A more agreeable Alcohol Beverage Control Board

Matt Kibbe, president of the nonprofit Free the People, once told me that beer is freedom. He posited that the alcoholic beverages industry is an unexpectedly useful gauge for a free market. The more flexibility a brewery, vintner or distillery has to experiment and serve a creative product, the freer the market. As it so happens, various states in this country have wildly draconian laws pertaining to the licensing, manufacture and sale of alcohol. Much of that is leftover from the U.S. Prohibition Era, but even younger states like Alaska caught the bug.

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Graphic by Jian Bautista.

Alaska’s Alcohol Beverage Control Board is a regulatory and quasi-judicial agency which operates as part of the Alcohol & Marijuana Control Office. The ABC Board is responsible for managing licenses across the state’s numerous alcohol-serving businesses. The board’s five members interpret state law to the best of their ability and issue approvals or rejections to businesses attempting to obtain or renew a license.

Trying to interpret state law when business owners’ investments are at stake is an unenviable burden. Law can never be written to perfectly encompass every possible situation, so technicalities in the wording can make or break a business owner’s license. For example, the ABC Board rejected a license application from The Old Tower Bar at Eaglecrest Ski Area in Juneau on Oct. 15. The reason cited was that state law defines a recreational license as one where baseball games, car races, hockey games, dog sled racing events or curling matches are regularly held during a season. Ski areas are not included in that.

Technicalities like that seem to be trivial, but they have real effects on small business owners. Abby Williams, a business partner in The Old Tower Bar, said that she and the City of Juneau invested almost $40,000 in the project before the ABC Board’s rejection. She said that it would not be financially feasible to pursue a different type of license.

Although the ABC Board must work using state law, it can be surprisingly elastic when it comes to public interest. For example, the board approved an application by the Arctic Valley Ski Area of Anchorage, even though it possessed many of the same circumstances as the rejected The Old Tower Bar application. In this case, the ABC Board considered the public interest in their decision. Arctic Valley Ski Area was applying for a renewal, so rejecting it would cause a disruption among the established customers.

The debate here is between two sides: those who believe the ABC Board should strictly follow the wording of legal statutes, and those who believe it should evaluate circumstantially with the public interest in mind.

I argue for the latter. The board should exercise flexibility as it evaluates each license. It should do so with an appreciation of the free market, which allows for the easy establishment, expansion and continuum of private businesses to sell alcohol. The law is incredibly imperfect and fails to predict or adapt to circumstances.

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There are powerful detractors to this argument. Namely, the lawmakers themselves in the Alaska State Legislature. They audited the ABC Board and chastised them for issuing licenses inconsistently with legal statutes. But the legislature is overestimating the breadth of its laws. Incomplete or absent language in those laws clearly harms Alaskan small businesses. The ABC Board can mitigate this by considering public interest over the exact language of the law. The Old Tower Bar would have been in the public interest just as much as any other recreational establishment.

Another example of why the ABC Board needs to prioritize public interest over exact law can be found in the distillery controversy this year. The board voted to adopt new regulations that would ban distilleries from serving cocktails in January. This was based off a recommendation by the Department of Law, which decreed that a distillery’s product for sale must only be a distilled spirit. That does not include ingredients for drink mixing, like tonic, syrup or juice.

Curiously, the rule allowed distilleries to provide mixers separately. This led to an inconvenient but humorous situation where a bartender could legally serve a gin and a tonic next to each other, and the customer can mix the two, but the bartender breaks the law if he or she mixes it. This rule was reversed in October when the Alaska Legislature passed Senate Bill 45, allowing distilleries to create cocktails.

The lesson here is that the ABC Board cannot reasonably rely on the legislature to write comprehensive law nor can it just wait until the legislature clarifies the ambiguity its laws produce. The welfare of Alaskan small business owners is at stake. The board must evaluate licensing with the public interest in mind. That means deferring to the small business owner and the community being served.

 

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