SB 52-ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG  2:30:54 PM CHAIR REINBOLD reconvened the meeting. She announced that the next order of business would be SENATE BILL NO. 52, "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 common carrier approval to transport or deliver alcoholic beverages; relating to the Alcoholic Beverage Control Board; relating to offenses involving alcoholic beverages; amending Rule 17(h), Alaska Rules of Minor Offense Procedure; and providing for an effective date." 2:31:05 PM SENATOR COSTELLO clarified the original bill was before the committee. Senator Bishop objected for purposes of discussion. 2:31:31 PM EDRA MORLEDGE, Staff, Senator Peter Micciche, Alaska State Legislature, Juneau, paraphrased from the sponsor statement, which read as follows: SB 52 modernizes the Title 4 statutes governing the Alcoholic Beverage Control Board (board). The bill allows the board to function more efficiently as they regulate the alcohol industry in a manner that promotes public safety and health, while supporting the alcohol industry's continued growth and viability in today's current climate. This bill is the product of a seven-year, unprecedented collaboration of over 100 stakeholders from a diverse group of alcohol industry representatives, public health and safety entities, local governments and advocates for youth. Stakeholders established shared goals 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 without negative impacts on businesses and responsible operators. The result is a reorganization that clearly defines the rights and obligations of licensees, restructures penalties for offenses in Title 4, and organizes the statutes in a logical, common-sense manner for all users of Title 4 statutes. The bill requires that the director prepare an annual enforcement, education, training, and prevention budget and requires the Board to review fees every 10 years. Penalty sections are amended to ensure consistent enforcement and just outcomes. New statutory provisions retain the three-tier licensing system but create more flexibility for small manufacturers; create a new endorsement system to expand the boundaries of licensed businesses and accommodate special events; and modify the permitting system for clarity. The bill also creates local control in community population limits, adds mechanisms to prevent underage access to alcohol, regulates common carriers who deliver alcohol and provides for a smooth transitional implementation period. 2:33:19 PM MS. MORLEDGE said one of the main goals is to restructure licensing to make the current licensing clearer and to place regulatory provisions in statute. The permitting process would remain in regulation, she said. She said the goal is to streamline the process, place it under one title and make regulation easy for the board and industry members. She said that the goals included promoting a fair business climate, protecting public health and safety, limiting youth access to alcohol, promoting responsible alcohol use, reducing the harms of overconsumption, and implementing change without negatively harming existing businesses and responsible operators. The other main goal is to make Title 04 as clear and consistent as possible for the board, licensees, and law enforcement, she said. 2:34:43 PM MS. MORLEDGE explained the key concepts in Title 04 were the three-tier system, including separating manufacturers, wholesalers, and retailers to prevent monopolies. Second, it would restructure and reorganize the licensing system to include the clearly defined categories. Finally, it would address population limits, which regulates the number of licenses available in each community by type. One of the issues raised has been the length of the bill. She explained that this was necessary because changes affect many different sections. 2:35:25 PM SENATOR PETER MICCICHE, Alaska State Legislature, Juneau, spoke as sponsor of SB 52. He stated that he has worked on a rewrite of the alcohol beverage control statutes for at least five years. 2:36:15 PM SENATOR BIRCH asked whether this was substantially the same as last year's bill or if there were any substantive changes. SENATOR MICCICHE answered that it was essentially the same bill that passed last year, with a few minor changes. The stakeholder groups met during the interim and some minor changes were made at their request. 2:37:31 PM SENATOR MICCICHE explained his interest in the rewrite. As a legislator, he was initially surprised at the number of bills that come before the legislature related to alcohol. Then he discovered that the statutes were outdated, in part, because the industry has dramatically changed in the last 30 years. He said the he reviewed the public health and safety issues, including overserving, serving minors, and the quality of operators. He said that he realized that these issues were intertwined. He pulled together a group of stakeholders to address things that did not make sense. He highlighted that the goals were to support this industry since it is an important one to the state, but still obtain the best results for public health and public safety. He said that SB 52 was the result of this work. He has observed the interaction between industry and the [Alcoholic Beverage Control Board (ABC Board). He said that sometimes people are upset with them when they follow the law, but also when they do not. This bill would clarify the law, so everyone would understand expectations for operators. He offered his belief that this bill would promote a fair business climate, limit youth access to alcohol, promote responsible alcohol use, and reduce the harms of overconsumption. He said that this bill would implement these changes without negatively impacting existing businesses and responsible operators. 2:39:43 PM SENATOR MICCICHE said that the legislature has been focused on the opioid epidemic. However, alcohol still represented about 95 percent of the substance abuse problem in Alaska. He said that many things that have affected public health and safety in Alaska for generations, including suicide, sexual abuse, and domestic violence were all tied to alcohol abuse. He said that this bill would take it all into account and redistribute the statutes to make sense. It would add licensing and endorsements to reflect today's operations and provide a comprehensive approach that resets how alcohol is managed in Alaska. 2:41:26 PM MS. MORLEDGE said that pages 1-5 of the summary relate to chapter 6 of Title 4, the Alcoholic Beverage Control Board. Chapter 6: Alcoholic Beverage Control Board Section 1: Declaration of Policy; purpose; finding. Adds a new section AS 04.06.005 (Pages 1-2. 2:41:57 PM MS. MORLEDGE read Section 2. Section 2: Authority of director. Adds a new subsection AS 04.06.075 to require that the director of the Alcoholic Beverage Control board (ABC board) shall include in the agency's budget resources for administration, enforcement, education, training, and prevention activities under Title 4. (Page 2) 2:42:16 PM MS. MORLEDGE referred to the color coded the document; green referred to new concepts, yellow highlighting showed provisions that were relocated, and magenta referred to the penalty provisions. 2:43:01 PM SENATOR BISHOP complimented staff because this made it easy to follow. 2:43:42 PM MS. MORLEDGE read Sections 3 and 4. Section 3: Delegation of Authority. Amends AS 04.06.080 to add endorsements to the delegated powers of the director of the ABC board. (Page 2) Section 4: Powers and duties. Amends AS 04.06.090(b) to relocate existing language in 04.11.070 and adds endorsements to the powers of the ABC board. (Page 2) 2:44:05 PM MS. MORLEDGE reviewed Section 5. Section 5: Powers and duties. Amends AS 04.06.090(e) to add endorsements. This section requires the board to notify all licensees and municipalities of major changes to Title 4. (Page 2) She said that the yellow highlighting relates to existing law. 2:44:21 PM SENATOR COSTELLO acknowledged that this document was highlighted. She suggested that the committee skip the yellow highlighted provisions and spend more time on the new concepts that were highlighted in green and the penalty provisions highlighted in magenta. CHAIR REINBOLD agreed. 2:45:22 PM MS. MORLEDGE read Section 10, "Proposed Chapter 9, Endorsements and Permits." Proposed Chapter 9: Licenses, Endorsements and Permits Section 10: Adds the new Chapter 09 to Title 4 Licenses, Endorsements and Permits. Relocates many existing licenses and permits from Chapter 11, organizes into articles of licenses, endorsements and permits. (Pages 5-50). 2:45:36 PM MS. MORLEDGE referred to page 3 of the sectional analysis [shown in magenta]. AS 04.09.150. Failure to pay annual fee or file affidavit. States that failure to pay an annual wholesale fee or file an affidavit is a violation and sets the penalty. (Page 11) AS 04.09.160. Failure to pay biennial fee or file declaration. States that failure to pay a biennial fee and failure to file a declaration are violations and sets the penalty. (Pages 11-12) 2:46:21 PM MS. MORLEDGE reviewed page 4, [shown in yellow] that reorganizes existing retail licenses. 2:46:39 PM At-ease. 2:47:24 PM CHAIR REINBOLD reconvened the meeting. MS. MORLEDGE reverted to page 2, to "New Chapter 9: Licenses, Endorsements and Permits." She explained that this entire section pertained to "Article 1, License Types and Article 2, Manufacturer Licenses," including brewery, winery, and distillery manufacturer licenses. These provisions refer to existing licenses, which were put into the new article. 2:47:56 PM MS. MORLEDGE read AS 04.09.050. AS 04.09.050. Authorized sales. Allows smaller manufacturers to self-distribute to retail, wholesale, permitted and out of state or country licensees. Requires large manufacturers to go through wholesale distributors and not hold retail licenses. (Pages 6-7) MS. MORLEDGE referred to page 3 of the sectional analysis, which relocated the existing penalties in AS 04.09.060 and AS 04.09.070. She read the new penalty provision in AS 04.09.080. AS 04.09.060. Unlicensed manufacturing. Relocates the existing penalty for unlicensed manufacture from 04.11.010. (Page 7) AS 04.09.070. Unlicensed manufacturing in a local option area. Relocates the existing penalty for unlicensed manufacture in a local option area from 04.11.010. (Pages 7-8) AS 04.09.080. Unauthorized manufacturer sale. Defines unauthorized manufacturer sale as violating 04.09.050 and sets the penalty. (Page 8) SENATOR MICCICHE suggested she review the new penalty provisions. 2:49:20 PM MS. MORLEDGE read AS 04.09.150 and AS 04.09.160 [shown in magenta]. AS 04.09.150. Failure to pay annual fee or file affidavit. States that failure to pay an annual wholesale fee or file an affidavit is a violation and sets the penalty. (Page 11) AS 04.09.160. Failure to pay biennial fee or file declaration. States that failure to pay a biennial fee and failure to file a declaration are violations and sets the penalty. (Pages 11-12) 2:49:40 PM MS. MORLEDGE referred to page 4, "Article 4. Retail Licensees," [shown in yellow] were provisions being relocated and reorganized. In response to Chair Reinbold, she explained the reason to reorganize was because some licenses exist in other areas of the state statutes. She said the sponsor seeks to have all of the licenses relocated to AS 04.09. MS. MORLEDGE reviewed page 5 of the sectional analysis to the provisions [shown in green] related to brewery, winery, and distillery licenses. AS 04.09.310. Brewery retail license. Creates new license type based on existing language in AS 04.11.130 for brewery retail activities, sets biennial fee at $1,250, requires retail license to be adjacent to manufacturing location, and sets penalty for failure to comply with license terms. (Pages 21-22) AS 04.09.320. Winery retail license. Creates new license type based on existing language in AS 04.11.140 for winery retail activities, sets biennial fee at $1,250, requires retail license to be adjacent to 5 manufacturing location, defines sales volume limits for cider and mead depending on alcohol content, and sets penalty for failure to comply with license terms. (Pages 22-23) AS 04.09.330. Distillery retail license. Creates new license type based on existing language in AS 04.11.170 for distillery retail activities, sets biennial fee at $1,250, requires retail license to be adjacent to manufacturing location, and sets penalty for failure to comply with license terms. (Pages 23- 24) 2:51:16 PM MS. MORLEDGE reviewed AS 04.09.350 and AS 04.09.360 [shown in green], which were new provisions. AS 04.09.350. Seasonal restaurant or eating place license. Creates new license type, sets biennial license fee at $1,250, defines which communities can qualify for having this license type, sets out formula for determining number of allowed licenses per community, and sets penalty for failure to comply with license terms. (Pages 26-27) AS 04.09.360. Winery direct shipment license. Creates new license type authorizing direct to consumer (including online) sales of wine for in-state or out- of-state winery, sets biennial license fee at $200, directs the board to develop an application form specifically for this license, prohibits sales by this license type to local option areas, and sets penalty for failure to comply with license terms. (Pages 27- 29) 2:51:51 PM SENATOR MICCICHE explained the brewery, winery, and distillery references on this slide were incorrect and would be updated. 2:52:16 PM MS. MORLEDGE reviewed "Article 5. Endorsements," on page 6 of the sectional analysis [shown in green]. She said that these provisions would allow for manufacturer licenses to obtain varying endorsements for activities occurring on their licensed premises. As an example, she referred to the manufacturer sampling endorsement under as 04.09.410. AS 04.09.410. Manufacturer sampling endorsement. Creates new endorsement for onsite sampling based on existing language from manufacturing licenses, defines per person per day volume limits by product type, sets biennial fee at $200, sets penalties for unendorsed sampling and endorsement noncompliance. (Pages 30-31) She explained that breweries currently provide tasting samples. This provision would create a new endorsement for onsite sampling. 2:53:11 PM MS. MORLEDGE reviewed AS 04.09.420. AS 04.09.420. Multiple fixed counter endorsement. Creates new endorsement for multiple fixed counters with language relocated from duplicate license section in AS 04.11.090, sets biennial fee at $200, sets initial application fee of $1,250 per counter, sets penalties for endorsement noncompliance and unendorsed service. (Pages 31-32) She said that a bar with several rooms would get an endorsement under one license rather than obtaining a duplicate license for each of the rooms. 2:53:30 PM MS. MORLEDGE reviewed AS 04.09.420. AS 04.09.420. Multiple fixed counter endorsement. Creates new endorsement for multiple fixed counters with language relocated from duplicate license section in AS 04.11.090, sets biennial fee at $200, sets initial application fee of $1,250 per counter, sets penalties for endorsement noncompliance and unendorsed service. (Pages 31-32) AS 04.09.430. Hotel or motel endorsement. Creates new endorsement using some language relocated from AS 04.11.090, sets biennial fee at $200, sets penalties for unendorsed hotel or motel service and endorsement noncompliance. (Pages 32-33 AS 04.09.440. Large resort endorsement. Creates new endorsement using some language relocated from AS 04.11.090, defines a large resort, sets biennial fee at $200, sets penalties for unendorsed large resort service and endorsement noncompliance. (Pages 33-35) 2:53:53 PM SENATOR BISHOP asked if the definition of a large resort was for a 100-room occupancy. 2:54:58 PM ANNA BRAWLEY, Title 4 Project Review Coordinator; Senior Associate, Agnew Beck Consulting, Anchorage, answered that a large resort would be a place that offers outdoor recreational activities and overnight lodging for guests. It would also have at least 10 contiguous acres. She said that it could be one big property or parcel. 2:55:22 PM SENATOR BISHOP asked whether 10 acres was the key. MS. BRAWLEY answered that the language would require overnight lodging, but it did not require a specific number of rooms. 2:55:39 PM MS. MORLEDGE suggested that the presentation at the next hearing would help to clarify some things. 2:56:04 PM MS. MORLEDGE reviewed AS 04.09.450 [shown in green and yellow]. AS 04.09.450. Restaurant endorsement. Creates new endorsement using language from the Restaurant Designation Permit currently in regulation, defines which license types may qualify for the endorsement, sets biennial fee at $200, defines situations in which minors may be present on licensed premises for employment or dining, and sets penalties for unendorsed restaurant service and endorsement noncompliance. (Pages 35-36) She said that some provisions were being redefined under a separate endorsement. AS 04.09.460. Package store shipping endorsement. Creates new endorsement by relocating language from AS 04.11.150, allows licensees to accept online orders, sets biennial fee at $200, maintains requirement to enter orders to customers in local option areas in written order database, and sets penalties for unendorsed package store shipping and endorsement noncompliance. (Pages 36-38) AS 04.09.470. Package store delivery endorsement. Creates new endorsement by relocating language from AS 04.11.150, sets biennial fee at $200, sets penalties for unendorsed package store delivery and endorsement noncompliance. (Page 38) AS 04.09.480. Package store repackaging endorsement. Creates new endorsement by relocating language from regulation, sets biennial fee at $200, sets penalties for unendorsed package store repackaging and endorsement noncompliance. (Page 39) 2:56:56 PM MS. MORLEDGE turned to page 7 of the sectional analysis. She referred to AS 04.09.490. Package store sampling endorsement [shown in green]. AS 04.09.490. Package store sampling endorsement. Creates new endorsement, defines per person per day volume limits by product type, sets biennial fee at $200, sets penalties for unendorsed package store sampling and endorsement noncompliance. (Pages 39-40) She reviewed the next three provision [shown in green and yellow]. AS 04.09.500. Bowling alley endorsement. Creates new endorsement using language from AS 04.11.090, sets biennial fee at $200, sets penalties for unendorsed bowling alley service and endorsement noncompliance. (Pages 40-41) AS 04.09.510. Golf course endorsement. Creates new endorsement using language from AS 04.11.115, allows a beverage dispensary to serve alcoholic beverages on its course, sets biennial fee at $200, and sets penalties for unendorsed golf course service and endorsement noncompliance. (Pages 41-42) AS 04.09.520. Brewery repackaging endorsement. Creates new endorsement by relocating language from AS 04.11.135, limits availability to licensees currently operating brewpubs as of the bill's effective date, sets biennial fee at $200, sets penalties for unendorsed brewery repackaging and endorsement noncompliance. (Pages 42-43) 2:57:13 PM MS. MORLEDGE reviewed "Article 6. Permits" [shown in yellow], which were consolidated in the same place, she said. She directed attention to AS 04.09.670 [shown in green] on page 8. AS 04.09.670. Tasting event permit. Creates new permit, allows a package store to host a tasting event on the package store's licensed premises, and service from its product inventory, sets a time limit and food requirement, and limits to six events per license per year. (Pages 47-48) MS. MORLEDGE said that this would allow a package store to host a tasting event on premise. She reviewed AS 04.09.700 [shown in magenta]. AS 04.09.700. Failure to comply with a permit requirement. Sets the penalties for failure to comply with permit requirements. (Pages 48-49) setting penalties for requirements MS. MORLEDGE reviewed "Article 7. Common Carrier Approval" [shown in green]. AS 04.09.750. Common carrier approval. Requires the board to approve a common carrier to transport and deliver alcoholic beverages to persons within the state in response to a consumer's order and sets requirements and penalties for common carriers. (Pages 49-50) 2:58:30 PM MS. MORLEDGE reviewed "Chapter 11. Licensing. Section 14." Section 14: Purchase from nonlicensee prohibited. Amends AS 04.11.015 to prohibit the purchase or barter for alcoholic beverages from a nonlicensee and adds penalty with $250 fine. (Page 51) She related that Section 14 [shown in magenta] added a penalty. 2:58:48 PM MS. MORLEDGE said that Sections 16-19 and Section 21 on page 9 [shown in magenta] added penalty provisions. Section 16: Board approval of transfers. Adds new subsections to AS 04.11.040 (d) and (e) to make it an offense and provide for a penalty for the unauthorized transfer of an alcoholic beverage license or permit. It is a violation. (Page 52) Section 17: Reports required of limited liability organization. Adds new subsections to AS 04.11.045 (c) and (d) to add a penalty for failure to report a change in member interest or manager with $250 fine. (Page 52) Section 18: Reports required of corporations. Adds new subsections to AS 04.11.050 (c) and (d) to add a penalty for failure to report a stock transfer or change of officers or board members with $250 fine. (Page 52) Section 19: Reports required of partnerships. Adds new subsections to AS 04.11.055 (c) and (d) to add a penalty for failure to report a transfer of partnership interest or change of general partner with $250 fine. (Page 52) 2:59:08 PM MS. MORLEDGE said that Section 20 was relocated. She reviewed Section 21 [shown in magenta], which added a penalty provision. Section 21: Nonresident distiller, brewer, winery, or wholesaler. Amends AS 04.11.060 to add a new subsection (b) to provide a penalty for violating the previous section, making it a class A misdemeanor. (Page 53) MS. MORLEDGE reviewed Section 23 [shown in green]. Section 23: Application for new license or permit. Amends AS 04.11.260 to exempt winery direct shipment license from the application process for other license types. (Page 54) She said that this provision would exempt a winery direct shipment license from the application process. 2:59:43 PM SENATOR BISHOP asked whether he could contact a winery in Oregon and have wine shipped directly to his home. MS. MORLEDGE answered that existing wine clubs currently deliver. However, they were not licensed companies in the state, but this would provide licensure. SENATOR MICCICHE explained that the reason it was important is because anyone can order wine and liquor, but they may not be of age or be in a dry community. He said the goal is to license them so the state knows who the companies are and that they would be taxed similarly to other establishments in Alaska. [SB 52 was held in committee.]