Feb. 8, 2023
Rep Vaught Welcome to the Rules Committee. Mr. Vice Chair, do you have anything you want to say today?
Rep Peaarce No, I’m good.
Rep Vaught All right, well, let’s start with House Bill 1162. Representative Ray, you’re welcome to join us at the table. Introduce yourself and you may begin.
Rep Ray Thank you, Madam Chair. Representative David Ray, District 69. With your permission, I’d like to ask Mr. Albert Bronfish to join me at the table.
Rep Vaught Please introduce yourself for the record.
Bronfish This is. I’m Albert Bronfish. I’m one of the co-owners of Lost 40 Brewing.
Rep Ray Okay. Thank you, Madam Chair and Committee. House Bill 1162 deals with microbreweries and ready to drink beverage products. So what the bill would do is it would simply authorize Arkansas microbrewery restaurants to manufacture and sell what are known as ready to drink products. There’s no other substantive changes in the bill. I’m sure many of you are familiar with ready to drink products. They’re defined in our, in our law as beverages containing spiritous liquor with a final finished product of no more than 15%. So these are sometimes referred to as canned cocktails. So like a a margarita in a can or if you’re familiar with ranch water, like a tequila soda or a vodka soda. Those are common examples. These products are already on the shelves in Arkansas package stores all across the state. The reason for the bill is because the there, are the big national breweries like Anheuser-Busch they can already manufacture these products as well as the the medium sized breweries as well. But our small Arkansas microbreweries are prohibited from doing that. And so this would just level the playing field. It would give Arkansas package stores and our consumers more options and choices and variety, particularly Arkansas made products. So that’s a benefit of the bill as well. And it would have positive economic benefits for our small Arkansas microbreweries because they would be able to increase employment, improve production and efficiency. I know that some people have asked me, does this bill expand alcohol in Arkansas? It does not. As I mentioned, these products are already made and sold in Arkansas, and it just simply lets them compete in a rapidly growing popular category that their competitors can already participate in. With that, I’ll be happy to try and answer any questions.
Rep Vaught Representative Wardlaw you’re recognized for a question.
Rep Wardlaw Thank you, Madam Chair. Reading your bill, go to page three, line 30. You inserted, it looked like you changed the language all through the bill, just to be clear where I’m going with this. You changed it all to ready to drink. I don’t think I have a problem with that. But on line 30 it goes through this on premises consumption and ready to drink product, blah, blah, blah. And it talks about portions of cities and counties. Is that referring to the entertainment districts or what? What are you getting at there and how does that practically work?
Rep Ray I think what we wanted to ensure with that provision.
Rep Wardlaw Because what you just explained is all these inserts are ready to drink all through there. I don’t know that you explain what this means.
Rep Ray Sure. That particular portion of the bill, if I remember correctly, was recommended by Ms. Chandler at ABC.
Rep Wardlaw Okay, can we ger her to the table?
Rep Vaught Please introduce yourself for the record and then you may begin.
Chandler ABC Doralee Chandler, director of the Alcoholic Beverage Control. There are when these counties go wet they are going wet for the alcohol, the beer and wine consumption. Many counties have not elected to have liquor by the glass, and so they cannot sell the cocktails without having a restaurant mix. A private club permit would allow them to sell them. Many cities have not. Pulaski County has has elected to have liquor by the glass here, so you can have a restaurant mixed drink permit that would allow you to have the beverages such as the margaritas and stuff without having to have a private club permit. But there are areas across the state, in fact, we only have four counties, I believe, that have liquor by the glass. There are local ordinances that are passed in various counties that allow it, but it is not across the state as a whole. So this would allow them to sell their beverages on premises. The RTDs in those areas that have elected or have passed an ordinance to allow such beverages.
Rep Ray And yes, she refreshed my memory, we wanted to make sure that we weren’t inadvertently, adding areas where liquor could be served by the bill. So that was just to clarify that it’s only allowed where it’s already allowed.
Rep Wardlaw Okay. So where these entertainment districts are, that would be allowed by liquor, by the glass is that not correct. And those are now allowed through the previous bill. Representative Ray run, I believe was the one where it’s private clubs are in the dry areas. Is that not right?
Chandler ABC So the entertainment districts allow you to leave the on premise permitted location with that beverage. It doesn’t expand what is served at that permitted location. And so if that area has liquor by the glass, then they can remove those beverages from the on premise into the entertainment district. If the area does not have liquor by the glass, they may be removing them from private clubs, but it will not impact the entertainment district.
Rep Wardlaw Okay. Thank you, Madam Chair. I think, I think I understand maybe.
Rep Vaught Are there any other questions? Thank you, ma’am. We have Mr. Danny Bradley signed up to speak against the bill. You’re recognized to introduce yourself first, though.
Bradley My name is Danny Bradley, and I wanted to start it off by saying thank you for giving me this opportunity to speak in opposition to this bill. I will try to be as brief as possible and to the point as to why I oppose this bill. However, it does take a little explanation, so I would appreciate a little bit of leniency here. I’m a Ph.D. scientist and a former employee of the top five animal health care company in the world. That is important because I’m considered to be an industry leader in the area of animal gut health and more importantly, how fermentation, probiotics, yeast and enzymes aid in the animal gut health. I’m also a small business owner. My wife and I are co-owners of Crystal Ridge Distillery in Hot Springs. I’m also serving my second term as president of the Arkansas Distillers Guild, and I’m here on behalf of the distillers in the state. I’ll give a brief description on how ethanol alcohol is produced in the art of producing ethanol alcohol, in its simple form is very elementary yeast eats sugar and produce alcohol and give off a byproduct of carbon dioxide. Beer is manufactured in a brewery where they take grain in combination with water and cook it to extract carbohydrates. These carbohydrates are then exposed to an enzyme found in malt called alpha amylase. These enzymes break down the polysaccharides into individual molecules of sugar small enough for the yeast to eat, and then fermentation takes place and ethanol is produced. Historically, beer has been produced at a low ABV or alcohol by volume, usually less than 5%, but can be found higher. Wineries produce wine. The sugar source for the wine is pectin is found to be in the crushed grapes, but the ethanol alcohol is produced largely in the same fashion. The yeast eat the sugar and produce alcohol and carbon dioxide. Historically, wine is also contained in low ABV usually 11 to 13%, but is commonly found up to 20%. Spiritist liquors, such as whiskey or vodka are produced in a distillery. In producing the spirits. We use the same process as beer or wine, but we add another step. Distillation. Distillation is where we take the beer If producing whiskey or wine, if producing a fruit brandy and heat it to produce separation in the liquids. In the mash. The separation occurs because different liquids boil at a different temperature. Ethanol boils at 173 degrees Y, water boils at 212. When it boils, it turns to a vapor and rises. Divided vapor is then cooled below 173 degrees and it turns back into a liquid at a higher percentage of alcohol. The more times it is distilled, the more pure it becomes. And vodka is the purest and most dangerous form of alcohol distillation. By federal definition, vodka has to be produced at greater than 190 proof or 95% ethanol alcohol. It is the most dangerous form because the liquids and vapor produced are very explosive. In fact, ethanol alcohol is what we add in our gasoline. On December 5th, 1933, alcohol prohibition ended in the United States. And bear with me a little bit on this. Coming out of the Prohibition era, the federal government and state governments decided the best way to break up the mob’s control over the alcohol industry and to reduce the likelihood of the mob regaining control would be to fracture the industry into different categories. As a result, beer, wine and spirits are now licensed, permitted, regulated and taxed very differently. For example, although ready to drink cocktails can be can be produced using wine, malt beverage or spiritous liquors up to 15% as this law is calling for the RTD containing spiritous liquor cannot be sold in convenience stores, retail outlets such as Wal-Mart or grocery stores. One more example. In the United States you can make beer or wine in your garage, but making spiritous liquor is against the law and you’re required to have a federal DSP or distillery permit. It is against the law, in part due to safety. During the prohibition, many people fell ill or even died due to uneducated producers of moonshine who did not understand the spirits distillation and did not cut out toxic concentrations of methanol or acetone that are usually concentrated as well as the alcohol in the distillation process. Many producers also perished due to the explosions and volatility in the alcohol production at greater than 50% concentration where ethanol, liquid and vapors become flammable. In order to apply for the federal DSP permit like I have. One is required to already have in possession a building and all the equipment in place. For Crystal Ridge Distillery, this was over a $2 million investment before I could even apply for the federal permit. Allowing breweries that create beer to manufacture and sell ready to drink sodas containing spiritous liquor would be unprecedented in our state in that it would allow for alcohol categories to be crossed. Hurtful to native distilleries business in our state and creating competition in an already crowded market and potentially very dangerous in allowing breweries to manufacture products containing potentially explosive properties without proper or or equipment or building codes. In summary, I’m opposed to HB 1162 because, one, it would be unprecedented because it would allow for the breweries in our state to cross categories and produce ready to drinks with spiritous liquors but remain as a brewery. Admittedly, I don’t understand all the laws or implications of this bill to this point. However, I do know that one cannot produce spirits without a federal DSP permit or even buy such spirits without a DSP permit or a rectifiers license that will allow them to produce these products but not manufacture the spirits. Number two, this change in law would also be detrimental to our native distilleries and employees by creating competition in an already very crowded market. As you know, the population of Arkansas is approximately 3 million, and more than 50% of our small state is dry. Breweries would likely not be able to produce the RTDs or the spirit going into the RTD and would have to contract with large bulk suppliers of spiritous liquor and drive the prices down. Also hurting craft distilleries ability to manufacture produce at competitive prices. Lastly, and most important is safety of the manufacturers and consumers. Spiritous liquor is potentially dangerous for two reasons. Different equipment and building requirements are required for this high proof alcohol, and everything in the distillery has to be explosion proof not only the equipment but every plug in. Spiritus liquor.
Rep Vaught Sir, I hate to stop you, but we have got to recess and then come back. So I’m going to have to stop you right there. And we’re going to recess this committee. We have a press conference that a bunch of us have to be at, and then we’ll come back after after the press conference.
Bradley All right. I apologize for taking so long, I wasn’t aware.
Rep Vaught Sorry everybody, but we’re going to recess at this moment and we’ll come back during the session. Thank you.
Rep Vaught If you would like to come and finish your presentation you’re welcome to do so. Just please introduce yourself again for the record, since we’re back on now.
Bradley Okay. Thank you very much. And again, I apologize for taking so long. I’m on my last point. Number three, lastly, and most important is safety of the manufacturers and consumers. Spiritous liquor is potentially dangerous for two different reasons. Different equipment and building requirements. Everything is required to be explosion proof in a distillery, but not in a brewery. Liquor is produced at a higher ABV and requires all equipment and building electrical plugs to be spark proof and explosion resistant. Number two. Manufacturers are are unaware of proper techniques on making cuts and cutting the poisons such as methanol or acetone out and death could potentially occur. This actually happened a lot during the pandemic when out of the country producers of hand sanitizer was leaving the methanol and methanol poisoning occurred. So in conclusion, I urge to you to consider the potential risk and consequences of passing this bill and to vote against HB 1162. At this time would be glad to take any questions. And I really appreciate your time and consideration today.
Rep Vaught Does anybody have any questions? Seeing no questions, thank you for your testimony.
Bradley Thank you.
Rep Vaught Next we have for the bill. Albert Bronfish. Please state your name for the record and then you may begin, sir.
Bronfish Albert Bronfish, co-owner of Lost 40 Brewing. Just like to reiterate what Representative Ray had said about this bill. I think it really is nothing more than creating a level playing field for the existing players in the state of Arkansas. I look at Lost 40 Brewing where I spend all my time. We worked through distributors, Golden Eagle here, for example, and that same Golden Eagle facility is bringing in ready to drink product from Anheuser-Busch, going directly to the retailers and the wholesalers. So we’re taking non Arkansas product, putting in front of Arkansas consumers. We’re simply asking for the opportunity to have a competitive product that’s going in front of that same consumer at that same retail location.
Rep Vaught Representative Wardlaw, you are recognized for a question.
Rep Wardlaw Thank you, Madam Chair, but I’m not near that old. Do you guys have a distillery license today? That federal license the gentleman mentioned.
Bronfish We’re in the process of acquiring that. I would have to check with our CFO, but we would have to before producing this product to have that license.
Rep Wardlaw But you don’t have it today?
Bronfish Not to my knowledge, but I will double check and get that answer to you later today.
Rep Wardlaw Thank you.
Rep Vaught Are there any other questions? Seeing no other questions, thank you for your testimony. And next, we have against, Logan Nelson. (Inaudible) Would you like to close for your bill?
Rep Ray Thank you, Madam Chair. I do want to just address a couple of things that were mentioned in the testimony, and folks may not be aware that the brewers would have to have a distillery license in order to make this product, and brewers do obtain distillery licenses to create this product. The large brewers already do. There are many medium sized brewers that do as well. And I would like to add that I have heard from from other distilleries that are in support of this bill. Rock Town Distillery in Little Rock, for example, contacted me very much in support of the bill. Excited about the opportunities that they see through this legislation to partner with their local microbreweries. I know earlier there were some questions raised and I had some conversations with members of the committee who still have some lingering questions about the bill. And so, Madam Chair, with your permission, I’d like to just pull the bill back at this time so we can make sure everyone’s questions get answered appropriately and perhaps bring it back at a later time.
Rep Vaught I appreciate you being willing to pull it down and bring it back at a later time. I think everybody would agree to that. So thank you so much.
Rep Ray Okay. Thank you, committee.
Rep Vaught Next, we have a House bill 114. And I don’t see Representative Evans. So then we’ll go to–that was Senate Bill 114, sorry. And I don’t see Representative Evans. So House Bill 1344. Representative McKenzie, you’re welcome to join at the table, introduce your name for the record, and then you may begin.
Rep McKenzie Thank you, Madam Chair. Bret McKenzie, Representative, District 7. I’m here today to present House Bill 1344. It’s a bill relevant to the minimum container size of spirit of spiritous liquids for sale in off premises license stores in the state of Arkansas. When people come to the table, they often say, I’ve got a really simple bill. This is an extraordinarily simple bill. It’s 24 words and it actually affects two characters in the state code. The current state law requires consumers who go to off premises liquor stores to purchase a 100 milliliters of a spiritous beverage, what we colloquially call a airplane bottle. And most of those airplane bottles are actually formatted in 50 milliliter containers. So for liquor stores to comply with the current law, they either have to themselves co pack it in a two pack or sell a multi-pack of that product. At the end of the day, this is a moderation bill we are allowing. And the bill would ask that consumers be given the opportunity to purchase less liquor in the state of Arkansas. I’m happy to entertain any questions.
Rep Vaught Are there any questions? Seeing no questions, is there anyone here to speak against the bill? For the bill? Would you like to close for your bill?
Rep McKenzie I’d like to close for the bill. Thank you, Madam Chair. Thank you members of the committee. I hope for a good vote.
Rep Vaught What’s the will of the committee? Motion do pass. All in favor, say aye. Opposed. Your bill is passed. Congratulations. I see that Representative Evans has made it into the room. You’re welcome to present Senate Bill 114. Recognize yourself and then you may begin.
Rep Evans Thank you, Madam Chair. Members, real quick. Senate Bill 114 is clean up language regarding campaign finance, changing the statute to show that your final reports are due on the last day of the month rather than 30 days after the month following the election. This ran into a little bit of a problem where if the election was in March, April 30 was fine, if it was in May, June 30 was fine, but when the elections in November, the 30 days would end on December the 30th, creating an additional report for you on December 31st. This changes the language to the end of the month, striking out the 30 days.
Rep Vaught Are there any questions? Seeing no questions, is there anyone here to speak for the bill? Against the bill? Would you like to close for your bill?
Rep Evans I’m closed for the bill. I appreciate a good vote.
Rep Vaught What’s the will of the committee? We have a motion do pass. All in favor, say aye. Opposed no. Your bill is passed. Congratulations. And that was all the business for Rules. Thank you.