Legislature(2013 - 2014)BARNES 124
04/02/2014 03:15 PM House LABOR & COMMERCE
Audio | Topic |
---|---|
Adjourn | |
Start | |
HB309 | |
HB152 | |
HB160 |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
*+ | HB 309 | TELECONFERENCED | |
+= | HB 152 | TELECONFERENCED | |
*+ | HB 160 | TELECONFERENCED | |
+ | 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.