SB 99-ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG  2:40:09 PM CHAIR COSTELLO reconvened the meeting and announced the consideration of SB 99. "An Act relating to alcoholic beverages; relating to the regulation of manufacturers, wholesalers, and retailers of alcoholic beverages; relating to licenses, endorsements, and permits involving alcoholic beverages; relating to the Alcoholic Beverage Control Board; relating to offenses involving alcoholic beverages; relating to the offense of minor consuming; relating to revocation of a driver's license for a minor consuming offense; relating to the effect of the revocation of a driver's license for a minor consuming offense on a motor vehicle liability insurance policy; and providing for an effective date." 2:40:24 PM SENATOR MICCICHE, Sponsor of SB 99, thanked the Rasmuson Foundation for its support and helping to improve the public safety of all Alaskans. He introduced SB 99 reading the following sponsor statement into the record: [Original punctuation is provided.] SB 99 makes important updates to statutes governing the Alcoholic Beverage Control Board to allow the Board to function more efficiently and continue to regulate the alcoholic beverage industry in a manner that promotes public safety and health while allowing the industry continued viability. This bill is the product of a two-year, unprecedented collaboration of stakeholders from a diverse group of industry representatives and public health and safety entities. The result is a reorganization of Alaska Statutes, Title 4, to set out the rights and obligations of licensees and the consuming public in a logical, and well-organized manner. SB 99 would amend and clarify provisions on the appointment of the five-member ABC Board. Adequate representation would occur through appointment of persons from the public safety sector, public health sector, from a rural area, and the general public. Not more than two of the members may be actively engaged in the alcoholic beverage industry. The director of the ABC Board, depending on experience, could represent one of the enumerated sectors. A new section is added to the director's duties to require preparation of an annual budget to cover enforcement, education, training, and prevention activities. SB 99 would require the ABC Board to review fees not less than every 10 years. Provisions on fines and penalties for engaging in prohibited acts are updated for clarity as to when fines and penalties may be imposed. Other penalty sections are amended to enable consistent and predictable enforcement and just outcomes. The new statutory provisions continue with the three- tier licensing system for manufacturer, wholesaler, and retail licenses; create a new endorsement system to expand the boundaries of licensed businesses and accommodate special events; and modify the permitting system for clarity. Through this more comprehensive licensing structure, persons wishing to participate in the industry will know better what activities are allowed for each license type. The bill adds some provisions that reflect industry trends toward product tastings to authorize a holder of a beverage dispensary license to sell or dispense alcoholic beverages at a permitted tasting event. Passage of SB 99 will protect Alaskans, provide clarity for alcoholic beverage licensees and the public, and result in more consistent enforcement of the alcoholic beverage industry. SENATOR MICCICHE stated that the most important segment of the bill provides reasonable youth consumption improvements. It dramatically improves the process that now adversely affects a young person for the rest of life his/her life because of one poor decision. 2:44:47 PM BOB KLINE, Chair, Alcoholic Beverage Control (ABC) Board, informed the committee that Title 4 was written in the 1980s and was state of the art at the time. Since then, both the state and the industry has changed and revision is needed. He noted that brew pubs hadn't been invented when the statute was written. In May, 2012 70 some stakeholders assembled and made recommendations to improve the structure and implementation of Title 4. A rule that was established initially was that only consensus could move change forward. SB 99 is the result of thousands of hours of this collaborative effort and everyone is proud of the outcome. CHAIR COSTELLO thanked the participants for their commitment. 2:48:28 PM JEFF JESSE, Chief Executive Officer, Alaska Mental Health Authority, Anchorage, Alaska, stated that SB 99 is important legislation because the Title 4 statutes regulate alcoholic beverages in the state and the Alcoholic Beverage Control Board, staff and law enforcement carry out these laws. Title 4 is being reviewed because it has not been updated since 1980 and changes have been made in a hodge podge fashion. The laws became confusing and many were outdated. The review and rewrite was a lengthy and time-consuming process. Since May, 2012 more than 60 stakeholders and staff spent from 6,000 to 7,000 hours to craft the recommendations. The stakeholders included youth, public health, public safety, business, and rural communities. The Rasmuson Foundation and the Mental Health Trust funded the infrastructure, hired people to help draft the results and keep committee minutes. The committees involved in the review process were the Licensing Subcommittee, Role of the Board Subcommittee, Local Option Subcommittee, Underage Drinking Subcommittee, Internet Sales Subcommittee, and the Steering Committee. For each subcommittee he displayed the name of each member and the organization and sector that each represented. [This information may be found in the committee file and online.] Speaking as chair of the Licensing Subcommittee, he pointed out that it had representation from all the different licensing groups, ranging from the wholesalers to the manufacturers, to retailers, to attorneys for licensees, and public health. He pointed out that the Role of the ABC Board Subcommittee also had broad representation including local government. The Local Option Subcommittee had considerable representation from tribal entities, public safety, and industry. The Underage Drinking Subcommittee was led by the Division of Behavioral Health and also included representation from public safety, ABC Board staff, education, and industry. The Internet Sales Subcommittee examined the issue of internet alcohol sales that bypass Alaska's alcohol regulation and taxation system. Their recommendations are pending depending on a proposed USPS policy change regarding its ban on shipping alcohol through the mail. 2:53:00 PM MR. JESSEE explained that Alaska's alcohol license system is based on a three-tier system of regulation that separates the manufacturing tier, the wholesale tier, and the retail tier. The reason for the separate tiers is to keep the industry from getting monopolized by vertical integration. He related that one of the goals was to recognize the evolution of the business model and offer new business opportunities to industry that does not negatively affect the public health and public safety of communities. He displayed a schematic of the manufacturing and wholesale tiers and explained that rather than having a number of esoteric licenses, the proposal is to have a system of base license to which endorsements could be added. For example, in the manufacturing tier a brewery, winery, or distillery producer could add a sampling endorsement. He noted that the wholesale tier has a general wholesale component and a limited beer and wine component. The retail tier has a framework for community level licenses and tourism licenses. At the community level there are twelve different licenses and endorsements are available to different license types. The four types of tourism licenses are intended to maintain the population-based limit on access to alcohol in a community while allowing additional access points during the tourist season when Alaska's population increases dramatically. 2:55:28 PM MR. JESSEE reviewed the following licensing revisions recommended by the committee: · Decrease the number of license types and simplify the licensing system to achieve more consistent enforcement and adherence to state alcohol regulations. · Update licensing fees to support the ABC budget while placing more emphasis on education and training rather than enforcement. This includes adjusting wholesale license fees and simplifying supplier reporting. · Realign the system to better enforce population limits. · Implement a system of endorsements and permits to provide flexibility without creating more license types. · Bring all licenses, endorsements and permits into one place in statute and remove redundant or unused types. The role of the ABC Board Subcommittee was to ensure that the ABC Board fairly represents the interests of all Alaskans and can lead in alcohol education, policy and control. The proposed revisions included: · Implement uniform police reporting requirements; develop enforcement, education, and prevention plans directly connected to the matching funds. · Allow data about alcohol purchases to be released (aggregated at the region or community level) for analysis and community self-assessment. · Base the ABC Board budget on the activities and staffing needed to achieve the ABC Board's mission. · Designate ABC Board seats to ensure representation by: 1 public health, 1 public safety, 2 industry and 1 rural public member; consider the director's background in filling the designations. The Underage Drinking Subcommittee proposed revisions focused on reforming underage drinking sanctions so that adults who supply minors with alcohol are held to greater accountability. Other proposed revisions included: · Reducing the penalty for a licensee, agent or employee selling alcohol to a minor (Sec. 04.16.052) from a class A misdemeanor to a minor offense violation. · Increasing the consistency and certainty of administrative sanctions to licensees upon conviction of violating Sec. 04.16.052. · Requiring statewide keg registration. Another goal of the Underage Drinking Subcommittee was to reform the underage drinking sanctions so that minors do not become criminals for making one poor decision. The revisions included: · Clarifying required language on signs warning minors of the legal consequences of their entering licensed premises. · Restoring the minor consuming alcohol (MCA) offense to a true violation. MR. JESSEE displayed the Local Option Subcommittee proposed revisions to strengthen local options laws and the ability to enforce them. These included: · Repealing local option 4, which bans sale and importation of alcohol, but not possession. · Increasing the ABC budget for dedicated Title 4 enforcement staff. · Increasing the local option boundary from a 5-mile radius to a 10-mile radius from the village center. · Increasing the misdemeanor-level fines for bootlegging and imposing additional unit fines per container of alcohol. · Making possession of homebrew ingredients and/or equipment with intent to produce alcohol illegal in all local option communities. 2:58:01 PM MR. JESSEE opined that everyone comes out a winner with the Title 4 revisions. Business got more opportunity, youth are better protected, the public health is better protected, public safety is enhanced, and rural communities also get ahead. He said the recommendations were placed in the bill and the various stakeholders are in the process of examining it for completeness and accuracy. 2:58:44 PM CHAIR COSTELLO expressed appreciation for the introduction and announced she would hold SB 99 in committee for further consideration.