Legislature(1997 - 1998)
05/01/1998 03:40 PM JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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.