with monthly
limits already exists in statute. In these communities, someone
can order alcohol from a package store in, say, Anchorage.
Orders are tracked via a written order database. Package
stores, law enforcement, and AMCO are the only ones that have
access to this database. The package store checks that the
customer hasn't exceeded their limit, enters the order into the
database, and then ships the products. If there are issues or
illegal sales, this is where law enforcement has access.
MS. BRAWLEY discussed slide 28, "Proposed: Publish Community-
Level Data from Local Option Order Database." She said the
system is working as intended. However, the collected data,
which could potentially be useful to communities, is not
available because the database is purged every year and is just
a tracking system. The bill proposes some minor changes - the
data would have to be kept for ten years instead of one and
there would be no publishing or release of individual order
data, including the names of sellers and buyers to protect
privacy. The ABC Board would publish an aggregate report by
community level; for example, in 2021 X gallons of alcohol were
sold [in Region A]. This would help communities pinpoint a
bootlegging or illegal sales operation, especially if
communities are dry but seeing a lot of alcohol. This small
change would help communities and leverage the data that is
already being collected while protecting privacy.
9:32:45 AM
MS. BRAWLEY continued discussing policies in the bill. She
turned to slide 29, "Proposed: Revise Penalties for Lesser
Offenses." She stated that currently most everything in Title 4
is a Class A misdemeanor, which means everything from serving a
minor down to incorrectly posting a sign. She said the group
discussed how to increase enforcement and how to make
enforcement more consistent so issues like bad operators could
be addressed without unduly affecting folks for minor
infractions. The group looked at every violation in Title 4.
Under this proposal, many of the things that are now Class A
misdemeanors would become minor offenses so they can be treated
like traffic tickets. There would be no changes for serious
violations, especially felonies. The goal is to handle minor
things through a minor offense charge, not a court appearance or
a full criminal charge. The ABC Board has begun looking at this
and adopting it in regulation or practice, recognizing that it
is a more effective system.
MS. BRAWLEY continued to slide 30, "Proposed: Licensee Penalties
for Overserving an Adult or Serving a Minor." She pointed out
that this change in penalty targets the behavior and ensures
that licensees are held liable. Currently in Title 4 a licensee
or employee of a business that serves an intoxicated adult or
serves a minor is a Class A misdemeanor, a serious issue. To
attain the goal of consistent enforcement and ensuring that
business keep their employees on track, the bill proposes to
change the penalty for both the employee and the licensee. For
the employee, it would be considered a minor offense with a $500
fine and no court appearance; $500 would be a significant
economic impact to the employee and an incentive not to do it.
The business under whose license it happens would get an
administrative penalty of $250; this lets the business know the
violation occurred, holds the business accountable, and goes in
the business's record. Currently when those things happen it
may go in the record but the only time someone may look at it is
when their license is next up for renewal. The proposal would
put in an immediate time piece to ensure there is follow-up.
9:35:45 AM
SENATOR MICCICHE emphasized that the proposal would not reduce
the seriousness, rather it would hold people accountable. The
courts are backlogged, he pointed out, so serving a minor is not
going to make it through the system. Based on records of the
number that have been charged and number convicted, servers do
not seem to take this seriously. While it is likely a minor
proportion of operators in the state, it is thought that where
it happens often, often the owner of the establishment is not
aware. This proposal is a much more effective system of holding
people accountable for not being a quality operator.
9:36:42 AM
MS. BRAWLEY concluded her presentation with slide 31, "Proposed:
Require Keg Registration." She said this addresses a key public
health priority in the bill, which is to reduce underage
drinking. Alaska's alcohol laws are just one part of that,
along with prevention and treatment. Already in Anchorage and
Juneau municipal laws, this proposal would be applied statewide.
Keg registration is an evidence-based practice to reduce
underage drinking and to close the accountability loophole for
adults who legally purchase alcohol and then illegally provide
it to minors. Under this proposal, when a licensee sells a keg
to an adult purchaser, a legal transaction, a tag would be
affixed to the keg with the purchaser's name to record that it
was legally sold. Then, if that keg ends up at a party with
responsible adults and there are no issues, the tag can be
removed when the keg is returned to the store. But, if the keg
ends up at a party with underage drinkers and the police show
up, the tag will tell who bought that alcohol. Anybody removing
the tag can be held liable for that. This proposal would close
enforcement loopholes and ensure that adults providing alcohol
to minors are penalized.
9:38:36 AM
CO-CHAIR FIELDS opened invited testimony on CSSB 9(FIN).
9:38:48 AM
SARAH OATES, CEO/President, Alaska Cabaret, Hotel, Restaurant
and Retailers Association (Alaska CHARR), provided invited
testimony in support of CSSB 9(FIN). She noted that Alaska
CHARR is a nonprofit trade association for the hospitality
industry and represents over 800 businesses statewide. She
related that this is the eleventh year of robust stakeholder
work toward meaningful sensible alcohol regulatory reform in
which she has been involved since the beginning. Through
challenging yet thoughtful compromise, consensus on a complete
draft was reached in 2019 between public health, public safety,
state and municipal regulatory bodies, and the three tiers of
the industry.
MS. OATES implored the committee to pass this vital legislation
that captures this delicate compromise which took so many years
to reach. It will provide long term regulatory certainty and
desperately needed financial stability for the industry, she
continued. Liquor licensees have suffered devasting blows over
these past two years of COVID-19 pandemic. This constituency
represents $2 billion of annual revenue into Alaska and over
32,000 employees. In 2020, this industry statewide experienced
average revenue losses of 75 percent and only had 47 percent of
its regular employee count working, and significant losses and
hardship continue today. Many changes are included in the bill
that would benefit all sectors and stakeholders and which give
the industry hope that it can overcome ongoing challenges and a
better regulatory system.
9:40:49 AM
TIFFANY HALL, Executive Director, Recover Alaska, provided
invited testimony in support of CSSB 9(FIN). She noted that her
statewide organization is made up of health, safety, and
prevention leaders and works to reduce excessive alcohol use and
harm across the state. She said Recover Alaska has been working
on the contents of the bill for many years together with public
health and safety proponents, members of the industry at every
level, and local, municipal, and community leaders. Recover
Alaska is not an abstinence-only organization, she related, but
Alaska struggles with many problems associated with alcohol.
Alaskans are dying at a rate twice as high as the national
average. Alcohol costs Alaska $2.4 billion every year. In 2020
the leading cause of visitation to the emergency department was
alcohol related disorders for adults 18-64.
MS. HALL submitted that SB 9 is full of positive policy changes
which will help to change some of these statistics over time.
It would create a regulation system for internet sales, which
will mean taxes coming into the state and requiring an ID check
instead of leaving boxes of alcohol on a doorstep. The bill
would restructure enforcement and add licensee and social host
liability, both of which are best practices proven to reduce
motor vehicle fatalities and reduce underage drinking. The bill
would close the loophole on server education, making sure
everyone who serves alcohol has undergone a safety training.
The bill would regulate alcohol outlets, one of the most
effective strategies for reducing excessive consumption and
related harms. Also, the bill would increase license fees to
give AMCO more resources to do things like education and
underage compliance checks.
MS. HALL pointed out that alcohol is not an ordinary commodity.
No other product comes with a multi-billion-dollar price tag to
Alaska, she continued. A whole title is required to regulate
alcohol and SB 9 keeps intact many ways to protect and promote
business while also keeping in mind the necessary health and
safety regulations. Recover Alaska worked long and hard over
the years with more than 120 stakeholders representing various
sectors, issues, and regions of the state. Stakeholders argued,
listened, and worked together to find solutions, and this bill
overall will be a huge win for the state of Alaska.
9:43:36 AM
GLEN KLINKHART, Director, Alcohol and Marijuana Control Office
(AMCO), provided invited testimony in support of CSSB 9(FIN).
He said his bosses on the Alcoholic Beverage Board have
supported this Title 4 rewrite since its first inception in 2016
and is again doing so this year. The board has struggled over
the years, he explained, because the board's actions are
directed by statutes that are 20-30 years old and not updated.
The board sees the frustrations from law enforcement, folks like
Recover Alaska, and from the industry to be able to have other
options.
MR. KLINKHART related that he was a law enforcement officer for
almost 25 years. When he came to AMCO, he was surprised to
learn how old the statutes were and that they pretty much only
give enforcement officers "a hammer." When a cop is given a
hammer, he explained, everything is a nail, and that is not the
best way to be able to do business. This Title 4 rewrite would
give law enforcement officers the opportunity to look at certain
circumstances and be able to have the correct discipline to
change and correct actions. For repeat offenders, law
enforcement would then have ways to be able to show that, find
that, and correct them up to and including taking their license.
9:45:51 AM
REPRESENTATIVE NELSON drew attention to slide 25 and online
sales limits. He asked what is in place currently to prevent
someone from ordering the limit on one web site and then
ordering the limit on another web site.
MS. BRAWLEY replied that nothing is currently in place in Alaska
for Alaska customers, so this can be done today. The bill does
not propose to regulate a customer's total order limits like it
does for Local Option areas, so it would not restrict a consumer
from doing that. The limit would be per vendor. It is limited
to breweries, wineries, and distilleries, so it would not hamper
the ability of, say, a whiskey collector, to get those types of
products. However, she continued, shipping costs to Alaska are
high, so the practical limit on someone amassing a fair amount
of alcohol through that system is going to be limited.
REPRESENTATIVE NELSON, regarding delivery and verifying that
someone is over 21, asked whether verification would fall on the
shipping company itself or on the delivery driver. He further
inquired about who it would fall on if charges were brought up
for delivering to a minor.
MS. BRAWLEY responded that most of that responsibility would be
on the shipper, meaning the seller, so the seller wouldn't
legally be able to complete that sale. Most companies that do
this for other states, she related, already have an online ID
verification system; so, they are used to doing that and the
liability would be on them. For example, they could lose their
license if there is a pattern of this happening. Once the
alcohol is in the carrier's custody, it is the carrier's
responsibility to check ID. The carrier is assuming that the
sale was legal and that is not the carrier's responsibility to
determine, but the carrier is responsible for where it ends up.
SENATOR MICCICHE pointed out that entities like the ABC Board
understand the intent of what is written in statute and will put
the specifics in the regulations to eliminate any ambiguity. A
regulation package for this bill will have to happen, so the
board is looking at that right now in hopes the bill will pass.
The statute doesn't cover every tiny aspect about how it will
hit the road operationally. "We" will be working with the board
on final regulations as well.
9:49:23 AM
CO-CHAIR FIELDS commented that it is self-evident why this bill
is positive for public health and good for newer models like
breweries and distilleries. He asked how the bill would help
bar owners.
MS. OATES answered that many things in the bill help the entire
industry. Specific to bars, part of this compromise would be
some bumpers put on what manufacturing retail licenses can do.
It would set a hard close time for manufacturing retail licenses
whereas currently there is no hard close time, just a stop
service time. It would provide for limitations on the number of
that specific type of license that can be purchased but would
allow for additional opportunities for manufacturers to purchase
full retail licenses if they want additional privileges like
staying open later, providing more entertainment, serving a full
bar, and other things. Currently, a manufacturer isn't allowed
to purchase a beverage dispensary license and vice versa, so
there are loopholes where some establishments have taken some
backdoor channels. But the current bill would provide for
additional entrepreneurship and opportunities for businesses,
create a more level playing field. The bill also would create
actual enforcement. Current law has penalties of misdemeanors
for everything at the minimum and this would create true
violations that would be like speeding tickets. The lack of
enforcement on some things is concerning for industry when bad
operators are seen and there isn't punishment happening because
the penalties are too strict and so they are not being enforced.
Most importantly the bill would streamline processes, including
enabling an online application system. The current paper-based
licensing process is cumbersome, challenging for staff, and
challenging for the industry to navigate. Many Alaska CHARR
constituents have spent tens or hundreds of thousands of dollars
on attorney fees trying to navigate this very complicated system
to get their application through and trying to understand the
laws. The bill would help reduce their cost, help shorten time
periods so people can enter and participate in commerce, bring
money into the state, and give more funding for AMCO so that
AMCO could do more proactive education for the industry rather
than educating solely through enforcement which is what is
largely taking place right now.
9:53:34 AM
LEE ELLIS, President, Brewers Guild of Alaska, provided invited
testimony in support of CSSB 9(FIN). He stated that since Title
4 was rewritten in the 1980s it has been an evolution of
patchwork legislation, statute, and regulations to bring the
industry up to modern standards. This bill furthers that
mission and helps to bring the craft brewing industry up to par
with the other entities in the alcohol industry in Alaska. Many
parts of the bill took hard work to see modernization for the
[craft brewing] industry and it continues to be a local growing
industry in Alaska. Currently the [craft brewing industry]
provides about $330 million of economic impact and employs over
2,000 people across Alaska. That number is expected to continue
to grow, and SB 9 is critical in this regard, especially given
the recent difficulties with COVID-19 and loss of tourism.
9:55:00 AM
REPRESENTATIVE KAUFMAN commented that through the 11 years of
work by many stakeholder groups, SB 9 is essentially a
foundational reset of a hodgepodge of accrued requirements, and
he is interested in hearing more.
SENATOR MICCICHE responded that if this were the oil and gas
industry, there would be major violations and citations due to
the interaction of the backward and confusing statutory support.
While the bill isn't very concise, it is a delicate balance.
Things have been discussed by the hundreds of stakeholders for
hours and years to get to this point, so it is not a little
change [when a legislator brings forth an amendment]. All those
stakeholders have agreed on the balance in this bill. It is an
important piece of legislation, and it is a reset, and it does
capture the way the industry is operating today.
9:57:25 AM
CO-CHAIR FIELDS asked how the state fair would be supported here
without inadvertently creating a loophole that would result in
lots of fairs around the state that evade all the other permits
and endorsements.
SENATOR MICCICHE answered that it is thought there is a good
balance. Stakeholders support the fair and are working together
on an agreement with the fair. He confirmed that if the bill
were to pass the way it is currently written, he could do a
"Peter's Liquor Fair" every night this summer. So, he
continued, the hope is that stakeholders can come together on a
better agreement than what is currently in the bill, an
agreement that allows the fair to operate the way it has been
operating without opening a faucet of irresponsible festival
activity throughout the state on a nightly basis.
[CSSB 9(FIN) was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 9 CS HFIN ver. G 2.10.22.PDF |
HL&C 2/11/2022 9:00:00 AM HL&C 2/16/2022 3:15:00 PM |
SB 9 |
| SB 9 Fiscal Note DFCS - PS 2.4.22.pdf |
HL&C 2/11/2022 9:00:00 AM HL&C 2/16/2022 3:15:00 PM |
SB 9 |
| SB 9 Fiscal Note DOR - TAX 2.4.22.pdf |
HL&C 2/11/2022 9:00:00 AM HL&C 2/16/2022 3:15:00 PM |
SB 9 |
| SB 9 Fiscal Note JUD - ACS 2.4.22.pdf |
HL&C 2/11/2022 9:00:00 AM HL&C 2/16/2022 3:15:00 PM |
SB 9 |
| SB 9 Fiscal Note DCCED - AMCO 2.4.22.pdf |
HL&C 2/11/2022 9:00:00 AM HL&C 2/16/2022 3:15:00 PM |
SB 9 |
| SB 9 Fiscal Note DCCED - CBPL 2.4.22.pdf |
HL&C 2/11/2022 9:00:00 AM HL&C 2/16/2022 3:15:00 PM |
SB 9 |
| SB 9 Title 4 Presentation 2.11.22.pdf |
HL&C 2/11/2022 9:00:00 AM HL&C 2/16/2022 3:15:00 PM |
SB 9 |