Legislature(2017 - 2018)BELTZ 105 (TSBldg)
03/22/2018 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB76 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 76 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 76-ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG
2:03:40 PM
CHAIR COSTELLO announced the consideration of SB 76.
2:05:03 PM
At ease
2:05:29 PM
CHAIR COSTELLO reconvened the meeting and asked Anna Brawley to
finish walking through the sectional analysis.
2:05:46 PM
ANNA BRAWLEY, Consultant, Agnew Beck Consulting, Anchorage,
Alaska, stated that she would start on page 20 of the sectional
for SB 76.
Repealers, Transitions, Applicability, Court Rule
Amendment, and Effective Dates.
Pages 109-114
Section 149
Amends court rule 17 by adding a statutory reference.
Section 150
Repeals the section reference with the effective date
of January 1, 2020.
Section 151
Includes the sections for immediate repeal.
Section 152
Repeals additional sections with an effective date of
January 1, 2028.
Section 153
Incudes several sections for repeal effective January
1, 2020.
Section 154 Uncodified law
Applicability. It states that offenses committed on,
or after the effective date applicable to the new
penalty.
Section 155 Transition
Covers conversion of applications and licenses.
Provides that the board shall convert all necessary
licenses and applications within 90 days.
Section 156 Transition
Creates a seasonal restaurant or eating place license.
Converts applications for restaurant or eating place
licenses to seasonal restaurant or eating place
license application if the establishment serves beer
and wine for a period not exceeding six months.
Section 157 Transition
Regulations. Directs the Department and the Board to
create necessary regulations to adopt the bill.
Section 158
Includes an immediate effective date clause for
portions of the act.
Section 159
Includes a January 1, 2020 effective date for the
remainder of the act.
2:07:40 PM
CHAIR COSTELLO asked how the transition in Section 156 is
affected by the population requirements, if it falls under that
provision.
MS. BRAWLEY advised that the purpose of including this in
Transition is this is a new license type that some existing
restaurant licenses may wish to take advantage of. It is not a
license under the population limits defined by permanent
residents, but it does include a formula to determine the number
of licenses available per community.
2:08:56 PM
At ease
2:09:19 PM
CHAIR COSTELLO reconvened the meeting and asked Ms. Brawley to
walk through the PowerPoint.
MS. BRAWLEY advised that the presentation is an overview of
Chapter 9: bill section 9; Chapter 11: bill sections 10-72; and
Transition: bill sections 149-159. She reminded members that
other bill sections were covered in prior hearings.
SENATOR GARDNER referenced the note at the bottom of slide 3,
"Local Option recommendations are documented in the report, but
not included in SB 76. More comprehensive review and discussion
of Local Option laws is needed in the future." She asked if the
Local Option recommendations aren't included in SB 76 because
the stakeholders didn't reach agreement or because certain
issues were particularly thorny.
MS. BRAWLEY said it wasn't a lack of agreement. The Title 4
review group focused on law enforcement and technical issues in
the statute that affected Local Option. Through the course of
discussion, they identified other, larger issues to review
further, such as the number of Local Options and the penalties
associated with Local Option. The group did not have sufficient
representation, including from rural communities that have Local
Options, to tackle some of the larger issues that were
identified. A future goal is to dive further into those issues.
2:11:34 PM
MS. BRAWLEY reviewed the key concepts in Title 4.
• The 3-tier system: Separates manufacturers, wholesalers and
retailers to prevent monopolies.
• Population limits: defines the number of license types
available in each community, based on the year-round
population.
• License transfers: means selling ownership in the business
or moving the physical location within the same community
it was issued.
• Proposed new concept: Endorsements are license add-ons that
allow an expanded physical presence or expanded activities
on the license.
2:13:10 PM
MS. BRAWLEY displayed slide 5 that illustrates that alcohol must
be manufactured, distributed, and sold to the public by
different businesses. This three-tier system was established
after prohibition and was designed to prevent monopolies. The
laws have changed over the years, but many of the main tenants
of Title 4 are related to the three-tier system.
MS. BRAWLEY advised that population limits are an important
concept to understand in Title 4. It is what is known as a
limited entry system for most licenses. That means that a
certain number of licenses are available in each community and
that is determined by the full-year resident population. For
most licenses it is one per 3,000 people and for restaurants it
is one license per 1,500 people.
2:14:08 PM
CHAIR COSTELLO recalled that testimony during a previous meeting
indicated that the limit for breweries is one license per 9,000
people. She asked for an explanation of that provision.
MS. BRAWLEY said the proposed population limit would be for
manufacturer/retail licenses for brewery retail, winery retail,
and distillery retail. These would be a higher population limit
because each of those product types operating in the same
community could result in a great number of alcohol outlets. The
proposal is to further limit those in recognition of the new
license types and that the population limits are defined by
license type.
She displayed slide 7 that illustrates the unintended
consequences of having a lot of license types. Even though there
is a population limit for each license type, she said this shows
it is possible to have a very high density of alcohol outlets
overall.
2:15:37 PM
SENATOR GARDNER asked if SB 76 greatly reduces the potential
number of licenses in communities.
MS. BRAWLEY said the goal is to manage the number of license
types going forward, but not necessarily to reduce the number of
existing licenses because they realize those are operating
businesses. It is looking to the future.
CHAIR COSTELLO offered her understanding that the presentation
addresses the current Title 4.
SENATOR MICCICHE asked Ms. Brawley to identify the differences
between current law and new proposals because there has been
some confusion.
2:17:10 PM
MS. BRAWLEY displayed slide 8, Population Limits: Current Title
4, AS 04.11.400. She explained that it is intended to illustrate
current law in Title 4. It demonstrates that licenses are
defined by community. In places that have cities within a
borough, a separate number of license types are available in a
city versus a borough. Some license types can be issued outside
population limits, generally to serve tourists. She clarified
that SB 76 does not propose to change this general mechanism.
MS. BRAWLEY turned to slide 9, P-1. Population Limits Apply to
Retail Licenses Only. She said a proposal in SB 76 is to apply
population limits to retail-tier licenses only. Licenses focused
on tourism and winery direct shipment licenses are excluded. The
purpose is due to the public health implications of the number
of alcohol outlets focused on service to the public rather than
business activity like wholesale.
MS. BRAWLEY reviewed the transfer of ownership or location of a
license under current Title 4. She explained that most license
types can be transferred to a new owner and/or to a new location
within the same community the license was issued.
MS. BRAWLEY explained that the proposed change in SB 76 allows
all licenses to be transferred to a new owner. Any existing
restrictions of licenses for transfer of location would still
apply. In part this is to help family-owned businesses or those
that want to do an internal transfer of ownership to not need to
go through the process of applying for a new license. She noted
that some license types currently are not transferable by owner
or location.
MS. BRAWLEY reviewed the license application process in the
current Title 4. She explained that the licenses are valid for
two years and AMCO [Alcohol and Marijuana Control Office] sends
renewal notices to existing licensees. The process includes
sending notice of the application to the local governing body
and publishing notice. Local governments can protest the license
or recommend conditions and individuals can submit objection to
a license. The ABC [Alcoholic Beverage Control) Board either
approves or denies the license application.
2:20:16 PM
CHAIR COSTELLO asked Ms. McConnell if SB 76 will help speed up
the time-consuming process of transferring a license. She noted
that businesses in her district have experienced interruptions
due to the current transferring process.
2:20:53 PM
ERIKA MCCONNELL, Director, Alcohol and Marijuana Control Office
(AMCO), Anchorage, Alaska, said she didn't recall that the bill
made significant changes to the process of transferring a
license. The intent is not to interrupt service, but there are
steps that must be taken in a certain order. She explained that
a management agreement, which is addressed in regulation, can
help manage the gap that occurs when the business changes hands
before the license is transferred.
SENATOR GARDNER asked how long the process to transfer a license
might take, on average.
MS. MCCONNEL said AMCO tells people to plan on three to six
months. Three weeks of advertising is required and there is
uncertainty based on when the application is submitted relative
to when the board next meets, which is about five times a year.
CHAIR COSTELLO relayed the constituent frustration of going to
an established restaurant that has traditionally served beer and
wine only to learn that it is unavailable. She said she would be
open to a conversation if there is a way to address that issue.
CHAIR COSTELLO asked Ms. Brawley to continue.
2:23:50 PM
MS. BRAWLEY directed attention to slide 13, N-6. Improve the
License, Endorsement and Permit Application Process:
• Apply several technical changes to statutes for
applications for a license, endorsement or permit.
• Examples:
o Endorsement renewal part of license renewal
o Required items in application process: labeled
premises diagram, e-mail address for licensees
o Simpler signature requirements for multiple
owners and nonprofit organizations
o Simpler operating requirements (number of hours)
for licenses up for renewal
MS. BRAWLEY said SB 76 makes recommendations to make the
application process smoother. One change is to allow the board
to send electronic renewal applications.
MS. BRAWLEY said the committee previously reviewed endorsements
in SB 76. Endorsements are added to existing licenses, giving
businesses more flexibility in terms of physical premises and/or
activities allowed on the license. Endorsements allow sampling
on premises, service on a golf course, deliveries by package
stores, etc.
2:24:55 PM
MS. BRAWLEY displayed slide 15, R-7 Create Endorsements:
• Create endorsements as add-ons to licenses in Title 4
• Endorsements must be issued with a license, renewed
biannually with the license, and cannot be transferred
to a new location
• Endorsements are not population limited
• Convert some existing sections or activities into
endorsements; create new endorsements
MS. BRAWLEY said slide 16, Proposed Changes to Licenses,
Endorsements and Permits, gives the overview of the
reorganization of the license types, endorsements, and permits
in Title 4:
SB 76, Section 9: proposed new Chapter 9 in Title 4
04.09.010: Types of Licenses
04.09.020 - .040: Manufacturing Tier Licenses
04.09.100 - .110: Wholesale Tier Licenses
04.09.200 .360: Retail Tier Licenses
04.09.400: Definition of Endorsements
04.09.410 - .520: Types of Endorsements
04.09.600: Definition of Permits
04.09.610 - .690: Types of Permits
2:25:25 PM
MS. BRAWLEY said slides 17-19, Alaska's Liquor License System:
Proposed Changes in SB 76, illustrates the three-tier system,
which existing license types fit into that system, which
proposed endorsement would apply to each license type, and
whether these licenses are subject to population limits. Slide
17 shows the manufacturing/wholesale tier. Slide 18 shows the
retail tier. Licenses proposed to be new in statute are
highlighted. Slide 19 shows retail licenses that are exempt from
population limits that mainly serve tourists and shows the three
license types proposed for removal from Title 4 - brewpub,
bottling works, and public convenience - that will be replaced
by existing license types.
MS. BRAWLEY displayed the recommendations on slide 20, M-1.
Simplify Manufacturing Licenses:
• Keep three manufacturing license types: Brewery,
Winery, Distillery.
• Remove Bottling Works and Brewpub license types from
statute.
• Convert existing Brewpub licensees and Bottling Works
licensee to one of the three manufacturer types.
2:27:08 PM
MS. BRAWLEY said slide 21, Breweries and Brewpubs: Current Title
4, shows the difference between breweries and brewpubs. They
look similar to the general public, but a brewery license has no
production limit and limits retail activity. The brewpub is
exercised with a retail bar or restaurant license and does have
a limit on production and how much can be sold at wholesale.
MS. BRAWLEY said slide 22, Proposed in SB 76: Conversion of
Brewpubs, illustrates how brewpubs will fit into the new system.
Because they will have a brewery license, they will not have a
production limit.
MS. BRAWLEY covered the recommendation on slide 23, M-3. Small
Manufacturers Allowed to Hold Retail Licenses. She said this is
with the exception of brewpubs and the retail activities in
their licenses now. SB 76 proposes allowing manufacturers that
produce under a certain amount defined in the bill to hold
retail licenses:
• Remove the restriction in Prohibited Financial
Interest (AS 04.11.450), which does not allow
manufacturers to hold retail licenses, for smaller
manufacturers.
• Only manufacturers who produce less than a certain
amount of product annually would be eligible to hold
retail licenses.
• Large manufacturers would be limited to production.
• The proposed thresholds exceed the current production
of Alaska's largest manufacturers of each product.
MS. BRAWLEY said that slide 23, Proposed in SB 76: Multiple
Retail License Options for Manufacturers, uses a brewery license
as an example but the same system applies for wineries and
distilleries. They would either be able to get the retail
license, which is often known as a tasting room license, or
another retail license, such as a bar, restaurant, or package
store, any retail-tier license.
2:29:44 PM
CHAIR COSTELLO asked what REPL stood for in the slide.
MS. BRAWLEY answered restaurant or eating place.
MS. BRAWLEY said that the next recommendation, M-2. Manufacturer
Retail License + Manufacturer Sampling Endorsement, is to take
existing retail activities and make them into a retail license
specific for each product type:
• Add-on retail licenses specifically for manufacturers
to allow limited onsite consumption and offsite sales.
o Existing licensees converted
o New retail licenses have 1:9,000 population limit
o After 8 years, new licensees limited to only 20%
of sales volume in retail room
• A separate endorsement for free samples.
2:31:00 PM
CHAIR COSTELLO said there is a grandfather provision on the
80:20. She asked if that will be covered in the presentation.
MS. BRAWLEY said it is called out in the bullet "existing
licensees converted," but it doesn't specify that, yes, they
would be grandfathered from the 80:20 rule.
MS. BRAWLEY said that slide 26, Proposed in SB 76: Volume Limits
for Free Samples from Manufacturers, demonstrates the volume
limits for free samples. Currently the ounce limit for free
samples is not defined in statute. The proposed ounce limits are
generally specific to the alcohol equivalent for each product
type.
MS. BRAWLEY said slide 27, Proposed in SB 76: Onsite Consumption
Limits for Manufacturers, in Standard Product Units, shows the
proposed sales limits for on-site and off-site consumption. They
are by product type and the license type. Most of the limits are
the same as what is already defined in statute, except that
currently the limit is 5 gallons for beer instead of 5.167
gallons for beer and cider. Also, wine currently has no on-site
consumption limit.
2:32:55 PM
CHAIR COSTELLO said she previously asked for information on how
these amounts compare to other states and if the 80:20 provision
exists in other states.
MS. BRAWLEY said that research is ongoing. Preliminary research
shows that some states have defined ounce limits for samples and
others do not.
MS. BRAWLEY said that concludes the recommendations for
manufacturers. Moving on to wholesalers, she pointed out that
wholesalers have multiple types of fees that they are required
to pay in addition to the license fee. W-1. Adjust Wholesale
License Fees and Simplify Supplier Reporting proposes to
slightly reduce the annual business transaction fee for small
businesses and retain the maximum fee for the largest
businesses. Another proposal is to streamline one of the
reporting requirements. Rather than requiring paperwork for
every product line, they would report the total number of
product lines and would pay a fee accordingly.
MS. BRAWLEY said the chart on slide 29, Proposed Wholesale Fee
Changes, shows the current and proposed transaction fees.
MS. BRAWLEY said in reference to slide 30, R-1. Multiple
Licensed Premises with a Beverage Dispensary License, currently
duplicate licenses allow one business to have more than one room
qualify as licensed premises. In most cases they are only
allowed in the same contiguous building. There have been
situations allowed beyond that, so the proposal defines that
more clearly:
• Clarify the parameters that would allow and require
multiple fixed counters for a Beverage Dispensary
license (AS 04.11.090).
• Replace Duplicate licenses with Multiple Fixed Counter
endorsements.
• Create a Hotel/Motel endorsement, and a Large Resort
endorsement, which allows additional licenses in
separate buildings.
2:35:15 PM
MS. BRAWLEY noted that slide 31, Proposed in SB 76: Options for
Multiple Beverage Dispensary Locations, illustrates the options.
MS. BRAWLEY reviewed the recommendations on slide 32, N-3.
Expand Package Store Shipping Order Options:
• Allow orders under a Package Store Shipping endorsement to
be received in formats other than a written order from a
known customer.
• This allows online ordering from in-state package stores,
including customers in Local Option areas.
• Existing requirements in AS 04.11.150(a) for ID, shipping
and delivery still apply. Package stores would still be
required to report all orders to Local Option areas in
Written Order Database.
MS. BRAWLEY said slide 33, Tracking Alcohol Orders in Local
Option Areas: Current Title 4, illustrates the current process
for ordering alcohol in a Local Option area.
MS. BRAWLEY said R-3. Package Store Onsite Product Sampling
Endorsement would allow package stores to offer free samples of
their products:
• Create a separate endorsement to allow onsite sampling
at Package Stores.
• Limits volume per customer per day, hours of sampling,
public advertising of sampling.
• Providing free samples of products at package stores
is a common practice in several other cities and
states.
MS. BRAWLEY said slide 35, Proposed in SB 76: Package Store
Sample Limits, shows that these are the same volume limits
proposed for manufacturers.
2:37:22 PM
MS. BRAWLEY said R-2. Rename Recreational Site License to
Sporting Event License is not a change to the statute or
definition of this license. It is renaming it to be more
accurate about the types of events it is used at:
• Ensure the existing statutory definition of "recreation" is
consistently applied to Recreational Site license holders.
• Make a sunset provision of 8 years to review and retire
licenses that do not meet this definition, if not in
compliance with statute.
• Licenses issued outside definition was a finding in 2014
and 2017 audits of the ABC Board.
MS. BRAWLEY said that for slide 37, R-7 Standardize Permits,
there are not major changes proposed for permits currently
defined in statute or regulation. A standard application process
is proposed for permits:
• Define all permit types in statute, not only in
regulation
• Fee for all permits is $50 per event day
• Most permits listed are already in statute or
regulation
• New permit: Tasting Event Permit, allowing a Package
Store or Manufacturer to host an event on premises, in
partnership with a BDL [Beverage Dispensary License]
MS. BRAWLEY said slide 38, Proposed Permits, shows proposed
permits and whether they are currently in regulation or statute:
• R-7F | Beverage Dispensary Caterer's Permit (AS
04.11.230; 3 AAC 304.685)
• R-7G | Restaurant Caterer's Dining Permit (3 AAC
304.680)
• R-7H | Club Caterer's Permit (3 AAC 304.690)
• R-7I | Nonprofit Event Permit (AS 04.11.240)
• R-7J | Art Exhibit Permit (3 AAC 304.697)
• R-7K | Alcoholic Beverage Auction Permit (3 AAC
304.699)
• R-7L | Inventory Resale Permit (Retail Stock Sale
License, AS 04.11.200)
• R-7M | Tasting Event Permit (proposed in SB 76)
2:38:53 PM
MS. BRAWLEY reviewed a proposed permit in slide 39, Proposed in
SB 76: Tasting Event Permit. This allows a package store or
manufacturer to host a special tasting event on its premises
working with a beverage dispensary licensee or beverage
dispensary licensee tourism. Food must be served and the event
may last up to four hours.
MS. BRAWLEY said that for slide 40, P-3. Retire Public
Convenience Process; New Options for REPLs, the proposal is that
the Public Convenience Statute, which is a way of obtaining a
restaurant or eating place license outside of population limits,
is repealed:
• Repeal Public Convenience statute.
• Convert all existing Public Convenience license holders to
standard, fully transferrable REPLs.
• Create a Seasonal Restaurant Tourism License.
• Allow qualifying municipalities to petition the ABC Board
to increase the number of REPLs available in their
community.
MS. BRAWLEY said slide 41, Public Convenience Petition Process:
Current Title 4, illustrates the current Public Convenience
process in Title 4. The process involves gathering signatures on
a petition and submitting the petition and application to the
board. There is no definition of public convenience, and this
has resulted in more restaurant licenses issued in some
communities that otherwise would not have that many.
MS. BRAWLEY said slide 42, Proposed in SB 76: Convert Public
Convenience Licenses and Applications, shows one replacement
process if the Public Convenience License is repealed. Existing
licenses will convert to Restaurant or Eating Place Licenses.
The main advantage is that Public Convenience Licenses are not
transferable by location or owner. Converting these to regular
Restaurant or Eating Place would give licensees that privilege.
MS. BRAWLEY said slide 43, Proposed Seasonal REPL Tourism, shows
that REPL Tourism License would be available in smaller
communities only. It would not be subject to population limits,
but there is a formula that determines the number available
based on the number of visitors:
• Seasonal restaurant license
• Available in smaller communities (< 20,000 pop.)
• Same operating requirements and privileges as full-year
restaurants (REPL)
• Number of licenses per community determined by formula:
5-year average of annual visitors/months in season=Average
monthly visitor population
(Residents + average monthly visitors)/1,500=Available
Seasonal REP Tourism Licenses
• Season defined as up to 6 months per year, in any
combination Example: May through September + 1 winter
month
MS. BRAWLEY said slide 44, Proposed in SB 76: Local Government
Petition for Additional Restaurant Licenses, illustrates another
Public Convenience License replacement. Instead of allowing for
individual applications to be considered outside of population
limits, first-class cities and unified municipalities will have
the ability to petition the ABC Board for an additional number
of restaurant licenses. They need to demonstrate they have the
enforcement capability to manage any potential impacts from
those licenses and they have sufficient non-resident population
to support a market for that type of license. If the ABC Board
approves the petition and grants new licenses, someone goes
through the normal application process to obtain a license.
2:42:46 PM
MS. BRAWLEY said slide 45, N-7. Allow Relocation of a Package
Store from Borough to City, is about a change to a mechanism
that is already in law allowing relocation of a bar license or
package store:
• Amend AS 04.11.400(k) to allow transfers of both BDL and
Package Store licenses from a borough to a city within the
borough.
• Currently, BDL relocations are allowed in boroughs with at
least 60,000 population.
• SB 76 would make relocation available in boroughs with at
least 50,000 population and currently operating licenses
that exceed population limits.
MS. BRAWLEY said slide 46, Proposed in SB 76: Option to Relocate
Some Licenses from a Borough to a City, illustrates this
concept. Licenses in a borough could be relocated from one
community to another.
MS. BRAWLEY said slide 47 illustrates how many licenses would be
available. Each borough that would qualify under this section
have more than their normally allowed number of licenses
already.
MS. BRAWLEY said that slide 48, RB-1. Strengthen Reporting
Requirements for Municipal Enforcement, relates to license fees
for municipal governments. Municipal governments receive half
the license fees for licenses in their area, which is currently
known as a refund. SB 76 renames it as an allocation, which is
more accurate, and strengthens the requirement that
municipalities report how those funds are being used:
• Include in statutory requirements (AS 04.11.610) that
municipalities submit quarterly reports on Title 4
enforcement and education activities to the ABC Board:
violations, educational presentations, other
activities related to alcohol control.
• Municipalities with local law enforcement receive a
matching allocation ("refund") of license fees
collected within their jurisdiction. Funds intended to
be used for Title 4 enforcement.
2:44:49 PM
MS. BRAWLEY said that slide 49, Proposed in SB 76:
Accountability for License Fees Allocated to Local Governments,
illustrates this concept. Reporting is required in statute, but
because it is not well defined, it is not consistently being
followed. It gives the department the ability to withhold those
funds if they do not receive the reports.
MS. BRAWLEY said that for slide 50, N-12. Transition Provisions
for Existing Licensees, the goal is not to disrupt what
businesses are doing now but to smoothly transition to this new
system, which mainly involves renumbering licenses or renaming
things:
• Define process for current licensees of certain types to be
converted to equivalent license(s) in the new system.
• Also define process of converting applications for repealed
or renumbered license types.
• Included in Transition sections of SB 76 (end).
• See table on page 61 of Report for details.
MS. BRAWLEY said slides 51-53 show examples of current licenses
and applications completed as of January 1, 2020, being
converted.
2:46:41 PM
MS. BRAWLEY said that concludes the presentation.
2:46:55 PM
CHAIR COSTELLO turned to public testimony.
2:47:06 PM
LEEANN THOMAS, member, Alaska Cabaret, Hotel, Restaurant and
Retailers Association (CHARR), Juneau, Alaska, testified in
support of SB 76. She said many people worked for six years to
make improvements to Title 4. She represents Juneau alcohol
retailers, some of whom are in the room. Everyone is excited
about the rewrite of Title 4. There has been no rewrite for 30
years. This will make things better. The alcohol industry wants
and needs Title 4 laws to make sense and work for the industry.
2:49:06 PM
DANIEL CHEYETTE, Director, Bristol Bay Native Corporation,
Anchorage, Alaska, testified in support of SB 76. He said he
wanted to speak in particular about Section 57, which is
important to the flyout fishing lodge industry. Section 57 would
add outdoor recreation lodges to the list of license types that
a Local Option community can exempt. Specifically, in 2011
Aleknagik voted to be a Local Option community, but they voted
to exempt outdoor recreation lodges. There are a few in the city
limits, and they have contributed to the economy of the
community with bed and sales taxes. This past year they learned
that the ABC Board was contemplating not renewing the licenses
for those lodges because they thought the statutes did not allow
for an exemption for outdoor recreation lodges. Section 57 of SB
76 would add outdoor recreation lodges to the list of license
types that could be exempted.
2:52:10 PM
IDALIA FRAZIER, representing self, Homer, Alaska, testified in
support of SB 76. She stated that she is in full support of SB
76. "It is a fair and much-needed bill, she said.
2:52:27 PM
MATT JONES, co-owner, Moose's Tooth, Bear Tooth, and Broken
Tooth Brewing Company, Anchorage, Alaska, testified in support
of 76. He described the current Title 4 statutes as "a mess." He
and his partners have multiple licenses. Every time they have a
renewal, everyone at AMCO is confused and no one can come up
with a quick answer on what they need to do. He opined that the
rewrite represented in SB 76 will be very helpful. He related
that they are a brewpub and as a brewpub they have a production
limit. For the last ten years the business has not been able to
grow the brewing part of the business because of the limit on
production. If Title 4 is rewritten they will no longer be
considered a brew pub but rather a brewing manufacturer. That
will allow them to greatly increase the brewing side of the
business and grow the number of jobs at the brewery.
2:54:26 PM
SENATOR MEYER asked if the Moose's Tooth has a full dispensary
license.
MR. JONES confirmed that all their locations have full
dispensary licenses that come with the bundle of rights
associated with the beverage dispensary license (BDL).
2:56:04 PM
HILLARY SCHAEFER, representing self, Fairbanks, Alaska, said she
and her partner own a full dispensary license and are concerned
that the bill will benefit manufacturers and not benefit
beverage dispensary license holders. They have experienced a
reduction in gross sales since tasting rooms opened. The after-
work crowd isn't showing up between 5 p.m. and 8 p.m. or if they
do they have been overserved at the tasting rooms, which puts
them at a heightened liability. She asked the committee to limit
the amount in tasting rooms and the hours.
2:57:45 PM
JEFF JESSEE, representing self, Anchorage, Alaska, testified in
support of SB 76. He said he was the co-chair of the Title 4
Review Steering Committee and Licensing Committee. One issue
over the years was interpreting the statutes during ABC Board
meetings. It was obvious that Title 4 was well overdue for a
comprehensive overhaul. Industry and public health found common
ground. They found that violations often resulted in misdemeanor
charges which put people at considerable legal risk when what
they wanted to do was educate people into complying with the
law. SB 76 changes that to a fine system that holds people
accountable and focuses on education and remediation. They made
accommodations on rules on tasting rooms and internet sales, so
they would not have a negative effect on public health. There is
also more focus on education. SB 76 achieved an unprecedented
partnership between industry and public health.
3:00:59 PM
ANGELA COX, Vice President, External Affairs, Rasmuson
Foundation, Anchorage, Alaska, testified in support of SB 76.
She said the foundation has invested for 60 years in various
programs and facilities in Alaska dealing with sexual assault,
domestic violence, child abuse and neglect, and homelessness. It
is a founding member of Recover Alaska. Through Recover Alaska
they work to identify and address root problems of alcohol as a
challenging social problem. SB 76 will be a step forward:
internet sales should be regulated; it would increase fees,
providing more resources for education and enforcement of Title
4; and it would reduce alcohol access to youth. Rasmuson and its
partners have dedicated hundreds of hours to this process.
Rarely have so many stakeholders come together to tackle an
issue like this.
3:03:50 PM
RICHARD M. ROSSIM, General Counsel, Alyeska Resort, Anchorage,
Alaska, testified in support of SB 76. He participated in the
rewrite of Title 4 statutes. Everyone isn't happy with every
aspect, but it is a good compromise. He provided examples of how
the new statute helps the Alyeska Resort. In many other states
package stores can offer free samples. The statute would allow
that and a tasting event by a package store. It introduces the
concept of unfair trade practices regulation. These exist at the
federal level but are not enforced. It is patterned after the
federal statutes. The process for ordering wine from out of
state is not perfect but a step in the right direction.
3:07:15 PM
DYLAN DICK, representing self, Kodiak, Alaska, testified in
support of SB 76. He stated that he runs the restaurant Henrys
in Kodiak, is a CHARR member, and he supports SB 76. It is a
once in a generation opportunity to fix long-standing problems
with the alcohol statutes. The bill provides clarity for
everyone in the industry regarding the penalties and tries not
to harm current licensees. He listed various penalties including
staff changing prices twice in a week which could be considered
a crime instead of a minor error or something warranting a fine.
For the first time it will be not illegal for the bar owner or
managers to be in the bar updating books or doing inventory
after closing time.
SENATOR GARDNER asked him to expand on the comment that changing
prices could be an inadvertent violation
MR. DICK said his understanding is that in Alaska changing
prices twice within a week is a violation. He suggested that Mr.
Fox could clarify further.
3:09:25 PM
DALE FOX, President, Alaska Cabaret, Hotel, Restaurant and
Retailers Association (CHARR), Anchorage, Alaska, stated that
the current pricing and marketing statute, which is termed the
happy hour law, says a bar cannot change prices within a
calendar week. One of the interesting things about the current
law is that nobody knows what a calendar week is. It has to be
looked up. He isn't sure what it is, but that's the point.
Breaking that law is a class A misdemeanor, which calls for up
to a year in jail and a $10,000 fine. SB 76 fixes that by saying
that pricing is any seven days. If a price is changed on
Wednesday, it can be changed the next Wednesday. With the new
law, a mistake wouldn't put someone in jail for a year.
SENATOR GARDNER asked if he knew the rationale for prohibiting a
bar from changing prices within a calendar week.
MR. FOX said the idea in the 1980s was to prevent bars from
lowering prices to gain customers for happy hour. "They didn't
want the price from 5-6 on Mondays to be cheaper, he said.
SENATOR MEYER asked if the [Juneau restaurant] Hangar could
offer half price drinks on Fridays.
MR. FOX answered no. Under current law, a bar that runs a
special must offer that special for a calendar week. Under SB
76, the bar must offer the special for seven consecutive days.
3:12:00 PM
FREDRICK KASNICK, representing self, Juneau, Alaska, said he is
the owner of the Island Pub in Douglas. He asked if any
provisions in the bill have a ratio or percentage that
manufacturers would be allowed to sell at tasting rooms versus
on a wholesale or retail basis.
MS. BRAWLEY said that section is defined for manufacturers that
are not operating currently as the current ones would be
grandfathered. It is in Section 9 It would be AS 04.09.310 for
breweries and .320 for wineries and .330 for distilleries.
MR. KASNICK asked what that percentage is.
MS. BRAWLEY said that for the manufacturers that do not qualify
for the grandfather, after eight years they would be allowed to
sell up to 20 percent of their total production sales in Alaska
through that retail license. This would not apply to a
restaurant or a package store or another type of retail license.
MR. KASNICK asked if that means that that retail percentage
would be within their premises.
MS. BRAWLEY said yes.
MR. KASNICK asked if the manufacturers that are operating
currently would be grandfathered for eight years.
MS. BRAWLEY clarified that the licenses that are currently
operating would be permanently grandfathered. These provisions
would apply to licenses that are issued after the effective date
on January 1, 2020.
MR. KASNICK asked if a currently operating distillery is
unlimited in its ability to retail product on their premises.
MS. BRAWLEY replied she understands that there is no limit on
total sales. The only limits are the per person per day sales.
MR. KASNICK observed that the bill proposes to limit a
distillery to three ounces per visit. He offered his perspective
that distilleries are basically bars; they're selling three
drinks per person a night, which is what most people drink. He
doesn't feel it's right that he pays $200,000 for a license and
distilleries pay about $1,000 and they're operating as a bar
under this proposal.
MR. KASNICK noted that the previous page had a proposal for free
drinks and to him that ratio of free drinks should be the
retail. A tasting room down south at a winery might charge $5
for five quarter-ounces glasses, but these [distilleries] are
basically able to sell drinks and, under the grandfathered ones,
they're able to sell unlimited drinks.
CHAIR COSTELLO said one of the questions the committee has asked
the sponsor to provide is a comparison on the amounts in other
states, so the members can be more aware of where Alaska falls.
That's something they will be looking at.
SENATOR MICCICHE clarified that SB 76 does not change the three-
drink limit that exists in statute. The grandfathering provision
is about the 80:20 rule, which remains to be somewhat of a
problem between the brewers, particularly, and the other groups.
3:18:22 PM
CHAIR COSTELLO stated her intention to hold SB 76, awaiting
amendments from the sponsor.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 76 - Senate Labor and Commerce Presentation Two 3.22.2018.pdf |
SL&C 3/22/2018 1:30:00 PM |
SB 76 |
| SB76 Support Document - Revenue Sharing.pdf |
SL&C 3/22/2018 1:30:00 PM |
SB 76 |