Legislature(2005 - 2006)CAPITOL 17

04/10/2006 03:15 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSHB 431(L&C) Out of Committee
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
HB 431-WINERY LICENSES                                                                                                        
4:08:37 PM                                                                                                                    
CHAIR ANDERSON  announced that the  final order of  business would                                                              
be HOUSE  BILL NO.  431, "An Act  relating to sales  of wine  by a                                                              
winery licensee."                                                                                                               
4:09:01 PM                                                                                                                    
CHRISTINE  MARASIGAN,  Staff  to   Representative  LeDoux,  Alaska                                                              
State  Legislature, sponsor,  noted a  draft committee  substitute                                                              
(CS) included in members' packets.                                                                                              
REPRESENTATIVE ROKEBERG  made a motion to adopt  CSHB 431, Version                                                              
24-LS1578\G, Luckhaupt,  4/06/06, as the working  document.  There                                                              
being no objection, Version G was before the committee.                                                                         
MS. MARASIGAN  explained  that HB  431 makes  it possible  for in-                                                              
state wineries  to sell  wine in-state.   Currently, she  said, it                                                              
is  possible to  go  online and  purchase  wine from  out-of-state                                                              
wineries; however, it is currently illegal to purchase from in-                                                                 
state wineries.                                                                                                                 
4:10:38 PM                                                                                                                    
STEVEN  (STEVE) THOMPSON,  Owner, Alaskan  Wilderness Wines,  said                                                              
that  HB 431  would give  in-state wineries  equal treatment  with                                                              
out-of-state wineries.  He encouraged support of the bill.                                                                      
REPRESENTATIVE   ROKEBERG  asked  what   types  of   wine  Alaskan                                                              
Wilderness Wines produces.                                                                                                      
MR.  THOMPSON  replied  that  his  company  currently  produces  a                                                              
variety  of berry  wines, in  addition to  sparkling rhubarb,  and                                                              
mead.  He said that production is around 150 cases per year.                                                                    
4:12:01 PM                                                                                                                    
DALE FOX,  Executive Director,  Alaska Cabaret, Hotel,  Restaurant                                                              
&  Retailer's  Association  (CHARR),  related  that  Alaska  CHARR                                                              
supports the  provisions for  Alaska wineries  to ship  product to                                                              
Alaskans.  He  related that most states allowed  in-state wineries                                                              
to  ship but  not  the out-of-state  wineries,  which resulted  in                                                              
supreme court  challenges.  Alaska  has a small industry,  and all                                                              
that  can  be done  to  support  it  should  be done,  he  opined.                                                              
Clearly,  if  out-of-state wines  are  allowed  to be  shipped  to                                                              
Alaska,  those wineries  in the  state should  also be allowed  to                                                              
ship  to  Alaskans.    Mr. Fox  highlighted  that  when  a  retail                                                              
package store ships  alcohol it must follow the  specifications of                                                              
13 AAC 104.645,  which basically establishes provisions  to ensure                                                              
that the purchaser  is 21 years of age and the order  is paid.  If                                                              
in-state  wineries  are  allowed  to ship,  then  they  should  be                                                              
required to follow the same rules as package stores, he said.                                                                   
4:14:07 PM                                                                                                                    
REPRESENTATIVE   CRAWFORD   recalled  that   similar   legislation                                                              
addressed this two to three years ago.                                                                                          
CHAIR  ANDERSON reminded  the committee  that  the legislation  to                                                              
which Representative Crawford spoke did not pass.                                                                               
REPRESENTATIVE  GUTTENBERG noted  that there  was a supreme  court                                                              
ruling  that specified  that there  can't  be two  sets of  rules,                                                              
which  this legislation  corrects.    He asked  if  there are  any                                                              
statements by the courts that need to be addressed.                                                                             
4:15:29 PM                                                                                                                    
MS. MARASIGAN  explained  that in  most other  states wine  can be                                                              
shipped  within  the  state,  but  those  from  out-of-state  were                                                              
prevented  from shipping  wine  into the  state.   Therefore,  the                                                              
supreme court  ruling stated  that both  must be treated  equally.                                                              
In  Alaska, out-of-state  wineries are  allowed to  ship into  the                                                              
state while  in-state wineries aren't  allowed to ship  within the                                                              
REPRESENTATIVE  GUTTENBERG asked  if  the parity  of taxation  was                                                              
addressed in this ruling.                                                                                                       
MS. MARASIGAN said  she did not believe that it was.   She related                                                              
her belief  that taxes  were addressed  such that an  out-of-state                                                              
winery couldn't  be charged more  to ship into another  state than                                                              
what those in the state were being charged.                                                                                     
REPRESENTATIVE  GUTTENBERG questioned  whether the ruling  touched                                                              
taxation as it applies to Internet sales.                                                                                       
4:17:17 PM                                                                                                                    
DOUGLAS (DOUG)  B. GRIFFIN,  Director, Alcoholic Beverage  Control                                                              
Board  ("ABC Board"),  in response  to an  earlier question,  said                                                              
that  the ABC  Board  would not  have  a problem  instructing  the                                                              
wineries   to   follow   the  same   provisions,   written   order                                                              
provisions, as for  package stores.  For equity, he  agreed that a                                                              
similar  regulation  to apply  to  direct shipment  from  wineries                                                              
would be appropriate.                                                                                                           
REPRESENTATIVE ROKEBERG  surmised that  an amendment is  needed to                                                              
create the duty unless that is already in place.                                                                                
MR.  GRIFFIN said  that  he would  like to  speak  with his  legal                                                              
counsel on that matter.                                                                                                         
CHAIR ANDERSON  interjected  that the next  committee of  referral                                                              
for HB  431 is  the House  Finance Committee.   He suggested  that                                                              
the legislation could  be reported from committee  and the sponsor                                                              
and  staff  could  address  that  matter  before  the  legislation                                                              
arrives in the House Finance Committee.                                                                                         
REPRESENTATIVE  ROKEBERG opined  that the  winery should  abide by                                                              
the law and  it's merely a matter  of whether it should  be placed                                                              
in statute or whether the current regulations are applicable.                                                                   
REPRESENTATIVE   GUTTENBERG   asked    if   there   is   companion                                                              
legislation in the Senate.                                                                                                      
MS. MARASIGAN replied no.                                                                                                       
REPRESENTATIVE ROKEBERG  noted that this legislation  only extends                                                              
those  privileges   to  in-state   wineries.     He  related   his                                                              
understanding  that Alaska's  statutes  regarding the  importation                                                              
of wine are out of compliance.                                                                                                  
MR.  GRIFFIN  pointed  out  that  in  Alaska  there  was  never  a                                                              
statutory  or  regulatory  provision  that  addressed  an  Alaskan                                                              
ordering  wine from  an out-of-state  winery.   In the absence  of                                                              
the statute, the  ABC Board determined that it  is permissible for                                                              
Alaskans to order  wine from [out-of-state] wineries  for personal                                                              
use.   He  related  his  understanding  that the  Supreme  Court's                                                              
ruling  didn't  take  away  the powers  of  taxation,  but  mainly                                                              
attempted to treat all wineries equal.                                                                                          
4:22:19 PM                                                                                                                    
REPRESENTATIVE  ROKEBERG related his  understanding that  a winery                                                              
outside the state  has to be licensed with the State  of Alaska in                                                              
order to export into the state.                                                                                                 
MR. GRIFFIN replied no.                                                                                                         
CHAIR  ANDERSON,  upon determining  that  no  one else  wished  to                                                              
testify, closed public testimony.                                                                                               
4:23:06 PM                                                                                                                    
REPRESENTATIVE  ROKEBERG  asked  if there  was  a reason  why  the                                                              
winery fee was deleted.                                                                                                         
MS.  MARASIGAN answered  that Mr.  Griffin  didn't feel  it was  a                                                              
good idea and thus the winery fee was deleted.                                                                                  
REPRESENTATIVE LYNN moved to report CSHB 431, Version 24-                                                                       
LS1578\G, Luckhaupt, 4/6/06, out of committee with individual                                                                   
recommendations and the accompanying fiscal notes.  There being                                                                 
no objection, CSHB 431(L&C) was reported from committee.                                                                        

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