Legislature(2019 - 2020)BARNES 124
03/09/2020 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB235 | |
| HB93 | |
| HB301 | |
| SB52 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 235 | TELECONFERENCED | |
| *+ | HB 301 | TELECONFERENCED | |
| + | SB 52 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 93 | TELECONFERENCED | |
SB 52-ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG
4:04:17 PM
CHAIR SPOHNHOLZ announced that the final order of business would
be CS FOR SENATE BILL NO. 52(FIN) am, "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."
4:04:32 PM
The committee took an at-ease from 4:04 to 4:06 p.m.
4:06:01 PM
SENATOR PETER MICCICHE, Alaska State Legislature, as prime
sponsor, introduced SB 52. He reported that alcohol remains the
top abused substance in Alaska; however, for those that drink
responsibly, the industry is also an important economic driver
throughout the state. He said this bill has been an eight-year
effort involving 13,000 hours of work and input from 120 primary
stakeholders, as well as from the legislature. He recounted the
legislation's previous unanimous passage from the Senate in SB
76, which died in the House Finance Committee thereafter. The
current version, CSSB 52(FIN) am, also unanimously passed the
Senate. He stated that the bill's primary focus is public
health and safety, adding that the industry, the Alcohol
Beverage Control (ABC) Board, the Alcohol & Marijuana Control
Office (AMCO), the legislature, and the public were also
included. The goals, he said, are promoting a fair business
climate; protection of public health and safety; limiting youth
access to alcohol; promoting responsible use and reducing the
harms of overconsumption; implementing change without negatively
harming existing businesses and responsible operators; and
expanding local control for municipalities. SB 52 is about
balance, reorganization, and fairness, he said. He further
noted that although the bill is dense, about 90 percent of it is
reorganization of existing law. He said it modernizes the
state's 35-year-old patchwork of statutes into a modernized
framework for today's industry.
4:09:13 PM
ANNA BRAWLEY, Staff, Senator Peter Micciche, Alaska State
Legislature, informed the committee that she is a senior
associate at Agnew::Beck Consulting and that [the firm] has been
involved in this process since the first meeting in 2012. She
proceeded to provide a PowerPoint presentation, entitled
"Alcohol Beverage Control (ABC) Board Title 4 Review, on behalf
of Senator Micciche, prime sponsor. She stated that each state
is responsible for regulating alcohol manufacture, distribution,
and sales in its jurisdiction since the repeal of prohibition in
1933. The purpose of alcohol control laws is to balance the
interests of the industry with the public health and safety
concerns about alcohol misuse (slide 2).
4:10:55 PM
REPRESENTATIVE STUTES sought clarification on the type of
consulting provided by Agnew::Beck Consulting.
MS. BRAWLEY stated that they provide many different services,
including community planning, public health, and public policy.
4:11:24 PM
REPRESENTATIVE FIELDS questioned whether Agnew::Beck Consulting
has a history of working with the Alaska Mental Health Trust
Authority on issues of public safety related to substance misuse
and addiction.
MS. BRAWLEY confirmed that.
4:11:45 PM
MS. BRAWLEY resumed her presentation. She said the purpose of
the Title 4 project has been to consider the statutes as a whole
and to make them work better for everyone. She restated the
goals - all aimed towards promoting a fair business climate and
protecting public health and safety, as well as making Title 4 a
clear and consistent legal framework (slide 5).
CHAIR SPOHNHOLZ inquired as to the original impetus for the
entire Title 4 rewrite process.
MS. BRAWLEY explained that the process was initiated by the ABC
Board in 2012. The board members spearheaded the effort and
brought different stakeholders together. She said originally,
it was a one-day meeting where they figured out the biggest
issues that needed to be addressed. They formed subcommittees
and for several years, the process was funded by the Rasmuson
Foundation, the Alaska Mental Health Trust Authority, and
Recover Alaska, which started as an initiative by the
aforementioned groups.
4:13:27 PM
MS. BRAWLEY directed attention to slide 6, entitled Key
Concepts in Title 4, which read as follows [original
punctuation provided]:
The 3-tier system: separation of manufacturers,
wholesalers and retailers to prevent monopolies
Licenses and permits:
License: allows a business to sell, serve,
distribute and/or manufacture alcohol for 2 years.
Permit: time-limited alcohol sales or service, by a
licensee or non-licensed organization.
Population limits: regulates number of licenses
available in each community by type
Proposed new concept: Endorsements on licenses to
expand premises or allowed activities
MS. BRAWLEY continued to slide 7. She explained that the 3-tier
system was created after prohibition to address the concern that
monopolies in the alcohol industry would encourage behaviors
that lead to the consequences of alcohol misuse. The original
3-tier system proclaimed that alcohol must be manufactured,
distributed, and sold to the public by different businesses;
however, the industry has evolved since then, particularly with
breweries and smaller manufacturers becoming a more popular
business model that sells directly to the public (slide 7). She
turned attention to slide 8, entitled Categories of
Recommendations, which read as follows [original punctuation
provided]:
1. Alcohol Licenses, Permits and Trade Practices
2. Role and Functions of the ABC Board and Staff
3. Underage Drinking and Youth Access to Alcohol
4. Regulation of Internet Sales of Alcohol
5. Technical or Administrative Law Changes
6. Local Option Communities*
* Note: Local Option recommendations are documented in
the report, but not included in SB 52. More
comprehensive discussion of Local Option laws is
needed in the future.
4:16:42 PM
REPRESENTATIVE HANNAN asked if anything in SB 52 changes the
ability to exercise local option for communities in Alaska.
SENATOR MICCICHE noted the importance of not confusing local
option communities with local control. He said the only local
option that is affected is the online regulation and the
delivery of alcohol to communities that may be local option.
4:17:44 PM
MS. BRAWLEY resumed her presentation. She explained that slides
9-11 illustrate the systems proposed reorganization. The
slides show license type by each tier (manufacturing tier,
wholesale tier, retail tier) of the industry, which endorsements
would apply to those licenses, and which licenses are exempt
from population limits (slides 9-11). She noted the three new
retail licenses highlighted on slide 10: brewery retail, winery
retail, and distillery retail. She said they are only new in
the sense that they are taking privileges that manufacturers
have today and making them separate retail licenses. She added
that all three are proposed under existing population limits
(slide 10).
4:19:55 PM
REPRESENTATIVE STUTES questioned whether SB 52 proposes any
changes to current population limits.
MS. BRAWLEY said the bill changes the proposed brewery, winery,
and distillery retail licenses, putting them at 1 per 12,000 for
new licenses.
MS. BRAWLEY resumed her presentation on slide 12, explaining
that the rest of the slides focus on the proposed changes to
Title 4, such as more retail options for manufacturers. She
said under current law, the brewery, winery, and distillery
licenses have manufacturing and retail privileges SB 52 would
split that into two license types, allowing for a pure
manufacturing license that could be used with a retail license
(slide 12). She turned attention to brewpubs, which is
currently a license type that can be utilized with a bar;
however, it only allows the production of a limited number of
gallons per year. Essentially, she said, a traditional brewery
is limited to the amount they serve to the public, while a
brewpub can serve as much as they want to the public, but the
amount they can produce is limited. SB 52 would create more
equity within this tier and give manufacturers more options,
including participating in the existing retail license system
(slide 13). She noted that slide 14 illustrates the proposed
manufacturer sales limits by product type.
4:23:34 PM
REPRESENTATIVE STUTES questioned whether having both a brewery
license and a distillery retail license would allow for the sale
of 36 ounces of beer and 3 ounces of spirits to the same person.
MS. BRAWLEY said shes not sure if a licensee can currently
utilize two different licenses on the same premises.
REPRESENTATIVE STUTES restated her question, asking if someone
uses different licenses in the same venue, could they serve the
maximum that each license allows to each customer.
SENATOR MICCICHE offered his understanding that these types of
[retail] licenses cannot be stacked.
4:25:01 PM
MELISSA WALTER, Administrative Officer, Alcohol & Marijuana
Control Office, Department of Commerce, Community & Economic
Development, in response to Representative Stutes, said she does
not know that policy.
4:25:19 PM
The committee took a brief at-ease.
4:25:58 PM
MS. BRAWLEY directed attention to slide 15. She reported that
endorsements on licenses is another concept proposed under SB
52. She explained that this would allow for the potential
expansion of what a business can do. Depending on the
endorsement, a business could serve on larger grounds or offer
additional activities. She said it benefits both the individual
business and the system as a whole because it provides an
alternative mechanism in the policy instead of just creating a
new license for a very specific business type it would allow for
the creation of an endorsement in the future (slide 15). She
continued to slide 16, entitled Proposed Endorsements, which
read as follows [original punctuation provided]:
? 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
MS. BRAWLEY noted that most of this language already exists in
Title 4, such as the three package store endorsements (slide
16). In contrast, one of the new endorsements proposed under SB
52 would allow package stores to provide small free samples on
their premises with the package store sampling endorsement. To
address the concern of providing excess free alcohol, the
proposal places clear limits on what can be served. She stated
that any combination of products can be served, not to exceed
the alcohol equivalent of any single product type (slide 17).
CHAIR SPOHNHOLZ surmised that if business is interested in
offering different categories of alcohol at the same time it
would have to be a proportional amount. She asked if that is
correct.
MS. BRAWLEY confirmed that.
4:28:49 PM
REPRESENTATIVE HANNAN sought clarification on the underlying
licenses for several endorsements listed on slide 16. She asked
what the underlying license would be for the bowling alley
endorsement.
MS. BRAWLEY replied the bowling alley endorsement would be
attached to a BDL [beverage dispensary license]. She referenced
slide 10, which provides a code for the endorsements and their
corresponding license. She noted that not every endorsement is
available to every license type.
MS. BRAWLEY responding to a follow-up question from
Representative Hannan, said the BDL allows for liquor, beer, and
wine to be served, which is one of the aspects that
differentiates a BDL from a recreational site license. For a
bowling alley, she said, the endorsement allows drinks to be
served at the lanes instead of a designated bar room.
CHAIR SPOHNHOLZ questioned whether the recreational site license
would exist under SB 52.
MS. BRAWLEY explained that the recreational site license would
still exist as a license type; however, it would be renamed the
sporting event license. She noted that the language in the
statute would remain the same.
4:31:56 PM
REPRESENTATIVE HANNAN asked if recreational site licenses are
currently limited to beer and wine.
MS. BRAWLEY affirmed that.
4:32:16 PM
MS. BRAWLEY resumed her presentation on slide 18, entitled R-7
Standardize Permits, which read as follows [original
punctuation provided]:
? Unlike licenses, permits are typically issued for
single events, on or off licensed premises.
? Define all permit types in statute, not just in
regulation
? Fee for all permits is $50 per event day
? Most permits listed are already in statute or
regulation
? New permit: Tasting Event Permit, allowing a Package
Store to host an event on premises, in partnership
with a BDL
MS. BRALWEY highlighted the list of proposed permits on slide 19
and continued to slide 20. She explained that the package store
tasting event permit would allow a package store to host a
special tasting event on its own premises, with onsite
consumption of alcohol for those attending the event. She noted
that the event may last for four hours and must end by 9 p.m.
Furthermore, it limits each license to six events per year in
the same community as the license is located (slide 20). She
informed the committee that population limits currently exist
under Title 4 to determine how many of each license type may be
issued in each community (slide 21). Population limited are set
by each local government, which can exist within a larger
borough. She explained that there are a set number of licenses
based on the residents in the local government separate from
the residents in the surrounding borough (slide 22). She
directed attention to slide 23, entitled Seasonal REPL Tourism,
which read as follows [original punctuation provided]:
? Seasonal restaurant license
? Available in smaller communities (< 40,000 pop.)
? Same operating requirements and privileges as full
year
restaurants (REPL)
? Number of licenses per community determined by
formula:
- 5-year average of annual visitors/months in season =
Average monthly visitor population
- (Residents + Average monthly visitors)/1,500 =
Available Seasonal REP Tourism licenses
? Season defined as up to 6 months per year, in any
combination
Example: May through September + 1 winter month
MS. BRAWLEY stated that the public convenience system currently
exists under Title 4. It allows an individual seeking a
restaurant or eating place license (REPL) in a community where
there arent any licenses available to purchase to collect
petitions that can be turned into AMCO. From there, the ABC
Board evaluates whether issuing the license would satisfy public
convenience. She explained that SB 52 proposes converting
existing public convenience restaurants to full scale
restaurants (slide 24). An alternative to the proposed public
convenience system is to have local governments petition for
additional restaurant licenses [AS 04.11.405]. This would
provide cities more local control and encourage the
concentration of commercial uses in the city center instead of
outside the boarders.
4:40:04 PM
REPRESENTATIVE HANNAN asked if a city could apply for the
proposed local government petition for a REPL in advance of the
existing businesses.
SENATOR MICCICHE confirmed that. He explained that if the board
approves the licenses that were petitioned for, the city can
hold the licenses and then market them to licensees.
REPRESENTATIVE HANNAN asked when the fee must be paid. She
questioned whether the city is required to put the money up
front for the licenses they petition for or if they wait to pay
it until there is a physical restaurant to put on the books.
SENATOR MICCICHE offered his understanding that the license
would not be active until it is awarded to someone who would
then go through AMCO to pay the fee and claim the license.
4:42:15 PM
MS. BRAWLEY resumed her presentation on slide 26. She noted
that currently, Title 4 allows for the relocation of a bar (BDL)
from a borough to a city. The bill would keep that provision in
place while also allowing the relocation of package stores
without creating a new license (slide 26). Another issue, she
said, is the enforcement of existing federal law regarding
illegal trade practices. The concern centers around how much
consolidation of market power there would be in manufacturers or
wholesalers. To counteract that, the bill proposes adding
equivalent sections to Title 4, protecting retailers and
allowing for state enforcement. She noted that this would
protect manufacturers and wholesalers as well by promoting free
competition rather than shutting competitors out (slide 27).
MS. BRAWLEY turned to the adjustment of license fees to reflect
current ABC Board budgetary needs. She explained that in many
cases, the same type of business is paying a different level of
fee for the same activities. She said this is relevant to
ensure that license fees are fair across different licensees.
She noted that it also requires the ABC Board to review license
fees every 5 years and if appropriate, forward a recommendation
to the legislature (slide 28). She continued to slide 29,
entitled More Accountability for License Fees Allocated to
Local Governments, which read as follows [original punctuation
provided]:
• Current Title 4 allows for local government to
receive an allocation equal to the license fees
collected in their area, intended for enforcement
of Title 4 and related ordinances.
• Reporting on these activities is required, but
not defined in statute. Some jurisdictions report
regularly, while others do not.
• The bill includes better reporting and prevention
about use of these funds and requiring reports
about education activities as well as
enforcement.
MS. BRAWLEY directed attention to slide 30. She said the ABC
Board and AMCO, would work with other agencies and organizations
to develop a coordinated education plan about responsible
alcohol use and Title 4.
4:47:29 PM
MS. BRAWLEY addressed the next slide, slide 31, entitled
Internet Sales in Alaska: Few Rules, which read as follows
[original punctuation provided]:
? Alaska is one of the only states with no rules for
Internet sales of alcohol.
? Alaska Package Stores cannot sell alcohol online,
only via (paper) written orders.
Alaska Wineries and Package Stores can ship wine to
customers in some circumstances.
? Without state laws restricting online sales, there
are currently no limits on purchases of alcohol online
from out-of-state sellers.
? Alaska consumers also do not pay state excise tax on
online purchases, as they do on products sold and
purchased in state.
MS. BRAWLEY explained that SB 52 would create a winery direct
shipment license and allow online alcohol sales only from U.S.
wineries and Alaska package stores. She said the winery direct
shipment licensee would verify that the customer is 21 or older,
that the customer is in a non-local option area, and that the
order is within the limit for personal use, which is 6 cases per
sale and 12 cases per year (slide 32).
CHAIR SPOHNHOLZ asked how the licensee would verify that a buyer
is 21 or older when making an online purchase.
MS. BRAWLEY said shes not familiar with the specific software;
however, many wineries use ID verification.
4:49:42 PM
SENATOR MICCICHE added that the system would require that the
person ordering the alcohol is carded upon delivery.
CHAIR SPOHNHOLZ clarified that the proposal requires
verification of age.
4:50:09 PM
REPRESENTATIVE RASMUSSEN shared a personal anecdote in which she
was required to show ID upon delivery of a bottle of wine.
CHAIR SPOHNHOLZ sought to clarify whether age verification is
required by state law.
SENATOR MICCICHE noted that the spectrum of operators varies
dramatically. He said SB 52 would require that every operator
is required to verify the ID card of the person receiving the
package.
4:51:22 PM
REPRESENTATIVE HANNAN inquired as to why only wineries and
package stores can ship directly.
SENATOR MICCICHE clarified that the current discussion is about
selling alcohol online. He said that in Alaska, wine the only
type of alcohol that can be sold online.
MS. BRAWLEY noted that an in-state package store can sell any of
their products to a customer through written order, which has
been interpreted to mean that the store has the customers ID on
file. She further noted that currently, the state does not have
laws regulating this; however, the U.S. Postal Service is not
allowed to ship alcohol, and both UPS and FedEx have also
decided to only allow commercial shipments of wine.
4:53:47 PM
REPRESENTATIVE RASMUSSEN questioned whether wine could be
delivered to from grocery stores via Instacart.
MS. BRAWLEY said that specific business model is not discussed
in the bill; however, certain stores, such as Fred Meyer and
Safeway have their own package store license, which could be
used to provide that service. She noted that it would still
need to be delivered to an individual at home with ID
verification upon arrival.
4:55:19 PM
MS. BRAWLEY directed attention to slide 33 to discuss the
regulation of common carriers. She stated all common carriers
must be approved by the ABC Board to transport and deliver
alcohol to consumers throughout the state. Carriers must
demonstrate that they have policies and train employees to
properly handle shipments of alcohol. She added that the ABC
Board would publish that list of carriers, making it available
to direct shipment licensees and in-state package stores (slide
33).
REPRESENTATIVE RASMUSSEN expressed concern about the business
model.
SENATOR MICCICHE, in response to Representative Rasmussen, said
thats what the common carrier regulations are for. He
reiterated that the common carrier would be authorized for
alcohol deliveries and would have the necessary policies in
place. He offered his belief that those policies would include
barring underage individuals from delivering alcohol.
4:58:14 PM
MS. BRAWLEY noted that current laws allow underage individuals
to work in restaurants; however, they cannot deliver alcohol.
She continued to slide 34. She said there is already a system
in place that tracks alcohol orders to local option areas, which
the bill would maintain. She added that in current Title 4, all
data in the local option order database is private and deleted
after one year. SB 52 would keep individual order information
private but retain aggregate data for 10 years and allow the ABC
Board to publish annual total sales volume by region or
community that is available to the public (slide 35). She
continued to slide 36, entitled RB-6. Revise Title 4
Penalties, which read as follows [original punctuation
provided]:
? Review penalties for all Title 4 sections, and
revise as needed to make penalties proportionate to
the offense, and more consistently enforced.
? Retain existing Misdemeanor and Felony charges for
serious offenses, particularly those causing harm to
children.
Ensure that the ABC Board, and licensee, is informed
about Title 4 convictions: require court to send
records to AMCO, and AMCO to send to the licensee.
? ABC Board retains authority to impose conditions or
additional penalties, including suspending or revoking
license.
? See Appendix, Table 3 in Title 4 Review Report for
table of all current penalties and proposed changes.
MS. BRAWLEY noted that one of the most important penalty changes
is increasing the immediate accountability of licensees. She
said in current Title 4, a licensee or employee who overserves
an intoxicated adult or serves alcohol to a minor is guilty of a
class A misdemeanor. SB 52 would change the penalty for both
statutes to a minor offense with a $500 fine. Additionally, the
owner of the license would receive an administrative penalty of
$250. This would alert the owner that a violation occurred and
would hold them immediately accountable, while encouraging
future compliance (slide 38). To conclude, Ms. Brawley
highlighted required keg registration. She said it is currently
required in Anchorage and Juneau, but under SB 52, it would be a
statewide requirement. She explained that kegs tagged with the
purchasers contact information can be tracked if confiscated at
an underage party to better enforce underage drinking (slide
39).
5:02:28 PM
CHAIR SPOHNHOLZ asked how the proposed fines for overserving an
adult or serving a minor compare to the fines under current
Alaska law.
MS. BRAWLEY said the penalty for an employee that overserves an
adult or serves a minor is a class A misdemeanor, resulting in
up to a $10,000 fine and a court appearance. She added that
there is no immediate penalty on the licensee, which means they
might not be aware of the situation until they renew their
license.
5:04:01 PM
REPRESENTATIVE STORY asked for the current violation rates.
SENATOR MICCICHE said they are artificially low because it sets
an extreme fine that leads to unlikely conviction. He offered
his belief that enforcement loses interest when they know that
the penalty will not be realized. He added that the penalty
proposed under SB 52 would most likely lead to more results from
local or departmental enforcement.
[SB 52 was held over.]