CS FOR SENATE BILL NO. 16(FIN) "An Act relating to certain alcoholic beverage licenses and permits; relating to the bond requirement for certain alcoholic beverage license holders; and providing for an effective date." 9:01:32 AM Co-Chair Wilson noted the committee would continue public testimony from the previous afternoon. WILLIAM HARRINGTON, SELF, ANCHORAGE (via teleconference), did not support alcohol at sporting events and other fairs where children were present. He shared a story from personal experience. He did not believe rehab worked and he did not like the idea of serving alcohol at Eaglecrest Ski area in Juneau. He stressed that it was easy to purchase alcohol in the state. He believed that serving alcohol around children was harmful. 9:04:02 AM JEROME HERTEL, ALASKA STATE FAIR, HOMER (via teleconference), spoke in support of the bill. He believed that the bill would enable the fair to continue to serve alcoholic beverages as it had for the prior 37 years. Co-Chair Wilson asked whether the fair had any violations during the time the fair held the license. Mr. Hertel would have to check. He believed that the fair was violation free for most of the time they had held the license. He would follow up for accuracy. Co-Chair Wilson clarified that she wanted to point out on the record that the issue was not in response to any improper action by the fair and was responding to the reinterpretation of the license. Mr. Hertel answered that there had been no problems brought on by the fair. Representative Josephson interpreted that the bill grandfathered in the fair even if the bill did not create a new fair license. Mr. Hertel affirmed that the fair would be grandfathered in as a recreational site license. 9:07:11 AM CODIE COSTELLO, VICE PRESIDENT, STRATEGIC DEVELOPMENT AND COMMUNICATIONS, ALASKA CENTER FOR THE PERFORMING ARTS, ANCHORAGE (via teleconference), spoke in support of the legislation. The bill provided clarity and stability to allow the center to move forward and grow its business responsibly. She indicated that the center never had any prior incidences with the license. Co-Chair Wilson clarified that the bill grandfathered in the exact prior activities allowed under the license. Ms. Costello affirmed the statement. 9:08:14 AM TIFFANY HALL, EXECUTIVE DIRECTOR, RECOVER ALASKA, ANCHORAGE (via teleconference), requested an amendment for the bill. She shared that the organization worked to reduce excessive alcohol use and reduce high risk drinking by promoting best practices. She elaborated that the harm caused by alcohol use cost the state $1.84 billion annually. Alaskans were dying at a rate three times higher than the national average. She emphasized that any legislation that increased the outlets for alcohol consumption was antithetical to best practices. She understood many of the businesses had already been serving alcohol. She voiced that she was not speaking against the bill but hoped that the committee would consider adding health and safety measures to the bill. She suggested amending the bill to include a keg registration and noted that was a national best practice to ensure that if a person purchased alcohol for an underage person, they would be held liable. She recommended that the state regulate internet sales. She communicated that Alaska was one of the only states that did not have any regulation against purchasing alcohol from out of state. Currently, a teenager could order alcohol from the internet. In addition, Alaska was not collecting any taxes on alcohol internet sales. Co-Chair Wilson asked if she realized that the bill was not authorizing any new licensing. Ms. Hall understood and appreciated the comment. She advised that it would be wise to include public health and safety practices in SB 16. Co- Chair Wilson alerted Ms. Hall that a Title IV rewrite was expected and was the best way to address her concerns. 9:11:30 AM SARAH OATES, PRESIDENT AND CEO, ALASKA CABARET HOTEL RESTAURANT AND RETAILERS ASSOCIATION (CHARR), ANCHORAGE (via teleconference), testified in support of the bill. She reported that the association represented most of the alcohol licensees in the state. The organization supported grandfathering in the existing licensees and returning the license of business who had lost their license due to the change in enforcement. 9:13:21 AM Co-Chair Wilson CLOSED public testimony. Co-Chair Wilson asked what activities were allowed under a recreational license. She requested that Ms. McConnell recount exactly when the interpretation changed, and the first licensee was notified. ERIKA MCCONNELL, DIRECTOR, ALCOHOL AND MARIJUANA CONTROL OFFICE, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, answered that the statute AS 04.11.210 pertaining to a Recreational Site License allowed a license holder to sell alcohol during and one hour before and after a recreational event that was not a school event. She read the following from the statute, A recreational site included a location that baseball games, car races, hockey games, dog sled racing events or curling matches are regularly held during a season. She elucidated that the board began looking at the issue around 2010 or 2011 and crafted a policy that it implemented for two years. Subsequently, the office undertook a regulations project that was not implemented. In 2014 and in 2017, a legislative audit cited the board for issuing licenses that were not in compliance with the section of statue. She shared that the board had struggled with the issue for the past 10 years. Co-Chair Wilson asked when the board first alerted a license holder they no longer fit under the recreational license. Ms. McConnell replied that the 2018/2019 license renewal period was the first time the board issued a final renewal for two years along with a notice of non-renewal subsequent to the end of the two-year period. 9:16:30 AM Co-Chair Wilson inquired what license options were available when they were no longer able to obtain a recreational license. Ms. McConnell replied that the answer depended on the type of business affected. She elaborated that two businesses were able to find a restaurant or eating place license and others did not attempt to find other options like a beverage dispensary license. She noted that a beverage dispensary license was only available from the secondary market and were tremendously expensive. Co- Chair Wilson asked why the board had not looked at the possibility of grandfathering the businesses in. She pointed out that the result would have shut down businesses that were not at fault. Ms. McConnell answered that no provision existed in statute for the board to grandfather in businesses. However, the Title IV rewrite steering committee in 2012, proposed granting a noncompliant recreational site licensee an 8 year phase out period. Co- Chair Wilson asked if the action opened the state up to a lawsuit. She continued that the state had allowed businesses to grow based on a legally issued license and through no fault of their own they had been told their license was invalid. Ms. McConnell replied that she was not an attorney and was not able to answer the question. 9:18:54 AM Representative Knopp deduced that the recreational licenses had been issued liberally at one time. He thought that the reason they were not in compliance was because the recreational activities definitions were not in statute. He inquired whether Ms. McConnell felt that it was a little unreasonable to expect that a legislative body could identify every recreational opportunity. Ms. McConnell responded that under the situation the common guidance was to refer to the list of examples given in statute and evaluate the new proposal to determine whether it met the commonalities of the examples. She was unaware why the prior boards made the decisions it had 15 to 20 years earlier. She noted that they did appear to issue licenses to businesses that did not operate seasonally and whose activities did not match the commonalities included on the list in statute. Representative Knopp was frustrated and disappointed that the past director had not come forward to the legislature when the issue had occurred to ask for a remedy. He commented that instead, the legislature spent numerous years trying to fix what the board was trying to undo. The businesses operated in compliance and in the restrictive manner laid out in statute. He asked if Ms. McConnell thought the legislature should address recreation holistically in statute and not try to define it via example. 9:22:07 AM Ms. McConnell answered that the board did not wish to take licenses away from businesses. She wanted clarity and boundaries from the legislature. She suggested that the more clarity the better in terms of what businesses should be able to obtain liquor licenses. Representative Knopp maintained that under some circumstances legislative intent had to suffice. Representative Josephson asked if Ms. McConnell had been present at the recent House Labor and Commerce Committee meetings. Ms. McConnell believed so. Representative Josephson indicated that the prior version of the bill repealed surrendering the caterers permit. He noted the CS did not include the provision. He asked whether it was significant. Ms. McConnell answered that the provision was not significant. She reported that the permit was issued via email and the licensee was not required to return the permit after the event. Co-Chair Wilson asked if any of the 11 impacted businesses had been given notice or renewed. Ms. McConnell answered that one of the 11 businesses that had been denied claimed they had not been noticed and was currently working through an appeal process. She added that the other businesses were given notice. Co-Chair Wilson understood that one of the ski facilities was renewed last year. She asked whether they received a notice that it was the last renewal. Ms. McConnell answered that the ski area had been renewed without notice. Co-Chair Wilson asked why. Ms. McConnell was not privy to why the board renewed the license. Co- Chair Wilson noted that the ski area did not fall under the interpretation of statute and asked whether she advises the board. Ms. McConnell responded that she advised the board to deny the renewal. Co-Chair Wilson remarked that the board renewed anyway. Ms. McConnell affirmed the statement. Co-Chair Wilson related that based on the renewal another ski area applied for the license and was denied. Ms. McConnell answered that the applicant had written to her and acknowledged that a ski area did not comply with the statute guidelines but noted the history of approving recreational site licenses for other ski resorts. 9:26:32 AM Co-Chair Wilson restated her question regarding one ski resort renewal prompting another ski area to apply only to be denied. Ms. McConnell responded in the affirmative. Co- Chair Wilson noted that there were numerous issues going on with the Alcoholic Beverage Control (ABC) Board. She reiterated her previously stated concerns regarding the issue. She notified the committee that the denied ski area had their application fee returned but had wasted much time and investment applying. She also noted the issue regarding hours for playing music and reported that the bill would allow an organization to revert to their prior practices if they reapplied for a recreation site license even if the business had surrendered its license and purchased another type of license. The bill authorized that the business had to choose which license they wanted to operate under and sell the other. She asked Ms. McConnell if she was correct. Ms. McConnell answered in the affirmative. She clarified that a business could only operate under one license. 9:29:00 AM Representative Knopp asked whether a statute guided the entertainment hours under the recreational site license. Ms. McConnell answered that the recreational site licenses lacked any entertainment restrictions. However, there were entertainment restrictions for restaurant licenses. Co-Chair Wilson asked to hear from Legislative Audit regarding future auditing problems with passage of the bill. KRIS CURTIS, LEGISLATIVE AUDITOR, ALASKA DIVISION OF LEGISLATIVE AUDIT, answered that auditors looked at criteria and audited regarding the statutes and regulations. She affirmed that providing clarity to the board, auditors, and the public was very important. Co- Chair Wilson ascertained that the statute had allowed for much interpretation. She understood that the statute required clarity. Ms. Curtis voiced that the statutes were very clear and listed the specific activities that qualified a business. She listed the licensed entities found in the audit such as a spa, pool hall, travel tour company, etc. were clearly not in accordance with statute. Co-Chair Wilson wanted to truly right some wrongs related to licensees but did not want to grant new licenses. 9:32:19 AM Representative Knopp maintained his concern regarding the entertainment hours of operation in the bill. Co-Chair Wilson replied that if a business went back to a recreational license they would be allowed to operate in the prior manner. CSSB 16(FIN) was HEARD and HELD in committee for further consideration.