Community Perspective

Alaska needs a new twist on alcohol licensing

In 2017, the Legislature heard a bill in Juneau regarding the installation of residential satellite dishes. It would have allowed a technician to install a satellite dish without getting signed off by a licensed electrician. The reasoning was that there were limited licensed electricians in rural communities and these dishes were safe to install.

The International Brotherhood of Electrical Workers came out in opposition since it infringed on the domain of their licensed members. The bill never went anywhere.

Another bill proposed buying back a number of limited-entry fishing permits in Cook Inlet. The reasoning was that the number of fish caught was declining and that buying back a certain number of permits would protect the livelihoods of commercial fishermen.

The reason for these examples is to highlight the real issue behind the tasting room issue: the value of licensing. Licensing affects many professions: doctors, electricians, hairdressers, teachers, optometrists, etc. We see bills affecting all of them. Alcohol licensing also affects customers who just want to go out and have a drink.

Alaska has always based its number of beverage dispensary licenses on population. The practice, since before statehood, was to address alcohol overconsumption by limiting the number of retail businesses that can sell alcohol.

Every community has reached its quota, so the state cannot issue any more. That’s why they command such a high price in the private marketplace. Alaska is a quota state, and we have reached our quota. There are 17 quota states in the U.S.

This system changed some years ago when local manufacturers of beer and spirits obtained the ability to sell drinks on their premises without having a traditional beverage dispensary license. The idea was to allow these businesses to offer “samples” of their products in tasting rooms and increase their profits.

Now, some manufacturers make most of their profits from selling beverages and are quite busy as social meeting places. This leaves the owners of traditional liquor licenses feeling encroached upon since they have paid handsomely for the privilege of selling drinks and for a share of the market.

Fairbanks has about 40 beverage dispensary licenses. All of those licensees believe the competition is limited to the other dispensary license-holders. 

Currently, however, there is no limit to the number of tasting rooms allowed. Under the new proposed alcohol laws there could be up to 40 tasting rooms in Fairbanks. The beverage dispensary license-holder could have at least 79 competitors, possibly more.

Some have suggested that the new tasting room license-types pay a big fee much like the traditional license owners pay on the private marketplace. But this is missing the point. It’s not the total spent that’s the issue: It’s about buying a “slice of the pie.” If there are a limited number of drinkers, the pie gets cut into smaller and smaller pieces.

It’s arguable that people who go to tasting rooms are not the same people who go to bars. There is some truth to this. However, underlying competition for customers is still there. Some bars and restaurants have evolved with changing tastes, adapting to the new style that customers are demanding.

For example, one establishment in downtown Fairbanks sells only beer on tap; it looks much like a tasting room except they don’t make beer but instead use a beverage dispensary license. Another establishment has an Airstream trailer on its premises and uses a beverage dispensary license to cater various functions around town, selling drinks much like a food truck. These aren’t your grandfather’s bars.

I know as a former licensee and business owner that it’s dangerous to wade into this debate. I have certainly felt the repercussions. Beverage dispensary license owners don’t want to say anything publicly for this same reason.

People support tasting rooms because they’re popular, and rightly so. They’re nice places, and people like to have options for drinking.

If you’ve ever been to Portland, Oregon, you might’ve noticed that every breakfast establishment offers a full bar menu. In Asheville, North Carolina, there’s a brewery tasting room on every corner. These places are popular and business is booming. These states aren’t quota states, and liquor license laws are more relaxed. As far as quota states go, Alaska tasting room laws are among the least restrictive.

Maybe it’s time for Alaska to look at a new approach and no longer be a quota state. Let’s join the 33 other states that allow a more open market and have less-prohibitive alcohol laws.

Many states require food sales in order to sell alcohol and local option would still be possible. We would have to compensate those who have bought a license with a buyback program, but this change would open new markets, increase tourism, and boost businesses. This will create a level playing field and maybe end the current debate we’re having. It’s time for a new twist.

Rep. Adam Wool is a Democrat representing District 5 in the Alaska House of Representatives.

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