Legislature(2021 - 2022)BUTROVICH 205
03/29/2021 01:00 PM Senate JUDICIARY
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing | |
| SB9 | |
| SJR1 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SB 9 | TELECONFERENCED | |
| += | SJR 1 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 9-ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG
1:41:28 PM
CHAIR REINBOLD reconvened the meeting and announced the
consideration of SENATE BILL NO. 9, "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."
1:41:35 PM
SENATOR PETER MICCICHE, Alaska State Legislature, Juneau,
Alaska, stated that SB 9 contains the same language as
previously seen in the last legislature. The language contained
in SB 9 previously passed the Senate unanimously. He highlighted
that the goals were to create a fair business environment,
provide increased public health and safety, limit youth access
to alcohol, promote responsible alcohol use, reduce the harms of
overconsumption, implement change without negatively harming
existing businesses and responsible operators and to expand
local control for municipalities. He said that the bill stays
with the initial concept of regulating alcohol in the US and
Alaska, including a three-tier system, licensure, and population
limits. He offered his view that this bill is about balance,
reorganization and fairness. He highlighted that 95 percent of
the bill reorganizes the entire title. The statutory rewrite of
the bill helps make sense of the hodgepodge created by passing
bills for 38 years that affect these statutes. SB 9 will address
public health, safety and accountability, he said.
SENATOR MICCICHE said last year he proposed an amendment that
initially created some consternation from the more traditional
industry and the brewers and distillers, but it was worked out,
which is why the bill received unanimous support on the Senate
floor. He offered to summarize the bill in his presentation.
1:43:56 PM
SENATOR MICCICHE began a PowerPoint, "Alcoholic Beverage Control
(ABC) Board Title 4 Review Project," by reviewing slide 2. He
explained that alcohol is unique because nearly 100 percent of
the issues related to opioid drug and substance abuse is related
to alcohol. There is always a balancing act between what is good
for business and still protecting youth and adults' health in
communities.
1:44:33 PM
SENATOR MICCICHE highlighted that stakeholders have spent nine
years of work on the alcohol rewrite in SB 9. The process began
at the ABC Board, but parts of the title no longer work. This
bill will increase law enforcement, he said [slide 3].
SENATOR MICCICHE turned to slide 4, highlighting the diverse
group of stakeholders who worked through issues. The legislative
process has improved this bill.
SENATOR MICCICHE said the goal of the Title 4 review process is
to improve Title 4 by addressing key issues. The alcohol,
restaurant and tourism industries are important ones. The goals
of SB 9 are to help the industry grow, protect use, hold
violators accountable and to reduce the harms of overconsumption
of alcoholic beverages.
1:46:10 PM
SENATOR MICCICHE turned to slide 6. He said this bill will not
change the basic framework of the alcohol industry, but the bill
will address how the industry operates.
1:46:35 PM
SENATOR MICCICHE reviewed slide 7, stating that changes in the
3-tier system are designed to support the local craft industry.
SENATOR MICCICHE said slide 8 illustrates the six areas
stakeholders worked on, including alcohol licenses, the role and
function of the ABC Board, underage drinking, regulation of
internet sales of alcohol, technical or administrative law
changes, and local option communities.
1:47:05 PM
SENATOR MICCICHE reviewed slides 9 through 11 titled, "Alaska's
Liquor License System: Proposed Changes." He stated that these
slides demonstrate how licenses are organized and how
endorsements apply to licenses. Some licenses are not limited,
including many retail licenses designed for tourism.
1:47:34 PM
SENATOR MICCICHE turned to slide 12. He discussed the proposed
conversion of brewpubs. Currently, craft industry members cannot
own a retail license; SB 9 would allow them to have a retail
license. This bill would remove the limit on manufacturing and
allow pairing with any full retail license. This will allow a
brewery to have a Beverage Dispensary License (BDL), a
Recreational and Eating Place (REPL), or a package store
license.
SENATOR MICCICHE highlighted that the proposed conversion of
brewpubs on slide 13 illustrates what he discussed on slide 12.
1:48:38 PM
SENATOR MICCICHE discussed the proposed manufacturer sales
limits by product type on slide 14. This confirms existing
retail sales limits for brewery, winery, and distillery retail
businesses. If the business wishes to purchase an additional
license, he said the bill will allow the business to operate as
a bar.
1:49:04 PM
SENATOR MICCICHE discussed the proposed endorsements on licenses
on slide 15. This new concept would add endorsements to existing
licenses, giving businesses more flexibility without creating
more situation-specific license types. This will allow existing
licensees to select their endorsement and pay a fee. He said
that slide 16 lists the types of endorsements available, which
read:
• R-7A | Bowling Alley Endorsement
• R-7B | Package Store Shipping Endorsement
• R-7C | Package Store Delivery Endorsement
• R-7D | Package Store Re-Packaging Endorsement
• [R-1] Multiple Fixed Counter Endorsement
• [R-1] Hotel/Motel Endorsement
• [R-1] Large Resort Endorsement
• [R-3] Package Store Sampling Endorsement
• [M-1] Brewery Repackaging Endorsement
1:50:03 PM
SENATOR MICCICHE discussed the proposed limited samples for
package stores on slide 17. This will allow customers to sample
the products before buying. The provisions also help the
business manage sampling on-premises.
SENATOR MICCICHE reviewed R-7 standardized permits on slide 18.
The bill puts all the permits in one place.
1:50:39 PM
SENATOR MICCICHE related that the permits for special events are
shown on slide 19, as follows:
square4 R-7F | Beverage Dispensary Caterer's Permit (AS
04.11.230; 3 AAC 304.685)
square4 R-7G | Restaurant Caterer's Dining Permit (3 AAC
304.680)
square4 R-7H | Club Caterer's Permit (3 AAC 304.690)
square4 R-7I | Nonprofit Event Permit (AS 04.11.240)
square4 R-7J | Art Exhibit Permit (3 AAC 304.697)
square4 R-7K | Alcoholic Beverage Auction Permit (3 AAC
304.699)
square4 R-7L | Inventory Resale Permit (Retail Stock Sale
License, AS 04.11.200)
square4 R-7M | Package Store Tasting Event Permit
(proposed)
square4 [amended ver. E] | Music Festival Permit
(proposed)
square4 [amended ver. E] | Live Music & Entertainment
Permit (proposed)
1:51:04 PM
SENATOR MICCICHE stated that the package store tasting event
permit listed on slide 20 is a new concept that will allow a
package store to host a special tasting event on its own
premises with onsite consumption of alcohol paired with foods
for those attending the event.
1:51:15 PM
SENATOR MICCICHE reviewed the population limits on slides 21 and
22. SB 9 makes numerous changes to population limits to support
business growth and communities with limited licenses. He
reported that limits are set in AS 04.11.400, using a residents-
based formula. The ABC Board authorizes a set number of licenses
for each borough and city. This bill will provide some
flexibility to move a license from a borough to a city.
1:52:05 PM
SENATOR MICCICHE reviewed the proposed seasonal Recreational and
Eating Place (REPL) tourism licenses on slide 23. He stated that
these licenses are not under population limits but are designed
for businesses that operate seasonally.
SENATOR MICCICHE turned to slide 24. SB 9 will allow businesses
to convert public convenience licenses to full restaurant
licenses. It would also remove the difficult petition process,
which is time-consuming for the applicant, the city and the ABC
Board. He explained that currently, there are two types of
restaurant licenses, one that can be sold and one that cannot.
1:52:52 PM
SENATOR MICCICHE reviewed slide 25 pertaining to proposed local
government petitions for additional restaurant licenses. He
highlighted that local governments have asked for additional
restaurant license flexibility. He related that his Kenai
Peninsula community and the Mat-Su have requested this. He
explained the process. A city decides the number of licenses the
local community can support. The city can petition the ABC board
to grant more licenses. This process moves away from the case-
by-case process to one that gives cities more control. He
explained that a city or municipality would have the flexibility
to bank the licenses to attract businesses.
1:53:54 PM
SENATOR HUGHES referred to the yes or no arrows on slide 25. She
said some people are concerned that the ABC Board could deny the
restaurant licenses. She pointed out that the Mat-Su valley is
growing. She said having the ability to move licenses could
solve the situation. She said Sun Mountain is a new development
off the Parks Highway. There are five businesses interested in
opening restaurants but lack liquor licenses. She indicated that
if a license is denied, the city must wait a year before
petitioning for more restaurant licenses. She was unsure of the
solution.
1:55:11 PM
SENATOR MICCICHE cautioned that if this bill does not pass,
there will be no potential for success. However, if the bill
does pass, it is possible that everyone could work together to
prepare the petitions. Currently, there is not any flexibility,
he said. He also acknowledged that many people invested in
liquor licenses are on the other side of this equation. This
bill is designed to provide the fairest balance possible for
growing municipalities.
1:55:57 PM
SENATOR HUGHES acknowledged the time spent on the bill. She said
she worked with Recover Alaska when this process first started.
It was focused on protecting Alaska's youth in communities that
suffer from serious alcohol problems.
She was unsure how to resolve the issue of cities or
municipalities seeking new restaurant licenses. She suggested
that the board consider developing criteria so that the petition
would be granted when a community prepares an application and
meets certain criteria. She said she wanted to avoid subjective
decisions.
SENATOR MICCICHE responded that this is a public process. He
offered his view that if communities support the petition, the
board will likely grant the license. He offered his support for
the current ABC Board. He offered his view that growing
communities should have an option to expand their restaurant
liquor licenses. He acknowledged that some licensees do not want
new entrants. He said that the committee could certainly signal
its expectation for new entrants since some communities are
growing.
1:58:35 PM
SENATOR HUGHES pointed out more people live outside the city
limits, so the population being served is 110,000. While she
appreciates that the ABC board is functioning well, board
members change. She said she would like a long-term solution by
establishing criteria for the petition for the license process.
She suggested the current board could propose regulations, or
the committee could consider incorporating language in the bill
to address it. She voiced her understanding of the delicate
balance that is incorporated into the bill.
2:00:28 PM
SENATOR MICCICHE reviewed slide 26, which depicted a flowchart
that illustrates an option to allow reallocation of some
licenses from a borough to a city for package stores. He said it
could provide a solution for a store such as Walmart or Costco
to sell liquor.
2:01:00 PM
CHAIR REINBOLD asked if he could elaborate on whether this
relates only to bigger stores or if it pertains to smaller
businesses.
SENATOR MICCICHE explained the package store option. He said
this provides an avenue to address limited license concerns. If
a package store license were not available in the City of
Wasilla, a retailer could purchase a license from someone
located elsewhere, such as a more remote location.
CHAIR REINBOLD asked if this would benefit big stores over
smaller businesses.
SENATOR MICCICHE responded that there is always an advantage in
alcohol licenses to those with funds to invest. That is the
reason it is a commodity that goes up and down in value, he
said. He characterized this process as a free-market bidding
process that does not change under the bill.
2:02:30 PM
SENATOR MICCICHE reviewed slide 27, related to proposed
regulation of trade practices permitted under federal law. He
deferred to Anna Brawley to explain the enforcement of trade
practices.
2:04:03 PM
ANNA BRAWLEY, Title IV Review Coordinator, Agnew Beck
Consulting, Anchorage, Alaska, responded to illegal trade
practices. She stated that all practices listed on the slide are
prohibited in federal law but are not enforced at the state
level. She said that many states have put these rules in place
to protect small retailers. For example, a manufacturer could
offer an exclusive arrangement or agreement if the retailer
agrees not to sell their competitor's products. This will
protect all tiers of the industry and help to ensure that a
specific brewery is not shut out of the market.
CHAIR REINBOLD appreciated knowing it would help small
businesses.
2:05:18 PM
SENATOR MICCICHE reviewed the adjustments to license fees on
slide 28. He stated that many fees have not been adjusted in
decades. The Alcohol & Marijuana Control Office (AMCO) is
receipts funded and relies on fees for prompt responses to
licensees and enforcement activities.
SENATOR MICCICHE reviewed the proposed accountability for
license fees allocated to local governments on slide 29. It will
clarify the required reports from local law enforcement who are
directly involved in the enforcement of Title 4.
SENATOR MICCICHE reviewed efforts taken by the ABC Board and
AMCO to work with key partners and other agencies on alcohol
education efforts, including schools. It will not replace what
is happening, but these changes clarify their roles.
2:06:34 PM
SENATOR MICCICHE reviewed slide 31 through 33 related to
internet sales. Currently, internet sales are not well
regulated, he said. Alaska residents can buy alcohol online
without paying state excise taxes. This change will protect
small wineries in Alaska that must pay excise taxes. This
provision also prevents alcohol sales to underage Alaskans. It
would hold Federal Express and other carriers accountable for
delivering alcohol to underage consumers or local option areas
throughout Alaska. He related that slide 32 illustrates how the
process works: Alaska consumers order wine online from a winery.
The winery direct shipment licensee verifies the consumer is
over 21, in a non-local option are and within the personal use
limits. The common carriers will transport and deliver the order
in person and verify that the customer is over 21.
SENATOR MICCICHE stated that the ABC board must approve common
carriers to transport.
2:08:49 PM
SENATOR HUGHES asked if the signatures will be required for
internet deliveries.
SENATOR MICCICHE answered yes. He said that verification is not
currently required but will be required under the bill. Carriers
will not leave packages on doorsteps.
2:09:21 PM
SENATOR MICCICHE reviewed tracking alcohol orders in local
option areas under current Title 4 on slide 3. The ABC Board
records the information in a database accessible to the board,
package stores, and law enforcement. Currently, there are
monthly limits on personal use purchases for customers in damp
or dry communities. However, these provisions are presently
unenforceable.
SENATOR MICCICHE reviewed the local option database on slide 35.
Currently, all data in the database is private and deleted after
one year. The aggregate date will be kept for 10 years to allow
the board to publish annual total sales volume by region or
community. This would help communities and law enforcement to
understand the flow of alcohol into local option communities via
legal sales.
2:10:10 PM
SENATOR MICCICHE reviewed slides 36 and 37, related to penalty
provisions in Title 4. Almost all penalties are class A
misdemeanors, from serving alcohol to minors to minor
violations. Most violations are not prosecuted and the system
does not work. SB 9 would reduce violations for compliance
issues not related to safety and other minor offenses to fines
but retain class A misdemeanors for serious offenses. The bill
does change any felony penalties, especially with respect to
local option laws.
2:11:20 PM
SENATOR HUGHES asked how many misdemeanors are being overlooked.
SENATOR MICCICHE deferred to the Alcohol & Marijuana Control
Office to respond.
2:12:27 PM
GLEN KLINKHART, Director, Alcohol & Marijuana Control Office
(AMCO), Department of Commerce, Community and Economic
Development, Anchorage, Alaska, said he has a background in law
enforcement. He said very few cases had been prosecuted, that
cases are investigated but not pursued since the penalties are
onerous. He characterized the penalty provisions in SB 9 as
effective. These changes allow for a process that encourages
compliance. Sometimes warnings are effective, but if not,
violators can be fined. He said that frequent violators could be
prosecuted. He likes the system so well that he has worked with
the industry on a fine schedule.
2:14:40 PM
SENATOR HUGHES asked how many cases were investigated and not
pursued.
MR. KLINKHART offered to provide figures. He estimated about 20
to 75 per year could be handled with small fines. He said that
his enforcement team is excited about this because they
previously felt their hands were tied.
2:15:49 PM
CHAIR REINBOLD appreciated him providing a law enforcement
perspective.
2:16:27 PM
SENATOR MICCICHE stated that slide 38 outlines the proposed
penalties for overserving an adult or serving a minor.
Currently, a licensee or employee who knowingly overserves an
intoxicated adult or 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 subject to a $500 fine. In addition,
the bill would penalize the owner of the license by imposing an
administrative penalty of $250. He related that the license
owner may not know when the servers are repeatedly cited. This
allows the license owner to counsel any servers who are
overserving.
2:17:56 PM
CHAIR REINBOLD asked who would issue the fines.
SENATOR MICCICHE deferred to AMCO to respond.
2:18:30 PM
MR. KLINKHART answered that any certified police officer can
enforce Title 4. While AMCO will continue to provide primary
enforcement, the office will work with other law enforcement
agencies. Any fines will be deposited to the general fund, he
said.
2:19:48 PM
SENATOR MICCICHE reviewed the proposed keg registration on slide
39. This provision was designed to reduce the incidence of
adults purchasing alcohol and providing it to underage drinkers.
He stated that the process is modeled after Anchorage and Juneau
ordinances. When a licensee sells a keg, it is tagged with
purchaser information. If the keg is returned to the licensee,
the tag will be removed by the vendor. However, if underage
drinking occurs, enforcement will confiscate the keg and fine
the adult purchaser.
2:21:37 PM
SENATOR HUGHES asked whether purchasing a keg for a party with
underage drinkers would result in a violation, not a
misdemeanor. She offered her belief that it is one thing if a
parent allows a minor to drink at home, but it seems that the
penalty should be more than a $500 ticket for a person impacting
groups of minors.
CHAIR REINBOLD agreed.
SENATOR MICCICHE deferred to Ms. Brawley.
2:22:57 PM
MS. BRAWLEY responded that two penalties might apply. If a
person purchased a keg and removed the tag, the penalty for an
untagged keg would be a violation and fine of $100. He said that
law enforcement would more likely charge the person with
furnishing alcohol to a minor, a Class A misdemeanor. He added
that if someone works for a licensee, that person would be
charged separately.
2:23:14 PM
SENATOR SHOWER joined the meeting.
2:24:22 PM
SENATOR KIEHL offered his view that the keg regulation may not
be perfect, but it should be effective in reducing the problems
of adults providing alcohol to minors. He expressed concern
about the per capita limits. He said he has not found research
to support that per capita limits are effective in reducing
societal problems with alcohol.
2:25:27 PM
SENATOR KIEHL said the bill appears to place a more restrictive
per capita limit on new categories of licensees. He asked for
public safety reasons to impose this new set of limitations.
SENATOR MICCICHE answered that limits for tasting rooms of 1 in
9,000 were changed in SB 9 to 1 in 12,000. He deferred to Ms.
Oates or Ms. Hall to generally address population limits.
However, the bill changed this provision as a compromise to
address competitors' concerns. One prior restriction was to
prohibit entertainment in the tasting room. Under SB 9, tasting
rooms can have four events per year and hold classes or
community activities. Another provision for breweries and
distilleries will change the closing time from a soft close at
8:00 p.m.to a hard close at 10 p.m. Currently, people can arrive
just before 8:00 p.m., purchase alcoholic drinks, and stay at
the tasting room with no end time.
2:27:34 PM
SENATOR MYERS joined the meeting.
2:27:39 PM
SENATOR MICCICHE explained that the previous ABC Board
director's approach was to regulate activities at tasting rooms
even more. He recalled 1,200 pages of public testimony against
the ABC Board's proposed changes. These changes represent some
balances that work for the breweries and distilleries and
traditional bars or breweries. Since the public supports the new
model, this bill works to find a fair balance that will allow
additional activities to occur while still mindful that
traditional bar and brewery licensees invested substantial money
for their licenses.
2:28:48 PM
SENATOR KIEHL recalled that data supports zoning restrictions,
but he has yet to see anything that substantiates that
population limits work.
2:29:20 PM
SARA OATES, President, Alaska Cabaret, Hotel, Restaurant and
Retailers Association (CHARR), Anchorage, Alaska, responded that
she does not have the data.
2:29:42 PM
TIFFANY HALL, Recover Alaska, Anchorage, Alaska, responded that
research studies show that greater population density is
associated with increased alcohol consumption and related harm,
including medical harm, injury, crime and violence. Restrictive
population limits are an evidence-based strategy recommended by
the US Community Preventative Task Force, the World Health
Association, the federal Substance Abuse and Mental Health
Services Administration (SAMHSA). The Centers for Disease
Control and Prevention (CDC) highly recommend population limits
to reduce crime, violence, injury, and medical harm.
2:31:06 PM
SENATOR HUGHES asked if she could provide figures that would
show the data tipping point to stop these problems from
occurring.
MS. HALL responded that she does not have the figures. She
offered to research and report back to the committee. She
commented that these studies have been conducted in urban and
rural areas and found connections related to population limits.
SENATOR HUGHES highlighted that population limits in the bill
must match the data.
CHAIR REINBOLD agreed.
SENATOR SHOWER said he would like data from other states to
substantiate using population limits.
2:33:53 PM
SENATOR MICCICHE clarified that SB 9 does not change population
limits. Alaska has operated under this system for many years.
This bill captures the way the alcohol bill currently operates,
which is critically important, he said. He characterized it as a
"reset." He strongly urged members to consider other bills to
make additional changes to the system. SB 9 takes this
"hodgepodge" of statutes and regulations and makes it easy to
understand and organizes it.
[SB 9 was held in committee.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 9 ver B.pdf |
SJUD 3/29/2021 1:00:00 PM |
SB 9 SB9 Ver B |
| SB 9 Sponsor Statement ver B.pdf |
SFIN 5/3/2021 9:00:00 AM SJUD 3/29/2021 1:00:00 PM |
SB 9 SB9 Sponsor Statement |
| SB 9 Sectional Analysis version B 2.10.21.pdf |
SFIN 5/3/2021 9:00:00 AM SJUD 3/29/2021 1:00:00 PM |
SB 9 SB9 Sectional Analysis Version B |
| SB 9 Letters of Support 2.10.21 complete.pdf |
SJUD 3/29/2021 1:00:00 PM |
SB 9 |
| SB 9 Summary of previous support letters (SB52).pdf |
SJUD 3/29/2021 1:00:00 PM |
SB 9 SB 52 |
| SB 9 Title 4 Review Report 02.2019.pdf |
SJUD 3/29/2021 1:00:00 PM |
SB 9 |
| SB 9_Title4Pres_Senate_JUD_3.2021.1.pdf |
SJUD 3/29/2021 1:00:00 PM |
SB 9 |
| SJR001A.PDF |
SJUD 3/29/2021 1:00:00 PM |
SJR 1 SJR1 Version A |
| SJR 1 Sponsor Statement 2.8.21.pdf |
SJUD 3/29/2021 1:00:00 PM |
SJR 1 SJR1 Version A Sponsor Statement |
| SJR 1 Sectional Analysis 2.8.21.pdf |
SJUD 3/29/2021 1:00:00 PM |
SJR 1 SJR1 Version A Sectional Analysis |
| SJR 1 Leg History 1982 SB842 HFIN_Letter of Intent Al Adams 5-14-82 .pdf |
SJUD 3/29/2021 1:00:00 PM |
SB 842 SJR 1 |