Legislature(1999 - 2000)
02/24/1999 03:18 PM House L&C
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
February 24, 1999
3:18 p.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chairman
Representative Andrew Halcro, Vice Chairman
Representative Jerry Sanders
Representative Lisa Murkowski
Representative John Harris
Representative Tom Brice
Representative Sharon Cissna
MEMBERS ABSENT
COMMITTEE CALENDAR
* HOUSE BILL NO. 68
"An Act extending the termination date of the Board of Pharmacy to
June 30, 2005; and providing for an effective date."
- MOVED HB 68 OUT OF COMMITTEE
* HOUSE BILL NO. 69
"An Act relating to the Alcoholic Beverage Control Board; and
providing for an effective date."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 68
SHORT TITLE: BOARD OF PHARMACY
SPONSOR(S): LABOR & COMMERCE
Jrn-Date Jrn-Page Action
1/25/99 81 (H) READ THE FIRST TIME - REFERRAL(S)
1/25/99 81 (H) LABOR & COMMERCE
2/08/99 172 (H) FIN REFERRAL ADDED
2/24/99 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 69
SHORT TITLE: ALCOHOLIC BEVERAGE CONTROL BOARD
SPONSOR(S): REPRESENTATIVES(S) ROKEBERG
Jrn-Date Jrn-Page Action
1/25/99 81 (H) READ THE FIRST TIME - REFERRAL(S)
1/25/99 81 (H) L&C, FINANCE
2/24/99 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
CATHERINE REARDON, Director
Division of Occupational Licensing
Department of Commerce and Economic Development
P.O. Box 110806
Juneau, Alaska 99811-0806
Telephone: (907) 465-2536
POSITION STATEMENT: Testified in support of HB 68.
PAUL GIONET, Chairman
Board of Pharmacy
2841 DeBarr Road, Number 20
Anchorage, Alaska 99508
Telephone: (907) 279-2425
POSITION STATEMENT: Testified on HB 68.
JANET SEITZ, Legislative Assistant
to Representative Norman Rokeberg
Alaska State Legislature
Capitol Building, Room 24
Juneau, Alaska 99801
Telephone: (907) 465-4968
POSITION STATEMENT: Presented Version G, the proposed committee
substitute for HB 69.
MARY JACKSON, Legislative Assistant
to Senator John Torgerson
Alaska State Legislature
Capitol Building, Room 516
Juneau, Alaska 99801
Telephone: (907) 465-2828
POSITION STATEMENT: Testified on proposed amendment G.1 to HB 69
on behalf of Senator Torgerson.
JIM ELKINS
Elkins Tatsuda Liquor;
Board Member, Cabaret Hotel and Restaurant Retail Association
633 Strawberry Road
Ketchikan, Alaska
Telephone: (907) 225-3550
POSITION STATEMENT: Testified on proposed amendment G.1 to HB 69
on behalf of Elkins Tatsuda Liquor.
DOUG GRIFFIN, Director
Alcoholic Beverage Control Board
550 West 7th Avenue, Suite 350
Anchorage, Alaska 99501
Telephone: (907) 265-0350
POSITION STATEMENT: Testified on HB 69.
CHRIS ANDERSON, Co-Owner
Glacier Brewhouse
737 West 5th Avenue
Anchorage, Alaska 99501
Telephone: (907) 786-3789
POSITION STATEMENT: Testified in support of HB 69.
MATT JONES, Co-Owner
Moose's Tooth Pub and Pizzeria, Moose's Tooth Brewing
P.O. Box 202549
Anchorage, Alaska 99520-2549
Telephone: (907) 278-4499
POSITION STATEMENT: Testified in support of HB 69, suggested
amendment.
BOB ACREE, Co-Owner
Glacier Brewhouse
P.O. Box 241826
Anchorage, Alaska 99524-1826
Telephone: (907) 786-3278
POSITION STATEMENT: Testified in support of HB 69.
MIKE FORD, Legislative Counsel
Legislative Legal and Research Services
Legislative Affairs Agency
130 Seward Street, Suite 409
Juneau, Alaska 99801-2105
Telephone: (907) 465-2450
POSITION STATEMENT: Provided information on HB 69.
ANNE WILKAS
1513 Kinnikinnick Street, Number 1
Anchorage, Alaska 99508
Telephone: (907) 278-4214
POSITION STATEMENT: Testified briefly on HB 69 for the Moose's
Tooth as an attorney.
LINDA KESTERSON, Assistant Attorney General
Natural Resources Section
Civil Division (Anchorage)
Department of Law
1031 West 4th Avenue, Suite 200
Anchorage, Alaska 99501
Telephone: (907) 269-5100
POSITION STATEMENT: Testified on HB 69 as assistant attorney
general assigned to the Alcoholic Beverage Control Board.
ACTION NARRATIVE
TAPE 99-15, SIDE A
Number 0001
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce
Standing Committee meeting to order at 3:18 p.m. Members present
at the call to order were Representatives Rokeberg, Halcro,
Sanders, Harris, Brice and Cissna. Representative Murkowski
arrived at 3:19 p.m.
HB 68 - BOARD OF PHARMACY
Number 0065
CHAIRMAN ROKEBERG announced the committee's first order of business
is HB 68, "An Act extending the termination date of the Board of
Pharmacy to June 30, 2005; and providing for an effective date."
Number 0123
CATHERINE REARDON, Director, Division of Occupational Licensing,
Department of Commerce and Economic Development, came forward to
testify in support of HB 68. She stated, "I am here today to speak
in support of the extension of the Board of Pharmacy, which my
division staffs and assists. The Board of Pharmacy has achieved a
lot during the last sunset period. They worked hard ... to support
legislation that rewrote the pharmacy statute, and then follow it
up ... with a comprehensive rewrite of all of their regulations,
which was quite a large project, and the purpose of all that was to
try to bring the pharmacies' laws up to date with modern drug and
business practices. I think it's an example of a situation in
which a board is very important, it would have been very difficult
for my staff, with our lack of technical knowledge, to have carried
out such a project. You really need to know a lot about pharmacy
to effectively regulate that profession. The sunset audit does
recommend extending the board for this length of time, and had very
little to suggest in the way of changes, and this board, like all
of our licensing programs, is financially self-sufficient in that
the license fees cover the costs of regulation. So, I do have a
zero fiscal note for this bill, at the same time acknowledging that
the ongoing costs built into the budget already are approximately
$61,000 a year."
Number 0270
REPRESENTATIVE MURKOWSKI said, "Apparently there was a requirement
that you state your height, your weight, your hair color, and all
that, and in the recommendation it indicated that there was
reasonable cause to request this information, because it's
important when licensing individuals working with controlled
substances." She asked, "Do they do ... criminal background
checks, or what's the extent of the investigation?"
MS. REARDON responded that they do not do fingerprinting or
criminal background checks at the time of licensure. She said that
they do take a photograph of the person and have it notarized, in
order to verify that the person and the photograph match. She
noted they do ask questions on the initial application about
someone's criminal background, but they do not verify the answers
unless someone were to answer yes indicating that they were
convicted of something. Ms. Reardon commented that the issue has
come up recently with regards to medical licenses; the desire to
have physician applicants fingerprinted. The Federal Bureau of
Investigation (FBI) will only provide criminal background
information if there is a state law specifically saying that we
need to get FBI background checks. This means, if the legislature
wants that to take place, they will initiate a statute change.
Number 0440
REPRESENTATIVE MURKOWSKI commented that as a lawyer for the state
you are fingerprinted and there are character investigations, which
is basically a criminal background check. If the state is going to
require it of lawyers, than we might want to consider requiring it
of those handling controlled substances.
MS. REARDON said that she doesn't know whether the Drug Enforcement
Administration (DEA) is doing a criminal background check before
issuing the DEA license. The division does require pharmacists to
have DEA licenses, so there is a backup in that profession, but
that would not be the case for most of the division's professions.
CHAIRMAN ROKEBERG noted the chairman of the Board of Pharmacy is
participating via teleconference and the committee may want to
direct the more technical questions toward him.
REPRESENTATIVE CISSNA wondered if there has ever been any problems
with controlled substances and pharmacists.
Number 0564
MS. REARDON noted she would defer this question to the chairman of
the Board of Pharmacy. However she said she suspects in the
country as a whole there have probably been problems with theft or
misuse of drugs in that profession, just as there would be in any
profession with that kind of access to amphetamines, et cetera.
Ms. Reardon stated she has looked into the issue with regards to
physicians because of questions from legislators and citizens. She
said there has not been any history of a public complaint about the
quality of a practice and then later discovery of an undisclosed
criminal background. There does not seem to be a connection
between "bad doctors" and some secret undisclosed criminal
background. She said that she is not sure if the lack of criminal
background checks with regards to physicians has contributed to any
public harm.
REPRESENTATIVE HALCRO stated, "There seems to be some disagreement
with one of the recommendations - Prior Year Recommendation Number
5 - where it states in the report that it encourages several
organizations to establish fee levels that are more reflective of
the regulatory costs of the occupation [Audit Report, August 25,
1998, Division of Legislative Audit]. And in Commissioner
Sedwick's [Deborah B. Sedwick, Commissioner, Department of Commerce
and Economic Development] response, dated October 27, 1998, she
states, 'We don't concur, we don't agree with this.'"
Representative Halcro asked, "Can you give me a summary on what's
happening with this?"
Number 0707
MS. REARDON replied, "This a recommendation that you will probably
see appear in a lot of audits to come, because it's a difference of
opinion that isn't playing out just in the pharmacy board, but in
all of our programs. ... Alaska Statute 08.01.065(c) says that the
Department of Commerce will set license fees so that the revenue
generated from an occupation is approximately equal to the
regulatory costs." Ms. Reardon continued, "We've been audited
several times on this topic, and in the early '90s an audit
indicated that the use of the term 'occupation' meant that not just
a board area, like Board of Pharmacy or [State] Medical Board, but
the actual occupations within the board -- in pharmacy there are
pharmacy technicians, and facilities and pharmacists. In the
Medical Board there'd be physician assistants, paramedics,
physicians, osteopaths, podiatrists -- that it needed to be carried
down to that level. That was an audit, actually, by the Office of
Management and Budget, I believe, and in response, the division did
begin tracking costs at the occupation level, not just the program
board level. ... But we have not strictly applied the law to
always ensure that an occupation, versus a board or program, is
covering its own costs." Ms. Reardon continued, "I've been open
about that with future auditors and the legislature, in that we
have a 100 and some different occupations within our 36, 37 board
areas. ... When you get down to having self-sufficiency at that
level, you have a lot more occupations, a lot more groups, that
have fewer than 50 people - some fewer than 20 people - to pay, and
when you really make a group that small pay its own regulatory
costs, you get extremely volatile fees. Maybe someone appeals
their license denial - in a group of only 20 people, or 10 people
in some of these cases - it costs us $3 [$3,000] or $4,000 in legal
fees to take that appeal through. You've got so few people to
spread that cost to, their fees might ... become 2,000 bucks each
... for one period and then drop back down."
Number 0871
MS. REARDON further stated, "It's bad enough as it is with
self-sufficiency at the board or program level, with fees like the
psychology fees ... going up or down. At some point we thought to
exacerbate that by having 120 fees shooting up and down, and their
deficits and surpluses rolling forward from the previous two years
continually, that when a profession or a board seemed amenable to
a little bit of sharing going on within their program, we weren't
strictly ... saying, 'No, you may not share.' For example, in the
Medical Board it seems that the medical community accepts the idea
that the physicians will pay a little bit more, so that the
paramedics can pay a little bit less than they cost. As long as
everyone is pretty much getting along, we haven't pushed it and
said, 'No, you may not share.' When, in a profession, there isn't
that kind of getting along within a board area, and someone pushes,
then, quite honestly, I usually get into a situation where I go,
'Okay, we have to lower the boom and do something more strict,' and
then we do. But the auditors, I think, are looking at us and
saying, 'It might be a perfectly good public policy ... decision to
let programs pay for themselves, but it's not how we read the
strict letter of the law. Stop it.' We're just worried about what
that really means for your constituents and our licensees. How
many $1,000 fees we're going to get. That's a long answer, but
that's where the 'push and shove' is coming."
REPRESENTATIVE CISSNA asked if there would be a difference in terms
of the cost of administering those 100 different professions if the
administration is broken down to those 100 different professions.
Number 0987
MS. REARDON replied, "Yes, I believe there would be, in that part
of it is the tracking of the roll forward of deficits and
surpluses. We've been tracking that by program, by board area, so
you're 50,000 in the hole, you're 120,000 ahead, and we credit
that; but when you try to do that for 120 [professions], it becomes
a bigger challenge to be doing that every year. ... Another part
of this ... that we have an honest difference of opinion with the
auditors -- ... we track our revenue for a profession based on
licensing statistics. If we licensed 200 pharmacists, which we
know out of our database, we know how much money we got for that
whole board area in a year. When we get checks in the mail, we
don't actually credit them right then to the occupation, we just
credit them to the board area. Then we divvy up that revenue
within a board area, based on how many people we licensed, by using
our statistics out of our computer. The auditors would prefer that
as we open up each check, we right then decide which of the
sub-occupations it goes to, that slows up our paper work and
getting those checks in the bank. So, we respectfully suggest that
our statistical data is good enough, but they disagree in the audit
...."
Number 1064
CHAIRMAN ROKEBERG stated, "This is an ongoing battle we have with
the department, and something the chair is - and the old-timers
here are very familiar with. ... I would just like to point out
that there is a bill that's going to be introduced regarding the
Real Estate Commission Surety Fund and the licensing fee, which
will take up this very issue in a more generic sense ...."
MS. REARDON noted she would be happy to answer questions in another
setting from any of the committee members regarding this fee
setting issue.
REPRESENTATIVE HARRIS questioned if Ms. Reardon was familiar with
the Peter Crack (ph) case, a Dillingham pharmacist.
MS. REARDON replied she was vaguely familiar.
Number 1113
REPRESENTATIVE HARRIS commented that Mr. Crack (ph) was a
pharmacist who had been stealing drugs through the pharmacy and
giving them to boys for favors. He asked, "Do you have any idea
how that somebody could get away with that for that long ...
without being detected?"
MS. REARDON responded that she would need to review the case in
order to give a good answer.
REPRESENTATIVE HARRIS stated he thought it was an ongoing thing for
a long time. He indicated he hopes the system would have enough
checks and balances in it, since they are dealing with fairly heavy
drugs, to discover other similar situations if those situations are
occurring.
MS. REARDON said she believed there was first criminal action
against the pharmacist and then the Board of Pharmacy was able to
take licensing action very promptly. She thought the situation
involving Mr. Crack (ph) was uncovered through more of a criminal
investigation by the police in that town; the board hadn't received
any complaints, et cetera, about him.
REPRESENTATIVE HARRIS asked, "Aren't certain drugs through ... the
department, aren't they supposed to be monitored on a quarterly or
yearly basis, or something, to keep control of them?"
MS. REARDON asked if she could defer that question to the pharmacy
board chair.
CHAIRMAN ROKEBERG answered in the affirmative. He thanked Ms.
Reardon, asking her to stand by in case any follow-up is needed.
He indicated the committee would take teleconference testimony from
the chairman of the Board of Pharmacy, Paul Gionet.
Number 1231
PAUL GIONET, Chairman, Board of Pharmacy, testified via
teleconference from Anchorage. He stated, "Regarding the Crack
(ph) case and others similar to that -- ... the Crack (ph) case
was, as Catherine Reardon pointed out, ... brought to us ... from
a criminal side and then we were able to get Mr. Crack (ph) to
suspend his license and voluntarily do that rather quickly. As far
as drug usage amongst pharmacists, we do not monitor that. That
would have to be staffed by a team of investigators full time.
Usually in other states there are actually pharmacists as police
agents, and there just is not the amount of pharmacies or
pharmacists or moneys available in the state of Alaska to do that.
The DEA does not require the Boards of Pharmacies to monitor drug
activity; they take a stance of finding out about it if it occurs
on the criminal side, for the most part."
CHAIRMAN ROKEBERG asked Mr. Gionet if he had any additional
comments.
Number 1299
MR. GIONET stated, "I did want to mention [to] the first person
asking the question about the height, weight and color of eyes -
that is an optional question on the application that we have, any
applicant does not have to answer those questions. There was
another question about do we verify the photographs, and,
currently, as an applicant comes and takes the jurisprudence exam
in front of a board member, we do verify their drivers' licenses
against their photographs." Mr. Gionet noted that concluded his
comments, stating, "As Ms. Reardon stated, we did quite a few
projects in the last four to six years, rewriting a lot of our
statutes and regulations. We also wrote regulations regarding
sterile pharmaceuticals and home infusions. We're rewriting
regulations on nuclear pharmacy and ... we also licensed
technicians in the last year or two. ... We do require licensing
of out-of-state pharmacies, such as mail-order pharmacies, and
we're also looking at the issue of Internet pharmacies, of which is
hitting in the news now, and we're going to have to deal with this
as a safety issue in Alaska."
Number 1369
REPRESENTATIVE SANDERS asked, "To your knowledge, with Mr. Crack
(ph) or with anyone else who has been prosecuted over
pharmaceuticals in Alaska, do you know if a background check on any
of those people would have turned up anything in their history that
might have prevented them from getting in that position if we had
been doing so?"
MR. GIONET answered, "I don't believe that we do any background
criminal checks, but if they have any licensing actions against
them in any other state, that's reported to us before we issue
their license. I believe Mr. Crack (ph) had had his license for
quite a few years here in Alaska, and until a complaint is brought
to us by the public, either on the criminal side or to the board,
or to occupational licensing - to the investigators - then there's
really no way of us monitoring that or finding that out. But as
far as someone perhaps practicing in another state with problems
with their licenses - those are brought to our attention on a
fairly regular basis. ... I've been on the board six years, [and]
I'm sure at least ten of those have been brought to the Board of
Pharmacy, and they have been acted upon, and many licenses have
been denied because of that."
REPRESENTATIVE SANDERS questioned, "Then do you feel that we should
look into background checks, as a legislature -- into passing
something that would authorize you to do background checks?"
MR. GIONET replied he thought it would be a good idea, but it
depends on the cost to the state and if investigators are willing
to do some of that. He stated it would protect the public more.
Referring to the Crack (ph) case, Mr. Gionet said he believed Mr.
Crack's (ph) actions began while Mr. Crack (ph) was in Alaska and
there weren't too many ways for the board to find out,
unfortunately, until something happened.
Number 1475
CHAIRMAN ROKEBERG clarified that background checks would not be a
cost to the state, but a cost to Mr. Gionet and his colleagues.
REPRESENTATIVE MURKOWSKI asked Mr. Gionet if he would define
nuclear pharmacy.
MR. GIONET replied, "It actually has been occurring for quite a few
years. If you go into any hospital and you have any radiation
treatment for cancer, you're being treated with nuclear
radio-particles -- and, actually in the last two years, there is an
official nuclear pharmacy that was established in Alaska. ... Most
of their statutes and regulations are included on a federal level
because they are regulated by federal agencies, so we're actually
excited that we can write some regulations to incorporate the
federal regulations for the state of Alaska. But this has been
something that goes on in every hospital, practically, throughout
the state of Alaska and has always been monitored by radiologists
or radiologist technician[s], and there are nuclear pharmacies all
over the country. ... It's something that will help the public
safety."
REPRESENTATIVE HARRIS asked Mr. Gionet if people who are not
pharmacists or doctors are allowed to dispense drugs in rural
Alaska.
Number 1570
MR. GIONET stated, "No, they are not allowed. There are a few
instances under the Medical Board where physicians may, nurse
practitioners, and physician assistants, but otherwise no one is
allowed to dispense drugs. There are some still, I believe, rural
health aides under the federal program with the Natives that are
allowed to do things either under the federal law or under the
Medical Board of Alaska."
REPRESENTATIVE HARRIS asked if the Board of Pharmacy monitors that
activity.
MS. GIONET replied, "We do not have authorization by statute to
monitor any of that activity regarding the Medical Board or the
federal program."
CHAIRMAN ROKEBERG asked, "Can you describe, to the committee, what
the technical licensing is of the tech [technician]?"
Number 1616
MR. GIONET noted, "[In] any normal retail pharmacy in any state
there are always assistants to the pharmacists. ... In the last
probably 10 to 20 years ... we're getting more in tune to people
that are having alcohol abuse, and drug abuse, and mental problems,
and [we're] starting to encourage them to get help, and, if they
don't, have licensing action against them. There are so many
assistants in the pharmacy realm that we felt it necessary to
license these people in order to take some actions against them in
case we had some technicians that were in trouble. ... Last June,
we did license the technicians, and since then we've already been
able to suspend one license of a technician that was in a rural
area abusing narcotics along with the pharmacist. Had we not had
the technicians licensed, no action would have been taken against
that person, and they could just keep going on."
CHAIRMAN ROKEBERG asked Mr. Gionet if he believes the Board of
Pharmacy has the ability to control the pharmacy in the state's
Pioneers' Home system [Alaska Pioneers' Homes, Division of Alaska
Longevity Programs, Department of Administration], and if the board
needs any legislative authority, or his feelings.
Number 1693
MR. GIONET commented he would defer the question to Ms. Reardon.
He stated it is an active case with the investigators, they have
some sealed documents with the Board of Pharmacy, and he thinks the
board has been requested not to discuss the issue.
CHAIRMAN ROKEBERG commented, "Obviously you have jurisdiction ...
if it's being investigated."
MR. GIONET responded, "It's being investigated, but the
investigators won't tell us yet, because they're actively
investigating it, what we're even to rule on. ... I'm assuming
maybe we'll have some part of it, but it's total secrecy because we
act as jurors in the case."
Number 1723
CHAIRMAN ROKEBERG asked Mr. Gionet if he was aware of any
prohibitions that disallow the board from jurisdiction in a state
institution.
MR. GIONET answered in the negative.
CHAIRMAN ROKEBERG thanked Mr. Gionet for his testimony and asked if
there were any further questions or testimony. There being none,
the chairman stated the public hearing on HB 68 is closed.
Number 1774
REPRESENTATIVE HALCRO made a motion to move HB 68 out of committee
with the attached zero fiscal note and individual recommendations.
There being no objections, HB 68 moved out of the House Labor and
Commerce Standing Committee.
Number 1801
CHAIRMAN ROKEBERG called a brief at-ease at 3:48 p.m. The
committee came back to order at 3:49 p.m.
HB 69 - ALCOHOLIC BEVERAGE CONTROL BOARD
Number 1806
CHAIRMAN ROKEBERG announced the committee's next order of business
is HB 69, "An Act relating to the Alcoholic Beverage Control Board;
and providing for an effective date." He commented he would
entertain a motion to adopt the proposed committee substitute (CS),
Version G, for discussion.
Number 1868
REPRESENTATIVE HARRIS made a motion to adopt the proposed CS for HB
69, labeled version 1-LS0354\G, Ford, 2/19/99, as a work draft.
There being no objection, Version G was before the committee.
Number 1898
JANET SEITZ, Legislative Assistant to Representative Norman
Rokeberg, Alaska State Legislature, came forward to explain the
proposed CS, as aide to the House Labor and Commerce Standing
Committee. She stated Version G adds some language about limited
liability companies (LLCs) and limited liability partnerships
(LLPs), referred to as limited liability organizations. This is at
the request of the board [Alcoholic Beverage Control Board (ABC
Board)], because they were having some problems with licensing in
that area. That language is in Sections 1 to 3, 5 to 8, 10, and
11. Section 4, on page 3, makes amendments so that brewpub
licensees are allowed to sell their manufactured beer, not only on
the licensed premises where the beer is made, but at other licensed
premise of that same licensee. Section 9, beginning on page 4,
adds a corkage clause to the statute, which means that you can
bring a bottle of fine wine, for example, into a restaurant and the
restaurant will charge a fee for the stemware and costs. She noted
one of the proposed amendments [G.2] would make this corkage option
subject to the agreement of the licensee. Section 12 extends the
termination date of the ABC Board to June 30, 2002. That is the
only bill section with an immediate effective date, all the other
sections have a July 1, 1999, effective date.
Number 2021
REPRESENTATIVE MURKOWSKI commented she was unaware of any state
besides Utah with a corkage fee, and wondered what the reason is
for inserting the corkage clause into the bill.
CHAIRMAN ROKEBERG responded that it is a common practice in most
states but existing Alaska Statute prohibits corkage. He noted it
also a very customary ability throughout the world.
REPRESENTATIVE HALCRO commented that in some countries, such as
Japan, you can actually buy a bottle of Scotch [whisky] and leave
it at the restaurant for the every time you come in. He asked, "Is
this what you're envisioning?"
Number 2060
CHAIRMAN ROKEBERG indicated having one's own wine bin on a premise
has been known to happen. The chairman said the bill represents a
good deal of what was in the prior legislation from the last
legislature - a significant part of the language, and the limited
liability organizations. He pointed to both LLCs and LLPs in the
definition section. The chairman continued that Section 4 would
probably be the section in question today. For the committee's
reference, he briefly described the different types of alcoholic
beverage licenses: 1) The beverage dispensary license, allowing
the sale of cocktails [hard liquor]. 2) An endorsement, allowed by
the Alaska Statutes, to a beverage dispensary license to be a
brewpub; a brewpub has to be a beverage dispensary licensee to get
an endorsement to be a brewpub. 3) The grandfathered
brewery-restaurant or GBR, in the chairman's words, also known as
taverns. Chairman Rokeberg commented there was a period about four
years ago when the legislature allowed these, and then another bill
he sponsored disallowed these. The chairman stated there were only
four [five] of those licenses grandfathered in Alaska, commenting
one of those had gone out of business and that testimony would be
heard from two others today. He noted one of the problems resolve
around these unusual licenses. 4) The brewery license itself,
which is separate from the brewpub or the grandfathered brewery
restaurant license. He stated he wanted to take up amendment G.1
[labeled 1-LS0354\G.1, Ford, 2/23/99] and hear testimony on that.
The chairman noted there was also another amendment before the
committee [labeled 1-LS0354\G.2, Ford, 2/24/99].
Number 2224
MARY JACKSON, Legislative Assistant, Senator John Torgerson, Alaska
State Legislature, came forward to testify on the proposed G.1
amendment. She stated that the amendment before the committee
relates to package store licenses. Last year there was a bill, SB
138, and many portions of that bill were supported by the ABC
Board, including this amendment which was in SB 138. She noted SB
138 had died in the Senate Finance Standing Committee the previous
session. Ms. Jackson commented Senator Torgerson felt very
strongly about this amendment and she stated, "A little over a year
ago, we had a contact by constituents, and their request was that
they 'piggyback' on some of the economics boom of the cruise ship
business. ... What they wanted to do then was supply bon voyage
gifts of flowers and candy and champagne, and order to do that, of
course, they needed to have the ABC Board get involved. What we
did, as an office, and Senator Torgerson actually personally,
worked with these people. We took it to the ABC Board; the ABC
Board reviewed it, they considered it, and they thought it was
actually a pretty darn good idea, too. They worked with us, and we
in turn, worked with Senate Bill 138 language and inserted the
language that you see before you now as an amendment. I have
reviewed this amendment language and it is the exact same language
as was in old Senate Bill 138. I also spoke, just today ..., with
Director Griffin of the ABC Board; they supported all of these
amendments."
REPRESENTATIVE HALCRO asked, "The package store, meaning the liquor
store, can sell to a florist, who then puts the bottle of wine or
champagne in a basket and takes it to the ship?"
MS. JACKSON responded, "That's correct."
REPRESENTATIVE HALCRO asked, "Now the florist has to have -- I
mean, according to this, the delivery ... has to be made by
somebody who has undergone the server training."
MS. JACKSON replied that is her understanding too.
REPRESENTATIVE HALCRO asked, "If I have gone under the server
training, what am I doing working in a florist shop?"
Number 2335
MS. JACKSON responded, "I believe the only reason you're working
there is to make money, and so you're going to do whatever your
boss tells you to do, and that included delivering to a cruise ship
with a bottle of champagne, and if part of your job is to have this
license so that you can do that. More than likely, though,
honestly, I suspect that it would be the owner of the business that
would provide that function."
REPRESENTATIVE HALCRO stated that he thinks it is a great idea, but
he indicated his concerns are with penalties to those without
server licenses, enforcement, et cetera, for those requested to
make deliveries by their florist employers.
MS. JACKSON stated that she did not know the answer to that, but
that she'd assume the responsibility would mainly be on the
employer who directs the employee to do this knowing the employee
does not have the license.
Number 2380
REPRESENTATIVE BRICE asked, "Where does the responsibility fall if
you have a couple of teenagers ... placing orders to get wine and
champagne and how is that dealt with?"
MS. JACKSON replied that she believes, as before, that the
responsibility falls on the licensee, the owner of the florist
shop, in this case. She noted there could be others, for example
a candy shop that sold flowers and gifts. Ms. Jackson commented
this is really a very interesting proposition to "piggy-back" on
the thriving Kenai Peninsula tourism industry, at least in Homer
and Seward from all kinds of Outside cruise ships.
REPRESENTATIVE MURKOWSKI referred to Section 6(k), relating to the
delivery of alcoholic beverages, seeking clarification on the term
"responsible adult" and the phrase "the social event as defined by
regulation of the board."
MS. JACKSON replied that she was not sure of the definitions. She
stated that her office had very little to do with the language of
the bill as it was drafted. The bill was drafted by the ABC Board,
they approved the language which works with all of their
regulations. She offered to find the specific information.
Number 2469
CHAIRMAN ROKEBERG commented the director of the ABC Board is online
via teleconference.
REPRESENTATIVE BRICE indicated his guess is the first sentence of
Section 6(k) of amendment G.1 ["* Sec. 6. AS 04.11.150 is amended
by adding new subsections to read: ... (k) A package store license
authorizes the licensee to deliver alcoholic beverages between the
hours of 8:00 a.m. and 5:00 p.m. to a responsible adult at the
location of a wedding or wedding reception or ..."] probably refers
to delivery to someone who is sober.
REPRESENTATIVE SANDERS commented, "I kind of think the answer to
that is farther down there where it says, 'They must provide
acknowledged receipt of the alcoholic beverage in writing'. When
they acknowledge the receipt, they are the responsible adult at
that point."
Number 2501
MS. JACKSON added, "Mr. Chairman, if I may too make note that much
that is by regulation of the board, so..." [TESTIMONY INTERRUPTED
BY TAPE CHANGE]
TAPE 99-15, SIDE B
Number 0017
CHAIRMAN ROKEBERG asked if there were further questions on this
amendment.
REPRESENTATIVE BRICE indicated one of the provisions in Section
6(k) of the amendment that he did not see in Section 6(j) was the
written acknowledgment of proof of age for the person receiving the
alcoholic beverage delivery. He asked if there is any particular
reason for that.
Number 0044
CHAIRMAN ROKEBERG commented he thought it is because of the
different fact pattern: subsection (k) refers to this gift package
being delivered to a vessel and subsection (j) refers to a delivery
being made to an entire wedding reception. He commented he did not
think an underage person would go to an entire ruse to have a
bottle of champagne with flowers delivered to him or her on a ship.
REPRESENTATIVE BRICE asked, "Or to a hotel room, possibly?"
REPRESENTATIVE HALCRO confirmed that specific hours, between 8:00
a.m. and 5:00 p.m., would be set for deliveries to weddings, but no
times set for deliveries to ships.
CHAIRMAN ROKEBERG said perhaps Mr. Griffin can make a distinction
regarding Representative Brice's question.
Number 0105
JIM ELKINS, Elkins Tatsuda Liquor; Board Member, Cabaret Hotel and
Restaurant Retail Association (CHARR), came forward to testify on
the proposed G.1 amendment on behalf of Elkins Tatsuda Liquor in
Ketchikan, Alaska. He commented that he didn't believe CHARR has
developed any opinions on this issue, but he has some. Mr. Elkins
commented he thinks the flow of goods is wrong for security
reasons. The candy, flowers, et cetera should go to the liquor
store and be delivered by the licensee. He thinks there's a lot
more control, that's where the liability for wrongdoing is anyway,
and the staff are already trained. The one problem Mr. Elkins has
with a cruise ship, from a security standpoint regarding delivery
to minors, et cetera: nobody delivers anything past the main
entryway of a cruise ship. He indicated the deliverer has no
control over the delivery past that point. Mr. Elkins commented
the committee might also want consider expanding it beyond floral
and candy, especially when delivering to hotel rooms, to include
crackers, cheeses and meats - something a grocery store might want
to participate in. He also mentioned Christmas baskets.
CHAIRMAN ROKEBERG asked Mr. Elkins if he was recommending that the
chain of delivery on the hotel/cruise ship provisions under
subsection (j) of the amendment would be that the package store
would put this together and make the delivery.
Number 0195
MR. ELKINS agreed, commenting it doesn't mean the florist shop
couldn't sell the package.
CHAIRMAN ROKEBERG referred to the absence of licensed florists and
said that this would also give the package store the last
opportunity to apply a mark-up. The chairman commented the
committee would be holding HB 69 over and confirmed that concluded
Mr. Elkins' testimony.
MR. ELKINS said he would wait to testify on the bill itself.
Number 0263
DOUG GRIFFIN, Director, Alcoholic Beverage Control Board, testified
next via teleconference from Anchorage. The large part of the
change the ABC Board wanted the committee to address was the entire
question of dealing with limited liability companies allowed under
state law several years ago, but not specifically addressed in
Title 4 of the Alaska Statutes dealing with alcoholic beverages.
He said, "This has created a lot of problems for my licensing
staff, some problems for some of our customers, [and] frankly, some
of the licensees. And we've been operating for several years under
an attorney general's opinion that has not been quite as easy ...
to implement as if we had a very clean law, which we think we have
now in this bill, to be able to address this new type of business
organization that is becoming very popular. ... A lot of this bill
deals with that, ... and we can get into details and probably Linda
Kesterson, the assistant AG [attorney general] to the ABC board, is
probably the best person to address that." Mr Griffin continued,
"When the bill first came to us, we did have some concerns about
this new term 'a limited liability organization', but I think Linda
talked to your staff, Mr. Chairman, and we've basically come around
to the feeling that this does, in fact, address the concern that
the board had, and it does provide us a much more workable
framework in which to license different types of limited liability
organizations, whether they be partnerships, or companies or
corporations." Mr. Griffin indicated that concluded his comments
on regarding that part of the legislation.
Number 0344
MR. GRIFFIN stated, "On the corkage issue, I know ... we did
request, because ... no matter who brings the alcohol to the ...
restaurant, we need to hold somebody responsible in the service of
alcoholic beverages, and we felt that that needed to be spelled
out. And I do see in the amendment, you haven't yet adopted it,
but that you do talk about inserting that the licensee has to
provide the permission, and with that, we would hold that person
responsible. So, if they got somebody in a drunken condition, even
if it was with their own wine, we would still hold the licensee
responsible for that action." Mr Griffin further stated, "I did
talk to our chairman, Bob Klein, he thought that as long ... -- he
didn't really see the need for the limitation of the one bottle for
every two persons, as long as you held the licensee ultimately
responsible, so that's just his perspective. I think he was
thinking more of people that might want to just have ... relatively
small portions of several wines in some type of a wine tasting
situation, maybe a different wine with each course of dinner, that
type of thing, and of course if you had enough people in your party
you could do that ....
MR. GRIFFIN continued, "But he's not speaking on behalf of the
board, because we haven't taken this up as a board, but he's
speaking as chairman of the ABC Board. So, I did tell him I'd pass
along his comment on the corkage, for whatever it's worth. ...
From my perspective, I don't really have strong feelings about
limiting how much wine you bring in. I think ultimately, as long
as we can hold the licensee responsible, that's really the bottom
line, and that they ... provide this corkage service with
responsibility and common sense ,and moderation for the consumption
of the wine. And I guess the last thing, just in the original
bill, is the extension of the board to 2002 ... That's very
important under the sunset provision that the board be extended.
I think the board serves a very important purpose to the state, ...
in a state that does have the number of problems with alcohol abuse
that we have, that we do need a regulatory framework to be able to
license and enforce the liquor laws of the state of Alaska." Mr.
Griffin noted that concluded his remarks and stated the board is in
support of the original Version G.
CHAIRMAN ROKEBERG noted Mr. Griffin had omitted comments on Section
4 with regards to brewpubs.
Number 0493
MR. GRIFFIN said the drafting of this provision is in keeping with
the general thrust of the board's position the previous year with
SB 138. He indicated the committee would hear from one
brewery-restaurant whose situation is not completely addressed by
this section. Mr. Griffin said this provides an incentive to these
brewery-restaurant combinations to get a beverage dispensary
license. Senate Bill 138 contained the provisions allowing beer
manufactured at one location to be sold at another premise licensed
to the same company, group or person; and the requirement that
other beer a brewpub manufactured had to be sold through a
wholesaler, so there are no problems with those provisions. He
commented it is not identical to the previous legislation, in fact
going a little further, but is really in keeping with the board's
desire to try to straighten out this whole brewpub/brewery issue.
It is certainly one way to start trying to settle this once and for
all. The existing law does restrict to having only one
establishment, not allowing them to have other restaurants and
expand their businesses. Mr. Griffin stated the board is in
support of these sections.
REPRESENTATIVE SANDERS referred to his occupation as a
longshoreman, noting he believed many of the other committee
members also do not have wine cellars. He asked Mr. Griffin if the
ABC Board would have any objection if the committee amended this to
say that people could bring wine or Miller Lite onto the premises.
He indicated his comments were amusing, but it is a serious
question.
Number 0616
MR. GRIFFIN replied he couldn't speak for the board because it has
never taken a position on corkage, but he and his staff think it
isn't a big problem, that corkage is doable. He noted
Representative Sanders does touch on a problem. It's very clear
now that people do not bring alcoholic beverages into bars -
beverage dispensary premises - or into restaurants. Similarly,
people don't open alcohol and consume it on package store premises.
He commented that corkage kind of "fuzzes up the line," noting the
current situation was very clear. Mr. Griffin described the
various types of beverages besides wine that someone might want to
bring into an establishment. He drew the analogy of being on a
slippery slope with the possibility of sliding if people provide
some rain and mud is created. Mr. Griffin noted, "The first person
that provides a little rain might say, 'Why can't I bring my beer?'
and then they'll say, 'Why can't I bring ... my 25-year-old Scotch
... or my 100-year cognac ...." He stated if it just says wine and
the line is drawn there, then that is what the board will enforce,
but does beg these other questions. Those kinds of questions could
arise, and that is the problem with getting away from the current
very definitive bright line.
Number 0729
REPRESENTATIVE MURKOWSKI noted the chairman had indicated the
committee would not be moving the legislation this day and she
questioned whether Mr. Griffin or other board members would be
online the next time, when the committee would take up the audit
comments. She asked if this is an appropriate time to do that.
CHAIRMAN ROKEBERG responded that he would like to proceed to the
testimony, noting he thought Mr. Griffin would make himself
available at the committee's will.
Number 0756
REPRESENTATIVE HALCRO asked Mr. Griffin, "If ... the corkage phrase
were to pass, how many restaurants do you think would allow
customers to bring in their own wine? I mean, it seems to me, in
the food and beverage industry, liquor, obviously, associated with
the menu items, is a big part of the ticket price."
MR. GRIFFIN said that he had no idea, but he could try to obtain a
figure through discussion with his staff and the board.
REPRESENTATIVE HALCRO asked Mr. Griffin how much notice has gone
out to licensees about this proposal to allow corkage.
Number 0811
MR. GRIFFIN said he doesn't know. He said that the people present
from CHARR [Cabaret Hotel and Restaurant Retail Association] and
the Anchorage Restaurant and Beverage Association (ARBA) may be
better at addressing that. He said that he doesn't think there has
been a whole lot of notice, noting the chairman of the ABC Board
might bring it up at ARBA's meeting today
CHAIRMAN ROKEBERG said that CHARR, ARBA, and the "Hotel-Motel
Association" are fully aware of it, had it at their meeting in
Juneau last week, and it has been something the chairman has
discussed with the three associations for the last four years. He
noted it is also very customary throughout the world. Chairman
Rokeberg clarified the trouble is that there are some restaurants
which allow this to happen currently, not realizing they are
breaking a law, because it is customary in a lot of jurisdictions.
Number 0880
REPRESENTATIVE MURKOWSKI said when she first read Section 9 of the
proposed CS, she made the assumption that regardless of whether or
not the establishment lets the person bring in a bottle, they are
allowed by law to bring it in. She asked, "Is it a discretionary
thing with the establishments?"
CHAIRMAN ROKEBERG replied there is an amendment here that makes
sure of that [proposed amendment G.2]. The establishments have a
right, and they charge for the use of the stemware. The corkage is
a fee included in the [restaurant] bill, which means the restaurant
has an incentive to not use its own inventory.
CHAIRMAN ROKEBERG noted the LB&A [Joint Committee on Legislative
Budget and Audit] audit had suggested the year 2002. The committee
had passed out a bill the previous session giving the board a
one-year extension based on that 1997 audit. The chairman noted if
Mr. Griffin would like to have a further extension, he would not
object, and this is something that could be discussed by the
committee.
Number 0933
REPRESENTATIVE HALCRO stated, "The proposed amendment to allow for
delivery, whether it's to ships or whatever, this is similar to
what I would imagine is Internet sales. Are Internet sales of
alcohol currently regulated in the state of Alaska?"
MR. GRIFFIN replied that he didn't know what Representative Halcro
means by regulated. He said that if someone wants to order wine
from some place out-of-state and they wish to do it for personal
use only, it is permitted as the board interprets it. He noted the
law is silent on this. However, the board does not allow people to
solicit, and that is where the Internet is in kind of a gray area
as to whether an Internet ad is solicitation. Mr. Griffin noted
the board has interpreted that to mean someone has to seek out the
website or chance upon it, and so the board has not looked at that
as a problem. Receiving wine through ordering from a winery or a
beer-of-the-month club gift, for example, is permitted for personal
use only. He indicated delivery would have to be through some
delivery service other than the United States Postal Service.
CHAIRMAN ROKEBERG said that he would like to move on and hear from
Chris Anderson.
Number 1026
CHRIS ANDERSON, Co-Owner, Glacier Brewhouse, testified next via
teleconference from Anchorage. He said that he is in support of
these changes as his motive is to open another establishment in the
state of Alaska. He indicated he has been seeking some
modification of the law to allow him to do this for the last three
years because the current statutes prohibit any brewery-restaurant
dual license from owning or operating any [other] beverage
dispensary or restaurant eating place in the state. Mr. Anderson
said he has worked extensively with the CHARR and ARBA, the
wholesalers, and the retailers, to finally reach some kind of
consensus. This legislation will allow them to purchase a beverage
dispensary license and then be able to sell beer to themselves or
to a wholesaler. He said that he felt it was a good compromise and
he'd like to see it move forward. He noted his business is located
in downtown Anchorage. He continued, "I did send you, yesterday,
an amendment to Section 4. The Moose's Tooth is another
brewery-restaurant license holder, and they have a difference in
their license, is [that] their brewery is not on premise. ... The
amendment that I sent you would state that a brewpub license may be
issued to a holder of a grandfathered brewery restaurant license
issued on or before the effective date. So, their intention is to
move along ... in this fashion, so there would really only be one
license in the state that would be of the old style
restaurant-brewery operating, which would be the Sleeping Lady --
Snow Goose." He agreed with an unidentified speaker that the
"Armadillo" [Armadillo Tex-Mex Cafe] in Juneau is also under this
same licensing.
CHAIRMAN ROKEBERG indicated he had not been aware the Armadillo is
also included in this license group. He confirmed Mr. Anderson had
concluded his testimony.
REPRESENTATIVE MURKOWSKI stated, "I'm not clear what the amendment
was, is that one that's been incorporated here?"
Number 1198
CHAIRMAN ROKEBERG replied, "No ... Mr. Ford [Legislative Counsel,
Legislative Legal and Research Services, Legislative Affairs
Agency] is here, he indicates that we don't need that, but we're
going to have this discussion .... There's further testimony
coming, hopefully, from Mr. Jones from the Moose's Tooth to
describe his circumstances." The chairman indicated it was his
intent for the committee to take the testimony then hear from Mr.
Ford to ensure the proper statutory language is included.
CHAIRMAN ROKEBERG asked Mr. Anderson if it is his objective to
expand his business by opening another premise.
MR. ANDERSON answered that is correct.
CHAIRMAN ROKEBERG asked, "You want to be able to sell the beer you
currently brew in your ... grandfathered brewery restaurant, ...
[or] GBR, into your new beverage dispensary-licensed premise, is
that correct?"
MR. ANDERSON answered, "Well maybe not (indisc.) the brewhouse
would become a beverage dispensary, (indisc.) that brewhouse would
be a brewpub under current statute, which would require it to have
a beverage dispensary license." He noted the next location could
be a restaurant.
Number 1266
CHAIRMAN ROKEBERG confirmed, "In other words, you'd be able to
start another restaurant across town, ... conceivably, and then be
able to sell the beer you're brewing downtown now at the next
place. That's what your objective is." The chairman questioned
whether that was prohibited under current law.
MR. ANDERSON said that that is correct as a brewpub.
CHAIRMAN ROKEBERG noted that is the prohibition, "You're going to
change your status under the license law, and then we need these
amendments to allow you to conduct a rational business."
MR. ANDERSON said, "Right, I will turn in my brewery license and my
restaurant/eating place license, purchase a beverage dispensary
license, and re-license under the brewpub statutes, ... which would
be Section 4."
CHAIRMAN ROKEBERG commented that would leave two, possibly three ,
out of the four or five [GBRs] originally grandfathered in.
Number 1315
MR. ANDERSON noted that was correct and he indicated it seems to
have been the intention of CHARR and ARBA to get rid of those
licenses, leaving the remaining two forms of business.
CHAIRMAN ROKEBERG confirmed there were no further questions of Mr.
Anderson. He indicated he wished the committee to hear Matt Jones'
testimony to help it frame the question before it. The chairman
informed Mr. Jones his letter and amendment have not been
distributed to the committee, but he asked Mr. Jones to describe
his circumstances.
Number 1362
MATT JONES, Co-Owner, Moose's Tooth Pub and Pizzeria, Moose's Tooth
Brewing, testified next via teleconference from Anchorage. He
stated that, unlike the other restaurant brewery combinations, they
are not co-located - they are located approximately 2.5 miles
apart. However, if allowed, they would do the same thing as Mr.
Anderson; they would turn in their restaurant and brewery licenses,
and purchase a beverage dispensary license in order to obtain a
brewpub license.
CHAIRMAN ROKEBERG asked, "You have one of the -- what I categorize
as the grandfathered brewery-restaurant licenses, is that correct?"
MR. JONES replied that is correct; they were issued those licenses
in June and July of 1996.
CHAIRMAN ROKEBERG confirmed their situation is unique because they
are not co-located, and they are the only business with these
circumstances in the entire state.
Number 1425
MR. JONES reiterated that their situation is unique because they
are not co-located, but they ask that the amendment be worded in
such a way that they can be entitled to it - that they have the
option to turn in their restaurant brewery license and purchase a
beverage dispensary license in order to qualify for a brewpub
license, so that they are basically on the same playing field as
the other original "GBRs," the chairman referred to.
CHAIRMAN ROKEBERG confirmed that concluded Mr. Jones' testimony.
He asked, "Right now under the GBR is there a limit on how much you
can brew?"
MR. JONES replied that under the GBR there is not.
CHAIRMAN ROKEBERG noted he believed there is a volume limitation
under the beverage dispensary license.
Number 1489
MR. JONES agreed, noting he believes it is 75,000 gallons. Like Mr.
Anderson, they are also interested in expanding. If they are
eligible for this, they would buy the beverage dispensary license,
get a brewpub license, and then open a second location which would
have a restaurant or eating place license. Of the 75,000 gallons
of beer produced, some would go to the original location, some to
the new location, and they would be allowed to sell any extra to a
wholesaler.
CHAIRMAN ROKEBERG commented, "By doing this, you would give up any
right to your free-standing brewery to maintain a brewery license.
Is that how you would understand it?"
MR. JONES replied that is correct; they would give up the brewery
license.
CHAIRMAN ROKEBERG confirmed the Moose's Tooth currently has two
licenses: a brewery license and a restaurant or eating place
license.
MR. JONES noted the group of five GBRs being discussed all actually
had two licenses apiece, a brewery license and a restaurant or
eating place license. He said the Glacier Brewhouse, the "Snow
Goose," the Armadillo, and the "Railway" all own two licenses. Mr.
Jones confirmed for the chairman that the endorsement was on the
restaurant portion.
Number 1592
CHAIRMAN ROKEBERG questioned if the 75,000 gallon limit is
problematic.
MR. JONES said that is difficult to say. It would probably suffice
for two locations, but could be a burdensome cap if someone wanted
to distribute, depending on the size of someone's distribution
network.
CHAIRMAN ROKEBERG said that he feels the statutory intention of the
legislature was to "delimit" the amount of production at brewpubs,
so they are not in direct competition or they are licensed
differently than breweries, which don't have a limit.
MR. JONES said that he believes that is true. He said, "Presently,
it is 75,000 gallons for one, and an infinitive number of barrelage
for the other. Whether that 75,000 is a hindrance to commerce for
a brewpub, I'm not sure. ... (Indisc.) it could go up; I think
right now it would work."
Number 1652
REPRESENTATIVE HALCRO said the amendment also gives the option of
selling to a wholesaler. He asked, "Does this mean, someday I
might be able to find my favorite Polar Pale Ale at a retail
establishment?"
MR. JONES answered in the affirmative, noting they could sell it to
a wholesaler who could take it to one of the various liquor stores
around town [Anchorage] or who could then sell it to another
restaurant or eating place license.
REPRESENTATIVE HALCRO asked how that works with a 75,000 gallon
limit.
MR. JONES replied, "Under both the federal and state regulatory
schemes, we're required to keep track of the beer production.
Basically, we have to file a monthly report to the ATF [Bureau of
Alcohol, Tobacco and Firearms] and a monthly report to the State
Department of Revenue. And so we know exactly how much beer we
produce, and those records ... are available to the ABC [Alcoholic
Beverage Control Board] or anyone else who would want to question
how much beer we're producing. But, for instance, with the 75,000
gallon cap, we could produce 30 [30,000] gallons for the first
location, another 30 [30,000] gallons for the second location, and
whatever the 'delta' is that remains could go to a wholesaler."
Number 1794
BOB ACREE, Co-Owner, Glacier Brewhouse, testified next via
teleconference from Anchorage. He emphasized he feels it's
important for everyone to understand that none of the "GBRs" can
currently open a second restaurant in the state of Alaska,
indicating that has been the primary driving force behind this for
the last three years on the Glacier Brewhouse's part. He indicated
the other issue is in terms of the limit. He thinks the way this
is currently written, if a business wants to brew more than 75,000
gallons, it could brew an additional 75,000 gallons in a second
location if it obtains a second beverage dispensary brewpub
license.
CHAIRMAN ROKEBERG responded that is true, but they would need a
second license. He confirmed Mr. Acree agreed and that concluded
his testimony.
Number 1879
REPRESENTATIVE SANDERS asked Mr. Acree if he literally meant he
couldn't open a restaurant, or if he meant he couldn't open a
restaurant and sell his beer in it.
MR. ACREE replied they are prohibited by law from opening another
restaurant, even one that does not serve alcohol. He stated,
"That's been our big contention, and we've tried every which way to
get this massaged the last three years, and finally we just agreed
to bite the bullet and buy a beverage dispensary license in order
to get all the parties to quit fighting us."
CHAIRMAN ROKEBERG indicated he would like to describe that for the
committee later. He asked Mr. Acree what the approximate cost is
for a beverage dispensary license in the Anchorage area.
Number 1955
MR. ACREE said his guess is about $150,000. He noted others
present in Anchorage seemed to concur.
CHAIRMAN ROKEBERG commented, "You're willing, in order to be able
to grow your business, to invest as much as $150,000 to change just
a licensure, so you can expand because ... the existing law
prohibits you, is that correct?"
MR. ACREE said after three years of fighting they have reluctantly
agreed to do that.
CHAIRMAN ROKEBERG asked if that fighting is just within the
industry.
MR. ACREE replied, "That's my impression, yes."
Number 1996
CHAIRMAN ROKEBERG stated, "Just for the committee and for the
record let me describe, I believe it was House Bill 372 of the
Nineteenth Legislature, which I was a sponsor, changed a division
in the law in the first session of the Nineteenth Legislature which
allowed these types of restaurants-brewery combinations that were
not brewpubs. But they were a restaurant license? And which were
a lot cheaper than $150,000 or whatever the value was [of a
beverage dispensary license] to exist, and was requested by the
folks at the Snow Goose in Anchorage and some other growing areas
to try to be -- to create the separate, new type of license because
they didn't want to become a brewpub and buy a beverage dispensary
license. They really wanted to do it on a more modest (indisc.)
budget. So, the industry realized after the fact of what had
happened, so the bill that I sponsored came in and actually
repealed that, and in repealing, we grandfathered these other
establishments that had gotten the licenses under that, so we
grandfathered those particular licenses in. So, there was only, I
believe, four or five licenses - one of which now, the Railway
Brewery in Anchorage, has already gone bankrupt. So, there's a
very small number here."
CHAIRMAN ROKEBERG continued, "And what these gentlemen are actually
offering to do is diminish that number further, because what was
done is in the Senate bill -- in the bill that I sponsored, the
Senate changed the bill in such a manner that it prohibited
multiple licensing ownerships, and also the, as we're hearing here,
the prohibition of doing anything else. It was -- this particular
amendment was offered by Senator Halford in the Senate ... The
intent was to prohibit expansions of other businesses, and to keep
-- this was - those grandfathered licenses were perceived by the
industry as not being on a level playing field 'cause they had not
made the investment in the beverage dispensary license, so this is
what these gentlemen are saying, they're actually saying, 'Uncle,
... you guys win. We will agree to buy the beverage dispensary
license to be on the level playing field, and give up the other
type of license to get away from this other clause now in the
law.'"
Number 2190
REPRESENTATIVE SANDERS asked if this meant that because this was
grandfathered in, they couldn't get it back in a couple years if
they changed their minds.
CHAIRMAN ROKEBERG replied, "No, they're going to have to give it
up." He asked Mr. Griffin if what he had just described is a valid
description.
MR. GRIFFIN responded, "That is correct. There is specific
language, prohibited financial interest, that if you own a brewery,
besides these ones that are grandfathered in, you cannot have
ownership in another restaurant, and you're right. And in response
to the question ... from Representative Sanders, yes, since these
are kind of grandfathered licenses, if they do make this decision
to convert, there's no going back, they can't go back and go play
under the old rules." He indicated it was probably a good thing to
get away from this special class of grandfathered licenses, have a
clearer set of rules for this operation, and allow the expansion.
CHAIRMAN ROKEBERG asked if brewpub licenses are alienable; can you
sell a beverage dispensary/brewpub combination?
Number 2305
MR. GRIFFIN replied the chairman had described it correctly,
stating, "Right now you have to have a beverage dispensary license
- you call it an endorsement, it is another kind of license, it's
sort of a secondary license - but a condition of getting a brewpub
license is first being a beverage dispensary licensee ... with the
intent that you want to manufacture some beer at this point for
sale on your premises. And so you (indisc.) the second type of
license for that purpose. This bill does expand it a little bit,
allowing the sale of some of that beer to another..."
CHAIRMAN ROKEBERG interjected, noting Mr. Griffin had misunderstood
his question. He restated, "If you have a beverage dispensary
license and then you become a brewpub license, under our statutes
now can you sell that business to another party?"
MR. GRIFFIN answered in the affirmative.
CHAIRMAN ROKEBERG said, "The point being, right now with the
grandfathered licenses, those are not alienable ... you cannot
transfer those, is that correct?"
MR. GRIFFIN commented it is not clear about what would happen if
someone wanted to sell one. Mentioning the "Railway," he commented
the board has not been notified that it has officially declared
bankruptcy.
CHAIRMAN ROKEBERG said he had written the bill; they are not
supposed to be able to transfer those things.
Number 2415
MR. GRIFFIN indicated perhaps Mr. Ford could address this. He
noted the board hasn't had to face an attempt to transfer one of
these licenses yet, and he reiterated what would happen is not
clear to him.
CHAIRMAN ROKEBERG commented the restaurant portion of the license
could be sold, but not the right to be the combination. He stated,
"Because they had a vested interest, they had given consideration
potentially for the restaurant license, but they were granted by
statute this special right to be able to be a combination."
MR. GRIFFIN replied if that interpretation is correct, that is
probably even another reason why it needs to be fixed.
Number 2482
CHAIRMAN ROKEBERG said, "I'm just recalling off the top of my head,
I'm not sure that - Mr. Ford's shaking his head, 'Yes,' right now
- 'cause that was the intention of the sponsor."
MR. GRIFFIN noted the board understood that was Chairman Rokeberg's
intent, adding, "And if that situation were presented to us, we
would do a lot of investigation and..." [TESTIMONY INTERRUPTED BY
TAPE CHANGE]
TAPE 99-16, SIDE A
Number 0021
MIKE FORD, Legislative Counsel, Legislative Legal and Research
Services, Legislative Affairs Agency, came forward to answer
questions from the committee about HB 69.
CHAIRMAN ROKEBERG asked Mr. Ford if he had been shown
communications from the Moose's Tooth Brewing Company and the
Glacier Brewhouse requesting that HB 69 be further amended to
provide for the dual premise situation previously discussed. He
asked Mr. Ford to reassure them or speak to this issue.
MR. FORD testified as far as he had heard discussed, he did not
believe there needs to be any amendment to existing laws if, in
fact, these businesses are giving up the licenses they presently
have because then they no longer fall under the prohibited
financial interest section. They will not have any licenses that
are in conflict under the law. If these businesses are willing to
give up their existing licenses and purchase a beverage dispensary
license, they can do that now. Mr. Ford added that that is what he
heard them say they wanted to do.
CHAIRMAN ROKEBERG agreed, but added, "It's the multiple premise
issue that's spoken to in the existing draft ...."
Number 0126
MR. FORD confirmed that the draft proposed CS in front of the
committee amends the brewpub license provisions, which would allow
one to brew beer and sell it at some other licensed location one
may have. That is a change to existing law. He noted, "If that's
their concern, then the draft you have, Section 4, will solve that
problem, ... but I believe what they're talking about is some
additional element that they're looking for that would allow them
to dispose of their existing licenses to use these provisions."
CHAIRMAN ROKEBERG clarified that the Moose's Tooth is concerned
because they are not co-located, their circumstance are rather
unique. Apparently, the Moose's Tooth has the brewery license and
the restaurant license with the "endorsement," so they are
concerned that they may not be able to make the conversion because
of the other clause prohibiting the multiple ownership.
Number 0214
MR. FORD advised that multiple ownership is only prohibited in
certain combinations, and that it is permissible to have a brewpub
license and a restaurant or eating place license.
CHAIRMAN ROKEBERG asked about a brewery license, commenting he
thinks that is the problem.
MR. FORD replied a brewpub is kind of a brewery. He added, "So if
that's the license they want -- if they can live with this limit of
75,000 gallons -- I can't see a problem for them."
CHAIRMAN ROKEBERG asked if Mr. Jones was still there.
Number 0255
MATT JONES of the Moose's Tooth, stated, "I think the confusion
here is that if we give up our restaurant and brewery license ...
and try to become a brewpub, the brewpub language states that you
can only sell beer manufactured on premises licensed under the
beverage dispensary license. So, in our particular case, the
beverage dispensary license has to fall both on the eating side of
our establishment and on the brewery side, even though they're
three miles apart." He clarified that all of the other
grandfathered brewery restaurants are, for all intents and
purposes, located in the same building; however, the Moose's Tooth
is not, and the law specifically states that the beer has to be
manufactured on the premises. He noted as long as they could be
considered one premises, it is not a problem, and he guesses that
is the reassurance they are looking for.
MR. FORD suggested that was perhaps a good question for Mr.
Griffin, noting he thinks the ABC Board will determine what their
actual premises are under that license. Mr. Ford stated he
believes in the brewpub situation it is required to be in the same
building.
Number 0368
MR. JONES agreed, and reiterated that this is the reason the
Moose's Tooth is asking to be given the same opportunity as the
other grandfathered brewery restaurant licenses. He emphasized
that, even if the ABC Board gives its okay, they would like to
know, come different administrations or future change of law, that
their license will be viable ten years from now. He read their
proposed amendment [to AS 04.11.135(a)], "A brewpub license may be
issued to the holder of a grandfathered brewery restaurant issued
on or before the effective date of this Act." Mr. Jones indicated
this would make all five of the original grandfathered brewery
restaurants eligible for a brewpub license, whether or not they
decided to exercise that option, and it would eliminate the issue
of co-location.
CHAIRMAN ROKEBERG questioned why the Moose's Tooth applied for the
combination license initially when they were operating as a brewery
and a restaurant.
MR. JONES deferred the question to Mr. Griffin.
Number 0464
MR. GRIFFIN responded that the Moose's Tooth is probably the only
true brewery-restaurant, with a brewery on one side of town and a
restaurant on the other. The other restaurants really are brewpubs
because of their co-location, their combination. However, because
the law did not allow these other restaurants to form brewpubs with
just restaurant/eating place licenses, they found they could get to
the same place by becoming breweries and restaurants, which was not
a prohibited combination at the time. This is the path the Moose's
Tooth also followed, but they truly are a brewery-restaurant
combination, even though their brewery operation is small and
apparently would fall underneath the 75,000-gallon cap envisioned
for brewpubs. Mr. Griffin added that at that time having a brewery
and a restaurant was a very permissible combination, and it was
even possible to open up additional restaurants. He noted this was
before the stricter prohibited financial interest provision was
enacted by the Halford amendment
CHAIRMAN ROKEBERG agreed that, from a drafting standpoint, it would
be simplest to just repeal the Senate's amendment, indicating,
however, there other factors are involved. Chairman Rokeberg
commented he thought Mr. Jones wants an exception here, and,
indicating the risk of special legislation, the chairman questioned
Mr. Ford whether something could be drafted that would provide for
Mr. Jones' circumstances.
Number 0596
MR. FORD referred the question to Mr. Griffin, and asked, "If
someone applied for a brewpub license, and they came to you and
said, 'I have ... a facility at location X, and I want to brew beer
under the brewpub license and sell it at location Y, which is two
miles away,' what would you say?"
MR. GRIFFIN responded that the ABC Board would say it is not
allowed because AS 04.11.135(a) specifies: "(a) A brewpub license
authorizes the holder of a beverage dispensary license to (1)
manufacture on premises licensed under the beverage dispensary
license not more than 75,000 gallons of beer in a calendar year."
CHAIRMAN ROKEBERG noted that was a brewpub, and he asked why
someone who owns a brewery couldn't sell beer on a retail basis if
they own a restaurant license.
Number 0660
MR. GRIFFIN referred to the prohibited financial interest portion
of the law, which he paraphrases to say, "'You can't be in the
manufacturing business and in the retail business.'". The
manufacturing being a brewery in this case, not a brewpub, and the
retail business being a beverage dispensary licensee or a
restaurant/eating place licensee. Mr. Griffin noted this is in AS
04.11.450(b), which reads:
(b) A person who is a representative or owner of a
wholesale business, brewery, winery, bottling works, or
distillery may not be issued, solely or together with
others, a beverage dispensary license, a restaurant or
eating place license, or package store license. A holder
of a beverage dispensary license may be issued a brewpub
license, subject to the provisions of AS 04.11.135 . The
prohibition against issuance of a restaurant or eating
place license imposed under this subsection does not
apply to a restaurant or eating place license issued on
or before October 1, 1996 or a restaurant or eating place
license issued under an application for a restaurant or
eating place license approved on or before October 1,
1996.
MR. GRIFFIN commented that the "a restaurant or eating place
license" language was inserted by Senator Halford. Mr. Griffin
stated, "Basically, it's saying if you're in the business of making
product you cannot be on the retail end of it. It goes back to the
old 'Tidehouse (ph) Laws', is what they were called, when the
brewery owned the saloons and they'd make a lot of beer, ... and
there was a great incentive to sell as much as they could, and as
we went through Prohibition (indisc.) seemed to be a bad thing, so
that's sort of the brief history of that. ... And then there's
language further on in (b) which provides for this grandfathering,
because at the time, because the restaurant/eating place license
was not ... among this list of retail licenses - it was just the
beverage dispensary and package store - they closed that loophole,
if you will - that's probably the way Senator Halford looks at it.
And the one exception that still remains of combining some kind of
manufacturing, albeit at a lower level, and retail is the brewpub
license."
Number 0786
MR. GRIFFIN continued, "We kind of crossed this bridge a little bit
when we allowed the brewpub license to come into being, where we
allow someone to make a little beer and sell it on their premises
if they had a beverage dispensary license. These four or five
licensees we are talking about found another way to do that as
well, because owning a brewery and owning a restaurant at the same
time was permissible until the law was changed. That's why we're
at where we're at, and so now we're looking at needing to change
the brewpub statute, and almost call what really is a brewery -
because it stands alone, it's not associated with a restaurant or
a bar - and call that a brewpub ... and it really isn't that." Mr.
Griffin indicated the entity in question is a small microbrewery -
owned by the Moose's Tooth and licensed as a brewery to Moose's
Tooth Brewing.
CHAIRMAN ROKEBERG asked if Mr. Ford cared to comment.
Number 0855
MR. FORD indicated he would agree that allowing a brewpub to have
a brewing facility that is not in the same building is, in fact,
what was intended to be prohibited by the "prohibited financial
interest" portion of the law. He indicated this section of law
prohibited breweries from holding restaurant licenses, but he said
there would be a difference because there is a limit on manufacture
under a brewpub license. A brewpub is a brewery, but it happens to
be a brewery in a restaurant. So, it is a combination of a kind
that was prohibited by a law, it's just that now there is a
different kind of license. Mr. Ford noted what he was trying to
get at, as far as whether that could be done, is that there is a
definition of "licensed premise". "Licensed premise" just means
that designated portion of a building one uses to operate the
license. He commented he could not see how this definition would
prohibit what he had suggested, although he said it is possible to
interpret it that way. It is possible the legislature could amend
the brewpub license to specifically provide for that: saying a
brewery operation does not have to be in the same building - that
the licensed premise could be building A and building B. Mr. Ford
indicated that returned them to where they had started: a
mini-brewery having a restaurant license.
CHAIRMAN ROKEBERG commented it opened up a Pandora's Box.
Number 0960
REPRESENTATIVE SANDERS stated to Mr. Griffin it has become very
apparent to him during this hearing that these proposed amendments
and changes are definitely going to endanger the extension of the
ABC Board. He questioned whether Mr. Griffin, in light of this,
would be in favor of returning to the original bill, allowing these
issues to be taken up in separate legislation.
MR. GRIFFIN agreed, noting he would have no problem trying to take
out those parts deemed controversial. He indicated he was in favor
of returning to the original Version G proposed CS with the
deletion of the brewpub/brewery part, but leaving in, for example,
the limited liability organization section. He stated, "I
recognize the fact that ... because this is a bill that the
Administration wants, and obviously the ABC Boards want
(indisc.--talked over) it becomes a bit of a magnet for ... any
kind of alcoholic (indisc.--talked over) pass. ... I would be
happy to work further on this in a separate bill, but I think the
people (indisc.) really want this, the people that have ...
financial stake in this, would like to keep as close to our
(indisc.) as possible, just because it ... improve[s] their chances
of passing." Mr. Griffin commented on the legislative "give and
take," and, noting Representative Sanders' greater understanding in
that area, Mr. Griffin commented he defers to and has to agree with
the Representative's comments.
Number 1080
REPRESENTATIVE HALCRO stated, "To me, ... it seems a little bit
odd. Here, on one hand, we're talking about a ... corkage
provision which would allow somebody to bring a bottle of wine into
a restaurant, but yet here we won't let a licensed operator bring
their own beverages into their facility. ... With Mr. Ford's
interpretation of the description of 'licensed premise,' are you
telling me that there is no administrative action or waiver that
you could grant Mr. Jones, especially considering that this is a
very unique situation?"
Number 1133
MR. GRIFFIN stated he would feel uncomfortable doing that, noting
he would like it to be spelled out as clearly as possible. He
observed the board is subject to legislative audit. Mentioning
another sunset audit in three or four years, Mr. Griffin commented
he would not want to be "called on the carpet" for having read too
much into a statute, or done something administratively that is
not, in his mind, clearly spelled out by the statute. He noted
those in the executive branch are often criticized for trying to
read more into statute than was intended, or than is there. He
expressed his willingness to work with Mr. Ford to reach agreement
and ensure nothing is done beyond what the legislature intended;
however, he thinks it is fairly clear the law intends for a brewpub
to be connected to the operation of a beverage dispensary license.
He referred again to the statutory language, paraphrasing, "It says
it right there, you're manufacturing on premises licensed under the
beverage dispensary license."
REPRESENTATIVE HALCRO assured Mr. Griffin he appreciated his
conservative approach, but, since Mr. Jones' operation is the
"exception versus the rule," and given Mr. Ford's interpretation of
licensed premise, he feels they should make accommodations in the
interest of commerce.
MR. GRIFFIN deferred to Linda Kesterson, the assistant attorney
general for the ABC Board.
CHAIRMAN ROKEBERG indicated the committee would take testimony from
another witness in Anchorage before hearing from Ms. Kesterson.
Number 1258
ANNE WILKAS testified via teleconference from Anchorage. She
indicated she did some work for the Moose's Tooth as an attorney
and would not take up the committee's time. She stated, "I want to
see the Moose's Tooth ... get legislated in because if there's ever
a question of legislative intent, I think it needs to be very clear
that the Moose's Tooth has the approval of the legislature, not
just the executive branch, and I think, as an attorney, and having
had to go research the legislative record, that that is important."
Ms. Wilkas noted that was all she really wanted to add.
Number 1305
LINDA KESTERSON, Assistant Attorney General, Natural Resources
Section, Civil Division (Anchorage), Department of Law, testified
via teleconference from Anchorage. She referred to the definition
of a premise and directed the committee's attention to AS
04.11.430. In AS 04.11.430 a license is to be issued to a specific
location, and that has always meant one physical location. She
commented that it is simply not tenable to say the board could
interpret the brewpub legislation, "where it says 'on premises
licensed to the beverage dispensary license,'" to include a
separate physical location. That is not anything the board has
ever done, she said, and her reading of AS 04.11.430 is that the
board cannot say that a licensed premise can include more than one
physical location. Ms. Kesterson stated that if the Moose's Tooth
is going to get some contingent protection, as when it was
grandfathered in, it is going to need some specific exception. The
Moose's Tooth will not fit within the current Section 4 of the
proposed amendment [G.2].
CHAIRMAN ROKEBERG noted it was getting late. He indicated he hoped
Mr. Ford, Ms. Kesterson, and his office could work together to find
a solution meeting the needs of the Moose's Tooth. The chairman
questioned whether anyone else wished to testify this day.
Number 1394
MR. JONES of the Moose's Tooth responded to a previous question
regarding why the brewery and the restaurant had been built in
different locations. Mr. Jones stated it was always their
intention to open a restaurant with a brewery, and open multiple
satellite locations. However, the primary reason they located in
disparate places is because distribution out of a brewery located
anywhere but in an industrial zone is prohibited under Anchorage
municipal code. If the brewery was built downtown and they wanted
to do significant distribution, there would have been problems with
the municipality. "Incidental distribution" is allowed, but is not
clearly defined. Mr. Jones stated the Moose's Tooth was operating
under the rules existing at that time, although he thinks there is
now some flexibility allowed regarding incidental distribution. He
commented, "That's why we located in different places, if we had
built a restaurant and a brewery right next door to each other, we
would have had a different level of government telling us that we
couldn't distribute."
CHAIRMAN ROKEBERG assured Mr. Jones the purpose of the House Labor
and Commerce Standing Committee is to ensure that the commerce of
the state runs smoothly. He noted that was one of the committee's
objectives with the legislation.
Number 1471
MR. JONES added, "Like Mr. Anderson, we're in a position, finally,
where we can expand. We employ about 62 people between the
restaurant and the brewery, and we started that on a shoestring
budget. ... I think at a time when the state is looking at
dwindling incomes, we should probably try and figure out -- without
annoying or causing the loss of revenue to other people with
different licenses -- we should look at how we can ... allow
business such as ours to prosper and to ... grow the jobs, so to
speak."
CHAIRMAN ROKEBERG agreed fully, noting that was why he introduced
the legislation with these amendments. The chairman announced HB
69 would be held over for further public testimony and
consideration.
ADJOURNMENT
Number 1531
CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing
Committee meeting at 5:19 p.m.
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