Legislature(2017 - 2018)BELTZ 105 (TSBldg)
04/11/2018 01:30 PM Senate JUDICIARY
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| Audio | Topic |
|---|---|
| Start | |
| SB76 | |
| HB307 | |
| HB20 | |
| SB195 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 195 | TELECONFERENCED | |
| += | SB 47 | TELECONFERENCED | |
| += | SJR 14 | TELECONFERENCED | |
| += | HB 208 | TELECONFERENCED | |
| + | SB 76 | TELECONFERENCED | |
| += | HJR 21 | TELECONFERENCED | |
| += | HB 307 | TELECONFERENCED | |
| += | HB 44 | TELECONFERENCED | |
| + | HB 20 | TELECONFERENCED | |
| + | SB 134 | TELECONFERENCED | |
SB 76-ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG
1:38:47 PM
CHAIR COGHILL announced the consideration of SB 76. [CSSSSB
76(L&C) was before the committee.]
1:39:02 PM
SENATOR PETER MICCICHE, Alaska State Legislature, Juneau,
Alaska, sponsor of SB 76, stated that the bill is the Title 4
rewrite. SB 76 modernizes the state's 35-year-old alcoholic
beverage statutes to allow the Alcoholic Beverage Control Board
to operate more efficiently as it regulates the industry in a
manner that promotes public safety and health while supporting
the industry's viability. The bill is the product of a five-year
collaboration of over 100 stakeholders. This diverse group
includes representatives of the alcohol industry, public health,
public safety, local governments, and advocates for youth.
Five shared goals served as the foundation for developing the
recommendations:
1. Promoting a fair business climate while protecting public
safety and health
2. Creating rational regulations for all tiers of the state's
alcohol industry
3. Limiting youth access to alcohol
4. Promoting responsible alcohol use and reducing the harms of
overconsumption
5. Implementing without negative impacts on business and
operators
SENATOR MICCICHE said SB 76 is largely a reorganization of
existing statutes. It clearly defines the rights and obligations
of licensees, restructures penalties for Title 4 offenses, and
organizes the statutes in a logical manner for all the users.
1:41:30 PM
ANNA BRAWLEY, Title 4 Project Review Coordinator and Senior
Associate, Agnew Beck Consulting, Anchorage, Alaska, thanked the
committee for hearing SB 76 and invited questions at the end of
each section of the presentation. She said she would give a
brief overview of the Title 4 review project and highlight the
recommendations in SB 76. She would also clarify the substantive
portions that are not changing but being reorganized.
She said the title has not been updated since 1980 and piecemeal
changes have created confusion in the law. Looking at the entire
title to see what is and is not working and how the pieces fit
together was the goal of the project. The Alcoholic Beverage
Control (ABC) Board initiated the project in 2012 in recognition
of the issues with the statutes that needed to be addressed. The
board and others brought together over 100 stakeholders and have
put in at least 12,000 hours on the project since 2012. The
result is SB 76.
MS. BRAWLEY displayed slide 4, which is a sectional overview of
SB 76 that helps show how the bill is organized. There are
several chapters of Title 4 that deal with different subjects
and that's the way the bill is organized. For example, Chapter
11 is licensing, Chapter 6 is powers and duties of the board.
The Title 4 Review Stakeholder Report has a more thorough review
of each recommendation and what was considered by the
stakeholder group.
She listed the following six categories of the Title 4 review
recommendations:
1. Alcohol licenses, permits and trade practices
2. Role and functions of the ABC Board and staff of the
Alcohol and Marijuana Control Office
3. Recommendations relating to underage drinking and youth
access to alcohol
4. Regulation of internet sales of alcohol
5. Technical or administrative law changes such as
reorganizing the statutes
6. Discussion about local option communities
MS. BRAWLEY noted that the stakeholder group is interested in
continuing the discussions with local option communities but the
bill doesn't have many recommendations about this because more
discussion and participation from rural communities is needed.
She reviewed the following key concepts in Title 4:
• Licenses and permits:
- License: Allows a business to sell, serve, distribute
and/or manufacture alcohol for the term of the license (2
years).
- Permit: Allows time-limited alcohol sales or service by a
licensee or non-licensed organization.
• The 3-tier system: The separation of manufacturers,
wholesalers and retailers to prevent monopolies.
• Population limits: This statute regulates the number of
licenses available in each community by type.
• Proposed new concept: Endorsements are license add-ons that
allow an expanded physical presence or expanded activities
on a license.
MS. BRAWLEY displayed slide 7, the 3-tier system that
illustrates that alcohol must be manufactured, distributed, and
sold to the public by different businesses. This system was
established after prohibition and was designed to prevent
monopolies. The laws have changed over the years, and a main
theme of the discussion is how much of the 3-tier system to
preserve and how much to change, given the changes in the
industry.
She advised that population limits is another key concept that
is addressed in current statute. Each license type is limited by
the number of permanent residents in the community. For most
licenses it is one per 3,000 residents and for restaurants it is
one license per 1,500 residents. A few license types are exempt
from population limits, most of which are for serving tourists.
Retail outlets primarily have raised health and safety concerns
regarding the population limits because a large number of
different license types can result in a high density of licenses
in a community even though the statute seems very restrictive.
MS. BRAWLEY said the first recommendation in SB 76 relates to
population limits.
P-1. Population Limits Apply to Retail Licenses Only
• Apply population limitations on the number of
licenses only to retail-tier licenses (excluding
tourism-focused licenses and Winery Direct
Shipment License).
• Wholesale licenses, manufacturer licenses who do
not directly serve the public, and some licenses
designed to serve tourists would be exempt from
limits.
SB 76: Section 43, 04.11.400(a); Section 44,
04.11.400(i)
1:48:50 PM
SENATOR WIELECHOWSKI noted that slide 8 indicates that one
package store is allowed for every 3,000 people and restaurants
are one for every 1,500 people but the numbers on slide 9 are
much lower. He asked how that happened and if those businesses
are grandfathered or operating illegally.
MS. BRAWLEY said it's not licenses that are operating illegally.
One reason that there are more licenses than the statute allows
is that some were probably issued before the population limits
were put in place. Also, slide 9 shows the total number of
retail licenses in those communities, not just bars or package
store. Depending on the number of types of licenses being
operated in the community, the numbers can get very high.
SENATOR WIELECHOWSKI asked if she knew the number of package
stores or restaurants per residents in Juneau, Nome, and
Fairbanks to get an apples to apples comparison versus the
statute.
MS. BRAWLEY said she would get the numbers from the Alcohol
Marijuana Control Office (AMCO). They publish the number of
licenses operating in each community.
SENATOR WIELECHOWSKI asked how the rewrite will change the
overall density of licenses based on population.
MS. BRAWLEY replied the rewrite will not change the underlying
population limit formulas. It keeps any retail license that is
currently under population limits at the same level. Part of the
rewrite is a recommendation to not create new license types or
at least to consider the implications of creating new license
types.
1:51:02 PM
MS. BRAWLEY directed attention to slide 11 and explained that
another primary recommendation of SB 76 is to increase license
fees. Most license fees have not been increased since the 1980s
or when the license type was created in statute.
F-1 Adjust License Fees to Reflect Current ABC
Budgetary Needs.
• Update license fees according to privileges and
administrative costs of each, and collect
sufficient revenue to cover the ABC Board's
required activities:
Administration of licenses & permits
Education about Title 4 and related regulations
Enforcement of Title 4 and related regulations
• ABC Board required to review license fees at
least every 10 years.
• (see also RB-3: Revise ABC Board Budget to
Adequately Fund Necessary Activities).
• See Appendix, Table 2 on page 66 of the report.
SB 76: Section 5, 04.06.090; License fees throughout
Section 9
CHAIR COGHILL asked if this will help relieve some of the stress
the board is under regarding licensing, enforcement, and
permits.
MS. BRAWLEY deferred the question to Erika McConnell, the
director of AMCO.
1:53:33 PM
MS. BRAWLEY directed attention to the recommendation in slide
12. Under current statute, municipal governments receive half
the license fee revenue collected by the ABC Board for the
purpose of enforcing Title 4. SB 76 strengthens the existing
requirement that municipalities report how those funds are being
used:
RB-1. Strengthen Reporting Requirements for Municipal
Enforcement.
• Include in statutory requirements (AS 04.11.610) that
municipalities submit quarterly reports on Title 4
enforcement and education activities to the ABC Board:
violations, educational presentations, other
activities related to alcohol control.
• Municipalities with local law enforcement receive a
matching allocation ("refund") of license fees
collected within their jurisdiction. Funds intended to
be used for Title 4 enforcement.
Slide 13, Proposed in SB 76: Accountability for License Fees
Allocated to Local Governments, illustrates the current system
and notes that the report would be required as part of the
revenue allocation.
Slide 14 illustrates the reorganization of existing statutes.
Proposed Changes to licenses, endorsements and permits
SB 76, Section 9: proposed new Chapter 9 in Title 4
04.09.010: Types of Licenses
04.09.020 - .040: Manufacturing Tier Licenses
04.09.100 - .110: Wholesale Tier Licenses
04.09.200 .360: Retail Tier Licenses
04.09.400: Definition of Endorsements
04.09.410 - .520: Types of Endorsements
04.09.600: Definition of Permits
04.09.610 - .690: Types of Permits
MS. BRAWLEY displayed slide 15, License Types by Tier. She noted
that more information about each tier is in the stakeholder
report and that most of the license types are not changing
substantively.
• Manufacturing Tier
Brewery, Winery, Distillery
• Wholesale Tier
General Wholesale, Beer & Wine Wholesale
• Retail Tier
Subject to population limits: Beverage
Dispensary, Restaurant or Eating Place, Club,
Package Store, Pub, Theater, Common Carrier
Dispensary, Sporting Event, Golf Course, Brewery
Retail, Winery Retail, Distillery Retail
Exempt from population limits: Outdoor
Recreation Lodge, Destination Resort, Beverage
Dispensary Tourism, Seasonal Restaurant or Eating
Place Tourism, Winery Direct Shipment License
[SB 76: Section 9, defined in 04.09.020 040;
04.09.100 110; 04.09.200 360.]
1:55:58 PM
SENATOR SHOWER asked how the population limits and exemptions
would apply to a summertime tourist town like Talkeetna.
MS. BRAWLEY said Talkeetna's situation would not be changed in
the sense that certain license types are issued without
consideration of population limits. Also, the existing
population limits set within a borough or community within a
borough are not changed by SB 76.
SENATOR SHOWER asked for confirmation that Talkeetna and Denali
with the Princess lodges are in the Unincorporated Borough and
would not change.
MS. BRAWLEY said that's correct.
MS. BRAWLEY displayed slide 16, M-2&3. Manufacturer Retail
Operations + Sampling. It lists the following proposals for
breweries, wineries, and distilleries:
• Allow small manufacturers, with the threshold defined
in the bill, to obtain a retail license (restaurant,
package store, etc.) Currently, with the exception of
brewpubs, a manufacturer cannot get a package store
license or a restaurant license.
• Add-on retail licenses specifically for manufacturers
to allow limited onsite consumption and offsite sales.
Existing licenses converted
New retail licenses have 1:9,000 population limit
• A separate endorsement for free samples.
SB 76: Section 9, 04.09.310, .320, .330; 04.09.410;
Section 43, 04.11.400(a).
She said the 1:9,000 population limit recognizes the possible
unintended consequence of creating three new license types.
CHAIR COGHILL said he's heard some tension about the differences
in fees and licenses.
MS. BRAWLEY said her understanding is that there is an
application fee for all licenses and each has a different
license fee set in statute.
CHAIR COGHILL commented that the population limits are based on
an arcane formula that he needs to become familiar with.
2:00:08 PM
SENATOR SHOWER asked if the town of Valdez could have a second
manufacturer. It currently has one and a population of 4,000.
MS. BRAWLEY said the limit currently is 1:3,000. The statute
says 3,000 or part of 3,000 so a town of 4,000 people could have
two brewery licenses. SB 76 grandfathers any existing brewery
and any new applicant would be subject to the 1:9,000 limit. The
existing brewery in Valdez could open a new manufacturing space,
which is not subject to population limits. A tasting room would
not be available unless the population increases.
SENATOR SHOWER asked if that could be appealed to the board or
commissioner.
MS. BRAWLEY deferred the question to the Alcohol and Marijuana
Control Office.
MS. BRAWLEY said that slide 17, Proposed in SB 76: Volume Limits
for Free Samples from Manufacturers, demonstrates the volume
limits for free samples. Currently the ounce limit for free
samples is not defined in statute. The proposed ounce limits are
generally specific to the alcohol equivalent for each product
type.
2:02:31 PM
MS. BRAWLEY said that slide 18, Proposed in SB 76: Multiple
Retail License Options for Manufacturers illustrates the
different retail options for the manufacturing licensees. They
could either get a specific manufacturer retail license or they
could obtain an existing retail license. The slide provides an
example for breweries but the same would apply for all three
license types.
MS. BRAWLEY said slide 19, Proposed in SB 76: Onsite Consumption
Limits for Manufacturers, in Standard Product Units, shows the
proposed sales limits for on-site and off-site consumption.
These are by product type and license type. The bill does not
make substantive changes to the brewery and distillery retail
licenses. It does add ounce equivalents for winery retail, which
are not currently defined.
She asked if thee were any questions on the highlighted changes
to licenses.
CHAIR COGHILL said he's heard some pushback on the Distillery
Retail 3-ounce equivalent. He asked if that was debated during
the process.
MS. BRAWLEY said there was some debate and the group opted to
maintain the limits in current statute.
SENATOR WIELECHOWSKI asked if the bill fixes the issue of
distilleries being able to serve mixed drinks.
MS. BRAWLEY said no; the issue came up after the review process
was completed.
SENATOR WIELECHOWSKI asked if she would support amending the
bill to include a fix for that issue.
MS. BRAWLEY deferred to the sponsor.
CHAIR COGHILL said he received a negative response when he asked
the question but the committee should still ask him about that.
SENATOR COSTELLO asked how the ounce equivalents allowed for
Distillery Retail place relative to other states.
MS. BRAWLEY said her recollection is that 3 ounces is high in
the states that define an ounce limit. Some states do not define
a limit other than a small, free sample.
2:06:08 PM
MS. BRAWLEY said slide 20, Proposed in SB 76: Endorsements, is a
new concept. The idea is to provide more options for businesses
in terms of the area they are able to serve or the activities
they engage in. They are an add-on to existing licenses that
could only be transferred with a license and would need to be
renewed every two years. This also provides the legislature more
options to address new business concepts without having to
create a new license type.
CHAIR COGHILL asked if the ABC Board would authorize the
endorsements.
MS. BRAWLEY said the ABC Board would review applications for the
endorsements, but they would not create endorsements. They would
be defined in statute.
She said that slide 21, R-7 Create Endorsements, is a summary of
endorsements. The concept was used to reorganize and make more
logical activities that businesses can currently do.
• Create endorsements as add-ons to licenses in Title 4
• Endorsements must be issued with a license, renewed
biannually with the license, and cannot be transferred
to a new location
• Endorsements are not population limited
• Convert some existing sections or activities into
endorsements; create new endorsements
MS. BRAWLEY said that slide 22 lists the proposed endorsements.
The package store sampling is new. The sectional summary
provides information about whether or not they are new or in
current law. For example, [R-3] Package Store Sampling
Endorsement is new.
Slide 23, Proposed in SB 76: Package Store Sample Limits
illustrates the sample amounts allowed by product type. Alaska
law currently does not allow package stores to offer consumption
on premises. This proposal would allow a package store to apply
for an endorsement to provide small, free samples on their
premises. The samples would be subject to ounce limits defined
as: "Any combination of products, not to exceed the alcohol
equivalent of any single product type." The sample limits by
product are: beer or cider - 12 ounces; wine or mead 6 ounces;
and spirits 1.5 ounces. The business would decide whether to
operate this through a ticket system or menu.
2:09:52 PM
MS. BRAWLEY said that slide 24, R-7 Standardize Permits, does
not propose major changes for permits currently defined in
statute or regulation. A standard application process is
proposed for permits:
• Define all permit types in statute, not only 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 or Manufacturer to host an event on premises, in
partnership with a BDL [Beverage Dispensary License]
SENATOR SHOWER asked if a town could apply for a one-day Tasting
th
Event Permit for a July 4 celebration or if an existing license
would be required.
MS. BRAWLEY said it is defined by permit type. Some are
available only to current license holders of a specific type
while others are available to nonprofit organizations or other
entities.
MS. BRAWLEY said slide 25, Proposed Permits, shows proposed
permits and whether they are currently in regulation or statute:
• R-7F | Beverage Dispensary Caterer's Permit (AS
04.11.230; 3 AAC 304.685)
• R-7G | Restaurant Caterer's Dining Permit (3 AAC
304.680)
• R-7H | Club Caterer's Permit (3 AAC 304.690)
• R-7I | Nonprofit Event Permit (AS 04.11.240)
• R-7J | Art Exhibit Permit (3 AAC 304.697)
• R-7K | Alcoholic Beverage Auction Permit (3 AAC
304.699)
• R-7L | Inventory Resale Permit (Retail Stock Sale
License, AS 04.11.200)
• R-7M | Tasting Event Permit (proposed in SB 76)
MS. BRAWLEY highlighted that the Tasting Event Permit allows a
package store or manufacturer to host a special tasting event on
its premises in partnership with a beverage dispensary licensee
to showcase their products. Six of these events per license is
allowed each year.
CHAIR COGHILL commented that passage of the bill will have a
huge impact on the existing codes.
MS. BRAWLEY agreed and added that she would address the
implementation period later in the presentation.
She said that is the end of the permit recommendations.
2:12:13 PM
MS. BRAWLEY said slide 27, Proposed in SB 76: Regulate Trade
Practices, illustrates another recommendation that impacts
licenses. Federal laws governing trade practices protect
retailers from manufacturers or wholesalers unfairly influencing
purchase decisions. Most states have implemented parallel state
laws because the federal government lacks capacity for
enforcement. Also, federal law does not regulate trade practices
for breweries. That regulation is left to the states. Examples
of trade practices are:
• Tied House Partial ownership of retail license by a
manufacturer or wholesaler to control what products are
sold or exclude competitors. This does not apply to 100
percent manufacturer-owned licenses.
• Exclusive Outlet An agreement between a supplier and
retailer to exclude other retailers or suppliers.
• Commercial Bribery The supplier pays a bonus or provides
merchandise in exchange for exclusive arrangement or
agreement not to purchase other products.
• Consignment Sales A supplier and retailer make deals to
take back unsold products .
SB 76: section 77, 04.16.017
2:13:46 PM
MS. BRAWLEY said that slide 28, P-3. Retire Public Convenience
Process; New Options for REPLs, lists the recommendations for
Public Convenience Licenses:
• Repeal Public Convenience statute.
• Convert all existing Public Convenience restaurant licenses
to standard restaurant licenses. They are fully
transferrable and subject to population limits with
grandfathering.
• Create a Seasonal Restaurant Tourism License.
• Allow qualifying municipalities, first class cities, or
unified municipalities to petition the ABC Board to
increase the number of REPLs available in their community.
SB 76: Section 9, 04.09.210, .350; Sections 46-48,
04.11.405; Transition
MS. BRAWLEY said slide 29, Public Convenience Petition Process:
Current Title 4, illustrates the current Public Convenience
process in Title 4. The process involves gathering signatures on
a petition and submitting the petition and application to the
ABC Board. There is no definition of public convenience in
statute, so there isn't clear guidance on whether a license
would serve public convenience. If the ABC Board grants the
license, a new restaurant license can be issued without regard
to population limits.
MS. BRAWLEY said slide 30, Proposed in SB 76: Local Government
Petition for Additional Restaurant Licenses, illustrates another
Public Convenience License replacement. Instead of allowing for
individual applications to be considered outside of population
limits, first-class cities and unified municipalities will have
the ability to petition the ABC Board for an additional number
of restaurant licenses. They need to demonstrate they have the
enforcement capability to manage any potential impacts from
those licenses and that they have sufficient non-resident
population to support a market for that type of license. If the
ABC Board approves the petition and grants new licenses, the
city cannot petition again for 10 years. If the petition is not
granted, the city can return with a revised petition.
SENATOR SHOWER asked how the five-year limit applies, and if the
appeal process goes from the board to the commissioner.
MS. BRAWLEY said the language in the bill says 10 years if the
restaurant licenses are granted. If the permit is denied, there
is no limit on the ability to repetition. This system doesn't
exist in statute now, so there is no associated appeal process.
There is an appeal process for a denied or revoked license.
MS. BRAWLEY said slide 31, N-7. Allow Relocation of a Package
Store from Borough to City, is about a change to a mechanism in
current law allowing relocation of an existing bar license or
package store:
• Amend AS 04.11.400(k) to allow transfers of both BDL and
Package Store licenses from a borough to a city within the
borough.
• Currently, BDL relocations are allowed in boroughs with at
least 60,000 population.
• SB 76 would make relocation available in boroughs with at
least 50,000 population and currently operating licenses
that exceed population limits.
MS. BRAWLEY said slide 32, Proposed in SB 76: Option to Relocate
Some Licenses from a Borough to a City, illustrates this
concept. Licenses in a borough could be relocated from one
community to another.
Slide 33, Proposed in SB 76: Option to Relocate Some Licenses
from a Borough to a City, shows how many licenses would be
available currently for each of the three boroughs that would
qualify under this system. Only the borough's licenses in excess
of the population limits would be eligible for relocation into a
city. The purpose of that is to ensure that the population of
the borough continues to be served by sufficient licenses.
She said this concludes the recommendations regarding licensing.
MS. BRAWLEY said the next few recommendations relate to the
powers and duties of the ABC Board.
Slide 34, RB -4 ABC Board as Key Partner for Alcohol Education
Efforts, makes explicit that part of the board's mission would
be to provide education about Title 4.
• Designate the ABC Board and AMCO as the agency to develop a
multi-department, public-private sector education plan
about responsible alcohol use and applicable laws.
• Coordinate the ABC Board and AMCO as the agency to develop
a multi-department, public-private sector education plan
about responsible alcohol use and applicable laws.
SB 76: section 1, 04.06.075; section 5, 04.06.090
MS. BRAWLEY said slide 35, RB -2. Community Analysis of Written
Order Database, lists the duties and obligations associated with
the database that is overseen by the ABC Board:
• Allow data about direct shipment orders of alcohol in local
option communities to be made publicly available,
aggregated at the region or community level for analysis
and community planning.
• Written order database can only be accessed by AMCO
enforcement staff, other law enforcement, and package store
licensees who fill written orders.
• Personal information would be kept confidential.
SB 76: sections 6-7, 04.06.095
Slide 36, Proposed in SB 76: Publish Community-Level Data in
Local Option Order Database, illustrates how the Local Option
Order Database is treated currently and as proposed in the bill:
• In Current Title 4, all data in the Local Option Order
Database is private and is deleted after one year.
• SB 76 would keep individual order information private, but
retain aggregate data for 10 years and allow the ABC Board
to publish annual total sales volumes by region or
community.
• This valuable information would be available to communities
and law enforcement to understand the flow of alcohol into
local option communities via legal sales.
SB 76: sections 6-7, 04.06.095
SENATOR SHOWER asked what is the intended use of that data.
MS. BRAWLEY said it's knowing how much alcohol is coming into a
community. The data is already being collected and the proposal
was to make better use of that information.
SENATOR SHOWER said he'd need to think about that.
CHAIR COGHILL said there's been an ongoing debate in the
legislature about local option and how to have a dry community.
It's easier in the rural areas than in urban areas. He commented
that even the aggregated data could contain sensitive
information.
MS. BRAWLEY said that the next recommendation is to look at the
penalties defined in Title 4. Currently, almost all of the Title
4 penalties are class A misdemeanors. This ranges from serious
offenses such as selling without a license to not filing
paperwork correctly.
RB-6. Revise Title 4 Penalties
• Review penalties for all Title 4 sections, and revise
as needed to make penalties proportionate to the
offense, and more consistently enforced.
• Reduce most current Class A Misdemeanors to Minor
Offenses.
• Retain existing Misdemeanor and Felony charges for
serious offenses, particularly those causing harm to
children.
• Ensure that the ABC Board, and licensee if applicable,
is informed about Title 4 convictions by requiring the
court to send records to AMCO, and AMCO to send to the
licensee.
• ABC Board retains its authority to impose conditions
or additional penalties, including suspending or
revoking license.
• See Appendix, Table 3, pp. 67-72 in Report for table
of all current penalties and proposed changes.
SB 76: defined throughout; most prohibited acts are defined
in chapter 16
2:24:15 PM
CHAIR COGHILL said the members will be interested in looking at
the penalties individually and discerning the effectiveness of a
misdemeanor versus a fine that could have an economic impact.
MS. BRAWLEY noted the last bullet points to the table with the
current penalties and proposed changes.
MS. BRAWLEY said slide 38 addresses the rationale for reducing
penalties in Title 4. The stakeholder group looked at the
charges from 2009 to 2013 and found that a lot of cases were
dismissed. They also found that the Title was not being
consistently enforced. The rationale was to improve enforcement
of Title 4 by making lower level offenses more automatically
enforced and keeping more serious offenses at the current level.
She noted that Minor Consuming offenses was dealt with in a
different bill.
CHAIR COGHILL said offenses of minor consuming will be a future
topic of discussion. His intention is to make sure that bad
actors can't easily co-opt children.
MS. BRAWLEY said slide 39 highlights the general penalties for
each offense class. She pointed to the report for the specifics.
She said that concludes the recommendations related to the
powers of the board. The penalty recommendations cross multiple
sections of the bill.
CHAIR COGHILL said his primary focus for the committee is the
penalties.
2:27:16 PM
MS. BRAWLEY said the next recommendations related to underage
drinking and internet sales of alcohol. Slide 40 looks at the
effectiveness of current penalties and alternatives.
UAD-1. Employee Penalty for Selling Alcohol to a Minor
• Reduce the penalty for a licensee, agent or employee
selling alcohol to a minor (AS 04.16.052) from a Class
A Misdemeanor to a Minor Offense with $500 fine.
UAD-2. Licensee Liability for Employee Sales to Minors N-9.
Licensee Liability for Overservice by Employees
• Increase the consistency and certainty of sanctions to
licensees for violations of AS 04.16.030 and -052.
• A licensee whose employee incurs either violation
receives an administrative penalty of $250.
SB 76: section 81, 04.16.030; section 94, 04.16.052
CHAIR COGHILL said the level of the penalty is one thing, but
the mental state is another. He asked if the person serving the
alcohol would automatically lose their TAM Card as part of the
penalty.
MS. BRAWLEY said she didn't know.
She said slide 41 illustrates the licensee penalties for
overserving an adult or serving a minor.
MS. BRAWLEY said the next recommendation is something that was
enacted in 2016 for Minor Consuming Alcohol and Minor on
Premises. SB 76 proposes a similar system:
UAD-5. Minor Consuming Alcohol (MCA) and Related Violations
• Enacted in 2016: Restore Minor Consuming Alcohol (AS
04.16.050) to a true violation; same changes to Minor
on Premises (AS 04.16.049), previously Misdemeanor A.
• Proposed in SB 76: similar changes to penalties for
Minor Purchasing or Attempting to Purchase
(04.16.060).
• Similar to already enacted changes above, youth
charged with 04.16.060 would not appear in CourtView.
SB 76: section 98, 04.16.060
2:30:25 PM
MS. BRAWLEY said slide 43 deals with server education:
Require Server Education Card for All Retail Sales &
Service of Alcohol
• Server education includes training in verifying age
and identification, responsible alcohol service,
overserving, and applicable penalties for violations.
• Some, but not all, license types are required that
servers (employees) have alcohol server education
cards. Also not required for servers at permitted
events.
• Proposed in SB76: Require all license types who serve
the public, including sampling activities, to maintain
server education cards.
• Require servers for permitted events to be certified
prior to the actual event.
SB 76: sections 125, 126, 127; 04.21.025
MS. BRAWLEY said the next recommendation applies to keg
registration.
UAD-3. Statewide Keg Registration
• Require all beer kegs purchased in the state to be
registered (and tagged with customer's name).
• Law enforcement who confiscate a keg at an underage
party can determine who legally purchased the keg and
hold adults responsible for furnishing alcohol to
minors.
• Modeled on existing laws in Anchorage and Juneau.
• Applies to kegs (containers) 4 gal. or larger.
• Licensee keeps customer information about keg purchase
on file for a period of time.
• Purchaser can be fined for removing tag on a full keg.
SB 76: section 122, 04.21.012
MS. BRAWLEY said Alaska is one of the few states that has no
rules about internet sales of alcohol. Anyone can order alcohol
online from an out-of-state business and have it delivered to
their house. It is up to the business to check ID. The proposal
in SB 76 would regulate these sales. Slide 45 illustrates that
there are more rules on in-state businesses than out-of-state
businesses in this regard.
Internet Sales in Alaska: Few Rules
• Alaska Package Stores cannot sell alcohol online, only
via written order to "known" customers with ID on
file.
• 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.
MS. BRAWLEY said slide 46 introduces the Winery Direct Shipment
License.
• Create a license available to U.S. wineries to ship
orders of wine to Alaska customers.
• Prohibit online sales through this license in Local
Option areas.
• Prohibit other online sales of alcohol not under this
license or the Package Store Shipping endorsement.
• Modeled on similar licenses or permits for wineries
that exist in 44 other states.
• Requires age verification and delivering to the
customer in person, including a signature to
acknowledge receipt.
• Exempt from Alaska population limits.
SB 76: (Chapter 9) section 9, 04.09.360; section 79,
04.16.022
Slide 47 illustrates how the regulation of internet sales would
work.
Slide 48 highlights that the bill would allow collection of
excise tax on internet sales.
INT-2. Collect Alaska Excise Tax for Internet Sales
• In addition to maintaining current collection of excise tax
on sales from in-state wineries, require all out-of-state
holders of a Winery Direct Shipment license to pay the same
excise tax on Alaska orders.
• Currently, no tax is collected from online sales of alcohol
to Alaska customers.
• Legal precedent for collecting state alcohol tax from out-
of-state alcohol manufacturers: Granholm v. Heald (2005)
SB 76: section 146; 43.60.060
Slide 49 relates to package store shipping options
N-3. Expand Package Store Shipping Order Options
• Allow orders under a Package Store Shipping endorsement to
be received in formats other than a written order from a
known customer.
• This allows online ordering from in-state package stores,
including customers in Local Option areas.
• Existing requirements in AS 04.11.150(a) for ID, shipping
and delivery still apply. Package stores would still be
required to report all orders to Local Option areas in
Written Order Database.
SB 76: Section 9, 04.09.460; Section 105, 04.16.125
for common carrier rules
Slide 50, Proposed in SB 76: Regulate Internet Alcohol Sales,
illustrates the ABC Board's duties related to common carrier
transport and delivery of alcohol.
• Common carriers would need to 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.
• It would be the licensees' responsibility to work with
approved carriers for shipments to Alaska.
MS. BRAWLEY said this concludes the presentation.
2:35:20 PM
CHAIR COGHILL said he appreciates that the alcohol must be
delivered to a person He asked what procedure carriers follow if
they can't find the person receiving the package.
MS. BRAWLEY suggested FedEx and UPS answer the question; they
have their own existing policies.
SENATOR WIELECHOWSKI commented that this is a heavy lift
considering this is day 86 [of the 90-day legislative session].
He asked how this regulatory scheme compares to the alcohol laws
and regulations in other states.
MS. BRAWLEY said that's difficult to answer because states do
things differently.
SENATOR WIELECHOWSKI asked if she had a sense for how the bill
would impact alcohol abuse in the state.
MS. BRAWLEY replied a goal of the project is to address alcohol
abuse in Alaska. Changing business laws alone won't achieve
that, but the more logical the laws the easier it will be for
businesses and customers to operate responsibly. The rules about
service of alcohol are intended to have a beneficial impact.
SENATOR WIELECHOWSKI said he wonders if less regulation might be
more beneficial; it doesn't sound like there is any statistical
information on whether the bill proposes a heavier or lighter
touch than the laws in other states.
MS. BRAWLEY said the group looked at evidence-based best
practices and several are incorporated in the proposal. These
include keg registration, holding licensees responsible for what
happens on their premises, and population limits.
CHAIR COGHILL said the booklet, Recommended Changes for
Statutory Change is a good description of the process the
stakeholder group went through. He recommended it be posted
online. He asked if the group discussed the benefit of a
monetary penalty versus a misdemeanor penalty for an individual
who furnishes alcohol to a minor.
MS. BRAWLEY said the discussion the stakeholder group had was
that there would be a significant monetary impact on an
individual. The bill proposes a minor offense with a $500 fine.
It would not impact other related charges.
CHAIR COGHILL said he'll look at that penalty closely and have a
conversation with law enforcement on how that is applied.
SENATOR SHOWER asked if a first-class or home rule city could
opt out of license requirements and do it locally.
MS. BRAWLEY said it would be a change to the current system.
Current law says only the ABC Board can issue, transfer, renew,
suspend, and revoke licenses.
SENATOR SHOWER asked her thoughts on an amendment to allow a
community to ask for more licenses after 3 years versus 5 years.
MS. BRAWLEY said the city would primarily be impacted by making
more frequent requests.
SENATOR SHOWER said the MatSu is growing and there has been some
concern about limiting economic growth when the population is
increasing so rapidly.
CHAIR COGHILL asked her to review the implementation provisions.
MS. BRAWLEY said most of the bill, including most of the
licensing and penalty changes, would take effect January 1,
2020. The ABC Board has the ability to draft regulations to
implement the bill provided they do not take effect before the
bill takes effect. A few provisions, such as the repeal of
public convenience and the replacement aspects that were
discussed, take effect immediately. There are also a few sunset
provisions for licenses that don't fit current statutory
definitions.
2:52:55 PM
At ease
2:53:59 PM
CHAIR COGHILL reconvened the meeting and asked Ms. Brawley to
discuss the penalty provisions.
MS. BRAWLEY asked members to turn to page 13 of the sectional
analysis. She explained that most penalties in Title 4 are
currently class A misdemeanors. The sections that are not
clearly defined as a misdemeanor or felony are reduced to minor
offenses with a $250 fine.
Chapter 16. Regulation of Sales and Distribution.
Pages 79-97
Section 73 Hours of sale and presence on licensed
premises (standard closing hours)
AS 04.16.010(c) is amended to allow a person to be on
the licensed premises outside of the hours of sale to
conduct business with the licensee, maintenance, or
improvements, common carrier licensees, and adds
restaurant endorsement reference.
Section 74
AS 04.16.010 adds a penalty for violating the section.
Section 75 Pricing and marketing of alcoholic
beverages
AS 04.16.015(a) exempts sampling endorsements and
defines week as seven days.
Section 76
AS 04.16.015 adds a penalty for violating the section.
Section 77 Trade practices
AS 04.16.017 new section that specifies which illegal
trade practices cannot be practiced by manufacturers
or wholesalers and directs the board to adopt
regulations defining exceptions to those rules as well
as administrative penalties for violations.
CHAIR COGHILL said those regulations would be forthcoming.
MS. BRAWLEY said yes.
She continued to review the penalty provisions.
Section 78 Solicitation of alcoholic beverages;
purchase on behalf of another
AS 04.16.020 sets penalty for unauthorized
solicitation or purchase of alcoholic beverages.
Section 79 Online sale and purchase of alcoholic
beverages
AS04.16.022 new section prohibiting online purchase
and sale in Alaska unless the licensee has a winery
direct shipment license or package store shipping
endorsement. It also defines the penalties. [She noted
the penalties are different for a business selling
versus a person purchasing.]
Section 80 Illegal presence on premises involving
alcoholic beverages
AS 04.16.025(a) adds statutory references to all
penalties involving sale without a license. [ She
noted that current statute has one penalty that says
it is illegal to sell or manufacture without a
license. The bill breaks this out into multiple
penalties that are specific to unauthorized
manufacture or sale or unauthorized retail or sale.]
SENATOR WIELECHOWSKI referenced subsection (b) in Section 79 and
questioned how many people would check to see if the person they
were purchasing from held either a winery direct shipment
license issued under AS 04.09.360 or a package store shipping
endorsement under AS 04.09.460. He asked if it was common to
punish the purchaser in that situation.
MS. BRAWLEY said she didn't know about enforcement in other
states, but she understands that out-of-state businesses that
operate this way are diligent about checking whether they can
serve somebody in another state.
SENATOR WIELECHOWSKI asked if the standard for guilt in this
situation would be a knowing standard.
MS. BRAWLEY deferred the question to the Department of Law.
CHAIR COGHILL said he wanted to highlight the penalties today
and the Department of Law could discuss them more thoroughly at
a later date.
3:00:23 PM
MS. BRAWLEY continued to review the penalties in the sectional.
Section 81 Prohibited conduct relating to drunken
persons
AS 04.16.030 changes the existing penalty for
prohibited conduct relating to a drunken person, adds
an administrative penalty to the licensee if the
employee is convicted of a violation of this section,
and adds misdemeanor penalty for the licensee who
knowingly allows employees to violate this section.
CHAIR COGHILL commented that this section adds a penalty for a
licensee who knowingly violates this section.
MS. BRAWLEY said yes. The concept in AS 04.16.150 that says
licensees are responsible if they knowingly allow any illegal
activity on their premises, is added to this section.
SENATOR WIELECHOWSKI read the first sentence in the proposed
subsection (e) in Section 81. He asked if it means the holder of
the license is strictly and vicariously liable for any damages
that may be caused in addition to the $250 administrative
penalty or if the penalty is limited to just $250.
MS. BRAWLEY deferred the question to the Department of Law.
CHAIR COGHILL said he would flag that question for the
Department of Law.
MS. BRAWLEY continued to review the penalties in the sectional.
Section 82 - Possession of ingredients for homebrew in
certain areas
AS 04.16.035 changes the statutory reference from one
specific local option area to all local option areas,
consistent with AS 04.21.025 restricting private
manufacture of alcohol in all local option areas.
Section 83
AS 04.16.035 maintains the current penalty for
possession of ingredients for homebrew.
SENATOR WIELECHOWSKI asked what areas this relates to.
MS. BRAWLEY said it's any local option community that has held
an election to either limit sales or limit sales and importation
or limit sales, importation, and possession of alcohol.
SENATOR WIELECHOWSKI commented that the existing law seems to
broadly prohibit the possession of ordinary household items.
MS. BRAWLEY said it is her understanding that, depending on the
circumstances of the case, somebody who keeps yeast in their
house would not necessarily be considered possessing with the
intent to homebrew.
Section 84 - Access of drunken persons to licensed
premises
AS 04.16.040 rewords language relating to licensed
premises.
Section 85
AS 04.16.040 relocates and changes penalty for
prohibited access by a drunken person to licensed
premises. [She clarified that this relates to the
drunken person, not the licensee.]
Section 86 Obligation to enforce restrictions in
licensed premises
AS 04.16.045 relocates and changes penalty for
permitting consumption not authorized under a license.
Section 87 Access of persons with restriction on
purchasing alcohol
AS 04.16.047 adds a reference to a penalty for
entering and remaining on licensed premises defined in
AS 04.16.160.
CHAIR COGHILL clarified that he only wanted Ms. Brawley to
review the penalty sections.
Section 93
AS 04.16.051 changes penalties for furnishing or
delivering to a minor by a person, maintains one C
felony charge for situations where a minor is given
alcohol and causes serious injury or harm but removes
C felony for the offense of serving a minor in a Local
Option area, consistent with change in Section 61.
CHAIR COGHILL said he would look at that section closely because
some people groom minors with alcohol.
MS. BRAWLEY continued to review the penalty sections.
Section 94 Furnishing of alcoholic beverages to
person under the age of 21 by licensees
AS 04.16.052 changes penalties for furnishing or
delivering to a minor by a licensee or employee, adds
administrative penalty to licensee if employee is
convicted of a violation of this section and shifts
misdemeanor penalty in AS 04.16.150 to licensee who
knowingly allows employees to violate this section.
Section 95 -Room rental for purposes of consuming
alcoholic beverages
AS 04.16.055 changes the penalty for renting a room
for the purpose of providing alcoholic beverages to a
person under 21 years of age.
Section 96 Permitting minor to illegally possess
liquor in a dwelling
AS 04.16.057(b) maintains current violation for
allowing a minor to possess alcohol in a dwelling and
adds a $500 fine.
Section 98
AS 04.16.060 defines penalties for purchase by a
person under 21 years of age and delivery to a person
under 21 years of age. For persons under 21, adds
similar penalty structure as those in AS 04.16.049 and
AS 04.16.050, $500 fine for violation with option to
reduce fine to $50 if youth completes treatment or
community diversion panel. [She noted that if the
person is 21 years or older, it would be a minor
offense with a $500 fine.]
Section 100
AS 04.16.080 sets the penalty for consuming at a
school event.
Section 102
AS 04.16.090 defines the crime of maintaining a bottle
club, relocates and maintains current penalty.
3:07:57 PM
SENATOR WIELECHOWSKI asked if the definition of school event in
Section 100 would include a school fundraiser at a private
restaurant.
MS. BRAWLEY said her understanding is it would be an event that
is held on school grounds.
SENATOR WIELECHOWSKI requested further clarification on that
point.
CHAIR COGHILL flagged the question.
MS. BRAWLEY continued to review the penalty sections.
Section 103 Sale of certain alcoholic beverages
prohibited
AS 04.16.110 defines sale of a prohibited alcoholic
beverage, relocates and maintains [the misdemeanor]
penalty.
Section 104 Removal or introduction of alcoholic
beverages
AS 04.16.120 defines removal or introduction of
alcoholic beverages, sets penalty and exemptions.
[This is reduced to a minor offense.]
Section 105 Alcoholic beverages transported by
common carrier
AS 04.16.125 repeals and reenacts the section. Allows
for delivery to a person over the age of 21 with
signature from an order filled by a package store or
winery direct shipment licensee only by an approved
carrier, requires board to review carrier policies and
publish list of approved carriers, and removes some
detailed language for delivery to a local option area.
Maintains penalty for unauthorized transportation of
alcoholic beverages by common carrier into a local
option area and makes noncompliance a violation. [An
unapproved carrier who delivers alcoholic beverages
would be subject to $500 fine. It would be a $250 fine
if a carrier is approved but does not comply.]
Section 106 Stock confined to licensed premises
AS 04.16.130 sets penalty for unauthorized storage of
alcoholic beverages. 17
Section 107 - Sale or consumption of alcoholic
beverages in a warehouse
AS 04.16.140 sets penalty for consumption or sale of
alcoholic beverages in a warehouse
3:10:06 PM
SENATOR WIELECHOWSKI asked what constitutes unauthorized storage
in Section 106.
MS. BRAWLEY advised that it is any place that is not designated
as a licensed premises because storage of alcoholic beverages
must be on a designated licensed premises.
SENATOR WIELECHOWSKI referenced Section 105 and asked if a
person who is driving from the Lower 48 to Alaska would violate
the provision of transporting alcohol into the state if they
were not registered and had a bottle of beer in their car.
MS. BRAWLEY said she didn't believe this covers that situation.
SENATOR WIELECHOWSKI asked for clarification from the Department
of Law.
CHAIR COGHILL flagged the question for the Department of Law.
MS. BRAWLEY continued to review the penalty sections.
Section 108 Licensee responsible for violations
AS 04.16.150 changes the penalty for failure to ensure
compliance [to a minor offense with a $250 fine. The
exceptions would be the sections relocated to those
relating to serving a minor.]
Section 109 Restriction on purchasing alcoholic
beverages
AS 04.16.160 maintains current [misdemeanor] penalty
for failure to comply with a restriction on purchasing
alcoholic beverages.
Section 110 - 111 Source of alcoholic beverages
AS 04.16.170 exempts winery direct shipment license
and maintains current penalty for sale of alcoholic
beverages from or to an unlicensed person.
Section 112 - 113 Restrictions on purchase and sale
of alcoholic beverages
AS 04.16.172 renumbers cross-references to license
types and maintains current penalty for licensee
obtaining alcoholic beverages from an unlicensed
seller.
Section 114 Furnishing alcoholic beverages in aid of
gambling enterprise
AS 04.16.175 maintains current [misdemeanor] penalty
for the crime of furnishing an alcoholic beverage in
aid of a gambling enterprise. [She noted that
situation is not on a licensed premises so it's not a
licensee.]
Section 115 Penalties for violation
AS 04.16.180(b) adds statutory references to
prohibited conduct related to drunken persons and
furnishing alcoholic beverages to persons under the
age of 21 by licensees. [She noted that this section
is the penalties the ABC Board can apply to
licensees.]
3:14:17 PM
At ease
3:18:03 PM
CHAIR COGHILL reconvened the meeting and asked Senator
Micciche's staff, Rachael Hankey, to continue the sectional
summary of SB 76, starting with Chapter 21 keg registration.
3:18:17 PM
RACHAEL HANKE, Staff, Senator Peter Micciche, Alaska State
Legislature, Juneau, Alaska, reviewed the following sections of
SB 75 on behalf of the sponsor.
Chapter 21. General Provisions.
Pages 97-104
Section 122 Keg registration
AS 04.21.012 adds new section establishing a keg
registration process including proof of age,
registration form requirements, identification tags,
and establishes the penalty for possession and sale of
alcoholic beverages in an unregistered keg. [She noted
the penalty for the licensee is a $250 fine. The fine
for a person possessing an unregistered keg containing
alcohol is $100.]
Section 123 - 124 Civil liability of persons
providing alcoholic beverages
AS 04.21.020(a) renumbers cross-references.
Section 125 Alcohol server education course
AS 04.21.025(a) repeal and reenact section to list
license types that do not require server education
training: only licenses not serving the public are
exempt from requirement. [She noted the penalty is
reduced from a class A misdemeanor to a minor
offense.]
Section 126
AS 04.21.025(b) adds reference to permit holders and
individuals listed on an application as servers for a
permitted event.
Section 127
AS 04.21.025(c) adds reference to permit holders and
requires servers listed on the permit application to
have a current alcohol servers card by the first event
day.
CHAIR COGHILL said he understands that those penalties will be
followed by regulation.
MS. HANKE replied it falls under the alcohol server education
course in AS 04.21.025.
Section 128
AS 04.21.025 defines the offense of failure to comply
with alcohol server education requirements and sets
penalty.
Section 129 Proof of age and of not being restricted
from purchasing alcoholic beverages
AS 04.21.050(a) renumbers cross-reference.
Section 130 Warehousing of alcoholic beverages
AS 04.21.060 defines the offense of unauthorized
warehousing and establishes penalty. [She noted the
penalty is reduced from a class A misdemeanor to a
minor offense.]
SENATOR COSTELLO asked if warehousing is defined.
MS. HANKE deferred the question to Erika McConnell to say
whether or not a definition was in regulation.
Section 131 Posting of warning signs
AS 04.21.065(a) updates list of license types that
require warning signs. [She noted this remains a minor
offense with a fine of $20 to $300 per day depending
on the situation.]
Section 132
AS 04.21.072. Fines and other criminal penalties. New
section which sets penalties for other violations,
misdemeanors, or felonies unless otherwise specified.
AS 04.21.074. Bail forfeiture schedule. Directs the
supreme court to set a bail schedule for Title 4
violations.
AS 04.21.076. Suspension of fine or sentence. Prevents
the court from suspending fines or sentences for minor
offenses.
Section 133 Court records of persons under 21 years
of age
AS 04.21.078 adds additional statutory reference to
violations of AS 04.16.060.
Section 134 Definitions
AS 04.21.080(b)(6) adds reference to permit holders
and license holders.
Section 135
AS 04.21.080(b)(15) adds endorsements.
Section 136
AS 04.21.080(b) adds definitions.
MS. HANKE said the following are changes to other various
titles.
Amendments to Various Other Titles.
Pages 104-109
Section 137 Definitions
AS 05.15.690(48) renumber beverage dispensary license reference
and update "bar" definition.
She noted she was moving out of the penalties.
Section 146 Winery direct shipment tax; statement; audit
AS 43.60.060 establishes tax collection on direct wine shipments
from out of state businesses holding this license and outlines
requirements for the Department of Revenue.
CHAIR COGHILL observed that the penalty would be in regulation.
MS. HANKE clarified that this is a new concept. Most of the
licensees would be out-of-state and the penalties would be minor
offenses.
SENATOR COSTELLO asked if the bill had a fiscal impact.
MS. HANKE replied new revenue is generated by the bill and the
fiscal notes are posted online.
SENATOR COSTELLO said she didn't believe the bill had a finance
referral.
MS. HANKE agreed.
CHAIR COGHILL said he'd think about that. He asked Ms. Hanke to
ensure that the Department of Law and the Alcoholic Beverage
Control Board were available for the hearing on Friday.
3:25:22 PM
CHAIR COGHILL held SB 76 in committee for further consideration.