Legislature(1997 - 1998)

05/01/1998 03:40 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                 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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