Legislature(1995 - 1996)
04/06/1995 09:15 AM Senate FIN
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SENATE BILL NO. 87
"An Act relating to community local options for control
of alcoholic beverages; relating to the control of
alcoholic beverages; relating to the definition of
'alcoholic beverage'; relating to purchase and sale of
alcoholic beverages; relating to alcohol server
education courses; and providing for an effective
date."
Senator Taylor testified that last year the Alcoholic
Beverage Control Board, prompted by concerns over a lack of
clarity in how local option elections are to be conducted,
asked for legislation to simplify the process. The board
also asked that the same vehicle be used to address long
needed technical and common sense amendments to Title 4.
The result was Senate Bill 372, which passed the Senate and
moved through the committee process in the House, only to
die in the Rules Committee in the hectic final days of the
18th State Legislature. Senate Bill 87 is substantially the
same as last year's legislation. The bill addresses the
shortcoming in the current statute dealing with local option
elections, for which no provision is made for moving from
one type of option to another. Under current law, a
community must first vote to remove all restrictions on the
sale and importation of alcoholic beverages and then conduct
another vote on a new option. This burdensome process can
cause confusion for municipalities and unincorporated
villages alike. SB 87 was amended in the Community and
Regional Affairs and Judiciary Committees to address
specific concerns raised by local option communities. Those
amendments have the support of the ABC Board and the
chairman of the sponsoring committee. He also noted that
except for a potential average annual income, or increase in
revenues of approximately $5,000 from the registration of
beverages, this legislation does not create any fiscal
impact on Board operations, or on the Division of Elections.
Pat Sharrock, Director, Alcohol Beverage and Control Board,
responded to Senator Rieger's inquiry of Section 1, page 1,
lines 13 and 14. He stated that it does not apply because
it is referring to a package store that would exist in the
community as the result of that community obtaining a
package store license under that local option provision. He
stated that there are only 3 or 4 community-owned package
stores in the state.
Senator Donley questioned Mr. Sharrock as to the Board's
ability to police. He spoke of licensees with frequent
violations and bad records, and asked if there was anything
in this legislation to encourage the Board to take action on
such cases, because he stated that they are not doing it
now.
Mr. Scharrock responded that there was nothing in the
legislation that would detract from the Board's ability to
pursue enforcement activity. He stated that he was in
disagreement because he is the one to enforce the law and
initiating enforcement actions against licensees. Mr.
Scharrock said that the budget is part of the problem. In
response to Senator Donley's inquiry to page 4, line 4, he
stated that 75,000 gallons is what is needed to establish a
brew pub.
Co-chair Halford requested a section by section explanation
of the legislation.
Mr. Scharrock began with Section 1. He stated that a
current licensee could not solicit or have someone in the
area receive orders on his or her behalf. He said that this
bill removes the name community license. Discussion was had
on this section.
Section 3, eliminates the name of the community liquor
license because that has been changed in the local option
provisions.
Section 4, is a suggestion by the Board itself. It is new,
and a result of restaurants holding a beer and wine license
instituting entertainment on their premises, where at times
the primary activity of patrons is not dining, but rather
entertainment. The law and the class of license did not
intend for that to happen. Even the regulations by the
Board, state that primary activity must be dining. The
Board tried to address it through regulation saying that
restaurants could have entertainment between the hours of 6
and 9 p.m. That was unsatisfactory to most licensees. What
this amendment does is allow one license for each 10, to
come under this exempt provision that says all they have to
have is food available. It addresses the issue of either
changing times or the desire of licensees to do different
things. The Board has referred to it at times as a semi-
tavern license. It does not create an additional class of
license. The Board did not want to do that. In essence,
for eating or restaurants offering beer and/or wine, they
cannot have more than 50% of gross revenues from the sale of
alcohol removed for the license.
Joe Ambrose, Legislative Aid from Senator Taylor's office.
He pointed out a provision that would make the licenses non-
transferable to another person. Eventually, there would be
a reduction in the number of licenses, because as people
went out of business, that license would cease to exist.
Additionally, it requests the Board to take action, and must
be approved by the local governing body who has authority
and responsibility over the area in which the premises
exists. Additional discussion regarding the particulars of
this section continued.
Teresa Williams, Dept. of Law, Anchorage interjected that
the semicolon on line 18 means or.
Section 6 relates to a number change related to another
section because of the rewrite of the local option.
Section 7 is a technical amendment which says that a package
store licensee, in response to a written order for alcoholic
beverages, can only ship whatever he orders to the
purchaser.
Teresa Williams responded to Section 8. She stated that it
is a technical amendment to conform with the new law. Beer
is sold in gallons. The language has been changed to
reflect that measure.
Section 9 relates to primary source. It solidifies or
enhances what is nationally known as a three tier system.
Alcohol is produced by a manufacturer, purchased by a
wholesaler, sold to a retailer, who sells to the public.
This requires a registration of brands by wholesalers in
this state, identifying the suppliers that they receive
alcoholic beverages from and they pay a fee to file that
information with the Alcoholic Control Board.
Section 10 is a continuation of Section 9. It states that
holders of beverage dispensary or bar licenses, package
store licenses or club licenses, and restaurant licenses,
must purchase their alcoholic beverages for resale from a
wholesale licensee within the state.
Section 11 has been amended to read that the licensee may
continue to do business if he has not renewed his license,
but the fine has increased to $500 and the new deadline is
January 1.
Section 12 adds a citation difference and removed a sub-
section 7 and 8 which are obsolete since the rewrite of the
local option provision.
Section 13 is an amendment that says the Board can impose
conditions on licenses. Page 9 line 3. Senator Donley asked
if the Board ever denied renewal to a licensee who was
convicted of having illegal gambling operations on their
premises? Mr. Sharrock responded that the Board has
suspended licenses for that offense. Senator Donley would
like to cross-reference the activity division of gaming and
harness illegal operations. His interests were focused on
ABC board revoking licenses. Ms. Williams interjected that
her office deals with approving the filing of non-renewals
and accusations. Her office has filed an accusation in all
cases in which the Division of Gaming has instituted
proceedings against the gaming license. The ABC Board is
the one who often first discovers the problem. In the past
two years, there have been 4 or 5 licenses which have had
action taken against their license, as a result of illegal
gaming. In addition, a non-renewal of license for the
Lonely Lady in Fairbanks, for such activities including the
owners participation in illegal gaming. That license was
revoked.
Senator Donley requested a list covering the past 5 years
showing the licensees recommended to the Board for action
and what the Board actually did.
Section 14 and 15 is a change in the statutory citation.
Ms. Williams explained that subsections 9 and 10 covering
the reference to community liquor license was completely
removed. One of the various options is to restrict licenses
to be: only a package store, a restaurant, or a beverage
dispensary. The notion of a community liquor license
operating as the only operation has been deleted and instead
it is that function which is being permitted.
End of Tape 26
Begin Tape 28, Side 1
Senator Rieger addressed the complaints on arbitrary
enforcement. Mr. Sharrock responded that he has not heard of
a complaint on arbitrary enforcement in a long time. He
stated that he would not bring a matter to review for
prosecution unless he knows he has a strong case. He also
mentioned that continuously, notices of violations are
issued to licensees for perceived or alleged violations or
possible violations as a result of receiving police reports.
Section 17 puts in statute, the Board's ability to impose
restrictions on licenses. It may do so under the force of
statute. He stated that at a recent Board meeting, several
applicants had somewhat questionable backgrounds. Some had
alcohol problems in the past, convictions from misdemeanors,
etc. The Board placed conditions on the granting of those
applications on those licensees stating, "if you have a
problem with substance abuse, alcohol or anything else, on
or off the premises, we would revoke or not renew your
license." The ability to do that is what would be enhanced
by this particular amendment.
Section 18 clarifications of language and changes to
statutory citations because of the rewriting of the local
option law.
Section 19 fixes a glitch that occurred when we moved from
annual to bi-annual renewal. When we went to bi-annual
renewal, half of the licensees that didn't file the renewal
were not reviewed by an assembly or community counsel or
local government body. This allows a municipality during
the window of January 1 to 31st, to review a license
operation and protest.
Senator Sharp questioned the regulations that circumvent the
statutory 30-day period in Section 19 for a local government
protest to be considered? Mr. Sharrock stated that there is
a regulation that allows them an additional 30-days to
protest. Discussion was had on the transfer of days.
Co-chair Halford the bill will be brought back at the next
meeting.
ADJOURNMENT
The meeting was adjourned at approximately 11:00 a.m.
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