SB 52-ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG  9:00:09 PM CHAIR HUGHES reconvened the meeting and announced that the final order of business would be SENATE BILL NO. 32, "An Act relating to criminal law and procedure; relating to controlled substances; relating to probation; relating to sentencing; relating to reports of involuntary commitment; amending Rule 6, Alaska Rules of Criminal Procedure; and providing for an effective date." [CSSB 52(L&C), Version S, was before the committee.] 9:00:39 PM SENATOR MICCICHE, speaking as sponsor of SB 52, said that with all the focus on drugs and crime, the reality is that a very high proportion is related to alcohol. Some experts say that the percentage of alcohol-related crimes is in the high 90s. he said. He said SB 52 rewrites Title 4, which can be described as a 30-year accumulation of mistakes and a hodgepodge of corrections. He said the primary focus is on public safety, public health, industry, the Alcoholic Beverage Control Board (ABC Board), and legislative issues. This bill is the result of approximately 140 stakeholders working together. He noted that everyone has a different way of viewing the importance of alcohol. The state supports the industry, which is the third largest taxpayer in the state, but representatives from public health and public safety ensure the right mix. SENATOR MICCICHE, paraphrasing from the sponsor statement, stated the primary goals that stakeholders established as the foundation for developing recommendations: ? Promoting a fair business climate and protect public health and safety. ? Creating rational regulation for all tiers of the state's alcohol industry. ? Limiting youth access to alcohol. ? Promoting responsible alcohol use and reduce the harms of overconsumption ? Implementing change without negative impacts on businesses and responsible operators. 9:02:38 PM CHAIR HUGHES referred to the April 22, 2019 PowerPoint in members' packets. 9:02:56 PM EDRA MORLEDGE, Staff, Senator Peter Micciche, Alaska State Legislature, Juneau, stated that Ms. Anna Brawley would provide an overview of the bill. She offered to follow the PowerPoint presentation with broad strokes of the 21-page sectional analysis. 9:03:46 PM ANNA BRAWLEY, Title 4 Project Review Coordinator and Senior Associate, Agnew Beck Consulting, Anchorage, began a PowerPoint, titled Alcoholic Beverage Control (ABC) Board Title 4 Review Project. 9:04:00 PM MS. BRAWLEY turned to slide 2, "Goals of Title 4 Review Process." She stated that this process began in 2012 with the Alcoholic Beverage Control Board (ABC Board) recognizing that Title 4 needed improvements. Goals of Title 4 Review Process Promote a fair business climate and protect public health and safety. 1. Create rational regulation for all tiers of the state's alcohol industry. 2. Limit youth access to alcohol, while ensuring youth are not criminalized 3. Promote responsible alcohol use and reduce the harms of overconsumption. Make Title 4 a clear and consistent legal framework. 1. Increase swiftness, proportionality and consistency of penalties. 2. Increase local law enforcement of Title 4. 3. Increase licensee accountability before the ABC Board for Title 4 violations. MS. BRAWLEY turned to slide 3, which listed diverse stakeholder groups involved in the process. Diverse Stakeholders: ? ABC Board, AMCO (staff) ? Public Safety and Law Enforcement ? Industry - Manufacturers - Wholesalers - Retailers ? Public Health - Recover Alaska - Department of Health and Social Services - Alaska Mental Health Trust Authority - Rasmuson Foundation ? Community Advocates ? Local Governments MS. BRAWLEY directed attention to the report in members' packets, "ALASKA TITLE 4 REVIEW FOR THE Alaska Alcoholic Beverage Control Board Recommendations for Statutory Change Updated February 2019." She noted she will refer to that report during this presentation. 9:04:41 PM MS. BRAWLEY turned to slide 4, "Categories of Recommendations." 1. Alcohol Licenses, Permits and Trade Practices 2. Role and Functions of the ABC Board and Staff 3. Underage Drinking and Youth Access to Alcohol 4. Regulation of Internet Sales of Alcohol 5. Technical or Administrative Law Changes 6. Local Option Communities* * Note: Local Option recommendations are documented in the report, but not included in SB 52. More comprehensive discussion of Local Option laws is needed in the future. Note: all section references current to CSSB 52 ver. B 4-19-19 She explained that the categories of recommendations relate to the subcommittee process the stakeholders went through. She said the bill makes some technical changes to local option laws, but most were deferred to further discussion especially in rural communities. Several parts of Title 4 were not touched in SB 52. 9:05:30 PM MS. BRAWLEY turned to slide 5, "RB-4 Board as Key Partner." RB-4. ABC Board as Key Partner for Alcohol Education Efforts • The ABC Board and AMCO would work with other agencies and organizations to develop a coordinated education plan about responsible alcohol use and applicable laws. • Coordinate with Department of Health and Social Services and other agencies tasked with alcohol- related education. Section 2, 04.06.075; Section 6, 04.06.0 She said that her presentation focuses on the high-level policy recommendations. One of the ways to be effective in enforcement is to work upstream and educate people about the laws and how to comply with them. One recommendation was to strengthen the Alcoholic Beverage Control Board's (ABC Board) role as a key partner in alcohol education. It is not meant to be in place of other alcohol education since it is specific to education about Title 4. This education would include outreach to local governments, the general public, and the alcohol industry. In response to Chair Hughes, she identified AMCO as the Alcohol & Marijuana Control Office. 9:06:29 PM MS. BRAWLEY turned to slide 6, "Alaska's Liquor License System: Proposed Changes." This slide illustrated graphics for the manufacturing and wholesale tiers, which are included in the Title 4 Review Report Appendix. Alaska's license system is based on the 3-tier system of alcohol regulation: separate entities manufacture, distribute, and sell alcohol to the public. She stated that the next three slides give a broad overview of changes to the licensing system. The slides clarify which endorsements and permits are available for each license. 9:07:17 PM CHAIR HUGHES reiterated the 3-tier system encompasses manufacture, distribution, and sales. 9:07:32 PM MS. BRAWLEY turned to slide 7 "Alaska's Liquor License System: Proposed Changes." She said that this graphic is intended to illustrate how all the licenses work together. She indicated the changes to brewery retail, winery retail, and distillery retail. One recommendation in SB 52 is to split manufacturing licenses into a production license and what is commonly referred to as a tasting room would fall under a retail license that a manufacturer could hold. The concept of endorsement is new and is intended to give more flexibility for businesses and the ABC Board to consider different business models without creating another license type for that model. 9:08:18 PM MS. BRAWLEY turned to slide 8, "Alaska's Liquor License System: Proposed Changes." This continues to illustrate the retail tier, including tourism licenses that tend to fall outside the population limits. Liquor licenses essentially are limited to a number of licenses that are available by community, but those that specifically serve visitors are outside those limits. A few license types are proposed for removal from Title 4, with the intent that they would be replaced by existing license types, including brewpub, bottling works, and public convenience, she said. Currently five types of manufacturing licenses exist, so this bill would also address the types of manufacturer's licenses. In response to Chair Hughes, she identified REPL as Restaurant or Eating Place License and directed attention to the left column on slide 7. 9:09:30 PM MS. BRAWLEY turned to slide 9, "Proposed: More Retail Options for Manufacturers." This slide illustrates that most of the recommendations do not make changes to licenses. One exception is to manufacturers. Currently, a brewery license has a production function and a retail function. This bill proposes splitting those into two different license types. It would also give manufacturers the ability to obtain a retail license, not currently allowed except for brewpubs. This would include a bar license, the beverage dispensary license (BDL), a package store, or any other retail license type. The establishments could retain their current retail license, which would have limited sales volume and limited hours. 9:10:18 PM MS. BRAWLEY turned to slide 10, "Proposed Manufacturer Sales Limits." This illustrates the recommendation for each license type and matches what is currently in statute. She directed attention to the offsite sales limits for brewery and wine retail which was changed in the CSSB 52(L&C) adopted on April 19, 2019. 9:10:42 PM MS. BRAWLEY turned to slide 11, "Proposed: Endorsements on Licenses." Add endorsements to existing licenses, giving businesses more flexibility without creating more situation-specific license types. Endorsements would allow sampling on premises, multiple bar rooms, deliveries by package stores, etc. Section 10, 04.09.400; endorsements defined in 04.09.410 - .520 She explained that endorsements do not currently exist in Title 4, but it would be an "add on" to a license, similar to a tobacco endorsement for a business license or commercial driver's license endorsement. She stated that most of the endorsements in the bill take existing language from a license type, permit, or regulation and create an endorsement. She further explained that either expands the activities that are allowed under a license or it allows a larger physical premises, such as a golf course endorsement would allow serving alcohol on the course. Most of these changes relocate existing language, she said. 9:11:33 PM MS. BRAWLEY turned to slide 12, "Proposed Endorsements. • R-7A | Bowling Alley Endorsement • R-7B | Package Store Shipping Endorsement • R-7C | Package Store Delivery Endorsement • R-7D | Package Store Re-Packaging Endorsement • [M-2] Manufacturer Sampling Endorsement • [R-1] Multiple Fixed Counter Endorsement • [R-1] Hotel/Motel Endorsement • [R-1] Large Resort Endorsement • [R-3] Package Store Sampling Endorsement • [M-1] Brewery Repackaging Endorsement Section 10, 04.09.410 - .520 She noted the codes on the left side correspond to those in the report that reference specific recommendations. 9:11:45 PM MS. BRAWLEY reviewed slide 13, "R-7 Standardize Permits." • Unlike licenses, permits are typically issued for single events, on or off licensed premises. • Define all permit types in statute, not just in regulation • Fee for all permits is $50 per event day • Most permits listed are already in statute or regulation • New permit: Tasting Event Permit, allowing a Package Store or Manufacturer to host an event on premises, in partnership with a BDL Section 10, 04.09.600; permits defined in 04.09.610 - .690 She said most permits are time limited for a specific event and defined in regulation. The recommendation is to standardize them and have a standardized fee. 9:12:14 PM MS. BRAWLEY reviewed slide 14, "Proposed Permits." • R-7F | Beverage Dispensary Caterer's Permit (AS 04.11.230; 3 AAC 304.685) • R-7G | Restaurant Caterer's Dining Permit (3 AAC 304.680) • R-7H | Club Caterer's Permit (3 AAC 304.690) • R-7I | Nonprofit Event Permit (AS 04.11.240) • R-7J | Art Exhibit Permit (3 AAC 304.697) • R-7K | Alcoholic Beverage Auction Permit (3 AAC 304.699) • R-7L | Inventory Resale Permit (Retail Stock Sale License, AS 04.11.200) • R-7M | Tasting Event Permit (proposed) Section 10, 04.09.600; permits defined in 04.09.610 - .690 She noted they have statute or regulation references. CHAIR HUGHES asked whether someone who obtained an endorsement would also need a permit for a specific event or if someone could get a permit without a license or endorsement. MS. BRAWLEY answered that an endorsement must be used with a license. She clarified that some license types can get permits but a license is not necessarily required to use a permit. For example, a nonprofit organization that wants to hold a fundraiser could apply for a certain type of permit and it would not need a license. 9:13:00 PM MS. BRAWLEY reviewed slide 15, "Population Limits: Current Title 4." • Some license types are exempt from population limits: most exempt license types are designed to serve tourists and travelers, such as hotels or outdoor recreation lodges. • They can be issued if other qualifications are met (ex: minimum number of hotel rooms). She stated that population limits provide an important public health protection against an excessive density of licenses. These are set by communities. The graphic on slide 15 illustrates that a city within a borough would have two sets of licenses using a formula that looks at permanent residents. Some license types are exempt from population limits. For example, the formula for licenses for restaurants is based on one for every 1,500 residents in the community, but they are also set by type. The more types of licenses the more frequently the clock resets for the number of total licenses. It basically means that the more types of licenses a community has the more outlets for alcohol the community could potentially have even though each one is limited by population. CHAIR HUGHES said that she resides in the fastest growing part of the state, although Palmer and Wasilla have fairly small city limits. She stated that much of commerce is located on the Wasilla side and it seems to explode during the summer as people head up the Parks Highway. She said she was not sure of the population, but it is a fraction of the number of people who come through Wasilla for services. She asked whether any accommodation is made for that situation since it would mean a small number of licenses if it is based on population even though they serve 100,000 people in the Mat-Su Borough and probably 30,000-40,000 people on a busy summer weekend. 9:15:11 PM SENATOR MICCICHE acknowledged that Chair Hughes' issue is a lot like the one in his community. He said that Soldotna has 4,000 people until summer when 30,000 people arrive. He said that this issue would be covered in more detail, but this bill would give some local options for communities to request additional licenses. He stated that city management from Soldotna and Kenai were involved in this process and they think they have found a healthy solution. 9:15:59 PM CHAIR HUGHES said that the City and Borough of Juneau and the Municipality of Anchorage each have massive areas and use the population ratio, but it is different in the Kenai and the Mat- Su Boroughs that have towns with small populations. MS. BRAWLEY said some things in current law recognize that reality. Some license types such as a bar license for a hotel is exempt from the population limits. 9:16:40 PM MS. BRAWLEY reviewed slide 16, "Proposed: Convert Public Convenience Licenses and Applications." Existing Public Convenience licenses would be converted to regular Restaurant or Eating Place Licenses (REPLs). Applications that have been completed as of the bill's signing date would be converted to applications for regular REPLs and could be approved by the ABC Board outside the existing population limits. Sections 165-166, Transition She said that public convenience is not defined in statute, so the board lacks guidance. The petition process used by an applicant requires a certain number of signatures, but the board does not have a process to verify if they are valid since it is not involved in elections. She said a lot of procedural issues exist. MS. BRAWLEY reviewed the three proposed replacements. First, the bill proposes converting public convenience licenses to REPLs, which allows transferability to a new location or owner, whereas public convenience licenses are not transferable. It would allow anyone going through the process to have their application converted to a full restaurant. 9:17:47 PM MS. BRAWLEY turned to slide 17, "Proposed Seasonal REPL Tourism." • Seasonal restaurant license • Available in smaller communities (< 40,000 pop.) • Same operating requirements and privileges as full- year restaurants (REPL) • Number of licenses per community determined by formula: 5-year average of annual visitors/months in season = Average monthly visitor population (Residents + average monthly visitors) 1,500 = Available Seasonal REP Tourism licenses • Season defined as up to 6 months per year, in any combination – Example: May through September + 1 winter month Section 10, 04.09.350 MS. BRAWLEY said that second replacement would be to have a Seasonal REPL Tourism license with its own limit. This would be similar to a bar license BVL tourism license in existing statute and would be available in communities under 40,000 in population. It would have the same privileges as a full year restaurant, but it would operate seasonally. She said seasonally would be defined as up to six months per year although it does not have to be consecutive months. For example, it could be the summer months and a winter month, she said. 9:18:18 PM MS. BRAWLEY reviewed slide 18, "Proposed: Local Government Petition for Additional Restaurant Licenses," which depicts a graphic flowchart that describes the process to apply for additional restaurant licenses. This would allow the city to petition the ABC Board for a certain number of licenses and use the 40,000 people traveling as justification. If approved, the city cannot petition again for more licenses for another three years. In the event the ABC Board denies the petition the city can reapply with a revised application. 9:19:36 PM MS. BRAWLEY reviewed slide 19, "F-1. Adjust License Fees to Reflect Current ABC Budgetary Needs." • Update license fees according to privileges and administrative costs of each, and collect sufficient revenue to cover the ABC Board's required activities: – Administration of licenses & permits – Education about Title 4 and related regulations – Enforcement of Title 4 and related regulations • ABC Board required to review license fees at least every 5 years. • See Appendix, Table 2 of the Title 4 Review report for current license fees and proposed changes. Section 6, 04.06.090; License fees throughout Section 10 MS. BRAWLEY said this is the first of several global changes to Title 4 that are intended to make it work better as a system. Many license fees have not been increased since 1980. Currently, a restaurant license to serve beer and wine is $600. A recreational license is somewhere between $400-$800; and a bar license is $2,500. The Alcohol & Marijuana Control Office (AMCO) is a receipts-funded agency. The amount of license fees it takes in for alcohol and marijuana sets its budget. This limits the amount of enforcement, education, and customer service it can provide. The recommendation is to increase the resources available to the agency, not just for enforcement but to provide proactive education, prevention, and working with licensees. CHAIR HUGHES asked whether these are one-time fees and if the board charges fees for endorsements. MS. BRAWLEY replied that all license fees are biennial so every two years the licenses must be renewed. She said that most endorsements have a $200 fee that renews biennially. She said that the license fees are set in statute and the proposal is that the ABC Board would be required to review those fees at least every five years and make recommendations to the legislature with any proposed changes. 9:21:38 PM SENATOR KIEHL asked whether all of the Alcohol & Marijuana Control Office's (AMCO) receipts are spent on AMCO. MS. MORLEDGE deferred the question to Ms. McConnell. 9:22:06 PM ERIKA MCCONNELL, Director, Alcohol and Marijuana Control Office (AMCO), Anchorage, said that in the last five years, AMCO has returned approximately $280,000 to the general fund each year. 9:22:35 PM MS. BRAWLEY directed members to the Title 4 Review Report, Appendix Table 2 for a table of all the current and proposed fees. 9:22:51 PM MS. BRAWLEY turned to slide 20, "More Accountability for License Fees Allocated to Local Governments." One of the benefits of increasing license fees is that it not only raises revenue for the ABC Board and AMCO, but for local governments that receive an amount equal to the license fees collected in their jurisdiction. This varies year to year depending on the number of licenses and whether the license renewal is occurring in that year. She said that the recommendation in SB 52 is for municipalities to report on education activities related to Title 4. For example, the municipality would need to report to AMCO if it performed a routine inspection of a bar. This is designed to help share the burden of the licensing process and enforcement of licensees in those communities. She said the 2017 sunset audit of the ABC Board found that municipalities receiving these funds are not consistently reporting how those funds are used. She said it takes considerable work for local governments to review license applications, consider a protest, and hold public hearings. CHAIR HUGHES asked whether any of the fees to keep Alcohol & Marijuana Control Office (AMCO) running are used for education or prevention or if the unused portion of the $280,000 goes back to the general fund. MS. MCCONNELL answered that AMCO has a local government specialist on staff whose main purpose is education for local governments and licensees. She offered her belief that the alcohol taxes are distributed in various ways. For example, some of the taxes are dispersed to the Department of Health and Social Services (DHSS) for education programs. She said this is not her area of expertise. 9:25:24 PM SENATOR KIEHL said that his initial question was triggered by Ms. Brawley stating that the license fees define the AMCO budget. He corrected that by stating that the appropriation process sets the budget. He recalled some requests have been made for the authority to use more of its fees for enforcement. He said that some of these requests have not ended up in the staffing allocation. He asked the sponsor to provide at some point information on the obligations that municipalities have to provide education. MS. MORLEDGE offered to do so. 9:26:11 PM MS. BRAWLEY turned to slide 21, "Proposed: Regulate Trade Practices." She said the industry brought an issue to the stakeholders' attention, that Alaska is one of the only states without an equivalent state law to the federal law for illegal trade practices. She described these as essentially a set of anti-competitive practices that are illegal at the federal level. For example, situations in which a wholesaler or manufacturer may pressure a retailer to purchase their products and not their competitor's products. The bill proposes putting those into statute so they can be enforced at the state level. They are also not in federal law for beer, just for wine and spirits and this proposal would provide enforcement across the board. It would allow the board to create administrative penalties, recognizing these are business and not criminal issues. 9:27:04 PM MS. BRAWLEY reviewed slide 22, "Regulate Internet Alcohol Sales. INT-1. Winery Direct Shipment License • Create a license available to all U.S. (including Alaska) wineries to ship orders of wine to Alaska customers. • Prohibit other online sales of alcohol not under this license or the Package Store Shipping endorsement. INT-2. Collect Alaska Excise Tax for Internet Sales • Require all out-of-state holders of a Winery Direct Shipment license to pay the same excise tax on Alaska orders. INT-3. Board Approval of Common Carriers for Alcohol  Delivery Require all common carriers who transport deliver alcohol directly to consumers in Alaska to be approved by ABC Board Section 10, 04.09.360; section 87, 04.16.022 She said the next few slides address another absence in Alaska law, which is to regulate Internet alcohol sales. She explained that currently, anyone can go online in Alaska and purchase alcohol, even in a local option community or if they are underage. Neither AMCO nor public safety would be aware of these purchases. She said this would be addressed in three parts. First, the winery direct shipment license, which is addressed in the next slide. Second, it would allow the Department of Revenue to collect Alaska Alcohol Excise Tax for Internet sales from out of state sellers to consumers. Third, it would regulate common carriers to ensure that any alcohol being delivered is done so responsibly to consumers. 9:28:01 PM MS. BRAWLEY turned to slide 23, "Regulate Internet Alcohol Sales." • Alaska does not limit online sales of alcohol. Orders from out-of-state businesses are not subject to Alaska's alcohol excise tax, and the state cannot track how much alcohol is ordered each year. • The bill would create a Winery Direct Shipment License and allow online alcohol sales only from U.S. wineries and Alaska package stores. She said that this system is modeled on one used in 43 or 44 states. This would allow a winery to ship to a customer. The winery would be responsible for ensuring that the person is of age, not in a local option area, and be limited to the amount of personal use alcohol that could be ordered annually. She said Idaho has 780 registered customers for wine and cider. She commented that wineries are accustomed to using this type of system. 9:28:51 PM MS. BRAWLEY turned to slide 24, "Regulate Internet Alcohol Sales." • Common carriers must be approved by the ABC Board to transport and deliver alcohol to consumers throughout the state. • Carriers must demonstrate that they have policies and train employees to properly handle shipments of alcohol. She said the third way Internet sales are regulated is by approving common carriers. The stakeholder group worked with FedEx and UPS [United Parcel Service]. These services do not allow shipment of beer and spirits from commercial sellers. This is in line with the system being used in many other states. 9:29:33 PM MS. BRAWLEY turned to slide 25, "Tracking Alcohol Orders in Local Option Areas: Current Title 4." Residents in Local Option communities that allow importation of alcohol may order a limited amount of alcohol each month for personal and non-commercial use. Sections 7-8, 04.06.095; monthly limits defined in AS 04.11.01 She said that the Winery Direct Shipment license would not allow shipment to local option areas, but this is already allowed for Alaska package stores. She said the ABC Board maintains a database of these orders to ensure that someone is not a restricted purchaser, that the individual has not met his/her monthly limit and that the sale is legal in the community. 9:30:12 PM MS. BRAWLEY turned to slide 26, "Public Community-Level Data from Local Option Order Database." • In current Title 4, all data in the Local Option order database is private and deleted after 1 year. • The bill would keep individual order information private but retain aggregate data for 10 years and allow the ABC Board to publish annual total sales volume by region or community. • This valuable information would be available to communities and law enforcement to understand the flow of alcohol into Local Option communities via legal sales. Sections 7-8, 04.06.095; monthly limits defined in AS 04.11.010 9:30:51 PM MS. BRAWLEY turned to slide 27, "RB - 6 Revise Title 4 Penalties." • Review penalties for all Title 4 sections and revise as needed to make penalties proportionate to the offense, and more consistently enforced. • Retain existing Misdemeanor and Felony charges for serious offenses, particularly those causing harm to children. • Ensure that the ABC Board, and licensee, is informed about Title 4 convictions: require court to send records to AMCO, and AMCO to send to the licensee. • ABC Board retains authority to impose conditions or additional penalties, including suspending or revoking license. • See Appendix, Table 3 in Title 4 Review Report for table of all current penalties and proposed changes. Defined throughout; most prohibited acts defined in chapters 11 + 16 She related that this last set of global changes to Title 4 would address penalties. Currently almost everything in Title 4 is a class A misdemeanor. The stakeholder group recommended keeping any serious felonies or misdemeanor under current law, but to make business-related violations or non-compliance minor offenses. She said that this would make enforcement more automatic and retain the ABC Board to take action against a licensee. For example, the board could take action and revoke, suspend, or otherwise take action if a licensee had a stack of violations. In response to Chair Hughes, she clarified that unless otherwise defined the penalties would be a class A misdemeanor. 9:32:48 PM MS. BRAWLEY referred to the Title 4 Review Report and to a list of all the sections under current law with a penalty. CHAIR HUGHES asked the sponsor whether penalties were considered in the prior committees and if the penalty provisions were previously vetted. SENATOR MICCICHE responded that this bill came before the Senate Judiciary Standing Committee last year. He explained that the bill would retain misdemeanor and felony charges for serious crimes, but minor violations were not being prosecuted. The bill would separate minor technical issues as violations and retain misdemeanor and felony charges for the more serious offenses, such as serving children. He offered to review the details but suggested that the logic will become apparent. CHAIR HUGHES suggested that it might be helpful to have a cheat sheet to identify violations, misdemeanors, and felonies. MS. MORLEDGE directed attention to page 68 of the Title 4 Review Report in members' packets, to a six-page cheat sheet of current law and the proposed changes. 9:35:09 PM MS. BRAWLEY turned to slide 28, "Why change penalties in Title 4?" Two pie charts on this slide illustrate Title 4 charges, including that 38 percent of all Title 4 charges between the years 2009-2013 were dismissed and 62 percent resulted in convictions. The second pie charge lists the total number of minor consuming alcohol cases between the years 2009-2013 at 16,357 and all other Title 4 cases numbered 5,457. Prosecutors were dismissing MCA charges; penalties were seen as too high for the offense, or not worth the resources. Violations of other sections of Title 4 are rare. AMCO has very limited enforcement resources to inspect 1,900 establishments statewide. She reiterated that the rationale for changing penalties is that they are not proportional to the offense. The state has 1,900 alcohol licenses and AMCO has limited resources to conduct inspections. She explained that if violations are not documented, it would not come to the ABC Board's attention, so this is an opportunity to close that communication loop. This would allow the board to take action when issues arise on premises, she said. 9:35:48 PM CHAIR HUGHES asked whether AMCO pursues misdemeanors and felonies or is limited to violations. She asked whether they need to bring in other law enforcement. 9:36:10 PM ERIKA MCCONNELL, Director, Alcohol and Marijuana Control Office (AMCO), Anchorage, Alaska, said statute gives AMCO and its employees the authority to criminally enforce these statutes. 9:36:30 PM MS. BRAWLEY turned to slide 29, "Revise Penalties." • In current law, almost all violations of Title 4 are class A misdemeanors. • When penalties are set high across the board and perceived to be too strict for most offenses, law enforcement is less likely to issue citations and courts are less likely to pursue those cases. • In the bill, many penalties would become minor offenses. Serious violations, such as selling alcohol without a license, allowing gambling on the premises, or perjury on a license application would remain misdemeanors or felonies, as they are today. Defined throughout; most prohibited acts defined in chapters 11 + 16 She said that the slide also provides some examples of violations, misdemeanors, and felonies. As Ms. Morledge mentioned, the table in the back of the report gives more detail, she said. 9:36:48 PM MS. BRAWLEY turned to slide 30, "Proposed: Licensee Penalties for Overserving an Adult or serving a minor." In current Title 4, a licensee or employee who knowingly overserves an intoxicated adult or who serves alcohol to a minor is guilty of a class A misdemeanor. The bill would change the penalty for both statutes to minor offense, with a $500 fine. In addition to the penalty to the person who commits the violation, the owner of the license would receive an administrative (non-criminal) penalty of $250. This alerts the owner that a violation occurred, holds them immediately accountable, and encourages future compliance. Section 89, 04.16.030; section 101, 04.16.052; sections 124 - 126, 04.16.180 She said the goal is to ensure that not only are servers following the law, but also that the licensees are aware of what is happening on their premises and actively involved in addressing any issues. She said that currently licensees are held accountable during the license renewal process or can be brought before the board for egregious violations on an emergency basis. She acknowledged that the manager might not disclose that the premise was ticketed. The bill would also recommend administrative penalties for overserving or serving alcohol to a minor, including an automatic $250 fine. SENATOR MICCICHE stated the penalty for knowingly serving alcohol to a minor would be increased to a class A misdemeanor. 9:38:24 PM MS. BRAWLEY turned to slide 31, "Proposed: Require Keg Registration." • Reduces adults' incentive to legally purchase alcohol and supply an underage drinking party. • Kegs tagged with the purchaser's contact information can be tracked if confiscated at an underage party or other situation where minors are given access to alcohol. • A person, not a licensee, possessing an untagged keg containing alcohol could be fined. • Modeled on existing Anchorage and Juneau ordinances. Section 131, 04.21.012 She emphasized this relates to public health and public safety since it addresses adults legally purchasing alcohol and providing it to minors. She said that keg registration is a best practice and is already in place in the City and Borough of Juneau and the Municipality of Anchorage. She described the registration process used when the adult purchases the keg, and if it is not found in an illegal gathering, no issue would arise. However, if the keg was confiscated, it could be traced to the person who purchased it. She said this helps to close the loophole on what is known as "social hosts" when adults provide alcohol to minors. 9:40:22 PM MS. MORLEDGE, in response to Chair Hughes, agreed that the sectional analysis for SB 52 is 21 pages. CHAIR HUGHES directed attention to a two-page summary in members' packets titled, "Sectional Summery, SB 52: Alcoholic Beverage Control; Alcohol Regulations." 9:40:54 PM SENATOR MICCICHE pointed out that SB 52 is a 119-page bill. He said the vast majority of the bill reorganizes Title 4. CHAIR HUGHES said that the long sectional analysis is color- coded, which is helpful to assist members in navigating the changes to Title 4. 9:42:00 PM MS. MORLEDGE provided a brief sectional analysis of SB 52. She said Sections 1-9, pages 1-5 of SB 52, set out the authority and duties of the ABC Board. It also includes a requirement for education plans, budget resources, enforcement, training, and prevention. She said it also requires them to post FASD [Fetal Alcohol Syndrome] information online. It also includes a provision for the statewide database Ms. Brawley mentioned. 9:43:00 PM MS. MORLEDGE said that the licensing reorganization is in new Chapter 9 of Title 4. Several articles address endorsements, licenses, and permits. It sets fees, and penalties for non- compliance. She pointed out it addresses three manufacturer's licenses, including brewery, winery, and distillery. It also covers two wholesale licenses, including general and limited wholesale of brewed beverages and wine. She indicated that there are 17 retail licenses. 9:43:50 PM MS. MORLEDGE said that SB 52 would provide 12 types of endorsements, and Article 6 covers permits. SB 52 has nine permits. Article 7 covers the common carrier approval process. 9:44:08 PM MS. MORLEDGE referred Chapter 11, Sections 11-80, (pages 50-83) pertaining to Title 4 licensing. These sections also provide for the winery direct shipment license exemption from the application and renewal process. This chapter relates to imposing restrictions or conditions on licenses, endorsements, permits, population limits, and prohibited financial interests. It adds penalties throughout and reorganizes and renumbers various sections. 9:44:51 PM MS. MORLEDGE turned to Chapter 16, Sections 81-130 (pages 83- 100) relating to regulation of sales and distribution and prohibited acts. This allows a person to be on a licensed premises off hours to conduct business, such as restocking or maintenance. It aligns state law with federal law regarding illegal trade practices. It also adds penalties throughout. Further, it includes the prohibition of online sales unless the licensee has a winery direct shipment license or a package store shipment license. 9:45:32 PM MS. MORLEDGE turned to Chapter 21, Sections 131-145, (pages 100- 107). These sections provide general provisions, including sections related to the statewide keg registration program, provisions relating to alcohol server education, and it provides penalties throughout the chapter. It reorganizes and renumbers existing statutes and provides definitions. 9:45:57 PM MS. MORLEDGE turned to Chapter 21, Sections 146-157 (pages 108- 113). She said that these are changes to other titles to amend statutory references to the new license types. In response to Senator Micciche, she reiterated the Sections are 146-157. This chapter also allows the Department of Revenue (DOR) to collect an excise tax pertaining to the winery direct shipment license. 9:46:36 PM MS. MORLEDGE turned to Sections 158-170 (pages 114-119), which includes the transition language and effective dates. 9:46:48 PM CHAIR HUGHES asked whether she could highlight the things that are brand new. For example, she recalled that the winery direct shipment license is new. MS. MORLEDGE deferred to Ms. Brawley. MS. BRAWLEY responded that in terms of license types and endorsements [the winery direct shipment license] is new. She turned to page 2 and said that the package store sampling endorsement and the package store sampling endorsements are new. She related that under permits, the tasting event permit for package stores would allow them to hold events on their premises. She reiterated that the illegal trade practice provisions are also new. 9:48:18 PM SENATOR MICCICHE said that Alaskan business owners collect taxes on everything they sell. This bill would also level the playing field to support Alaska businesses. Not only will hard liquor no longer be able to be purchased out-of-state, but it will be taxed. 9:49:20 PM SENATOR KIEHL asked whether the committee could run through the changes that were made by the Senate Labor and Commerce Standing Committee to the original bill. CHAIR HUGHES said she would plan that for the next hearing on SB 52. She noted that she previously served on the Recover Alaska group. 9:50:20 PM TIFFANY HALL, Executive Director, Recover Alaska, said that she is a lifelong Alaskan. She has served as the Executive Director of Recover Alaska for about three and a half years. She said that her organization has been working on this bill for over seven years. She said over 120 stakeholders and thousands of hours have been put in, largely with a focus to improve the legislation and make it easier to follow. It also emphasizes public health and safety. She highlighted that this bill is evidence-based on best practices that have been in place throughout the rest of the country. She emphasized some important aspects of the bill, including the statewide keg registration, increased license fees to allow for compliance checks. She related that data has shown that underage minors can order online and receive alcohol, so Internet sales regulation of alcohol is important. She said that Recover Alaska works to reduce excessive alcohol use in homes across the state. She said that her organization is not a prohibitionist organization. She recognized that low risk drinking in moderation occurs. This process has allowed her to become familiar with members in the alcohol industry and work together on issues. As a result of this work, other partnerships have been formed outside of this effort, she said. She expressed gratitude to be part of the process. 9:52:40 PM CHAIR HUGHES said that SB 52 would be held in committee.