House Rules

First up is house bill to fifteen eighty nine representative Richardson you're recognized please state your name for the record then you may begin. Good after. Of my bill is pretty simple what it does it strikes current language of that opens it up for other businesses to expand right now there are a total of fifteen liquor distributor licenses in the state. Of those fifteen ten of a more active five of more inactive some of the challenges that we have are those that are inactive of for other individuals to get into this business there they in some case they try to buy those in active licenses but because there's none being allowed in the State of there being so in some cases for exorbitant amount of money of upwards of I know of some cases over a half a million dollars for license because there are no more that are here I think this bill striking this language will allow businesses smaller distributors to expand our portfolio to expand their business and continue to give back to the communities that there in and with that I'll take questions. We have any questions. Representative Dalby you're recognized thank you madam chair any opposition on your bill I'm aware of one would you share that with this please of and I just forgot the name I'm sure they're here of. Yeah I can't I forgot I forgot and any local rugby vote there you go. Thank you he speak against it he'll be speaking against the bill. But there are no I'd best only opposition I know they're larger distributors within this state that are neutral. Are there any other questions. Seeing no other questions Mr Robbie Vogel you're welcome to come speak against the bill. Please state your name and who you're with and then you may begin. Hello. My name is Robbie Vogel my wife and I are founders of Arkansas wine and spirits we have a whole cell maximum permanent. Issued by the state of Arkansas representative Richardson has been very available to discuss this bill that he has brought before you all my concern is. Several. The first is we my wife and I understood that many years ago the legislature cap the number of permits that were issued in the state. As a result we invested in opening a new business obtaining the permit paying the permit fees. And then were able to finally invest in our business after we invested in our business we work for about five years to. Get it to where it is now we have about ten people all of a make. Salaries that are well over fifty thousand dollars and we go to many places in the state we represent a small fraction of the sales in the wholesale wine and spirits. Segment of our business we're very fortunate to be part of the industry in other ways through our mall permits so we have the leverage that we need to be a functioning company my fear is that if this bill passes and out of state interests come into the state who are multistate operators then we will our business that's homegrown here in the state of Arkansas will. Evaporate because out of state interest will come into this state. They will bring with them their brats in band with of product in portfolios that we do not have access to our state is very very very. Helpful to the three tier system and as such not all suppliers want to come to the state of Arkansas but we get request every day for. Products to be brought into our distribution network it's hard to keep those products happy because they have a high carrying cost we have to buy the inventory with cash we have to pay state excise tax upon receipt of the product and then we have to wait until the retailers are willing to buy it from us so. There's a bill coming I think before you all soon H. B. seventeen sixty from representative Cavenaugh that will remove the residency requirement of wholesale PERMITTEES I think my ask is simply can we as a legislative body deferred this amendment or bill to the next session after we learn the consequences of not having a residency requirement my fears is that our business will no longer exist in a couple years because more permittee's will flood the state they'll come and with their multistate operating network and they'll have a lot more band with then the small wholesaler like myself who the spent the better part of a decade trying to grow business from zero revenue to about four million dollars in revenue so thank you Richardson for your taking my calls and being very candid with me about the opportunity before you and I any questions are there any questions. Saying no question thank you for thank you appreciate. Representative would you like to close for your bill yes ma'am I'm close from a bill and ask for a good vote. Thank. What are the wishes of the committee. Until tomorrow so we'll hold this till tomorrow you're welcome to come back to the table again tomorrow and will vote tomorrow thank you ma'am thank you Sir. We are passing over house bill fifteen thirty one without objection we're gonna take up house bill seventeen fourteen representative Perry you are recognized to present your bill state your name for the record then you may begin. Thank you madam chairman mark Perry District sixty six thank you committee for a allow me to jump out of order house bill seventeen fourteen is a Is a bill to amend a law for a microdistillery bility to have a microdistillery wholesale only sales in a dry county so currently we're kind of in a weird area it's great township word weirded dry area in a wet County. Are you a take questions yes I'm ready for questions are there any questions seeing no questions. Making sure no. I don't see anyone signed up to speak against the will bill what is the will of the committee. Motion do pass all in favor say aye. I was no congratulations your bill is passed thank you Committee manager. We're gonna go back up to House bills sixteen eighty five representative Garner you are recognized to present your bill state your name for the record then you may begin. I understand you have an amendment they're passing out the amendment right now if you'll give us you go and state your name but give us a minute to see the amendment before you begin thank you ma'am Denise Garner representative district twenty. At you also have a hand out that you would like I stand out yes. Definitely. Representative garner since we've got a large. Amendment Amendment yes and the and something to pass out. Could we skip you to the side for just a minute let us come back to you and let me go back let me without objection go down the house bill seventeen twenty five. Seventeen twenty five representative Johnson. And this will give us a little bit of time to get all of our stuff on this to represent Garner thank you so much ma'am. Recognize your self for the record and then you may begin thank you madam chairs representative Lee Johnson District forty seven. And I have here with me a great selections back control. I'm Greg Leding director of Arkansas tobacco control. You may begin members are recognized as kind of a long billowing walk you through some things first of all what this bill is doing initially it's just moving some existing code out of title twenty six in the title twenty so currently there are some to back legislation if you turn to the back of the bill the last few pages of the bill you'll see legislation being struck. Out of Total twenty six that legislation is being moved with some clean up language tied into it into the first or one. Three four pages five pages of the bill so right now that leads that laws and tax code probably belongs better in regulatory codes the first part of the this bill what we're doing is moving some current statute out of one place into another and then some clean up clean up language in there as well start on the bottom of page five. The next five through. Looks like. Five through twelve something like that this is some new statue to recruiting and I want to tell you what we're trying to do with this the first thing we're doing is we're we're trying we're trying to make the staff. Less appealing to use this or one of the things we're doing is trying to control the advertising on the cigarettes or making it specific that you can't characterize the secret products vapor products as candy flavored ice cream flavored brownie flavored you can't characterize these as some sort of can be it doesn't change the laws regard to flavoring but how you advertise if the flavorings in an effort to try to prevent this from misleading young consumers the other thing we're doing this important is right now there's there's really very little in the way of regulation on the types of products can be so we're creating a registry within tobacco control to require manufacturers to register the products they sell and that they'd be approved by FDA so what we're trying to do here is say look if you're gonna celebrate for product in Arkansas it needs to be FDA approved and we're gonna have a R. sum to back control keep a list of those products there will be a fee assessed to the manufacturer an initial fee of a thousand dollars then the annual fee of five hundred dollars to help pay for the cost to keep up this registry and then of course they'll be a fine as well small find can be assessed if someone's in violation of product possession with regard to this list we do give them some time to comply with this regulation once this goes into effect and I would be happy to try to answer any questions referred to my friend here with the Arkansas tobacco control. Are there any questions representative Cavenaugh you're recognized thank you madam chair. You caught my attention when he said they have to be FDA approved are there any FDA approved site products. There are some now others I think it's my understanding there's quite a few that's in process of being approved of there's some that are already approved on the market now. Are we selling the ones that aren't approved. Currently yes and how many would we actually be able to sale that are FDA approved. I think right now there's probably. There's there's a handful I'm not sure exactly how many that are approved and there there's several others that are in process of approval and this bill here allows if they've already applied for the premarket approval they can be on our directory until such point is there denied. So if they if they've already applied and started that approval process they could be on our directory and be sold until such point they were denied okay thank you. Are there any other questions. Representative. Ferguson you're recognized thank you madam chair representative Johnson one quick question you talked about certain flavors not being able to advertise of course you know it's cigarettes they have a tacit menthol so is menthol going to be one of the flavors not no it's the specific things that replicate as I understand it to top products not specifically meant all. That is correct it's it's strictly of items that would be appealing to kids okay thank you thank you madam chair. Are there any other questions. Saying no other questions we have a. Scalps does. And please introduce yourself for the record and then you may begin. Hello my name is Scott Stubbs I'm with trippers Babe and hemp. I'm here today speaking against seventeen twenty five I'm in Arkansas license vapor retailer and manufacturer my husband and I have been manufacturing vapor products and helping our community switch from cigarettes to vapor for eight years. we have no problems with the marketing and advertising restrictions contained in this bill we agree with those that's something we supported for since we started our stores I have to request for simple changes to this bill to make it better for small businesses in our state the first is to exempt in state E. liquid manufacturers they're Littler literally only a few of us left but I'm aware of that manufacture E. liquid in Arkansas and we already obtain an E. liquid manufacturer permit from the ATC and are already under eighty C. oversight our manufacturing and safety standards are already inspected and we already pay and you will permit fees. The second is on page nine after line twenty seven to add the following that the manufacturer has refiled with FDA's recommended corrections on in other states this bill's language is been used to kick out of products when the FDA has not denied but is ask you to make a correction for a simple clerical error. Are the PMC a process it's S. arduous three to six year process I'm in the middle of it and it consists of multiple refusals to accept or a request request by the FDA to refile this is normal even for large companies with deep pockets half of all the liquids would fall under this category with a technically negative action by the FDA and would be forced out of the directory when an eventual approval is entirely possible refusal to follow actions by FDA our company by letter encouraging companies to reapply with Concerning elections where our agency is not privy to their inner workings of approval process of this is going to burden our state agencies by trying to enforce federal regulations that are changing all the time. It honestly is going to create a nightmare of paperwork and man hours trying to enforce federal regulations that only big tobacco has an interest in enforcing. Many of you know how active our members have been in policy making process we volunteered to have our souls regulated by partnering with HTC so far it has been a very open relationship and we've been able to help them accomplish anything that wanted to if the intent is to impact illegal youth usage we would prefer to see a twenty one and up establishment rule where adult only stores can more stringently keep these products out of the hands of youth all this does is create a directory and inevitably the federal rules will change and then the state will never match with the feds are doing I will be paying double the license fees to the state while still cutting through federal red tape with my own PM TA the PMC a process is a convoluted process and it's constant back and forth the way this is written even though I'm still in the review process I could be sent a letter buyer R. J. Reynolds the day after this passes to take my products off the shelf because I prefer you I received a refuse to file with the FDA with suggested corrections I'm happy to answer any questions and thank you for allowing me to speak here today thank you are there any questions. Representative Wardlaw you're recognized. Just a quick easy question have you are contacted sponsor and had to sponsor respond to you to us around and go over these amendments I actually just learned about this bill yesterday at three o'clock in the afternoon but we spoke short briefly before the meeting here today. Manager I have a little leeway yes Sir you're recognized I think since rules meeting tomorrow at noon normally we meet once a week basis we are meeting tomorrow noon an open schedule meeting. Doctor Johnson representive Johnson would you be objective to meeting with this lady and working through I mean I'm not saying take everything she wants but maybe there's a compromise here. Okay what I was trying to say is that there's a lot of parties to put some effort into this bill it's difficult for me to unilaterally say I can give or not give on any issue you know I'm always happy to visit with anyone that's always but not but I don't think I'm asking you to give in all right even amid I'm just sat down and worked through some of it because some of it sounds reasonable some of it I can agree with you that probably doesn't need to be included I think to make the Committee happy we are at the last hour and we do have a day to get to go here I think it's fair to have conversations I'm happy to pull it down and give time for some more conversations to happen and bring it back tomorrow thank you we'll put you on the calendar for tomorrow thank you thank you representative Johnson. Representative garner house bill sixteen eighty five. Please recognize yourself again for the. And then you may begin. You might. Thank you madam chair Denise Garner State rep District. Going to the amendment go ahead ma'am yes and I just wanted to explain a little bit about how the amendment came came about many of you may not know that we owned a liquor store for many many years in Northwest Arkansas the first Basically this is as much an economic bill as it is a wine bill what's happening is these wine clubs are getting together and going through of. Friends are consultants and going to other states which allow direct shipments of wine to of that friends or businesses and then they go pick up the wine and bring them back to Arkansas so what's happening is that Walgreens in Tennessee or Oklahoma or Kansas or Missouri or Texas can Ship wines are the winery's kinship wines to those companies and then our Kansans go and pick that up in those places and come home and consume it so we're losing the tax dollars basically there's no reason for those folks to be paying taxes to Arkansas so that this bill is really a two fold bill it's to do the same thing basically that we're doing with small wineries allowing shipments from small wineries without being physically present and those wineries and so that's that's what we're trying to do with this bill and you're still talking to the amendment because we got we need to adopt the amendment okay yes so you're that yeah are there any questions about the amendment. Seeing no questions. Others no one speak up to get out speak against the amendment either I'll get the. And the will of the committee on the amendment. The motion to accept the the. Amendment all in favor say aye. Because no. Okay now present your bill ma'am okay well that the bill the amendment is just if and thanks. it just means that. We can do the same thing we can have wineries shipped to individuals or to a business of where they're not selling the product but you can have it set to a business address so that if I wanted to have my wine from a wine club shipped to. My medical office because somebody is there all day then they can do that and sign for it. To the house where they have to leave it on on the doorstep for UPS so um we've talked about all of the permit all the necessary permits to do this sort of thing that ABC is neutral on the bill they're fine with it and There are of issues for any wineries that said. Don't have an ID so there's methodology for taking care of the eighteen and five. Are there any questions. Seeing no questions we have a Hey Mister Hastings standbys. He's recognize yourself the record then you may begin your speak against the bill. My name is Stan Hastings member third generation wine and spirits wholesalers the state of Arkansas. I understand consumer choice the internet and all of that. The problem with these direct shipping bills that come along is I don't level playing field completely with me as an in state wholesaler or with our retail partners. We pay a lot of taxes this state address that we pay excise taxes average retailer in this state pay someplace around thirteen percent sales tax yes we have an internet sales tax to five and a half percent that level the playing field there it's easy to say that the bill has all the accountability and it didn't have any penalties if I don't pay my taxes they come audit me they shut me down there's nothing in this about that there's no there's not a single penalty in this bill for somebody that that and follow the law. Our retail partner sitting back here they sell to minors. They lose their license. Robbie sent here testified earlier they're in the beer business plan wine and spirits same as me we don't pay our taxes we delivered to somebody that's under age doesn't have all the right paperwork were put out of business there's not a single penalty in this bill for anybody that breaks Arkansas laws the least you can do is totally level the playing field. To where everybody is held accountable in the system and it's easy to say that it requires delivery to businesses and all that kind of stuff but the most recent. Study survey sting operation whatever you wanna call it on this industry the direction of alcohol is done in Massachusetts last year and twenty twenty two by their state beverage control board. They found that during twenty twenty to compliance checks reveal that ninety six percent of the license direct to consumer shippers accepted orders and payments from a fifteen year. Additionally despite ninety eight percent of shipping's shipments being labeled alcohol only twenty three percent of the shipments were left at the door over twenty three percent just left. Forty three percent of all deliveries did not obtain an adult signature and none verified the age of the recipient when the shipment arrives. So the question is if you're gonna pass this how are you going to hold the people responsible to make sure they are delivering them to a business that they are delivering and somebody twenty one years old at the person ordered it is twenty one years old in what are the penalties. That's where I am. Why let out of state shippers into this state out of state sellers have a market advantage over all of this that are sitting here pay in taxes in supporting our state every day. Thank you. Thank you Sir for testimony are there any questions for. Representative Dalby you're recognized thank you manager just a quick question and you may not know I'm just curious other at state center allowing these direct shipments do they have a mechanism whereby they're collecting taxes and the enforcement and you may not know that may be outside your purview but when you brought that up I'm just curious how other State Street yes if they're a little more strenuous than this bill would be. What I'm aware of in the industry as far as direction of alcohol sees bills go back twenty plus years ago they started passing and again with zero accountability now the states are really looking at it includes something I don't believe in this bill I didn't say is a shipper reporting bill I believe there's fourteen states that have ship reporting so UPS FedEx DHL whoever is a chip in the Senate reports to the state how much is coming in and who is shipping that's part of this audit process to be able to go back and also to hold those people accountable for what they're doing at the point of delivery there are a lot of states are working to pass laws that is we know it's hard to go back and amend things I think the industry is far enough along as far as the direction of alcohol that now we could be a model state in past one piece of legislation I don't think it's right that it's just wine either by personal opinion is that uh and this varies with the industry but if you're going to ship alcohol you should be able to pass one bill that covers wind spirit small products all of it that have lots of controls for all of it everybody in our industry understands that substance we sell is very addictive it needs to be controlled we're one of the few industries that likes regulation to protect what we do in our our our consumers. Thing other questions thank you Sir for your testimony. Thank you. Representative garner would you like to close for your bill. Certainly we live we live our the. Our distributors and and appreciate our wine and spirit distributors certainly this is a small niche market it's a group of folks that are looking for organic and clean why. Available and they're going to other states and those states are getting that revenue to tax revenue and it's just a it's a hassle but but it's happening there thirteen line clubs just in my area that are going to other states to pick up this wine at Walgreens and those are. Six dollars so I am certainly willing to work with anybody. To try to make sure that we're we're making sure the accountability is there Monitor market and it's it's some. We've dealt with. For years in the wine industry not being able to get what we want and in Arkansas and because of the cost not because the. Because of the cost we're already working with small wineries and wineries that you've been to in person and we have the ABC has not said that there any issues with those so with that I just. With the will of the committee. I have a motion. All in favor say aye. Opposed no. Sorry representative Garner your bill is failed that second thank you. Now will move to Senate bill three fifty eight. Senator D.. We're waiting on an amendment so it's going to be just a few minutes. We'll be in recess until we get the men. We're in recess. We now have an amendment that's being passed out. Representative Gazaway and representative teacher both are Senator days sorry I have. You're both welcome to join us at the table. First Senate bill three fifty eight please recognize yourself for the record and who you're with. I'm state representative Jimmy Gazaway represent district thirty one. Center Tyler dis District thirty five. Right. I will give everybody just a second to view this. Amendment and then representative Gazaway. You may begin. Go ahead Sir manager with your permission I had a co presenter that I asked to be allowed to join at the table miss Amy right you're welcome to come to the table please state your name for the record and who you're with. Good morning madam chair and committee members my name is Amy Martin I'm from Fort Smith Arkansas licensed attorney in Arkansas thank you you're welcome to present the amendment Amy Martin I meant I apologize. Thank you madam chair members you should have an amendment before you Concerning Senate bill three fifty eight. The Amendment does some very basic things one what you'll see at the outset is there are some more specific have definitions or references if you will to the types of substances that were referring to and these are Let changes the language that came from the crime lab in from the department of health to be more consistent with existing code sections. And so you'll see that on the first page of the amendment also on the second page of the amendment. I think it may be worth noting on the second page of the amendment where it refers to page three this is to be consistent with existing federal law under the farm bill concerning transportation of and we have made an amendment there to say that. The product can be transported. The state of Arkansas so long as it's point three percent on a dry weight basis and it's produced in accordance with existing federal law. And so once again we're just trying to make sure that we're in compliance with existing federal law in the farm bill if you look at page three of the amendment you see more language references it once again these are changes they're made to be more consistent with existing code and we're at the recommendation of the crime lab in the department of health the important parts of the amendment I think you'll see on page three of the amendment that refers to.