Legislature(2017 - 2018)BELTZ 105 (TSBldg)
03/20/2018 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB157 | |
| SB76 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 157 | TELECONFERENCED | |
| += | SB 76 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 76-ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG
1:48:49 PM
CHAIR COSTELLO reconvened the meeting and announced the
continued consideration of SB 76, the Title 4 rewrite.
1:49:37 PM
ANNA BRAWLEY, Consultant, Agnew Beck Consulting, Anchorage,
Alaska, delivered the sectional analysis for SB 76. She began
with page two of the sectional analysis dealing with Section 9,
which is a proposed new chapter in Title 4, to replace sections
defining license types and permit types. These are currently
defined in Chapter 11. Many of the sections are not changes in
law; they are relocations or renumbering.
Chapter 09. Licenses, Endorsements, and Permits.
Pages 5-49
Article 1. License Types.
AS 04.09.010. Types of licenses. Gives the definition
of license, three tiers, and limits license types to
those listed in this chapter.
Article 2. Manufacturer Licenses.
AS 04.09.020. Brewery manufacturer license. Relocates
the brewery license from 04.11.130, moves other
provisions from current brewery manufacturer's license
to endorsements, sets the biennial fee at $1,500 and
requires that at least 80% of the final product of
brewed beverages sold be manufactured on licensed
premises in Alaska.
AS 04.09.030. Winery manufacturer license. Relocates
the winery license from 04.11.140, moves other
provisions from current winery license to
endorsements, sets the biennial fee at $1,500 and
requires that at least 80% of the final product of
wine sold be manufactured on licensed premises in
Alaska.
AS 04.09.040. Distillery manufacturer license.
Relocates the distillery license from 04.11.160, moves
other provisions from current winery license to
endorsements, sets the biennial fee at $1,500 and
requires that at least 80% of the final product of
distilled spirits sold be manufactured on licensed
premises in Alaska.
1:51:56 PM
CHAIR COSTELLO asked if the bill had a definition of
manufacturer.
MS. BRAWLEY said no, but there is a definition of the
individual product types.
AS 04.09.050. Authorized sales. Allows smaller
manufacturers to self-distribute to retail, wholesale,
permitted and out of state or country licensees.
Requires large manufacturers to go through wholesale
distributors.
AS 04.09.060. Unlicensed manufacturing. Relocates the
existing penalty for unlicensed manufacture from
04.11.010.
AS 04.09.070. Unlicensed manufacturing in a local
option area. Relocates the existing penalty for
unlicensed manufacture in a local option area from
04.11.010.
AS 04.09.080. Unauthorized manufacturer sale. Defines
unauthorized manufacturer sale as violating 04.09.050
and sets the penalty.
AS 04.09.090. Definition. Defines "packaging" which is
the process of containing alcoholic beverages in
bottles or other containers for sale.
Article 3. Wholesale Licenses.
AS 04.09.100. General wholesale license. Relocates the
general wholesale license from 04.11.160, moves other
existing components to other places in the chapter,
maintains $2,000 biennial fee, maintains $10,000
maximum fee, and reduces annual transaction fees for
smaller businesses.
AS 04.09.110. Limited wholesale brewed beverage and
wine license. Relocates limited wholesale license from
previous wholesale license section (AS 04.11.160(b))
in a separate section, maintains $400 biennial fee,
maintains maximum $10,000 fee, and reduces annual
transaction fees for smaller businesses.
AS 04.09.120. Annual fee and affidavit. Relocates
existing affidavit requirement from previous wholesale
licenses section (AS 04.11.160(c)-(d)), requires a
wholesale licensee to submit an affidavit to the board
stating total value of annual sales, including tax.
AS 04.09.130. Wholesaler supplier declaration.
Relocates the wholesale supplier declaration from
previous wholesale licenses section (AS 04.11.160(e)),
maintains current fee structure, and simplifies the
required reporting process.
AS 04.09.140. Unlicensed wholesale. Relocates
unlicensed wholesale provision from 04.11.010 and
maintains penalty.
AS 04.09.145. Unlicensed wholesale in a local option
area. Relocates existing penalty for unlicensed
wholesale in a local option area from 04.11.010.
AS 04.09.150. Failure to pay annual fee or file
affidavit. States that failure to pay an annual
wholesale fee or file an affidavit is a violation and
sets the penalty.
AS 04.09.160. Failure to pay biennial fee or file
declaration. States that failure to pay a biennial fee
and failure to file a declaration are violations and
sets the penalty.
Article 4. Retail Licenses.
AS 04.09.200. Beverage dispensary license. Relocates
and simplifies the BDL license language from,
maintains the $2,500 biennial fee, references the
multiple fixed counter endorsement, and sets the
penalty for unauthorized beverage dispensary activity.
Sections in current BDL (AS 04.11.090) for bowling
alley and hotel licensees relocated to become separate
endorsements.
AS 04.09.210. Restaurant and eating place license.
Relocates license from 04.11.100, sets biennial fee at
$1250, maintains 1:1 food to alcohol ratio, strikes
1996 exemption, limits the number of annual allowed
after-hours entertainment events to six, and sets
penalty for failure to comply with license terms.
SENATOR GARDNER asked how the ratio for food to alcohol is
measured.
MS. BRAWLEY said it's not specific in current law. The proposal
clearly defines that it should be food served on premises and
requires certification to the board that the business has met
this requirement prior to renewal.
SENATOR GARDNER asked if that means someone has to be eating
while drinking or is it ticket sales on the food side vs. the
alcohol side.
MS. BRAWLEY said it is not requiring an individual customer to
order food. It's total sales. The intent is that the business is
a bona fide restaurant serving food, not primarily alcohol.
MS. BRAWLEY said in both those sections there is a penalty for
not complying, which is different from current law.
2:00:00 PM
MS. BRAWLEY continued the sectional for SB 76.
AS 04.09.220. Club license. Relocates license from
04.11.110, sets biennial fee at $2,500, and sets the
penalty for failure to comply with license terms.
AS 04.09.230. Package store license. Relocates license
from 04.11.150, maintains biennial fee of $1,500, and
sets penalty for failure to comply with licenses
terms. Sections in current AS 04.11.150 for delivery,
shipping and other activities relocated to become
separate endorsements
AS 04.09.240. Pub license. Relocates license from
04.11.220, sets biennial fee at $1,250, and sets
penalty for failure to comply with license terms. Adds
provision allowing designation of alternating
premises, which allows a second location on a
university campus that must be operated during
mutually exclusive hours from existing license.
AS 04.09.250. Theatre license. Relocates license from
regulation (3 AAC 304.695), sets biennial fee at
$1,250, and sets the penalty for failure to comply
with license terms.
AS 04.09.260. Common carrier dispensary license.
Relocates license from 04.11.180, maintains current
fee schedule, removes "vehicle" as a qualifying
premises, and sets penalties for unauthorized common
carrier dispensary activity and common carrier
dispensary noncompliance. This statute refers to
alcohol served on airlines, cruise ships
MS. BRAWLEY said the proposal removes vehicle because to
date the ABC [Alcoholic Beverage Control Board] has not
granted a license to anyone who has requested it for a
vehicle. It is being removed because of concerns about
having alcohol in a road vehicle.
SENATOR GARDNER asked if someone who rents a limo can drink
while in the limo.
MS. BRAWLEY said she didn't know the rules now, but they
wouldn't have this license type.
SENATOR GARDNER said she imagines vehicle was there because
someone thought at some point that that could be the case.
MS. BRAWLEY continued the sectional for SB 76.
AS 04.09.270. Sporting event license. Relocates and
renames recreational site license, sets biennial fee
at $1,250, sets penalty for unauthorized sporting
event activity, and establishes 8-year sunset dates
for licenses issued under former AS 04.11.210.
AS 04.09.280. Outdoor recreation lodge license.
Relocates license from 04.11.225, sets biennial fee at
$2,500, and sets penalty for unauthorized outdoor
recreation lodge activity.
AS 04.09.290. Golf course license. Relocates license
from 04.11.115, sets biennial fee at $1,250, and sets
penalty for failure to comply with license terms.
AS 04.09.300. Destination resort license. Relocates
license from 04.11.255, sets biennial fee at $2,500,
and sets penalty for failure to comply with license
terms.
AS 04.09.310. Brewery retail license. Creates new
license type based on existing language in AS
04.11.130 for brewery retail activities, sets biennial
fee at $1,250, and sets penalty for failure to comply
with license terms. Requires new licensees to limit
retail sales to 20% of total volume sold in Alaska
after 8 years; exempts currently operating brewery
licensees with retail operations from this
requirement.
2:05:26 PM
CHAIR COSTELLO asked the rationale for a transition period of
eight years.
MS. BRAWLEY said a business needs to build a market and make the
case to a retailer to carry the product. This would give time
for that. The three-tier system says manufacturers should not be
selling directly to the public. This recognizes that after a
certain point, manufacturers should be participating in the
three-tier system.
CHAIR COSTELLO asked if it's a permanent exemption.
MS. BRAWLEY explained that anybody currently operating or in the
process of applying for a license as of the effective date of
the bill would be exempt. They in theory could sell 100 percent
of the product in the retail space, consistent with what is
allowed now.
CHAIR COSTELLO said that seems to set up an unfair environment.
MS. BRAWLEY said this license type had lots of discussion and
different stakeholders have different views. Manufacturers want
to showcase their product, but it does undermine the intent of
the three-tier system to prevent monopolies. The rationale was
to find a balance because some businesses are operating now and
have set up their business model accordingly.
2:08:18 PM
SENATOR GARDNER asked if the eight years starts when sales start
or when businesses get their licenses and start brewing or
distilling.
MS. BRAWLEY said the clock would start when they start operating
their license, either January 1 or whenever they were issued the
license.
AS 04.09.330. Distillery retail license. Creates new
license type based on existing language in AS
04.11.170 for distillery retail activities, sets
biennial fee at $1,250, and sets penalty for failure
to comply with license terms. Requires new licensees
to limit retail sales to 20% of total volume sold in
Alaska after 8 years; exempts currently operating
distillery licensees with retail operations from this
requirement. It defines per person per day limits for
sale. That includes on and of site consumption.
MS. BRAWLEY said each of the license types has a rough alcohol
equivalent of the amount of product they can sell per customer
per day.
CHAIR COSTELLO asked if she had that information in a chart.
MS. BRAWLEY said it's tab 4 in the report.
2:11:01 PM
At ease.
2:14:11 PM
CHAIR COSTELLO reconvened the meeting.
MS. BRAWLEY said it's in the PowerPoint presentation, the
report, and the bill. For onsite consumption, a brewery retail
license can serve 36 ounces of beer per customer per day or 18
ounces of sake. Alcohol product types are defined by how they
are made and what products they are made from. Sake is brewed.
Cider is considered a wine. Rough alcohol equivalent amounts are
provided to recognize that distilled products have a higher
alcohol content than beer, for example.
2:15:49 PM
SENATOR MICCICHE asked her to talk about how consumption limits
are different than current statute and regulations.
MS. BRAWLEY said for on-site consumption, the current limit is
36 ounces of beer, sake is not stated in law now, wine has no
defined limit, cider is not stated but would be 36 ounces, the
same as beer, and three ounces of distilled spirits is in
current law.
CHAIR COSTELLO asked how these amounts compare to other states.
MS. BRAWLEY offered to follow up with the information.
MS. BRAWLEY said for off-site consumption, the amounts are
roughly the same as current law. For the brewery license, now
they can sell 5 gallons of beer, and 5.167 gallons is proposed,
which is more of an industry standard. Sake, wine, and spirits
are sold in bottles defined by the liter. The proposal is 9
liters of sake, wine, or mead, the equivalent of one case.
Currently they are allowed to sell 5 gallons, but that is not a
typical amount. The proposal is 5.167 gallons of cider and 3.75
liters of spirits, which is consistent with current law.
AS 04.09.340. Beverage dispensary tourism license.
Relocates license from AS 04.11.400(d), maintains
biennial fee at $2,500, and sets penalty for
unauthorized beverage dispensary activity. Other
language in AS 04.11.400(d) relocated to Hotel or
Motel Endorsement.
AS 04.09.350. Seasonal restaurant or eating place
license. Creates new license type, sets biennial
license fee at $1,250, defines which communities can
qualify for having this license type, sets out formula
for determining number of allowed licenses per
community, and sets penalty for failure to comply with
license terms.
MS. BRAWLEY said the seasonal license would be equivalent
to the regular restaurant license, but it would be up to
six months of the year and available to communities with
populations under 20,000. This is a response to interest in
smaller communities in providing more opportunities for
tourists. It has a formula for determining how many
licenses to allow per community.
2:19:17 PM
CHAIR COSTELLO asked if there are limitations on the number of
licenses for brewery, winery, and distillery retail licenses.
MS. BRAWLEY said those are known as population limits and they
are in AS 4.11.400.
AS 04.09.360. Winery direct shipment license. Creates
new license type authorizing direct to consumer
(including online) sales of wine for in-state or out-
of-state winery, sets biennial license fee at $200,
directs the board to develop an application form
specifically for this license, and sets penalty for
failure to comply with license terms.
AS 04.09.370. Unlicensed retail sale. Relocates
existing unlicensed retail sale from 04.11.010 and
maintains penalty.
AS 04.09.380. Unlicensed retail sale in a local option
area. Relocates existing unlicensed retail sale in a
local option area from 04.11.010 and maintains
penalty.
MS. BRAWLEY said that for Article 4, endorsements are a new
concept in Alaska statutes for alcohol licenses.
Endorsements are seen in other businesses, such as
commercial driver's licenses. It is an add-on to a license.
It cannot be exercised by itself. It allows for a larger
physical presence, things like another room or golf course,
or would allow additional activities not allowed under the
base license.
Article 5. Endorsements.
AS 04.09.400. Types of endorsements. Defines
endorsements, clarifies that endorsements must be
exercised with a license.
AS 04.09.410. Manufacturer sampling endorsement.
Creates new endorsement for onsite sampling based on
existing language from manufacturing licenses, defines
per person per day volume limits by product type, sets
biennial fee at $200, sets penalties for unendorsed
sampling and endorsement noncompliance.
2:22:47 PM
SENATOR GARDNER said she would think brewery, winery, and
distillery are different kinds of manufacturers.
MS. BRAWLEY said the bill addresses the types of license. This
takes care of them with one endorsement.
SENATOR GARDNER clarified that if someone paid the biennial fee
for a license they would want to pay the $200 for an endorsement
for retail, on-site sampling.
MS. BRAWLEY agreed. Part of the purpose of endorsements is to
offer options to businesses. It also gives the ABC Board
flexibility in dealing with noncompliance. Rather than
suspending the entire license if the issue is sampling, the
board can choose to suspend the endorsement.
AS 04.09.420. Multiple fixed counter endorsement.
Creates new endorsement for multiple fixed counters
with language relocated from duplicate license section
in AS 04.11.090, sets biennial fee at $200, sets
initial application fee per counter, sets penalties
for endorsement noncompliance and unendorsed service.
CHAIR COSTELLO commented that it's defined by the counter where
the product is being sold, not necessarily whether someone has
to enter a new room. She asked if an owner currently has to buy
several licenses for the same property.
MS. BRAWLEY said yes. For example, Chilkoot Charlie's in
Anchorage has one building with multiple rooms. Each room
designated as licensed premises must have a fixed counter with
fixed plumbing.
SENATOR GARDNER said when the convention center in Juneau has an
event, it has multiple places to buy drinks. She asked if they
need an endorsement for each location.
MS. BRAWLEY said she cannot speak to that specific situation.
The duplicate license system is specific to beverage dispensary
licenses.
2:27:12 PM
SENATOR MICCICHE explained it's a catered event on an unlicensed
premise.
CHAIR COSTELLO asked if the response to the endorsement concept
from the stakeholders was positive.
MS. BRAWLEY said yes. She continued the sectional for SB 76.
2:28:19 PM
AS 04.09.430. Hotel or motel endorsement. Creates new
endorsement using some language relocated from AS
04.11.090, sets biennial fee at $200, sets penalties
for unendorsed hotel or motel service and endorsement
noncompliance.
AS 04.09.440. Large resort endorsement. Creates new
endorsement using some language relocated from AS
04.11.090, defines a large resort, sets biennial fee
at $200, sets penalties for unendorsed large resort
service and endorsement noncompliance.
AS 04.09.450. Restaurant endorsement. Creates new
endorsement using language from the Restaurant
Designation Permit currently in regulation, sets
biennial fee at $200, sets penalties for unendorsed
restaurant service and endorsement noncompliance.
2:30:26 PM
SENATOR MICCICHE asked her to explain that some of these were
licenses before and are now endorsements. Only a couple of
endorsements are new.
MS. BRAWLEY explained that the sampling endorsement is part of
the current manufacturers licenses. Multiple fixed counters are
in the current beverage dispensary statute as a duplicate
license. The language from hotel and motel and part of the
language from large resort endorsement are both in the beverage
dispensary tourism license. The restaurant endorsement is
currently in regulation. She continued the sectional.
AS 04.09.460. Package store shipping endorsement.
Creates new endorsement by relocating language from AS
04.11.150, allows licensees to accept online orders,
sets biennial fee at $200, sets penalties for
unendorsed package store shipping and endorsement
noncompliance.
AS 04.09.470. Package store delivery endorsement.
Creates new endorsement by relocating language from AS
04.11.150, sets biennial fee at $200, sets penalties
for unendorsed package store delivery and endorsement
noncompliance.
AS 04.09.480. Package store repackaging endorsement.
Creates new endorsement by relocating language from
regulation, sets biennial fee at $200, sets penalties
for unendorsed package store repackaging and
endorsement noncompliance.
AS 04.09.490. Package store sampling endorsement.
Creates new endorsement, defines per person per day
volume limits by product type, sets biennial fee at
$200, sets penalties for unendorsed package store
sampling and endorsement noncompliance.
AS 04.09.500. Bowling alley endorsement. Creates new
endorsement using language from AS 04.11.090, sets
biennial fee at $200, sets penalties for unendorsed
bowling alley service and endorsement noncompliance.
AS 04.09.510. Golf course endorsement. Creates new
endorsement using language from AS 04.11.115, sets
biennial fee at $200, sets penalties for unendorsed
golf course service and endorsement noncompliance.
AS 04.09.520. Brewery repackaging endorsement. Creates
new endorsement by relocating language from AS
04.11.135, limits availability to licensees currently
operating brewpubs, sets biennial fee at $200, sets
penalties for unendorsed golf course service and
endorsement noncompliance.
Article 6. Permits.
AS 04.09.600. Types of permits. Defines permits,
establishes application process, requires servers to
have an alcohol server education card, and sets daily
fee for all permit types at least $50 per event day.
AS 04.09.610. Beverage dispensary caterer's permit.
Relocates caterer's permit from 04.11.230 and renames.
AS 04.09.620. Restaurant caterer's dining permit.
Relocates permit from regulations, renames to allow
service of meals other than dinner, and requires meal
services as part of food to alcohol ratio sales
requirement.
AS 04.09.630. Club caterer's permit. Relocates permit
from regulations and simplifies existing language for
application process.
AS 04.09.640. Art exhibit permit. Relocates permit
from regulations, removes option for annual $100 fee,
and simplifies existing language.
AS 04.09.650. Nonprofit organization event permit.
Relocates special events permit from 04.11.240 and
renames, simplifies existing language for application
process.
AS 04.09.660. Alcoholic beverage auction permit.
Relocates wine auction permit from regulations and
renames to allow all alcoholic beverages to be
auctioned.
AS 04.09.670. Tasting event permit. Creates new
permit, allows a beverage dispensary license holder to
partner with a manufacturer retail licensee or package
store to host a tasting event on the partner's
location and serving the partner's product inventory,
sets a time limit and food requirement, and limits to
six events per partnering license per year.
AS 04.09.680. Inventory resale permit. Relocates
retail stock sale license from 04.11.200 and renames.
AS 04.09.690. Conditional contractors permit.
Relocates permit from 04.11.250.
AS 04.09.700. Failure to comply with a permit
requirement. Sets the penalties for failure to comply
with permit requirements.
2:39:51 PM
Chapter 11. Licensing.
Section 10 License or permit required; presumption
concerning possession for sale.
AS 04.11.010(a) relocates penalties for unlicensed
manufacture, sale and offering for sale. Unlicensed
sale is addressed in new sections in proposed AS
04.09.
Section 11 AS 04.11.010(b) adds reference to the
package store shipping license.
Section 12 AS 04.11.010(c) adds references to
unlicensed sale, corrects term "half-keg" and adds
barter to local option violation.
Section 13 Purchase from nonlicensee prohibited
AS 04.11.015 prohibits barter for alcoholic beverages
and adds penalty with $250 fine.
Section 14 Board approval of transfer AS 04.11.040
adds penalty
Section 15 Reports required of limited liability
organizations
AS 04.11.045 adds penalty for failure to report a
change in member interest or manager with $250 fine.
Section 16 Reports required of corporations
AS 04.11.050 adds penalty for failure to report a
stock transfer or change of officers or board members
with $250 fine.
Section 17 Reports required of partnerships
AS 04.11.055 adds penalty for failure to report a
transfer of partnership interest or change of general
partner with $250 fine.
Section 18 Nonresident distiller, brewer, winery, or
wholesaler
AS 04.11.060 amends reference to general wholesale
license.
Section 19
AS 04.11.060 maintains current penalty for violating
the section.
Section 20 Application for new license, endorsement,
or permit
AS 04.11.260 adds endorsement, requires phone number
and e-mail of applicant, requires annotated premises
drawing and adds license references with individual
application requirements.
Section 21
AS 04.11.260 exempts winery direct shipment license
from application process for other license types.
Section 22 Application for renewal of license or
permit
AS 04.11.270 adds endorsements, adds conditional
contractor's permit, edits reference, and allows
renewal applications to be sent via electronic mail.
Section 23
AS 04.11.270 exempts winery direct shipment license
from renewal process.
Section 24 Application for transfer of a license to
another person
AS 04.11.280 adds endorsements as transferrable with a
license.
2:43:27 PM
CHAIR COSTELLO said her constituents are concerned that they can
no longer have a glass of wine or beer with their pizza at a
certain restaurant as they have in the past. They were told it
is because the owner is in the process of transferring license
ownership. She asked if this would make that process easier. She
noted that Erika McConnell, Division Director of the Alcohol and
Marijuana Control Office, was available on line.
MS. BRAWLEY deferred to Ms. McConnell.
MS. BRAWLEY continued the sectional for SB 76.
Section 25 Criminal justice information and records
AS 04.11.295(a) adds issuance and renewal for
conditional contractor's permit.
Section 26
AS 04.11.295(b)(1) adds reference to conditional
contractor's permit.
Section 27 Notice of application
AS 04.11.310 exempts winery direct shipment license
from notice requirements.
Section 28 False statement on application.
AS 04.11.315 relocates AS 04.16.210 and defines crime
of making false statements on an application to as
perjury, defined in AS 11.56.200.
Section 29 Denial of new licenses and permits
AS 04.11.320(a) adds references to endorsements.
Section 30 Denial of license or permit renewal
AS 04.11.330(a) changes 30 eight-hour day minimum
operating requirement to 240 hours and removes
reference to public convenience license. [effective
immediately]
AS 04.11.315 relocates AS 04.16.210 and defines crime
of making false statements on an application to as
perjury, defined in AS 11.56.200.
Section 31
AS 04.11.330(a) duplicate section adds endorsement,
adds reference to beverage dispensary tourism license,
and adds reference to seasonal restaurant or eating
place tourism license. [effective with other licensing
changes, 1/1/2020]
Section 32
AS 04.11.330(d) exempts common carrier dispensary
licenses and renames reference to recreational site
license.
Section 33
AS 04.11.330 exempts winery direct shipment license.
Section 34 Denial of request for relocation
AS 04.11.340 removes reference to public convenience
license. [effective immediately]
Section 35
AS 04.11.340 duplicate section, adds reference to
04.11.400(k) and removes reference to 04.11.400(d).
[effective with other licensing changes, 1/1/2020]
Section 36 Denial of transfer of a license to
another person.
AS 04.11.360 removes public convenience license
reference. [effective immediately]
Section 37 AS 04.11.360 duplicate section removes
reference to brewpub license. [effective with other
licensing changes, 1/1/2020]
Section 38 Licensed premises in multi-unit
residential housing developments owned or financed by
the Alaska Housing Finance Corporation
AS 04.11.365 adds reference to restaurant endorsement.
Section 39 Suspension and revocation of licenses and
permits
AS 04.11.370 adds endorsements.
Section 40 Board imposed conditions or restrictions
AS 04.11.395 section title change and adds reference
to endorsements
2:47:20 PM
SENATOR GARDNER asked why page 10 of the sectional has different
effective dates.
MS. BRAWLEY said many of the effective immediately provisions
have to do with the removal of the public convenience license
process. She said she could speak to that now or when it came up
later.
SENATOR GARDNER said she would wait.
Section 41
AS 04.11.395 allows the director to impose conditions
or restrictions on any permit other than a conditional
contractor's permit.
Section 42 Population limitations.
AS 04.11.400(a) adds reference to 04.11.405.
[effective immediately]
MS. BRAWLEY said several sections have to do with
population limits. This is where the number of licenses per
community is defined. Generally speaking, a community is
allowed to have a certain number of licenses based on their
full-year, resident population. There is a formula for how
that population is determined. Generally, one license is
allowed for every 3,000 residents. Some licenses designed
to serve tourists are not subject to this.
CHAIR COSTELLO asked how many distilleries would be allowed in
Anchorage.
MS. BRAWLEY said now there are 92 or 93 of that license type.
The population limit is not proposed to change. Most licenses
would still be 1 to 3,000. Restaurants are 1 to 1,500. For
distilleries, part of the proposal is to remove the population
limits on licenses that do not directly serve the public. That
would be wholesale licenses and manufacturers licenses, just
production licenses. The proposal for the distillery, brewery,
and winery retail licenses is that each would be subject to a 1
to 9,000 population limit. The rationale is that they are
difference license types, but they are functionally the same.
They are producing and selling on site. Taken all together, the
limit is still 1 to 3,000.
MS. BRAWLEY continued the sectional for SB 76.
Section 43
AS 04.11.400(a) duplicate section, edits subsection
reference, defines five-mile radius outside cities,
adds new population limit for manufacturer retail
licenses, adds licenses exempt from population limits
and exempts local option populations from
calculations. [effective with other licensing changes,
1/1/2020]
Section 44
AS 04.11.400(i) lists licenses exempt from population
limits.
Section 45
AS 04.11.400(k) edits reference to beverage dispensary
license, allows relocation of a package store, lowers
borough threshold population, restricts number of
licenses eligible for transfer to those exceeding
population limits and defines number of allowed
transfers by city, not borough.
Section 46 Petition for additional restaurant or
eating place licenses for certain local governing
bodies
AS 04.11.405 adds new section that gives certain local
governing bodies the ability to petition the board for
additional restaurant or eating place licenses
allocated to their jurisdiction. [effective
immediately]
MS. BRAWLEY said Section 46 is a new statute that proposes
allowing a city to petition for additional restaurant or
eating place licenses. This is part of the proposal to
remove public convenience. Public convenience in statute
says that someone can create an appeal to get a restaurant
license. They go to residents in their area and ask if they
support or do not object to the license. When they have
enough signatures, they can go to the ABC Board and apply
for a restaurant license and the board may issue that
license outside of population limits if it is deemed to
support public convenience. There is no definition for
public convenience. Some communities have used this because
it is helpful for economic development to have more
restaurant licenses.
MS. BRAWLEY said the process of getting a public
convenience license and the process for AMCO [Alcohol and
Marijuana Control Office] reviewing those signatures and
determining whether they are valid has been onerous and can
result in inconsistent issuing of licenses. The stakeholder
group talked in great detail about this process and the
proposal is to repeal the section on public convenience but
have some replacements. All current licensees that have
public convenience licenses will be converted to
restaurants. Public convenience licenses are not
transferable now, and this would give them the ability to
transfer in the future by selling to another owner or
moving to a new location in that community. The seasonable
restaurant tourism license is a replacement for those
smaller communities. Smaller communities can petition the
ABC Board for more restaurant licenses.
2:58:01 PM
SENATOR GARDNER said currently, if she wants to open a
restaurant and serve wine and beer, she can survey the
neighborhood, go to the assembly, and if they approve it goes to
the board for a license. The change is that the community or the
assembly asks for new licenses. Then if she has a new restaurant
she petitions the assembly to get a license.
MS. BRAWLEY replied you would not petition the assembly for
that. It would just mean that five more licenses are available,
for instance, in that community. The applicant would not need to
petition the city. The applicant would just apply.
She said the purpose of the sections that look like
duplicates is that unlike most of the bill that would take
a fair amount of time and regulation development and
implementation, the repeal of public convenience would be
done immediately because this has been an implementation
issue over several years. The replacements for that
mechanism would be put into place immediately.
Section 47 48
AS 04.11.405(a)-(b) duplicate sections amending cross-
references to restaurant and eating place license.
[effective with other licensing changes, 1/1/2020]
Section 49 Person and location
AS 04.11.430 updates definition of corporation to
match Title 10 and requires additional information
from licensees.
Section 50 Prohibited financial interest
AS 04.11.450(b) retains restrictions for wholesale
licensees from owning a manufacturing tier license or
retail tier license, removes restriction on small
manufacturers owning retail tier licenses.
MS. BRAWLEY said Section 50 is one of the foundational
parts of the three-tier system, but it is becoming more
common for manufacturers to have retail operations. This
removes restrictions on small manufacturers so anyone
operating below a certain production limit defined in the
bill could own a retail license.
Section 51
AS 04.11.450(e) adds reference to limited wholesale
license to restriction on acting as an employee or
agent of a manufacturer tier license or retail tier
license and adds the new statutory license references.
CHAIR COSTELLO suggested that since individuals were waiting to
testify that Ms. Brawley find a place to stop today.
3:02:32 PM
SENATOR MICCICHE suggested it might make sense to get to Chapter
16.
MS. BRAWLEY continued the sectional for SB 76.
Section 52
AS 04.11.450 adds new section that restricts
manufacturers above certain annual production from
owning a wholesale tier license or retail tier
license.
Section 53 Prior public approval AS 04.11.460
exempts winery direct shipment license.
Section 54 56
AS 04.11.470 AS 04.11.480 adds endorsements to
allowable objections and protest.
Section 58 - 60 Local options
AS 04.11.491 renumbers statutory references to license
types and adds outdoor recreation lodge as one of
license types that can be exempted from restrictions
on sale in local option elections.
Section 61
AS 04.11.491(g) edits reference to package store
license and removes the ability for local option areas
to opt out of applying C felonies to furnishing or
delivery of alcoholic beverages to persons under the
age of 21 in a local option area because the need is
eliminated in section 92.
Section 62 Notice to local governing body
AS 04.11.520 clarifies language for notice process and
adds endorsements.
Section 63 Suspension and revocation based on acts
of employees
AS 04.11.535(a) adds endorsements, reference to
permittee as applicable and clarifying language.
Section 64 - 67
AS 04.11.537 AS 04.11.570 adds endorsements or
conditional contractors permit to application, renewal
and expiration, appeals, refunds and forfeiture of
fees procedures.
Section 68 Surrender or destruction of a license
AS 04.11.580(b) changes language to "not later than".
Section 69 Disposition of money
AS 04.11.590(a) adds reference to endorsements and
permits.
Section 70 Refund to municipalities
AS 04.11.610 changes "refund" to "allocation"
throughout and specifies content of reporting by
municipalities for how license fee funds were used for
alcohol-related education and enforcement.
Section 71 Accessibility of license and licensed
premises to inspection
AS 04.11.630(b) adds endorsements, permits and
includes premises during a permitted event.
Section 72 Duration of licenses and permits
AS 04.11.680 adds endorsements, conditional
contractors permit, states that permits must be issued
for a specified time, and removes fee reduction for
seasonal licenses.
3:06:07 PM
CHAIR COSTELLO thanked Ms. Brawley and turned to public
testimony.
3:06:41 PM
RYAN LINDSAY, Owner and Brewer, Devil's Club Brewing, Juneau,
Alaska, suggested changes to SB 76. He said he and Mr. Wood came
to talk about how unrealistic the 80:20 production split is. If
it were a stipulation in law today, Devil's Club Brewing could
not open. He said that is about a 50 percent growth in
production every year, which is almost physically impossible for
a small craft brewer.
3:07:35 PM
EVAN WOOD, Owner and Brewer, Devil's Club Brewing, Juneau,
Alaska, suggested changes to SB 76. He said he and Mr. Lindsay
followed their dream of putting a small brewery in their
hometown. If the proposed regulation with the 80 percent
distribution by year eight for the retail license was part of
Title 4, they would not have attempted to open a brewery in
Alaska. It wouldn't work. The only way that a small brewery can
operate is through the margin of retail sales. Requiring a
brewery, even after eight years, to stop that will not allow
breweries to operate. In the state now, he can guarantee that
less than five breweries would qualify under the 80:20 split as
currently drafted.
MR. WOOD said he realizes that Devil's Club Brewery would be
exempt under the current language, but he worries that it would
be a detriment to a booming national industry in this state.
Over the past year, Amalga Distillery, Barnaby Brewing Company,
and Devil's Club Brewing Company have opened in Juneau. Together
these businesses have invested over $4 million in the downtown
economy in renovations. None of those businesses would be able
to open or operate if they were expected to distribute 80
percent of their volume. It is impossible.
CHAIR COSTELLO said the members were told that this was a
consensus bill and everyone was on board. She asked if that
wasn't the case or were brewers not a part of that stakeholder
process.
MR. WOOD said he couldn't speak on behalf of the Brewers Guild,
but he believes the guild opposes the 80 percent split.
3:09:51 PM
SENATOR GARDNER asked what a realistic adjustment would be.
MR. LINDSAY said he didn't believe any forcing of offsite
production is realistic. There is already a long list of things
that separate craft breweries and distilleries from bars and
that alone is a large hurdle. Any mandatory distribution would
be very detrimental to small craft breweries.
SENATOR GARDNER asked if it was never their plan to wholesale a
significant portion of their product.
MR. WOOD said they do plan to wholesale a portion of their
sales. He didn't recall the numbers they planned on by year
five, but they did not plan eight years ahead. Even at year five
it made sense to focus on on-premise sales in downtown Juneau.
They would not have opened in downtown if they couldn't do on-
premise sales because the rent is higher.
CHAIR COSTELLO asked anyone interested to provide testimony in
writing.
3:12:15 PM
BRANDON HOWARD, Cofounder, Amalga Distillery, Juneau, Alaska,
suggested changes to SB 76. He said he supports SB 76 overall,
but agrees with the fellows from the Devil's Club Brewing
Company. The 80:20 split is unachievable. That limit was shot
from the hip. There is no research to support it and will
deliver the craft industry dead on arrival. In 2017 craft
production was the biggest manufacturing industry after plastics
and ahead of manufacturing from mining and oil extraction
equipment. In the last five years it has doubled the number of
jobs it has created. Craft breweries and distilleries are
economic powerhouses. Most states are choosing to support and
stimulate this growth. Aspects of this bill would stifle their
economic growth and development and young people from investing
in their communities and starting small businesses.
3:14:56 PM
RYAN MAKINSTER, Executive Director, Brewers Guild of Alaska,
Anchorage, Alaska, suggested changes to SB 76. He said they
support the bill overall but not the 80:20 rule. They have never
agreed with that rule and have been up front with that during
the process. They have been working with the sponsor to find
compromise, so they have not come out in opposition of the bill
as an industry. They had hoped for a compromise before this
time. It would be impossible to reach that number. Almost all
their members would not be in operation if they had to hit that
number. If this goes through, the current membership is not
affected. They all feel it is more important to grow the
industry than protect their own businesses. The bill is designed
to limit breweries to those existing today. The retail tasting
room is an important aspect to get the businesses off the
ground.
MR. MAKINSTER said a wholesaler is necessary to meet the 80:20
rule. That basically says that their brewers, after eight years,
will have to be at the whim of another private businessowner who
could be a competitor. Alaska has only three distributors. The
efforts of one or two distributors may mean that someone's
product may not be picked up. Wholesalers have a group of
clients and a new brewery may not fit in the product list. The
breweries would need to shut their doors. There are other
concerns along that line. They operated in good faith to get to
the level of compromise. They agreed with the one in 9,000
instead of one in 3,000 with the understanding that the craft
brewing industry would continue to be able to operate as they
do. They have prohibitions that BDL [beverage dispensary
license] owners do not, no entertainment, no gaming, no stools
at the bar, and limited hours and limited product they can sell.
They are not directly competing with BDL owners.
3:19:45 PM
JEREMY PRICE, State Director, Americans for Prosperity,
Anchorage, Alaska, suggested changes to SB 76. He said he
applauds the efforts to streamline the industry and eliminate
redundancies in terms of licensing requirements. Their main
objection is the 80:20 rule. The committee should get out of the
practice of limiting entry. Limiting entry is bad for
competition and innovation. The 1 in 9,000 population limit is
completely arbitrary and unnecessary. The idea that more
licenses, more bars, more tasting rooms, more manufacturers lead
to more negative fallout is untrue. Competition creates better
products and services to the customer. They have serious
concerns with those two measures.
3:21:36 PM
CHAIR COSTELLO found no further testimony.
SENATOR MICCICHE said it's no surprise that there is an issue
with the 80:20 rule. He noted that he referenced it during the
first hearing.
CHAIR COSTELLO held SB 76 in committee with public testimony
open.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 157 - Version A.PDF |
SL&C 3/20/2018 1:30:00 PM |
SB 157 |
| SB 157 - Transmittal Letter.pdf |
SL&C 3/20/2018 1:30:00 PM |
SB 157 |
| SB 157 - Sectional Analysis.pdf |
SL&C 3/20/2018 1:30:00 PM |
SB 157 |
| SB157-DCCED-INV-01-22-18.PDF |
SL&C 3/20/2018 1:30:00 PM |
SB 157 |