Legislature(1997 - 1998)
05/01/1998 03:40 PM Senate JUD
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SB 138 - REGULATION OF ALCOHOL
MR. RON DEFORE, representing the Americans for Responsible Alcohol
Access and the Emergency Nurses Associations, expressed concern
about toll free alcohol sales over the Internet.
TAPE 98-36 SIDE B
Number 001
MR. DEFORE said these Internet sales represent a rapidly expanding
underground economy that should be prevented. MR. DEFORE remarked
that other states have criminalized this type of sale of alcoholic
beverages and suggested Alaska should join them. MR. DEFORE
clarified that not only fine wines are available over the Internet,
but cheap beer and hard liquor are also available and can be
delivered overnight.
MR. DEFORE did not oppose consumer access to these products, if
underage purchase can be controlled. He said there is a process
under development now where people could order their favorite
products and have them delivered to a local retailer, through a
national locator system.
SENATOR PEARCE asked if the language before them would affect
auction sales of wine and spirits. MR. DEFORE replied he could not
comment specifically on that, but reiterated that he opposed any
direct shipment of alcohol to a person's doorstep, regardless of
the manner of purchase.
MR. J. ROSS RANFOLO, Special Counsel to the New York State Attorney
General, testified in support of the amendment to SB 138, also due
to the possibility of underage purchase and consumption of alcohol.
Number 500
MR. RANFOLO reported to the committee the results of an
investigation of some Internet companies: 14 out of 14 illegal
liquor sales and shipments to underage buyers without any type of
age verification. MR. RANFOLO added that some deliveries of alcohol
were also made to dry towns, subverting the will of the local
electorate. He cited greed and a desire to escape state tax as the
motive behind much Internet alcohol marketing. MR. RANFOLO
concluded by urging the adoption of the amendment.
MS. JAN WRENTMORE, owner of the Red Onion Saloon in Skagway,
supported the amendment.
MR. CHRIS ANDERSON, co-owner of the Glacier Brew House in
Anchorage, said the failure of this bill's passage has been a real
problem and is hampering the growth of his business. MR. ANDERSON
also expressed concern about losing his ability to provide
entertainment to his patrons and to sell "growlers" - half gallon
bottles of beer he believes his establishment sells responsibly.
MR. ANDERSON supported passage of the bill, with the proposed
amendments and the inclusion of the ability to sell growlers.
SENATOR PEARCE noted that the original version of the bill was
introduced at the request of the Alcohol Beverage Control Board.
MR. ANDERSON commented that the bill represented a reasonable
consensus achieved between the board and industry representatives.
SENATOR PEARCE asked what section precluded the sale of growlers
and MR. ANDERSON pointed out page three, section four, line 21.
CHAIRMAN TAYLOR asked if the Glacier Brewpub holds a retail licence
and MR. ANDERSON replied he did not. CHAIRMAN TAYLOR concluded that
may be the problem. He surmised this was a question of competition
brought up by the unique situation and licenses of brewpubs.
Number 255
SENATOR ELLIS moved Amendment #1, labeled E-3. There was an
objection from SENATOR PEARCE who explained the amendment also
prohibited Internet sale and auction sales as well. SENATOR PEARCE
said there was no concern about these issues from Alaska Law
enforcement. SENATOR ELLIS suggested the committee might modify the
amendment to alleviate SENATOR PEARCE's concern and prevent the
possibility of underage sale. CHAIRMAN TAYLOR suggested the
committee take testimony from the ABC Board to clarify the issue.
MR. DOUG GRIFFIN, representing the ABC Board, said the amendment
before them was not submitted by the Board. MR. GRIFFIN reviewed SB
138, identifying sections 1, 2, 3, 8, 10, 11, 13 and 16 as
housekeeping measures designed to deal with limited liability
companies (LLC).
Number 150
MR. GRIFFIN stated that concerns about bootlegger liability have
already been addressed in a bill passed in 1997 and section 15 of
the bill is redundant and may be removed. MR. GRIFFIN remarked that
the bill does provide for limited delivery of gift baskets
containing alcohol by package stores.
Number 121
MR. BOB BAILEY from Alaska Distributors testified from Anchorage in
support of SB 138, especially the provision prohibiting direct
shipping. CHAIRMAN TAYLOR asked if this amendment was offered on
MR. BAILEY's behalf and MR. BAILEY replied it was a consensus among
wholesalers, retailers and concerned citizens. CHAIRMAN TAYLOR
asked if, under this provision, SENATOR PEARCE would be able to
order products not available in state and have them shipped to her.
MR. BAILEY stated the amendment as written is a complete ban on
shipping but he feels the positive effects of the amendment
outweigh the negative effects.
Number 95
MR. RICHARD SASSARU, testified from Anchorage on behalf of Railway
Brewery Company in favor of SB 138 generally but specifically
opposed the limitation on the number of gallons that a brewpub can
produce, the elimination of growlers, and the prohibition on
entertainment. MR. SASSARU concluded by changing his support of the
bill to opposition, saying he preferred the status quo until these
problems could be worked out.
MR. GARY KLOPFER, owner of the Snow Goose Restaurant, apologized to
all parties involved, saying he and his partner started the brewpub
fracas in the first place.
TAPE 98-37, SIDE A
Number 001
MR. KLOPFER commented that he spent more than two million dollars
on his establishment and although he runs a pub, more than 75% of
his sales are food. He feels people are biased against brewpubs and
if the clause prohibiting entertainment was passed in SB 138, his
establishment would no longer be able to be host to the Fur
Rendezvous "Melodrama." MR. KLOPFER also repeated the idea that
growlers are a very valuable marketing tool. He concluded that he
did not support the bill in its present form.
MS. ANN WILKAS, representing the Moose's Tooth Brewing Company and
the Moose's Tooth Pub and Pizzeria opposed SB 138 and the
amendments proposed. MS. WILKAS agreed with previous testimony from
Anchorage breweries saying this bill needs work. MS. WILKAS
recommended the committee not pass SB 138.
Number 165
MR. DON GRASSE, General Manager of KML Distributors, clarified that
the proposed amendment would not allow for catalog or auction sales
of fine wines. MR. GRASSE recognized this as a problem.
SENATOR ELLIS interjected that his primary concern was shipment of
alcoholic beverages to underage people. SENATOR ELLIS added he
would be happy to make conceptual changes to the Amendment to
accommodate SENATOR PEARCE's ideas. CHAIRMAN TAYLOR affirmed that
it is already illegal to sell, deliver or convey alcohol to minors
and the problem exists with enforcement.
Number 240
SENATOR ELLIS withdrew Amendment #1.
CHAIRMAN TAYLOR declared Amendment #2 would not be offered.
CHAIRMAN TAYLOR brought up Amendment #3, which would change the
number of dispensary licenses in a community by limiting the award
of new licences to facilities with 35 rooms. CHAIRMAN TAYLOR asked
Doug Griffin for comments on this amendment. MR. GRIFFIN relied
that the board had no official position on this issue but is
sensitive to the intent behind it.
SENATOR PEARCE offered Amendment #3. Without objection, the
amendment was adopted.
CHAIRMAN TAYLOR addressed Amendment #4 as the next order of
business.
Number 350
SENATOR ELLIS explained that this amendment (#4) is, in the advice
of the drafter, the cleanest way to extend the life of existing
brewpubs by canceling the old brewpub arrangement and instituting
a new one. SENATOR ELLIS stated that amendment #4 is the only way
the Moose's Tooth can stay in business. MR. GRIFFIN added that the
Moose's Tooth is in a unique situation and the board's proposal
does not allow for them.
MR. GRIFFIN remarked that the board was uncomfortable with broad
language that grandfathers in existing businesses. He said as the
brewpub situation exists, brewpubs (restaurant/breweries) can
bottle and sell their beer via wholesalers, but they are limited to
75,000 gallons unless they receive permission from the board to
exceed that cap.
Number 494
SENATOR ELLIS moved Amendment #4 and without objection, the
amendment was adopted.
CHAIRMAN TAYLOR offered Amendment #1 and on a roll call vote of
three yeas and two nays the amendment was adopted.
SENATOR ELLIS proposed a conceptual amendment (Amendment #5) to
allow the continuation of the sale of growlers. Without objection,
it was so ordered.
CHAIRMAN TAYLOR also proposed (Amendment #6) to delete all of
section 15, which has been made redundant by a bill passed by
Representative Ivan Ivan in 1997. Without objection, Amendment #6
was adopted.
SENATOR ELLIS moved SB 138 out of committee with individual
recommendations. Without objection, it was so ordered.
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