Legislature(2017 - 2018)BELTZ 105 (TSBldg)

03/22/2018 01:30 PM LABOR & COMMERCE

Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.

Download Mp3. <- Right click and save file as

Audio Topic
02:03:17 PM Start
02:03:40 PM SB76
03:18:45 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Delayed to 2:00 p.m. --
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
         SB  76-ALCOHOLIC BEVERAGE CONTROL; ALCOHOL REG                                                                     
2:03:40 PM                                                                                                                    
CHAIR COSTELLO announced the consideration of SB 76.                                                                            
2:05:03 PM                                                                                                                    
At ease                                                                                                                         
2:05:29 PM                                                                                                                    
CHAIR COSTELLO reconvened the meeting and asked Anna Brawley to                                                                 
finish walking through the sectional analysis.                                                                                  
2:05:46 PM                                                                                                                    
ANNA BRAWLEY, Consultant, Agnew Beck Consulting, Anchorage,                                                                     
Alaska, stated that she would start on page 20 of the sectional                                                                 
for SB 76.                                                                                                                      
     Repealers,   Transitions,  Applicability,   Court  Rule                                                                  
     Amendment, and Effective Dates.                                                                                          
                         Pages 109-114                                                                                          
     Section 149                                                                                                            
     Amends court rule 17 by adding a statutory reference.                                                                      
     Section 150                                                                                                            
     Repeals the  section reference with the  effective date                                                                    
     of January 1, 2020.                                                                                                        
     Section 151                                                                                                            
     Includes the sections for immediate repeal.                                                                                
     Section 152                                                                                                            
     Repeals additional  sections with an effective  date of                                                                    
     January 1, 2028.                                                                                                           
     Section 153                                                                                                            
     Incudes several  sections for repeal  effective January                                                                    
     1, 2020.                                                                                                                   
     Section 154  Uncodified law                                                                                            
     Applicability.  It states  that offenses  committed on,                                                                    
     or  after  the effective  date  applicable  to the  new                                                                    
     Section 155  Transition                                                                                                
     Covers   conversion  of   applications  and   licenses.                                                                    
     Provides  that the  board shall  convert all  necessary                                                                    
     licenses and applications within 90 days.                                                                                  
     Section 156  Transition                                                                                                
     Creates a seasonal restaurant  or eating place license.                                                                    
     Converts  applications for  restaurant or  eating place                                                                    
     licenses  to   seasonal  restaurant  or   eating  place                                                                    
     license  application if  the establishment  serves beer                                                                    
     and wine for a period not exceeding six months.                                                                            
     Section 157  Transition                                                                                                
     Regulations. Directs  the Department  and the  Board to                                                                    
     create necessary regulations to adopt the bill.                                                                            
     Section 158                                                                                                            
     Includes  an   immediate  effective  date   clause  for                                                                    
     portions of the act.                                                                                                       
     Section 159                                                                                                            
     Includes  a  January 1,  2020  effective  date for  the                                                                    
     remainder of the act.                                                                                                      
2:07:40 PM                                                                                                                    
CHAIR  COSTELLO  asked  how  the transition  in  Section  156  is                                                               
affected by the  population requirements, if it  falls under that                                                               
MS.  BRAWLEY  advised  that  the purpose  of  including  this  in                                                               
Transition  is this  is a  new  license type  that some  existing                                                               
restaurant licenses  may wish to take  advantage of. It is  not a                                                               
license  under   the  population  limits  defined   by  permanent                                                               
residents, but it does include  a formula to determine the number                                                               
of licenses available per community.                                                                                            
2:08:56 PM                                                                                                                    
At ease                                                                                                                         
2:09:19 PM                                                                                                                    
CHAIR COSTELLO  reconvened the meeting  and asked Ms.  Brawley to                                                               
walk through the PowerPoint.                                                                                                    
MS.  BRAWLEY advised  that  the presentation  is  an overview  of                                                               
Chapter 9: bill  section 9; Chapter 11: bill  sections 10-72; and                                                               
Transition:  bill sections  149-159.  She  reminded members  that                                                               
other bill sections were covered in prior hearings.                                                                             
SENATOR GARDNER  referenced the  note at the  bottom of  slide 3,                                                               
"Local Option  recommendations are documented in  the report, but                                                               
not included in  SB 76. More comprehensive  review and discussion                                                               
of Local Option  laws is needed in the future."  She asked if the                                                               
Local  Option recommendations  aren't included  in SB  76 because                                                               
the  stakeholders  didn't  reach  agreement  or  because  certain                                                               
issues were particularly thorny.                                                                                                
MS.  BRAWLEY said  it wasn't  a lack  of agreement.  The Title  4                                                               
review group focused  on law enforcement and  technical issues in                                                               
the statute  that affected  Local Option.  Through the  course of                                                               
discussion,  they  identified  other,  larger  issues  to  review                                                               
further, such  as the number  of Local Options and  the penalties                                                               
associated with Local  Option. The group did  not have sufficient                                                               
representation, including from rural  communities that have Local                                                               
Options,  to  tackle   some  of  the  larger   issues  that  were                                                               
identified. A future goal is to dive further into those issues.                                                                 
2:11:34 PM                                                                                                                    
MS. BRAWLEY reviewed the key concepts in Title 4.                                                                               
   • The 3-tier system: Separates manufacturers, wholesalers and                                                                
     retailers to prevent monopolies.                                                                                           
   • Population limits: defines the number of license types                                                                     
     available in each community, based on the year-round                                                                       
   • License transfers: means selling ownership in the business                                                                 
     or moving the physical location within the same community                                                                  
     it was issued.                                                                                                             
   • Proposed new concept: Endorsements are license add-ons that                                                                
     allow an expanded physical presence or expanded activities                                                                 
     on the license.                                                                                                            
2:13:10 PM                                                                                                                    
MS. BRAWLEY displayed slide 5  that illustrates that alcohol must                                                               
be  manufactured,   distributed,  and  sold  to   the  public  by                                                               
different  businesses.  This  three-tier system  was  established                                                               
after  prohibition and  was designed  to prevent  monopolies. The                                                               
laws have  changed over the years,  but many of the  main tenants                                                               
of Title 4 are related to the three-tier system.                                                                                
MS.  BRAWLEY  advised that  population  limits  are an  important                                                               
concept  to understand  in Title  4.  It is  what is  known as  a                                                               
limited  entry  system  for  most licenses.  That  means  that  a                                                               
certain number  of licenses are  available in each  community and                                                               
that  is determined  by the  full-year  resident population.  For                                                               
most licenses it  is one per 3,000 people and  for restaurants it                                                               
is one license per 1,500 people.                                                                                                
2:14:08 PM                                                                                                                    
CHAIR COSTELLO recalled that testimony  during a previous meeting                                                               
indicated that the  limit for breweries is one  license per 9,000                                                               
people. She asked for an explanation of that provision.                                                                         
MS.  BRAWLEY said  the  proposed population  limit  would be  for                                                               
manufacturer/retail licenses  for brewery retail,  winery retail,                                                               
and distillery retail.  These would be a  higher population limit                                                               
because  each  of  those  product types  operating  in  the  same                                                               
community could result in a  great number of alcohol outlets. The                                                               
proposal  is to  further limit  those in  recognition of  the new                                                               
license  types and  that  the population  limits  are defined  by                                                               
license type.                                                                                                                   
She   displayed  slide   7   that   illustrates  the   unintended                                                               
consequences of having a lot  of license types. Even though there                                                               
is a population limit for each  license type, she said this shows                                                               
it is  possible to have  a very  high density of  alcohol outlets                                                               
2:15:37 PM                                                                                                                    
SENATOR  GARDNER asked  if SB  76 greatly  reduces the  potential                                                               
number of licenses in communities.                                                                                              
MS. BRAWLEY  said the  goal is  to manage  the number  of license                                                               
types going forward, but not  necessarily to reduce the number of                                                               
existing  licenses  because  they  realize  those  are  operating                                                               
businesses. It is looking to the future.                                                                                        
CHAIR COSTELLO  offered her  understanding that  the presentation                                                               
addresses the current Title 4.                                                                                                  
SENATOR MICCICHE  asked Ms. Brawley  to identify  the differences                                                               
between  current law  and new  proposals because  there has  been                                                               
some confusion.                                                                                                                 
2:17:10 PM                                                                                                                    
MS. BRAWLEY  displayed slide 8, Population  Limits: Current Title                                                               
4, AS 04.11.400. She explained  that it is intended to illustrate                                                               
current  law  in  Title  4. It  demonstrates  that  licenses  are                                                               
defined  by  community.  In  places that  have  cities  within  a                                                               
borough, a  separate number of  license types are available  in a                                                               
city versus a  borough. Some license types can  be issued outside                                                               
population  limits, generally  to serve  tourists. She  clarified                                                               
that SB 76 does not propose to change this general mechanism.                                                                   
MS. BRAWLEY  turned to slide  9, P-1. Population Limits  Apply to                                                               
Retail Licenses  Only. She said a  proposal in SB 76  is to apply                                                               
population limits to retail-tier  licenses only. Licenses focused                                                               
on tourism and winery direct  shipment licenses are excluded. The                                                               
purpose is  due to the  public health implications of  the number                                                               
of alcohol outlets  focused on service to the  public rather than                                                               
business activity like wholesale.                                                                                               
MS. BRAWLEY reviewed  the transfer of ownership or  location of a                                                               
license under  current Title 4.  She explained that  most license                                                               
types can be transferred to a  new owner and/or to a new location                                                               
within the same community the license was issued.                                                                               
MS. BRAWLEY  explained that the  proposed change in SB  76 allows                                                               
all  licenses to  be transferred  to  a new  owner. Any  existing                                                               
restrictions  of licenses  for transfer  of location  would still                                                               
apply. In part  this is to help family-owned  businesses or those                                                               
that want to do an internal  transfer of ownership to not need to                                                               
go through the  process of applying for a new  license. She noted                                                               
that some license  types currently are not  transferable by owner                                                               
or location.                                                                                                                    
MS.  BRAWLEY  reviewed the  license  application  process in  the                                                               
current Title  4. She explained  that the licenses are  valid for                                                               
two years and  AMCO [Alcohol and Marijuana  Control Office] sends                                                               
renewal  notices  to  existing licensees.  The  process  includes                                                               
sending notice  of the  application to  the local  governing body                                                               
and publishing notice. Local governments  can protest the license                                                               
or recommend  conditions and individuals can  submit objection to                                                               
a  license. The  ABC  [Alcoholic Beverage  Control) Board  either                                                               
approves or denies the license application.                                                                                     
2:20:16 PM                                                                                                                    
CHAIR COSTELLO  asked Ms. McConnell if  SB 76 will help  speed up                                                               
the time-consuming  process of transferring a  license. She noted                                                               
that businesses  in her  district have  experienced interruptions                                                               
due to the current transferring process.                                                                                        
2:20:53 PM                                                                                                                    
ERIKA MCCONNELL,  Director, Alcohol and Marijuana  Control Office                                                               
(AMCO), Anchorage, Alaska,  said she didn't recall  that the bill                                                               
made  significant  changes  to  the  process  of  transferring  a                                                               
license. The  intent is not  to interrupt service, but  there are                                                               
steps that must  be taken in a certain order.  She explained that                                                               
a  management agreement,  which is  addressed in  regulation, can                                                               
help manage the  gap that occurs when the  business changes hands                                                               
before the license is transferred.                                                                                              
SENATOR GARDNER asked how long  the process to transfer a license                                                               
might take, on average.                                                                                                         
MS.  MCCONNEL said  AMCO tells  people to  plan on  three to  six                                                               
months.  Three weeks  of  advertising is  required  and there  is                                                               
uncertainty based  on when the application  is submitted relative                                                               
to when the board next meets, which is about five times a year.                                                                 
CHAIR COSTELLO  relayed the constituent  frustration of  going to                                                               
an established restaurant that has  traditionally served beer and                                                               
wine only to learn that it  is unavailable. She said she would be                                                               
open to a conversation if there is a way to address that issue.                                                                 
CHAIR COSTELLO asked Ms. Brawley to continue.                                                                                   
2:23:50 PM                                                                                                                    
MS.  BRAWLEY directed  attention to  slide 13,  N-6. Improve  the                                                               
License, Endorsement and Permit Application Process:                                                                            
        • Apply several technical changes to statutes for                                                                       
          applications for a license, endorsement or permit.                                                                    
        • Examples:                                                                                                             
             o Endorsement renewal part of license renewal                                                                      
             o Required items in application process: labeled                                                                   
               premises diagram, e-mail address for licensees                                                                   
             o Simpler signature requirements for multiple                                                                      
               owners and nonprofit organizations                                                                               
             o Simpler operating requirements (number of hours)                                                                 
               for licenses up for renewal                                                                                      
MS.  BRAWLEY  said  SB  76  makes  recommendations  to  make  the                                                               
application process  smoother. One change  is to allow  the board                                                               
to send electronic renewal applications.                                                                                        
MS. BRAWLEY  said the committee previously  reviewed endorsements                                                               
in SB  76. Endorsements  are added  to existing  licenses, giving                                                               
businesses more flexibility in terms  of physical premises and/or                                                               
activities allowed  on the  license. Endorsements  allow sampling                                                               
on  premises, service  on a  golf course,  deliveries by  package                                                               
stores, etc.                                                                                                                    
2:24:55 PM                                                                                                                    
MS. BRAWLEY displayed slide 15, R-7 Create Endorsements:                                                                        
        • Create endorsements as add-ons to licenses in Title 4                                                                 
        • Endorsements must be issued with a license, renewed                                                                   
          biannually with the license, and cannot be transferred                                                                
          to a new location                                                                                                     
        • Endorsements are not population limited                                                                               
        • Convert some existing sections or activities into                                                                     
          endorsements; create new endorsements                                                                                 
MS.  BRAWLEY  said  slide  16,   Proposed  Changes  to  Licenses,                                                               
Endorsements   and   Permits,   gives   the   overview   of   the                                                               
reorganization of  the license  types, endorsements,  and permits                                                               
in Title 4:                                                                                                                     
     SB 76, Section 9: proposed new Chapter 9 in Title 4                                                                        
          04.09.010: Types of Licenses                                                                                        
         04.09.020 - .040: Manufacturing Tier Licenses                                                                          
          04.09.100 - .110: Wholesale Tier Licenses                                                                             
          04.09.200  .360: Retail Tier Licenses                                                                                 
          04.09.400: Definition of Endorsements                                                                               
          04.09.410 - .520: Types of Endorsements                                                                               
          04.09.600: Definition of Permits                                                                                    
          04.09.610 - .690: Types of Permits                                                                                    
2:25:25 PM                                                                                                                    
MS. BRAWLEY  said slides 17-19,  Alaska's Liquor  License System:                                                               
Proposed  Changes in  SB 76,  illustrates the  three-tier system,                                                               
which  existing  license  types   fit  into  that  system,  which                                                               
proposed  endorsement  would  apply  to each  license  type,  and                                                               
whether these  licenses are subject  to population  limits. Slide                                                               
17  shows the  manufacturing/wholesale tier.  Slide 18  shows the                                                               
retail  tier.  Licenses  proposed  to   be  new  in  statute  are                                                               
highlighted. Slide 19 shows retail  licenses that are exempt from                                                               
population limits that mainly serve  tourists and shows the three                                                               
license  types  proposed for  removal  from  Title 4  -  brewpub,                                                               
bottling works,  and public convenience  - that will  be replaced                                                               
by existing license types.                                                                                                      
MS.  BRAWLEY  displayed the  recommendations  on  slide 20,  M-1.                                                               
Simplify Manufacturing Licenses:                                                                                                
        • Keep three manufacturing license types: Brewery,                                                                      
          Winery, Distillery.                                                                                                   
        • Remove Bottling Works and Brewpub license types from                                                                  
        • Convert existing Brewpub licensees and Bottling Works                                                                 
          licensee to one of the three manufacturer types.                                                                      
2:27:08 PM                                                                                                                    
MS. BRAWLEY said slide 21,  Breweries and Brewpubs: Current Title                                                               
4,  shows the  difference  between breweries  and brewpubs.  They                                                               
look similar to the general public,  but a brewery license has no                                                               
production  limit  and limits  retail  activity.  The brewpub  is                                                               
exercised with a  retail bar or restaurant license  and does have                                                               
a limit on production and how much can be sold at wholesale.                                                                    
MS.  BRAWLEY said  slide 22,  Proposed  in SB  76: Conversion  of                                                               
Brewpubs, illustrates how brewpubs will  fit into the new system.                                                               
Because they  will have a brewery  license, they will not  have a                                                               
production limit.                                                                                                               
MS. BRAWLEY  covered the recommendation  on slide 23,  M-3. Small                                                               
Manufacturers Allowed to  Hold Retail Licenses. She  said this is                                                               
with  the exception  of  brewpubs and  the  retail activities  in                                                               
their licenses  now. SB 76  proposes allowing  manufacturers that                                                               
produce  under a  certain  amount  defined in  the  bill to  hold                                                               
retail licenses:                                                                                                                
        • Remove the restriction in Prohibited Financial                                                                        
          Interest (AS 04.11.450), which does not allow                                                                         
          manufacturers to hold retail licenses, for smaller                                                                    
        • Only manufacturers who produce less than a certain                                                                    
          amount of product annually would be eligible to hold                                                                  
          retail licenses.                                                                                                      
        • Large manufacturers would be limited to production.                                                                   
        • The proposed thresholds exceed the current production                                                                 
          of Alaska's largest manufacturers of each product.                                                                    
MS.  BRAWLEY said  that slide  23,  Proposed in  SB 76:  Multiple                                                               
Retail License Options for Manufacturers,  uses a brewery license                                                               
as  an example  but  the  same system  applies  for wineries  and                                                               
distilleries.  They  would  either  be able  to  get  the  retail                                                               
license,  which is  often known  as  a tasting  room license,  or                                                               
another retail  license, such  as a  bar, restaurant,  or package                                                               
store, any retail-tier license.                                                                                                 
2:29:44 PM                                                                                                                    
CHAIR COSTELLO asked what REPL stood for in the slide.                                                                          
MS. BRAWLEY answered restaurant or eating place.                                                                                
MS. BRAWLEY said that the  next recommendation, M-2. Manufacturer                                                               
Retail License  + Manufacturer Sampling  Endorsement, is  to take                                                               
existing retail  activities and make  them into a  retail license                                                               
specific for each product type:                                                                                                 
        • Add-on retail licenses specifically for manufacturers                                                                 
          to allow limited onsite consumption and offsite sales.                                                                
             o Existing licensees converted                                                                                     
             o New retail licenses have 1:9,000 population limit                                                                
             o After 8 years, new licensees limited to only 20%                                                                 
               of sales volume in retail room                                                                                   
        • A separate endorsement for free samples.                                                                              
2:31:00 PM                                                                                                                    
CHAIR  COSTELLO said  there  is a  grandfather  provision on  the                                                               
80:20. She asked if that will be covered in the presentation.                                                                   
MS.  BRAWLEY  said it  is  called  out  in the  bullet  "existing                                                               
licensees  converted," but  it doesn't  specify  that, yes,  they                                                               
would be grandfathered from the 80:20 rule.                                                                                     
MS. BRAWLEY said that slide 26,  Proposed in SB 76: Volume Limits                                                               
for  Free Samples  from  Manufacturers,  demonstrates the  volume                                                               
limits  for free  samples.  Currently the  ounce  limit for  free                                                               
samples is not defined in  statute. The proposed ounce limits are                                                               
generally  specific to  the alcohol  equivalent for  each product                                                               
MS. BRAWLEY said slide 27,  Proposed in SB 76: Onsite Consumption                                                               
Limits for  Manufacturers, in Standard  Product Units,  shows the                                                               
proposed sales limits for on-site  and off-site consumption. They                                                               
are by product type and the  license type. Most of the limits are                                                               
the  same as  what is  already  defined in  statute, except  that                                                               
currently  the limit  is  5  gallons for  beer  instead of  5.167                                                               
gallons for beer  and cider. Also, wine currently  has no on-site                                                               
consumption limit.                                                                                                              
2:32:55 PM                                                                                                                    
CHAIR COSTELLO said  she previously asked for  information on how                                                               
these amounts compare to other  states and if the 80:20 provision                                                               
exists in other states.                                                                                                         
MS. BRAWLEY  said that research is  ongoing. Preliminary research                                                               
shows that some states have  defined ounce limits for samples and                                                               
others do not.                                                                                                                  
MS.  BRAWLEY   said  that   concludes  the   recommendations  for                                                               
manufacturers.  Moving on  to wholesalers,  she pointed  out that                                                               
wholesalers have  multiple types of  fees that they  are required                                                               
to  pay in  addition to  the license  fee. W-1.  Adjust Wholesale                                                               
License  Fees   and  Simplify  Supplier  Reporting   proposes  to                                                               
slightly  reduce the  annual business  transaction fee  for small                                                               
businesses   and  retain   the  maximum   fee  for   the  largest                                                               
businesses.  Another  proposal  is   to  streamline  one  of  the                                                               
reporting  requirements.  Rather  than  requiring  paperwork  for                                                               
every  product  line,  they  would report  the  total  number  of                                                               
product lines and would pay a fee accordingly.                                                                                  
MS. BRAWLEY  said the chart  on slide 29, Proposed  Wholesale Fee                                                               
Changes, shows the current and proposed transaction fees.                                                                       
MS.  BRAWLEY  said  in  reference  to  slide  30,  R-1.  Multiple                                                               
Licensed Premises  with a Beverage Dispensary  License, currently                                                               
duplicate licenses allow one business  to have more than one room                                                               
qualify  as  licensed  premises.  In most  cases  they  are  only                                                               
allowed  in  the  same  contiguous   building.  There  have  been                                                               
situations  allowed beyond  that,  so the  proposal defines  that                                                               
more clearly:                                                                                                                   
        • Clarify the parameters that would allow and require                                                                   
          multiple fixed counters for a Beverage Dispensary                                                                     
          license (AS 04.11.090).                                                                                               
        • Replace Duplicate licenses with Multiple Fixed Counter                                                                
        • Create a Hotel/Motel endorsement, and a Large Resort                                                                  
          endorsement, which allows additional licenses in                                                                      
          separate buildings.                                                                                                   
2:35:15 PM                                                                                                                    
MS. BRAWLEY noted  that slide 31, Proposed in SB  76: Options for                                                               
Multiple Beverage Dispensary Locations, illustrates the options.                                                                
MS.  BRAWLEY  reviewed  the recommendations  on  slide  32,  N-3.                                                               
Expand Package Store Shipping Order Options:                                                                                    
   • Allow orders under a Package Store Shipping endorsement to                                                                 
     be received in formats other than a written order from a                                                                   
     known customer.                                                                                                            
   • This allows online ordering from in-state package stores,                                                                  
     including customers in Local Option areas.                                                                                 
   • Existing requirements in AS 04.11.150(a) for ID, shipping                                                                  
     and delivery still apply. Package stores would still be                                                                    
     required to report all orders to Local Option areas in                                                                     
     Written Order Database.                                                                                                    
MS.  BRAWLEY said  slide  33, Tracking  Alcohol  Orders in  Local                                                               
Option Areas:  Current Title 4,  illustrates the  current process                                                               
for ordering alcohol in a Local Option area.                                                                                    
MS.  BRAWLEY  said R-3.  Package  Store  Onsite Product  Sampling                                                               
Endorsement would allow  package stores to offer  free samples of                                                               
their products:                                                                                                                 
        • Create a separate endorsement to allow onsite sampling                                                                
          at Package Stores.                                                                                                    
        • Limits volume per customer per day, hours of sampling,                                                                
          public advertising of sampling.                                                                                       
        • Providing free samples of products at package stores                                                                  
          is a common practice in several other cities and                                                                      
MS.  BRAWLEY said  slide 35,  Proposed  in SB  76: Package  Store                                                               
Sample  Limits,  shows that  these  are  the same  volume  limits                                                               
proposed for manufacturers.                                                                                                     
2:37:22 PM                                                                                                                    
MS.  BRAWLEY  said  R-2.  Rename  Recreational  Site  License  to                                                               
Sporting  Event  License  is  not  a change  to  the  statute  or                                                               
definition  of  this  license.  It  is renaming  it  to  be  more                                                               
accurate about the types of events it is used at:                                                                               
   • Ensure the existing statutory definition of "recreation" is                                                                
     consistently applied to Recreational Site license holders.                                                                 
   • Make a sunset provision of 8 years to review and retire                                                                    
     licenses that do not meet this definition, if not in                                                                       
     compliance with statute.                                                                                                   
   • Licenses issued outside definition was a finding in 2014                                                                   
     and 2017 audits of the ABC Board.                                                                                          
MS.  BRAWLEY said  that for  slide 37,  R-7 Standardize  Permits,                                                               
there  are  not  major  changes proposed  for  permits  currently                                                               
defined in statute or regulation.  A standard application process                                                               
is proposed for permits:                                                                                                        
        • Define all permit types in statute, not only in                                                                       
        • Fee for all permits is $50 per event day                                                                              
        • Most permits listed are already in statute or                                                                         
        • New permit: Tasting Event Permit, allowing a Package                                                                  
          Store or Manufacturer to host an event on premises, in                                                                
          partnership with a BDL [Beverage Dispensary License]                                                                  
MS.  BRAWLEY  said slide  38,  Proposed  Permits, shows  proposed                                                               
permits and whether they are currently in regulation or statute:                                                                
        • R-7F | Beverage Dispensary Caterer's Permit (AS                                                                       
          04.11.230; 3 AAC 304.685)                                                                                             
        • R-7G | Restaurant Caterer's Dining Permit (3 AAC                                                                      
        • 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                                                                       
        • R-7L | Inventory Resale Permit (Retail Stock Sale                                                                     
          License, AS 04.11.200)                                                                                                
      • R-7M | Tasting Event Permit (proposed in SB 76)                                                                         
2:38:53 PM                                                                                                                    
MS. BRAWLEY reviewed  a proposed permit in slide  39, Proposed in                                                               
SB  76: Tasting  Event Permit.  This  allows a  package store  or                                                               
manufacturer  to host  a special  tasting event  on its  premises                                                               
working  with   a  beverage   dispensary  licensee   or  beverage                                                               
dispensary licensee  tourism. Food must  be served and  the event                                                               
may last up to four hours.                                                                                                      
MS.  BRAWLEY  said   that  for  slide  40,   P-3.  Retire  Public                                                               
Convenience Process; New Options for  REPLs, the proposal is that                                                               
the Public  Convenience Statute,  which is a  way of  obtaining a                                                               
restaurant or eating place license  outside of population limits,                                                               
is repealed:                                                                                                                    
   • Repeal Public Convenience statute.                                                                                         
   • Convert all existing Public Convenience license holders to                                                                 
     standard, fully transferrable REPLs.                                                                                       
   • Create a Seasonal Restaurant Tourism License.                                                                              
   • Allow qualifying municipalities to petition the ABC Board                                                                  
     to increase the number of REPLs available in their                                                                         
MS. BRAWLEY  said slide 41, Public  Convenience Petition Process:                                                               
Current  Title  4,  illustrates the  current  Public  Convenience                                                               
process in Title 4. The  process involves gathering signatures on                                                               
a petition  and submitting  the petition  and application  to the                                                               
board. There  is no  definition of  public convenience,  and this                                                               
has  resulted   in  more  restaurant  licenses   issued  in  some                                                               
communities that otherwise would not have that many.                                                                            
MS.  BRAWLEY said  slide 42,  Proposed in  SB 76:  Convert Public                                                               
Convenience  Licenses  and  Applications, shows  one  replacement                                                               
process if  the Public Convenience License  is repealed. Existing                                                               
licenses  will convert  to Restaurant  or Eating  Place Licenses.                                                               
The main  advantage is that  Public Convenience Licenses  are not                                                               
transferable by  location or owner.  Converting these  to regular                                                               
Restaurant or Eating Place would give licensees that privilege.                                                                 
MS. BRAWLEY said slide 43,  Proposed Seasonal REPL Tourism, shows                                                               
that  REPL   Tourism  License  would  be   available  in  smaller                                                               
communities only. It  would not be subject  to population limits,                                                               
but  there is  a  formula that  determines  the number  available                                                               
based on the number of visitors:                                                                                                
   • Seasonal restaurant license                                                                                                
   • Available in smaller communities (< 20,000 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                                                                     
MS. BRAWLEY  said slide 44,  Proposed in SB 76:  Local Government                                                               
Petition for Additional  Restaurant Licenses, illustrates another                                                               
Public Convenience  License replacement. Instead of  allowing for                                                               
individual applications  to be  considered outside  of population                                                               
limits, first-class  cities and unified municipalities  will have                                                               
the ability  to petition the  ABC Board for an  additional number                                                               
of restaurant  licenses. They need  to demonstrate they  have the                                                               
enforcement  capability  to  manage any  potential  impacts  from                                                               
those licenses  and they have sufficient  non-resident population                                                               
to support  a market for that  type of license. If  the ABC Board                                                               
approves  the  petition and  grants  new  licenses, someone  goes                                                               
through the normal application process to obtain a license.                                                                     
2:42:46 PM                                                                                                                    
MS. BRAWLEY  said slide  45, N-7. Allow  Relocation of  a Package                                                               
Store from  Borough to  City, is  about a  change to  a mechanism                                                               
that is  already in law allowing  relocation of a bar  license or                                                               
package store:                                                                                                                  
   • Amend AS 04.11.400(k) to allow transfers of both BDL and                                                                   
     Package Store licenses from a borough to a city within the                                                                 
   • Currently, BDL relocations are allowed in boroughs with at                                                                 
     least 60,000 population.                                                                                                   
   • SB 76 would make relocation available in boroughs with at                                                                  
     least 50,000 population and currently operating licenses                                                                   
     that exceed population limits.                                                                                             
MS. BRAWLEY said slide 46, Proposed  in SB 76: Option to Relocate                                                               
Some  Licenses  from  a  Borough  to  a  City,  illustrates  this                                                               
concept.  Licenses  in a  borough  could  be relocated  from  one                                                               
community to another.                                                                                                           
MS. BRAWLEY said slide 47  illustrates how many licenses would be                                                               
available.  Each borough  that would  qualify under  this section                                                               
have  more  than  their  normally   allowed  number  of  licenses                                                               
MS.  BRAWLEY  said  that slide  48,  RB-1.  Strengthen  Reporting                                                               
Requirements for  Municipal Enforcement, relates to  license fees                                                               
for  municipal governments.  Municipal  governments receive  half                                                               
the license fees  for licenses in their area,  which is currently                                                               
known as  a refund. SB 76  renames it as an  allocation, which is                                                               
more   accurate,    and   strengthens   the    requirement   that                                                               
municipalities report how those funds are being used:                                                                           
        • Include in statutory requirements (AS 04.11.610) that                                                                 
          municipalities  submit  quarterly  reports on  Title  4                                                               
          enforcement and education activities  to the ABC Board:                                                               
          violations,     educational    presentations,     other                                                               
          activities related to alcohol control.                                                                                
        • Municipalities with local law enforcement receive a                                                                   
          matching allocation ("refund") of license fees                                                                        
          collected within their jurisdiction. Funds intended to                                                                
          be used for Title 4 enforcement.                                                                                      
2:44:49 PM                                                                                                                    
MS.   BRAWLEY  said   that   slide  49,   Proposed   in  SB   76:                                                               
Accountability for  License Fees Allocated to  Local Governments,                                                               
illustrates this  concept. Reporting is required  in statute, but                                                               
because  it is  not well  defined, it  is not  consistently being                                                               
followed. It gives  the department the ability  to withhold those                                                               
funds if they do not receive the reports.                                                                                       
MS. BRAWLEY said  that for slide 50,  N-12. Transition Provisions                                                               
for  Existing  Licensees,  the  goal   is  not  to  disrupt  what                                                               
businesses are doing  now but to smoothly transition  to this new                                                               
system, which  mainly involves  renumbering licenses  or renaming                                                               
   • Define process for current licensees of certain types to be                                                                
     converted to equivalent license(s) in the new system.                                                                      
   • Also define process of converting applications for repealed                                                                
     or renumbered license types.                                                                                               
   • Included in Transition sections of SB 76 (end).                                                                            
   • See table on page 61 of Report for details.                                                                                
MS. BRAWLEY said  slides 51-53 show examples  of current licenses                                                               
and  applications   completed  as  of  January   1,  2020,  being                                                               
2:46:41 PM                                                                                                                    
MS. BRAWLEY said that concludes the presentation.                                                                               
2:46:55 PM                                                                                                                    
CHAIR COSTELLO turned to public testimony.                                                                                      
2:47:06 PM                                                                                                                    
LEEANN  THOMAS, member,  Alaska  Cabaret,  Hotel, Restaurant  and                                                               
Retailers  Association  (CHARR),  Juneau,  Alaska,  testified  in                                                               
support of  SB 76. She said  many people worked for  six years to                                                               
make  improvements  to Title  4.  She  represents Juneau  alcohol                                                               
retailers,  some of  whom are  in the  room. Everyone  is excited                                                               
about the  rewrite of Title 4.  There has been no  rewrite for 30                                                               
years. This will  make things better. The  alcohol industry wants                                                               
and needs Title 4 laws to make sense and work for the industry.                                                                 
2:49:06 PM                                                                                                                    
DANIEL  CHEYETTE,  Director,   Bristol  Bay  Native  Corporation,                                                               
Anchorage,  Alaska, testified  in support  of SB  76. He  said he                                                               
wanted  to  speak  in  particular  about  Section  57,  which  is                                                               
important to the flyout fishing  lodge industry. Section 57 would                                                               
add outdoor recreation  lodges to the list of  license types that                                                               
a  Local  Option  community can  exempt.  Specifically,  in  2011                                                               
Aleknagik voted  to be a  Local Option community, but  they voted                                                               
to exempt outdoor recreation lodges. There  are a few in the city                                                               
limits,  and  they  have  contributed   to  the  economy  of  the                                                               
community with bed  and sales taxes. This past  year they learned                                                               
that the  ABC Board was  contemplating not renewing  the licenses                                                               
for those lodges because they  thought the statutes did not allow                                                               
for an exemption for outdoor  recreation lodges. Section 57 of SB
76 would  add outdoor  recreation lodges to  the list  of license                                                               
types that could be exempted.                                                                                                   
2:52:10 PM                                                                                                                    
IDALIA FRAZIER,  representing self,  Homer, Alaska,  testified in                                                               
support of SB  76. She stated that  she is in full  support of SB
76. "It is a fair and much-needed bill, she said.                                                                               
2:52:27 PM                                                                                                                    
MATT  JONES,  co-owner, Moose's  Tooth,  Bear  Tooth, and  Broken                                                               
Tooth Brewing  Company, Anchorage,  Alaska, testified  in support                                                               
of 76. He described the current  Title 4 statutes as "a mess." He                                                               
and his partners  have multiple licenses. Every time  they have a                                                               
renewal, everyone  at AMCO  is confused  and no  one can  come up                                                               
with a quick answer  on what they need to do.  He opined that the                                                               
rewrite represented  in SB  76 will be  very helpful.  He related                                                               
that they are  a brewpub and as a brewpub  they have a production                                                               
limit. For the  last ten years the business has  not been able to                                                               
grow the  brewing part of  the business  because of the  limit on                                                               
production.  If Title  4  is  rewritten they  will  no longer  be                                                               
considered a  brew pub  but rather  a brewing  manufacturer. That                                                               
will  allow them  to greatly  increase  the brewing  side of  the                                                               
business and grow the number of jobs at the brewery.                                                                            
2:54:26 PM                                                                                                                    
SENATOR MEYER  asked if the  Moose's Tooth has a  full dispensary                                                               
MR.  JONES   confirmed  that  all   their  locations   have  full                                                               
dispensary  licenses   that  come  with  the   bundle  of  rights                                                               
associated with the beverage dispensary license (BDL).                                                                          
2:56:04 PM                                                                                                                    
HILLARY SCHAEFER, representing self,  Fairbanks, Alaska, said she                                                               
and her partner  own a full dispensary license  and are concerned                                                               
that  the  bill  will  benefit   manufacturers  and  not  benefit                                                               
beverage  dispensary license  holders.  They  have experienced  a                                                               
reduction in gross  sales since tasting rooms  opened. The after-                                                               
work crowd isn't showing up between 5  p.m. and 8 p.m. or if they                                                               
do they  have been  overserved at the  tasting rooms,  which puts                                                               
them at a heightened liability.  She asked the committee to limit                                                               
the amount in tasting rooms and the hours.                                                                                      
2:57:45 PM                                                                                                                    
JEFF JESSEE,  representing self, Anchorage, Alaska,  testified in                                                               
support of  SB 76.  He said he  was the co-chair  of the  Title 4                                                               
Review  Steering Committee  and  Licensing  Committee. One  issue                                                               
over the  years was  interpreting the  statutes during  ABC Board                                                               
meetings. It  was obvious  that Title  4 was  well overdue  for a                                                               
comprehensive overhaul.  Industry and public health  found common                                                               
ground. They found that violations  often resulted in misdemeanor                                                               
charges which  put people  at considerable  legal risk  when what                                                               
they  wanted to  do was  educate people  into complying  with the                                                               
law.  SB 76  changes  that to  a fine  system  that holds  people                                                               
accountable and  focuses on education and  remediation. They made                                                               
accommodations on rules  on tasting rooms and  internet sales, so                                                               
they would not have a negative  effect on public health. There is                                                               
also more  focus on  education. SB  76 achieved  an unprecedented                                                               
partnership between industry and public health.                                                                                 
3:00:59 PM                                                                                                                    
ANGELA   COX,   Vice   President,  External   Affairs,   Rasmuson                                                               
Foundation,  Anchorage, Alaska,  testified in  support of  SB 76.                                                               
She  said the  foundation has  invested for  60 years  in various                                                               
programs and  facilities in Alaska  dealing with  sexual assault,                                                               
domestic violence, child abuse and  neglect, and homelessness. It                                                               
is a  founding member of  Recover Alaska. Through  Recover Alaska                                                               
they work to  identify and address root problems of  alcohol as a                                                               
challenging  social  problem.  SB  76 will  be  a  step  forward:                                                               
internet  sales  should be  regulated;  it  would increase  fees,                                                               
providing more  resources for education and  enforcement of Title                                                               
4; and it would reduce alcohol  access to youth. Rasmuson and its                                                               
partners  have  dedicated  hundreds  of hours  to  this  process.                                                               
Rarely  have so  many  stakeholders come  together  to tackle  an                                                               
issue like this.                                                                                                                
3:03:50 PM                                                                                                                    
RICHARD M.  ROSSIM, General  Counsel, Alyeska  Resort, Anchorage,                                                               
Alaska, testified  in support  of SB 76.  He participated  in the                                                               
rewrite  of Title  4 statutes.  Everyone isn't  happy with  every                                                               
aspect, but it is a good  compromise. He provided examples of how                                                               
the new  statute helps the  Alyeska Resort. In many  other states                                                               
package stores  can offer free  samples. The statute  would allow                                                               
that and  a tasting event by  a package store. It  introduces the                                                               
concept of unfair trade practices  regulation. These exist at the                                                               
federal level  but are  not enforced. It  is patterned  after the                                                               
federal  statutes. The  process  for ordering  wine  from out  of                                                               
state is not perfect but a step in the right direction.                                                                         
3:07:15 PM                                                                                                                    
DYLAN  DICK,  representing  self, Kodiak,  Alaska,  testified  in                                                               
support of SB  76. He stated that he runs  the restaurant Henrys                                                                
in Kodiak,  is a  CHARR member, and  he supports SB  76. It  is a                                                               
once in  a generation opportunity  to fix  long-standing problems                                                               
with  the  alcohol  statutes.  The   bill  provides  clarity  for                                                               
everyone in  the industry regarding  the penalties and  tries not                                                               
to harm current licensees. He  listed various penalties including                                                               
staff changing prices  twice in a week which  could be considered                                                               
a crime instead of a minor  error or something warranting a fine.                                                               
For the first  time it will be  not illegal for the  bar owner or                                                               
managers  to be  in the  bar  updating books  or doing  inventory                                                               
after closing time.                                                                                                             
SENATOR GARDNER asked him to  expand on the comment that changing                                                               
prices could be an inadvertent violation                                                                                        
MR.  DICK  said his  understanding  is  that in  Alaska  changing                                                               
prices twice within a week is  a violation. He suggested that Mr.                                                               
Fox could clarify further.                                                                                                      
3:09:25 PM                                                                                                                    
DALE  FOX,  President,  Alaska  Cabaret,  Hotel,  Restaurant  and                                                               
Retailers  Association (CHARR),  Anchorage,  Alaska, stated  that                                                               
the current  pricing and marketing  statute, which is  termed the                                                               
happy  hour  law,  says  a  bar cannot  change  prices  within  a                                                               
calendar week.  One of the  interesting things about  the current                                                               
law is that  nobody knows what a  calendar week is. It  has to be                                                               
looked  up. He  isn't  sure what  it is,  but  that's the  point.                                                               
Breaking that  law is a class  A misdemeanor, which calls  for up                                                               
to a year in jail and a $10,000  fine. SB 76 fixes that by saying                                                               
that  pricing  is any  seven  days.  If  a  price is  changed  on                                                               
Wednesday, it  can be  changed the next  Wednesday. With  the new                                                               
law, a mistake wouldn't put someone in jail for a year.                                                                         
SENATOR GARDNER asked if he  knew the rationale for prohibiting a                                                               
bar from changing prices within a calendar week.                                                                                
MR.  FOX said  the idea  in the  1980s was  to prevent  bars from                                                               
lowering prices  to gain customers  for happy hour.  "They didn't                                                               
want the price from 5-6 on Mondays to be cheaper, he said.                                                                      
SENATOR  MEYER  asked if  the  [Juneau  restaurant] Hangar  could                                                               
offer half price drinks on Fridays.                                                                                             
MR.  FOX answered  no.  Under  current law,  a  bar  that runs  a                                                               
special must  offer that  special for a  calendar week.  Under SB
76, the bar must offer the special for seven consecutive days.                                                                  
3:12:00 PM                                                                                                                    
FREDRICK KASNICK,  representing self, Juneau, Alaska,  said he is                                                               
the  owner  of  the  Island  Pub in  Douglas.  He  asked  if  any                                                               
provisions  in  the   bill  have  a  ratio   or  percentage  that                                                               
manufacturers would  be allowed to  sell at tasting  rooms versus                                                               
on a wholesale or retail basis.                                                                                                 
MS. BRAWLEY said  that section is defined  for manufacturers that                                                               
are  not  operating  currently  as  the  current  ones  would  be                                                               
grandfathered. It  is in Section 9  It would be AS  04.09.310 for                                                               
breweries and .320 for wineries and .330 for distilleries.                                                                      
MR. KASNICK asked what that percentage is.                                                                                      
MS. BRAWLEY said  that for the manufacturers that  do not qualify                                                               
for the grandfather,  after eight years they would  be allowed to                                                               
sell up to  20 percent of their total production  sales in Alaska                                                               
through  that  retail   license.  This  would  not   apply  to  a                                                               
restaurant or a package store or another type of retail license.                                                                
MR.  KASNICK asked  if  that means  that  that retail  percentage                                                               
would be within their premises.                                                                                                 
MS. BRAWLEY said yes.                                                                                                           
MR.  KASNICK  asked  if  the  manufacturers  that  are  operating                                                               
currently would be grandfathered for eight years.                                                                               
MS.  BRAWLEY  clarified  that the  licenses  that  are  currently                                                               
operating  would be  permanently grandfathered.  These provisions                                                               
would apply to licenses that  are issued after the effective date                                                               
on January 1, 2020.                                                                                                             
MR.  KASNICK  asked  if  a   currently  operating  distillery  is                                                               
unlimited in its ability to retail product on their premises.                                                                   
MS. BRAWLEY  replied she  understands that there  is no  limit on                                                               
total sales. The only limits are the per person per day sales.                                                                  
MR.  KASNICK  observed   that  the  bill  proposes   to  limit  a                                                               
distillery to three ounces per  visit. He offered his perspective                                                               
that  distilleries  are  basically bars;  they're  selling  three                                                               
drinks per  person a night, which  is what most people  drink. He                                                               
doesn't feel it's  right that he pays $200,000 for  a license and                                                               
distilleries  pay about  $1,000 and  they're operating  as a  bar                                                               
under this proposal.                                                                                                            
MR. KASNICK noted that the previous  page had a proposal for free                                                               
drinks  and to  him  that  ratio of  free  drinks  should be  the                                                               
retail. A  tasting room down  south at  a winery might  charge $5                                                               
for  five quarter-ounces  glasses, but  these [distilleries]  are                                                               
basically able to sell drinks  and, under the grandfathered ones,                                                               
they're able to sell unlimited drinks.                                                                                          
CHAIR COSTELLO said one of  the questions the committee has asked                                                               
the sponsor  to provide is a  comparison on the amounts  in other                                                               
states, so the  members can be more aware of  where Alaska falls.                                                               
That's something they will be looking at.                                                                                       
SENATOR MICCICHE clarified that SB  76 does not change the three-                                                               
drink limit that exists in  statute. The grandfathering provision                                                               
is  about the  80:20  rule, which  remains to  be  somewhat of  a                                                               
problem between the brewers, particularly, and the other groups.                                                                
3:18:22 PM                                                                                                                    
CHAIR  COSTELLO stated  her  intention to  hold  SB 76,  awaiting                                                               
amendments from the sponsor.                                                                                                    

Document Name Date/Time Subjects
SB 76 - Senate Labor and Commerce Presentation Two 3.22.2018.pdf SL&C 3/22/2018 1:30:00 PM
SB 76
SB76 Support Document - Revenue Sharing.pdf SL&C 3/22/2018 1:30:00 PM
SB 76