Imagine you’re starting a business in a new field. For years, you work to hone your product. You confer with other businesses and entrepreneurs. You invest time and money into making your dream a reality. You work with legislators to ensure your business plan is in keeping with the law. Finally, you open — and you’re doing well.
Then you get a letter from the board that regulates your business. They say that in spite of what the lawmakers who crafted the legislation in question say themselves, your business may not be functioning legally. All your years of work are threatened.
That is what has happened to Alaska’s nine distilleries. Here in Juneau, that’s Amalga Distillery, which opened in April of this year.
The Alcohol and Beverage Control Board has in the past several months been seeking to clarify rules about how distilleries can serve their “product,” as the law calls it. At issue is whether or not distilleries are allowed to make and serve cocktails in their tasting rooms. When, three years ago, state legislators wrote the law the ABC board is interpreting, they’ve explicitly said they never meant to disallow cocktails.
“We can assure you there has been no misinterpretation of the statute by the distillers and they are acting in accordance with the Legislature’s intentions,” eight state senators and representatives who sponsored the bill wrote the ABC board on Aug. 15 of this year, three days after distillers were first told to stop serving mixed drinks. (Alaska’s distilleries are currently serving cocktails as the latest iteration of this saga plays out.) “Considering that many of the products sold by the distillers are intended to be mixed with other ingredients before consumption, it was assumed any sales or free samples would likely be mixed with other ingredients as well… We would also draw your attention to the well-publicized celebration ceremony of the new statute, when samples of mixed drinks using Alaska’s craft spirits were provided without question.”
The problem, says Alcohol and Marijuana Control Office Director Erika McConnell, is that ABC board members aren’t allowed to interpret the law through legislators’ intentions: they must consider only the law, which states that distilleries are allowed to serve three ounces of their product to a tasting room customer in a day. Cocktails weren’t explicitly mentioned, even by distillery owners in their letters of support for the law. That, she says, means they must serve their alcohol straight.
The ABC board’s review of the law was spurred by an anonymous complaint from a bar owner in Juneau. Some bar owners have concerns about distilleries being competition. We understand that. After all, liquor licenses are expensive. The going rate in the capital city, because of the limited number of liquor licenses the state makes available and the high demand for them, is around a quarter of a million dollars. That’s not a cheap business investment.
But a still isn’t cheap, either. Nor are years of honing recipes for your locally made products. Nor is remodeling a former office space to create a distillery and tasting room that was in line with every understood interpretation of state law, and legislators’ stated intent when they wrote it.
What’s more, distilleries differ from bars in key ways. Tasting room customers are allowed to consume no more than three ounces of the alcoholic product per day (if you’re drinking the product in a cocktail, it’s usually two drinks.) There are no chairs allowed at a distillery bar. There is no entertainment allowed (though the board has stalled on clarifying what exactly comprises “entertainment.”) And distilleries, by state law, must stop serving alcohol at 8 p.m. That’s pretty different from every bar we’ve ever heard of.
One of the changes the board is currently considering — that distilleries be forced to serve mixers in a separate glass — is a ludicrous example of form over function. The only difference between an employee and a customer mixing a drink is that the employee would likely do it better — and that businesses like Amalga Distillery have already invested money and resources in perfecting their pre-mixed gin and tonic, not to mention years of work in crafting recipes that best showcase their products. If it’s legal for distillery employees to serve a customer a glass of cucumber water (one of Amalga Distillery’s current mixers) there is no logical reason it should be illegal for them to serve it mixed with their legal gin.
McConnell has written that “… If the legislative intent was truly different [from preventing distilleries from serving cocktails] the legislature will need to amend statute to provide clarifying language.”
Even if the already-burdened Alaska legislature found time and sufficient momentum to take up the issue next session, what are distilleries supposed to do in the meantime? Changing an interpretation of a law that has existed for several years — an interpretation on which people have staked a significant part of their livelihoods — amounts to yanking a state-woven rug out from under a business owner’s feet. It is capricious, discourages innovation and is damaging to Alaska’s entrepreneurs.
The ABC Board is accepting comments about its proposed regulation changes for distilleries through Dec. 29 at 4:30 p.m. We encourage you to write the board and to make your voice heard.
Submit your comments to amco.regs@alaska.gov or 550 West 7th Avenue, Suite 1600, Anchorage, AK 99501. You can also submit through the Alaska Online Public Notice System. More information is available at https://aws.state.ak.us/OnlinePublicNotices/Notices/View.aspx?id=187850.
