Legislature(2013 - 2014)BARNES 124

04/02/2014 03:15 PM House LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 309 CRAFT DISTILLERY LICENSE TELECONFERENCED
Moved CSHB 309(L&C) Out of Committee
+= HB 152 PERS TERMINATION COSTS TELECONFERENCED
Moved CSHB 152(L&C) Out of Committee
*+ HB 160 LICENSING OF ATHLETIC TRAINERS TELECONFERENCED
Moved Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                HB 309-CRAFT DISTILLERY LICENSE                                                                             
                                                                                                                                
3:19:48 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced  that the first order of  business would be                                                               
HOUSE  BILL NO.  309,  "An  Act relating  to  a craft  distillery                                                               
license."                                                                                                                       
                                                                                                                                
REPRESENTATIVE  REINBOLD moved  to adopt  the proposed  committee                                                               
substitute  (CS) for  HB  309,  labeled 28-LS0698\Y,  Strasbaugh,                                                               
3/6/14, [Version Y] as the working document.                                                                                    
                                                                                                                                
CHAIR OLSON objected for the purpose of discussion.                                                                             
                                                                                                                                
3:20:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TUCK, Alaska  State Legislature,  stated that  HB
309 will not have any impact  on the state but will modernize the                                                               
distillery laws in  Alaska so they more closely  mirror those for                                                               
wineries  and breweries  by giving  distilleries  the ability  to                                                               
attract customers by hosting tours  of their facilities and offer                                                               
samples and sell products.                                                                                                      
                                                                                                                                
REPRESENTATIVE  TUCK  explained  the   changes  in  the  proposed                                                               
committee  substitute (CS)  for  HB 309,  Version  Y, will  allow                                                               
local  distilleries take  part  in the  tourism  industry.   This                                                               
could contribute more to the  economy and create jobs by allowing                                                               
for the sales of up to one  gallon of the product directly to the                                                               
public for consumption off premises.   This bill would also allow                                                               
for the  sale of not  more than  three ounces for  consumption on                                                               
premises  and for  the public  to  sample small  portions of  the                                                               
product free  of charge.   Similar to wineries and  breweries, HB
309 would prevent  distilleries from acting as a de  facto bar by                                                               
prohibiting  bar-like   amenities  such   as  limited   hours  of                                                               
operation.   This bill has  received the  support of all  five of                                                               
Alaska's  small distilleries,  the Brewers  Guild of  Alaska, the                                                               
Haines  Chamber  of  Commerce,   Explorer  Fairbanks,  the  Kenai                                                               
Peninsula Tourism Marketing Council,  the Alaska Farm Bureau, and                                                               
Alaska  Cabaret, Hotel,  Restaurant,  and Retailer's  Association                                                               
(CHARR).  He reported that HB 309 does not have any opposition.                                                                 
                                                                                                                                
3:22:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TUCK provided a  section-by-section analysis of HB
309, Version Y.  He referred to  page 1, lines 3-9, Section 1, to                                                               
AS 04.11.170, related  to distillery licenses.   Current law only                                                               
allows for the  distillery operation and sales to  licensees.  He                                                               
said that HB 309 will allow  the holder of the distillery license                                                               
to  sell   alcoholic  beverages   directly  to  the   public  for                                                               
consumption off  premises, limited to  one gallon.   He explained                                                               
that previously a distributor could only sell to licensees.                                                                     
                                                                                                                                
3:23:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TUCK referred to page  1, lines 8-9, of Version Y,                                                               
noting  the prohibition  of  selling less  than  five gallons  is                                                               
removed at  the request  of industry since  there wasn't  a clear                                                               
reason for the restriction.  He  referred to page 1, lines 10-15,                                                               
Section 2, which  allows for free samples in  small portions with                                                               
exceptions for  intoxicated persons.  He  related that subsection                                                               
(e) allows for sales of up to three  ounces a day to a person for                                                               
consumption   on  the   premises,  similar   to  provisions   for                                                               
breweries.   He  highlighted  prohibitions in  Version Y  against                                                               
live  entertainment, televisions,  pool  tables, dancing,  games,                                                               
game  tables, or  other recreational  or gaming  opportunities on                                                               
the premises  where the product  is served,  and seats at  a bar.                                                               
Additionally, this  section would  limit hours from  9 a.m.  to 8                                                               
p.m.  He  stated that these restrictions are  intended to prevent                                                               
distilleries  from  acting  as  de  facto bars.    He  noted  two                                                               
amendments in members' packets are pending.                                                                                     
                                                                                                                                
3:25:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  asked how  many distilleries  are located                                                               
in Alaska.                                                                                                                      
                                                                                                                                
REPRESENTATIVE TUCK  answered that five distilleries  are located                                                               
in Alaska, with one in  Matanuska-Susitna area, one in Anchorage,                                                               
one in Haines, and one located on the Kenai-Peninsula.                                                                          
                                                                                                                                
3:26:09 PM                                                                                                                    
                                                                                                                                
GEORGE  ASCOT, Staff,  Representative  Chris  Tuck, Alaska  State                                                               
Legislature,  identified the  five  distilleries in  Alaska.   He                                                               
stated  that the  Alaska Distillery  is located  in Wasilla,  the                                                               
Bare Distillery,  Alaska, LLC is  located in Anchorage,  the High                                                               
Mark Distillery, Inc.  is located in Sterling,  the Port Chilkoot                                                               
Distillery is  located in  Haines, and  Ursa Major  Distilling is                                                               
located in Fairbanks.                                                                                                           
                                                                                                                                
3:26:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REINBOLD asked about the fiscal note.                                                                            
                                                                                                                                
REPRESENTATIVE TUCK  said it  is a  false fiscal note.   It  is a                                                               
zero fiscal  note, but the false  fiscal note of $10  million per                                                               
year indefinitely was intended as an April Fools' Day joke.                                                                     
                                                                                                                                
3:27:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REINBOLD  moved to adopt Amendment  1, labeled 28-                                                               
LS0698\Y.1, Strasbaugh, 3/28/14, which read as follows:                                                                         
                                                                                                                                
     Page 2, following line 7:                                                                                                  
     Insert a new bill section to read:                                                                                         
        "* Sec. 3. AS 04.21.065(a) is amended to read:                                                                      
          (a)  A holder of one of the following types of                                                                        
       licenses or permits shall post on the licensed or                                                                        
      designated premises three separate warning signs as                                                                       
     described in (b) of this section:                                                                                          
               (1)  beverage dispensary license;                                                                                
               (2)  restaurant or eating place license;                                                                         
               (3)  club license;                                                                                               
               (4)  brewery license; this paragraph applies                                                                     
       only to a brewery that permits a person to sample                                                                        
     portions of the brewery's product;                                                                                         
               (5)  package store license;                                                                                      
               (6)  common carrier dispensary license;                                                                          
               (7)  recreational site license;                                                                                  
               (8)  pub license;                                                                                                
               (9)  winery license; this paragraph applies                                                                      
        only to a winery that permits a person to sample                                                                        
     portions of the winery's product;                                                                                          
               (10)  distillery license; this paragraph                                                                     
     applies only to a distillery that permits a person to                                                                  
     sample portions of the distillery's product;                                                                           
               (11)  caterer's permit;                                                                                      
              (12) [(11)]  special events permit;                                                                           
               (13)   [(12)]      conditional   contractor's                                                                
     permit;                                                                                                                    
               (14) [(13)]  another license or permit                                                                       
         issued by the board authorizing consumption of                                                                         
     alcoholic beverages."                                                                                                      
                                                                                                                                
CHAIR OLSON objected for the purpose of discussion.                                                                             
                                                                                                                                
3:27:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TUCK  explained  that  Amendment  1  adds  a  new                                                               
section that  requires posting of  warning signs to  caution that                                                               
drinking and smoking during pregnancy  can lead to birth defects.                                                               
It would also inform people that  a person providing alcohol to a                                                               
person  under the  age of  21  can receive  up to  five years  in                                                               
prison and  a fine of  $50,000.  Additionally, Amendment  1 would                                                               
identify  that  a person  under  21  years  of age  entering  the                                                               
premises could  be subject to a  fine up to $1,000,  which is the                                                               
same as for any type of establishment that serves alcohol.                                                                      
                                                                                                                                
3:28:39 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON  removed his  objection.    There being  no  further                                                               
objection, Amendment 1 was adopted.                                                                                             
                                                                                                                                
3:28:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REINBOLD  moved to adopt Amendment  2, labeled 28-                                                               
LS0698\Y.2, Strasbaugh, 3/28/14, which read as follows:                                                                         
                                                                                                                                
     Page 2, following line 7:                                                                                                  
     Insert a new bill section to read:                                                                                         
        "* Sec. 3. AS 04.21.025(a) is amended to read:                                                                      
          (a)  As a condition of issuance or renewal of a                                                                       
     license  and   selling  alcoholic  beverages   under  a                                                                    
     license, the  board shall require a  licensee who sells                                                                    
     or serves  alcoholic beverages and a  licensee's agents                                                                    
     and employees who sell or  serve alcoholic beverages or                                                                    
     check  the identification  of a  patron to  complete an                                                                    
     alcohol server education course  approved by the board,                                                                    
     if the license is for a                                                                                                    
               (1)  beverage dispensary;                                                                                        
               (2)  restaurant or eating place;                                                                                 
               (3)  club;                                                                                                       
               (4)  package store;                                                                                              
               (5)  recreational site;                                                                                          
               (6)  pub;                                                                                                        
               (7)  distillery;                                                                                             
               (8)  conditional contractor."                                                                                
                                                                                                                                
CHAIR OLSON objected for the purpose of discussion.                                                                             
                                                                                                                                
REPRESENTATIVE  TUCK stated  that  Amendment 2  adds  a new  bill                                                               
section  related  to  alcohol  server   education  courses.    He                                                               
explained  that distilleries,  their  agents,  and employees  who                                                               
sell  or serve  alcohol must  complete an  alcohol server  course                                                               
approved  by the  board.   He  said  that it  has  been known  as                                                               
[Techniques of  Alcohol Management]  (TAM), but  the new  card is                                                               
now  called a  [Training for  Alcohol Professionals]  (TAP) card.                                                               
He   noted   that   anyone   serving   alcohol   has   the   same                                                               
responsibilities  and requirements  to get  certified as  for any                                                               
other establishment.                                                                                                            
                                                                                                                                
CHAIR  OLSON  removed his  objection.    There being  no  further                                                               
objection, Amendment 2 was adopted.                                                                                             
                                                                                                                                
3:30:17 PM                                                                                                                    
                                                                                                                                
HEATHER SHADE,  Co-owner, Port  Chilkoot Distillery,  stated that                                                               
the distillery  produces hand crafted  small batches  of whiskey,                                                               
gin, and vodka in Southeast Alaska.   She wished she could invite                                                               
members  to  visit  the  distillery,   which  is  in  a  restored                                                               
historical  building;   however,  existing  laws   prohibit  this                                                               
invitation.  Five  distilleries are located in  Alaska, with each                                                               
representing a unique region of the  state.  She compared this to                                                               
over 450 small  distilleries nationwide.  She  reported that most                                                               
states have  updated their distillery  laws to allow  for on-site                                                               
tastings  and sales.    She stated  that this  has  led to  great                                                               
economic  success.   Idaho passed  their distillery  bill several                                                               
weeks  ago, which  is similar  to the  one before  members today.                                                               
The  distilleries  in  Alaska are  already  contributing  to  the                                                               
state's  economy, supporting  other  industries in  Alaska.   She                                                               
advised   members  that   her   distillery   buys  Alaska   grown                                                               
agricultural products, which  are used to make  the craft spirits                                                               
and  also creates  export  products for  the  state and  provides                                                               
jobs.   She predicted that if  this law is updated  she will hire                                                               
two additional  people to accommodate  the visitor aspect  of the                                                               
business.   It is  difficult to  compete with  national distilled                                                               
products so this  bill will model what  microbreweries have done.                                                               
She noted  the importance of  distilleries being able  to promote                                                               
their products on  site to be competitive.  In  fact, it is often                                                               
the personal  connection with  the customer  that sets  the small                                                               
distilleries  apart from  imported mass-produced  products.   She                                                               
related  the  many challenges  that  businesses  face in  Alaska,                                                               
including the seasonal market, the  high-cost of exportation, and                                                               
difficult  shipping  logistics,  and  the  bill  would  help  the                                                               
distilleries  be in  a better  position  to absorb  the costs  by                                                               
operating the distilleries as visitor destinations.                                                                             
                                                                                                                                
3:34:06 PM                                                                                                                    
                                                                                                                                
MS. SHADE  related that the  community of  Haines has been  a big                                                               
supporter  of  their  distillery  business and  many  people  are                                                               
excited to  show it off.   She pointed  out that the  business is                                                               
located next to the cruise ship dock  and she hopes to be able to                                                               
invite visitors  to the  distillery.   Essentially this  bill has                                                               
been  the result  of teamwork  with distilleries,  the breweries,                                                               
the  tourism  industry, the  farm  bureau,  and the  chambers  of                                                               
commerce.   She concluded that  the local communities  are hoping                                                               
to  see these  new businesses  survive.   Similar bills  in other                                                               
states have proved to be a huge  success and this one is good for                                                               
Alaska's businesses.  She hoped members would support the bill.                                                                 
                                                                                                                                
3:35:04 PM                                                                                                                    
                                                                                                                                
FELICIA  KEITH-JONES, Owner,  High Mark  Distillery, stated  that                                                               
her distillery is a hand-crafted one.   She said that HB 309 will                                                               
mean tastings, tours,  and bottle sales from  her own distillery.                                                               
She  emphasized  that  this  needs to  happen  to  modernize  the                                                               
industry  guidelines currently  being  enjoyed  by breweries  and                                                               
wineries across Alaska.  She  characterized the system as being a                                                               
little  antiquated only  since  distilleries  did not  previously                                                               
exist in Alaska.  The state  has five distilleries and it is time                                                               
to  catch  up  with  the  rest of  the  industry.    The  current                                                               
guidelines  are rather  restricting and  confusing, for  example,                                                               
the  federal government  requires the  distilleries to  train and                                                               
establish distilleries  across the  U.S.  She  personally trained                                                               
in Spokane at Dry Fly  Distillery and at Jack Daniels Distillery.                                                               
These  distilleries are  used as  models for  running an  Alaskan                                                               
distillery; however,  she was  informed that  Alaska's guidelines                                                               
do not follow  the same federal guidelines  that the distilleries                                                               
providing the training follow.   She said she is passionate about                                                               
HB 309  due to  the sales  potential and  the ability  to capture                                                               
lost revenue.   In  fact, distilleries  are anchors  for tourism,                                                               
and the Kenai Peninsula has  already lost potential revenue.  For                                                               
example,  the  Alaska  General Contractors,  Inc.  and  political                                                               
functions  would like  to  use the  Alaskan  spirits, but  cannot                                                               
currently sample the products.   The bill would also help support                                                               
buying Alaskan  products.  Fishing derbies  and dipnetting brings                                                               
thousands  of  visitors  to  the region  and  many  want  tasting                                                               
parties for  chartered clients.   Hotels  have reported  that the                                                               
distillery gives people a reason to stay an extra day to visit.                                                                 
                                                                                                                                
MS.  KEITH-JONES stated  that the  Kenai-Peninsula currently  has                                                               
five breweries, one winery, and  her distillery.  It keeps people                                                               
in the communities  for a longer length of time.   She personally                                                               
turned  away  three  carloads  of  people  who  wanted  to  visit                                                               
yesterday so the word is out.   On average, tasting rooms command                                                               
$45,000 to $150,000 per year  in purchases.  Alaskan distilleries                                                               
also  are subject  to three  taxes totaling  40 percent  for each                                                               
bottle sold, which is currently lost revenue to the state.                                                                      
                                                                                                                                
3:39:47 PM                                                                                                                    
                                                                                                                                
MS. KEITH stated  that her company provides  an interesting place                                                               
to go,  and the  distillery is an  example of  applied chemistry.                                                               
She pointed out  lost revenue to the state  and local government.                                                               
She also  noted that her  distillery could expand her  staff from                                                               
four to  six or  seven employees  if she has  a tasting  room. In                                                               
addition, her  distillery uses all  Alaskan or U.S. goods.   Last                                                               
year  she paid  $28,000 in  shipping  to one  company in  Alaska.                                                               
This industry  has been viable  and is  growing and she  hopes it                                                               
will  to  continue  to  grow.    The  distillery  uses  renewable                                                               
resources, including  grain and water  and donates spent  mash to                                                               
chicken farmers.  She also  employs a veteran.  Distilled spirits                                                               
are one  of the main products  that can easily be  exported, at a                                                               
profit,  to the  Lower  48  and internationally.    In fact,  her                                                               
products  are requested  internationally.   She also  highlighted                                                               
key  successes  in  hand  crafted   spirits,  noting  the  Kenai-                                                               
Peninsula has shown overwhelming  support towards the distillery.                                                               
She reported that High Mark  Distillery has been chosen two years                                                               
in a row  for people's choice awards at the  "Taste of the Kenai"                                                               
event and  was selected as Wells  Fargo's successful entrepreneur                                                               
of the  year for 2013.   The  Haines Chilkoot Distillery  and the                                                               
High  Mark   Distillery  were  chosen   by  the   small  business                                                               
development center  as success stories  for 2014.  She  said this                                                               
industry is  a highly motivated one  that has proven to  bring in                                                               
income and  create jobs.   Many  non-profits have  mentioned they                                                               
depend on  her distillery's contributions  to sustain them.   She                                                               
concluded by  mentioning letters  of support in  members' packets                                                               
from  many  organizations.    She  urged  members  to  allow  the                                                               
distilleries to use the "Buy Alaska" stamp.                                                                                     
                                                                                                                                
3:44:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MILLETT  asked  whether   anyone  has  talked  to                                                               
Mothers against Drunk Driving.                                                                                                  
                                                                                                                                
REPRESENTATIVE TUCK  answered no; but  commented that he  has not                                                               
had any push back so far.                                                                                                       
                                                                                                                                
3:44:40 PM                                                                                                                    
                                                                                                                                
DALE  FOX, President  & CEO,  Alaska Cabaret,  Hotel, Restaurant,                                                               
and Retailer's  Association (CHARR),  testified in support  of HB
309, noting the CHARR's  government affairs committee unanimously                                                               
supported the  intent of HB  309 to help the  Alaska distilleries                                                               
and  to  give them  the  same  rights  that  have been  given  to                                                               
breweries  and wineries.   He  complimented the  sponsor and  the                                                               
distilleries for doing a great  job on outreach and communicating                                                               
with  all of  the parties  to ensure  that the  bill had  all the                                                               
needed elements.   He characterized the bill as a  good bill that                                                               
is worthy of members' support.                                                                                                  
                                                                                                                                
3:45:38 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON,  after first  determining  no  one else  wished  to                                                               
testify, closed public testimony on HB 309.                                                                                     
                                                                                                                                
CHAIR  OLSON  removed his  objection.    There being  no  further                                                               
objection, Version Y was before the committee.                                                                                  
                                                                                                                                
REPRESENTATIVE JOSEPHSON  said it seems  like a good bill  and it                                                               
is a niche  that could be enhanced for this  type of opportunity.                                                               
He suggested the committee support it.                                                                                          
                                                                                                                                
3:46:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON asked to put a  question on the record.  He                                                               
recalled that  a distillery sells  its products at  the Anchorage                                                               
Airport.   He assumed  that this  would not be  a place  at which                                                               
samples could be given.                                                                                                         
                                                                                                                                
REPRESENTATIVE TUCK was unsure if  the bill limits location, that                                                               
if the  distillery is  licensed and  wishes to  dispense products                                                               
they could do so.                                                                                                               
                                                                                                                                
REPRESENTATIVE MILLETT said she likes the bill.                                                                                 
                                                                                                                                
REPRESENTATIVE TUCK  clarified that the distillery  is limited to                                                               
spirits.                                                                                                                        
                                                                                                                                
3:47:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REINBOLD  moved to  report the  proposed committee                                                               
substitute  (CS) for  HB  309,  labeled 28-LS0698\Y,  Strasbaugh,                                                               
3/16/14,   as  amended,   out   of   committee  with   individual                                                               
recommendations and  the accompanying  fiscal note.   There being                                                               
no  objection, the  CSHB  309(L&C) was  reported  from the  House                                                               
Labor and Commerce Standing Committee.                                                                                          
                                                                                                                                

Document Name Date/Time Subjects
HB309 ver C.PDF HL&C 4/2/2014 3:15:00 PM
HB 309
HB309 Sponsor Statement.pdf HL&C 4/2/2014 3:15:00 PM
HB 309
HB309 Draft Proposed Blank CS ver Y.pdf HL&C 4/2/2014 3:15:00 PM
HB 309
HB309 Summary of Changes ver C to Ver Y.pdf HL&C 4/2/2014 3:15:00 PM
HB 309
HB309 Draft Proposed Amendment ver Y.1.pdf HL&C 4/2/2014 3:15:00 PM
HB 309
HB309 Draft Proposed Amendment ver Y.2.pdf HL&C 4/2/2014 3:15:00 PM
HB 309
HB309 Supporting Documents-Assorted Letters.pdf HL&C 4/2/2014 3:15:00 PM
HB 309
HB309 Supporting Documents-News Articles-Assorted.pdf HL&C 4/2/2014 3:15:00 PM
HB 309
HB309 Fiscal Note-DCCED-ABC-03-27-14.pdf HL&C 4/2/2014 3:15:00 PM
HB 309
HB160 ver O.pdf HL&C 4/2/2014 3:15:00 PM
HB 160
HB160 Sponsor Statement.pdf HL&C 4/2/2014 3:15:00 PM
HB 160
HB160 Sectional Analysis.pdf HL&C 4/2/2014 3:15:00 PM
HB 160
HB160 Fiscal Note-DCCED-CBPL-03-28-14.pdf HL&C 4/2/2014 3:15:00 PM
HB 160
HB160 Supporting Documents- Athletic Trainer Profession Sheet.pdf HL&C 4/2/2014 3:15:00 PM
HB 160
HB160 Supporting Documents- Athletic Trainers Fact Sheet.pdf HL&C 4/2/2014 3:15:00 PM
HB 160
HB160 Supporting Documents-Assorted Letters.pdf HL&C 4/2/2014 3:15:00 PM
HB 160