04/09/2015 01:30 PM Senate LABOR & COMMERCE

         SB  99-ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG                                                                     
                                                                                                                                
2:40:09 PM                                                                                                                    
CHAIR  COSTELLO   reconvened  the   meeting  and   announced  the                                                               
consideration of SB 99. "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 the  Alcoholic Beverage  Control Board;  relating to                                                               
offenses involving  alcoholic beverages; relating to  the offense                                                               
of minor consuming; relating to  revocation of a driver's license                                                               
for  a minor  consuming offense;  relating to  the effect  of the                                                               
revocation of  a driver's license  for a minor  consuming offense                                                               
on a motor vehicle liability  insurance policy; and providing for                                                               
an effective date."                                                                                                             
                                                                                                                                
2:40:24 PM                                                                                                                    
SENATOR  MICCICHE,  Sponsor  of   SB  99,  thanked  the  Rasmuson                                                               
Foundation  for its  support and  helping to  improve the  public                                                               
safety  of  all  Alaskans.  He   introduced  SB  99  reading  the                                                               
following   sponsor   statement   into  the   record:   [Original                                                               
punctuation is provided.]                                                                                                       
                                                                                                                                
     SB  99 makes  important updates  to statutes  governing                                                                    
     the  Alcoholic  Beverage  Control Board  to  allow  the                                                                    
     Board  to function  more  efficiently  and continue  to                                                                    
     regulate the  alcoholic beverage  industry in  a manner                                                                    
     that promotes  public safety and health  while allowing                                                                    
     the  industry continued  viability.  This  bill is  the                                                                    
     product of  a two-year, unprecedented  collaboration of                                                                    
     stakeholders   from  a   diverse   group  of   industry                                                                    
     representatives and public  health and safety entities.                                                                    
     The  result is  a  reorganization  of Alaska  Statutes,                                                                    
     Title  4, to  set  out the  rights  and obligations  of                                                                    
     licensees and  the consuming public  in a  logical, and                                                                    
     well-organized manner.                                                                                                     
                                                                                                                                
     SB  99  would  amend  and  clarify  provisions  on  the                                                                    
     appointment  of  the  five-member ABC  Board.  Adequate                                                                    
     representation  would  occur   through  appointment  of                                                                    
     persons from  the public  safety sector,  public health                                                                    
     sector, from a rural area,  and the general public. Not                                                                    
     more than  two of the  members may be  actively engaged                                                                    
     in  the alcoholic  beverage industry.  The director  of                                                                    
     the   ABC  Board,   depending   on  experience,   could                                                                    
     represent one of the enumerated  sectors. A new section                                                                    
     is   added  to   the  director's   duties  to   require                                                                    
     preparation of  an annual budget to  cover enforcement,                                                                    
     education, training,  and prevention activities.  SB 99                                                                    
     would require  the ABC  Board to  review fees  not less                                                                    
     than every 10 years.                                                                                                       
                                                                                                                                
     Provisions  on  fines  and penalties  for  engaging  in                                                                    
     prohibited  acts are  updated  for clarity  as to  when                                                                    
     fines  and  penalties  may be  imposed.  Other  penalty                                                                    
     sections   are  amended   to   enable  consistent   and                                                                    
     predictable enforcement and just outcomes.                                                                                 
                                                                                                                                
     The new  statutory provisions continue with  the three-                                                                    
     tier  licensing  system for  manufacturer,  wholesaler,                                                                    
     and retail  licenses; create  a new  endorsement system                                                                    
     to  expand the  boundaries of  licensed businesses  and                                                                    
     accommodate special  events; and modify  the permitting                                                                    
     system  for clarity.  Through  this more  comprehensive                                                                    
     licensing structure, persons  wishing to participate in                                                                    
     the  industry  will  know better  what  activities  are                                                                    
     allowed  for  each license  type.  The  bill adds  some                                                                    
     provisions that reflect  industry trends toward product                                                                    
     tastings   to  authorize   a  holder   of  a   beverage                                                                    
     dispensary  license  to   sell  or  dispense  alcoholic                                                                    
     beverages at a permitted tasting event.                                                                                    
                                                                                                                                
     Passage  of  SB  99   will  protect  Alaskans,  provide                                                                    
     clarity  for  alcoholic   beverage  licensees  and  the                                                                    
     public, and  result in  more consistent  enforcement of                                                                    
     the alcoholic beverage industry.                                                                                           
                                                                                                                                
SENATOR MICCICHE  stated that the  most important segment  of the                                                               
bill  provides  reasonable  youth  consumption  improvements.  It                                                               
dramatically improves  the process  that now adversely  affects a                                                               
young person  for the rest  of life  his/her life because  of one                                                               
poor decision.                                                                                                                  
                                                                                                                                
2:44:47 PM                                                                                                                    
BOB  KLINE,  Chair,  Alcoholic   Beverage  Control  (ABC)  Board,                                                               
informed the committee that Title 4  was written in the 1980s and                                                               
was state of the art at the  time. Since then, both the state and                                                               
the industry  has changed and  revision is needed. He  noted that                                                               
brew pubs hadn't  been invented when the statute  was written. In                                                               
May,   2012    70   some   stakeholders   assembled    and   made                                                               
recommendations to  improve the  structure and  implementation of                                                               
Title  4. A  rule that  was established  initially was  that only                                                               
consensus  could move  change forward.  SB  99 is  the result  of                                                               
thousands of hours  of this collaborative effort  and everyone is                                                               
proud of the outcome.                                                                                                           
                                                                                                                                
CHAIR COSTELLO thanked the participants for their commitment.                                                                   
                                                                                                                                
2:48:28 PM                                                                                                                    
JEFF  JESSE,  Chief  Executive   Officer,  Alaska  Mental  Health                                                               
Authority,  Anchorage, Alaska,  stated  that SB  99 is  important                                                               
legislation  because  the  Title 4  statutes  regulate  alcoholic                                                               
beverages in the state and  the Alcoholic Beverage Control Board,                                                               
staff and law enforcement carry out  these laws. Title 4 is being                                                               
reviewed because it  has not been updated since  1980 and changes                                                               
have  been  made  in  a  hodge podge  fashion.  The  laws  became                                                               
confusing and many were outdated.                                                                                               
                                                                                                                                
The review and rewrite was  a lengthy and time-consuming process.                                                               
Since May,  2012 more than  60 stakeholders and staff  spent from                                                               
6,000  to   7,000  hours  to   craft  the   recommendations.  The                                                               
stakeholders  included  youth,   public  health,  public  safety,                                                               
business, and rural communities.  The Rasmuson Foundation and the                                                               
Mental Health  Trust funded the  infrastructure, hired  people to                                                               
help draft the results and keep committee minutes.                                                                              
                                                                                                                                
The committees involved in the  review process were the Licensing                                                               
Subcommittee,  Role  of  the  Board  Subcommittee,  Local  Option                                                               
Subcommittee,  Underage  Drinking  Subcommittee,  Internet  Sales                                                               
Subcommittee, and  the Steering Committee. For  each subcommittee                                                               
he displayed  the name  of each member  and the  organization and                                                               
sector that each  represented. [This information may  be found in                                                               
the committee file and online.]                                                                                                 
                                                                                                                                
Speaking as chair  of the Licensing Subcommittee,  he pointed out                                                               
that  it  had representation  from  all  the different  licensing                                                               
groups,  ranging from  the wholesalers  to the  manufacturers, to                                                               
retailers,  to attorneys  for licensees,  and  public health.  He                                                               
pointed out that the Role of  the ABC Board Subcommittee also had                                                               
broad  representation  including   local  government.  The  Local                                                               
Option Subcommittee  had considerable representation  from tribal                                                               
entities,  public safety,  and  industry.  The Underage  Drinking                                                               
Subcommittee was  led by  the Division  of Behavioral  Health and                                                               
also  included  representation  from  public  safety,  ABC  Board                                                               
staff, education,  and industry. The Internet  Sales Subcommittee                                                               
examined  the  issue  of  internet   alcohol  sales  that  bypass                                                               
Alaska's   alcohol   regulation   and  taxation   system.   Their                                                               
recommendations are  pending depending on a  proposed USPS policy                                                               
change regarding its ban on shipping alcohol through the mail.                                                                  
                                                                                                                                
2:53:00 PM                                                                                                                    
MR.  JESSEE explained  that Alaska's  alcohol  license system  is                                                               
based on  a three-tier  system of  regulation that  separates the                                                               
manufacturing tier, the wholesale tier,  and the retail tier. The                                                               
reason  for the  separate  tiers  is to  keep  the industry  from                                                               
getting monopolized by vertical  integration. He related that one                                                               
of  the goals  was to  recognize  the evolution  of the  business                                                               
model and offer new business  opportunities to industry that does                                                               
not  negatively affect  the public  health and  public safety  of                                                               
communities.                                                                                                                    
                                                                                                                                
He  displayed  a schematic  of  the  manufacturing and  wholesale                                                               
tiers and explained that rather  than having a number of esoteric                                                               
licenses, the  proposal is to  have a  system of base  license to                                                               
which  endorsements   could  be   added.  For  example,   in  the                                                               
manufacturing  tier a  brewery,  winery,  or distillery  producer                                                               
could add  a sampling  endorsement. He  noted that  the wholesale                                                               
tier has  a general  wholesale component and  a limited  beer and                                                               
wine component.                                                                                                                 
                                                                                                                                
The retail tier has a  framework for community level licenses and                                                               
tourism  licenses.  At  the  community  level  there  are  twelve                                                               
different licenses  and endorsements  are available  to different                                                               
license types.  The four types  of tourism licenses  are intended                                                               
to maintain the population-based limit  on access to alcohol in a                                                               
community  while allowing  additional  access  points during  the                                                               
tourist season when Alaska's population increases dramatically.                                                                 
                                                                                                                                
2:55:28 PM                                                                                                                    
MR.   JESSEE   reviewed   the   following   licensing   revisions                                                               
recommended by the committee:                                                                                                   
                                                                                                                                
   · Decrease  the  number  of license  types  and  simplify  the                                                               
     licensing system to achieve  more consistent enforcement and                                                               
     adherence to state alcohol regulations.                                                                                    
   · Update  licensing  fees  to support  the  ABC  budget  while                                                               
     placing more emphasis on education  and training rather than                                                               
     enforcement. This includes  adjusting wholesale license fees                                                               
     and simplifying supplier reporting.                                                                                        
   · Realign the system to better enforce population limits.                                                                    
   · Implement a  system of endorsements  and permits  to provide                                                               
     flexibility without creating more license types.                                                                           
   · Bring all licenses, endorsements  and permits into one place                                                               
     in statute and remove redundant or unused types.                                                                           
                                                                                                                                
The role  of the ABC  Board Subcommittee  was to ensure  that the                                                               
ABC Board  fairly represents  the interests  of all  Alaskans and                                                               
can lead in  alcohol education, policy and  control. The proposed                                                               
revisions included:                                                                                                             
                                                                                                                                
   · Implement  uniform  police reporting  requirements;  develop                                                               
     enforcement,  education,   and  prevention   plans  directly                                                               
     connected to the matching funds.                                                                                           
   · Allow   data  about   alcohol  purchases   to  be   released                                                               
     (aggregated at  the region or community  level) for analysis                                                               
     and community self-assessment.                                                                                             
   · Base the  ABC Board  budget on  the activities  and staffing                                                               
     needed to achieve the ABC Board's mission.                                                                                 
   · Designate  ABC Board  seats to  ensure representation  by: 1                                                               
     public  health, 1  public  safety, 2  industry  and 1  rural                                                               
     public  member;   consider  the  director's   background  in                                                               
     filling the designations.                                                                                                  
                                                                                                                                
The Underage Drinking Subcommittee  proposed revisions focused on                                                               
reforming underage  drinking sanctions so that  adults who supply                                                               
minors  with alcohol  are held  to greater  accountability. Other                                                               
proposed revisions included:                                                                                                    
                                                                                                                                
   · Reducing  the  penalty for  a  licensee,  agent or  employee                                                               
     selling alcohol to  a minor (Sec. 04.16.052) from  a class A                                                               
     misdemeanor to a minor offense violation.                                                                                  
   · Increasing the  consistency and certainty  of administrative                                                               
     sanctions to licensees upon conviction of violating Sec.                                                                   
     04.16.052.                                                                                                                 
   · Requiring statewide keg registration.                                                                                      
                                                                                                                                
Another goal of the Underage  Drinking Subcommittee was to reform                                                               
the  underage drinking  sanctions so  that minors  do not  become                                                               
criminals for making one poor decision. The revisions included:                                                                 
                                                                                                                                
   · Clarifying required language on  signs warning minors of the                                                               
    legal consequences of their entering licensed premises.                                                                     
   · Restoring  the minor  consuming alcohol  (MCA) offense  to a                                                               
     true violation.                                                                                                            
                                                                                                                                
MR.  JESSEE  displayed  the Local  Option  Subcommittee  proposed                                                               
revisions to  strengthen local  options laws  and the  ability to                                                               
enforce them. These included:                                                                                                   
                                                                                                                                
   · Repealing local  option 4, which  bans sale  and importation                                                               
     of alcohol, but not possession.                                                                                            
   · Increasing the ABC budget for  dedicated Title 4 enforcement                                                               
     staff.                                                                                                                     
   · Increasing the  local option boundary  from a  5-mile radius                                                               
     to a 10-mile radius from the village center.                                                                               
   · Increasing the  misdemeanor-level fines for  bootlegging and                                                               
    imposing additional unit fines per container of alcohol.                                                                    
   · Making possession  of homebrew ingredients  and/or equipment                                                               
     with intent to produce alcohol illegal in all local option                                                                 
     communities.                                                                                                               
                                                                                                                                
2:58:01 PM                                                                                                                    
MR.  JESSEE opined  that everyone  comes  out a  winner with  the                                                               
Title  4  revisions. Business  got  more  opportunity, youth  are                                                               
better protected,  the public health is  better protected, public                                                               
safety  is enhanced,  and rural  communities also  get ahead.  He                                                               
said the recommendations were placed  in the bill and the various                                                               
stakeholders are in the process  of examining it for completeness                                                               
and accuracy.                                                                                                                   
                                                                                                                                
2:58:44 PM                                                                                                                    
CHAIR COSTELLO  expressed appreciation  for the  introduction and                                                               
announced  she  would  hold  SB   99  in  committee  for  further                                                               
consideration.