STAND. COM. REP. NO. 1576

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  H.B. No. 1622
                                        H.D. 1
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Judiciary, to which was referred H.B. No.
1622, H.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO INTOXICATING LIQUOR,"

begs leave to report as follows:

     The purpose of this bill, as received by your Committee, is
to permit a brewer of beer to hold an interest in a
manufacturer's license and a wholesale dealer's license, when
such license is limited to wholesaling the beer brewed.

     Your Committee finds that this measure, as proposed, would
blur the lines of the current three-tier distribution system for
beer, wine, and other liquors.  Your Committee further finds that
the three-tier distribution system, which has been in place in
Hawaii and other states since the end of Prohibition, provides a
relatively high degree of regulation in the liquor industry in
response to anti-competitive abuses that were common before
Prohibition.  Your Committee believes the current system tends to
promote competition and thus provides more choice and competitive
pricing for the consumer.  Your Committee is, therefore,
reluctant to erode this system.

     Your Committee has been informed that there have been
differing interpretations as to whether the manufacturer's
license referred to in the law, a holder of which is prohibited
from holding any other kind of license, refers to a
manufacturer's license from any jurisdiction or a manufacturer's

 
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                                   STAND. COM. REP. NO. 1576
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license issued under Chapter 21, Hawaii Revised Statutes.  Your
Committee notes that the Attorney General has opined that they
interpret the law to mean that a holder of a manufacturer's
license issued pursuant to Chapter 281 may not hold an interest
in any other license issued under this same chapter.  However,
the Attorney General further opined that they would narrowly
construe this application to mean only entities holding a
manufacturer's license under Chapter 281, and not any
manufacturer.  Thus, your Committee agrees that a codification of
the Attorney General's opinion on this issue would help to
clarify this point and prevent litigation.

     Testimony in support of this measure was received from
Anheuser-Busch Sales of Hawaii, the Hawaii Restaurant
Association, two restaurants, two employees of Anheuser-Busch
Sales of Hawaii, and an alcoholic beverages consultant.

     Upon further consideration, your Committee has amended this
measure by deleting its contents and substituting an amendment to
section 281-31(a), Hawaii Revised Statutes, clarifying that the
restriction on a manufacturer's ability to hold another type of
license applies only to a manufacturer who holds a Hawaii
manufacturer's license. 

     As affirmed by the record of votes of the members of your
Committee on Judiciary that is attached to this report, your
Committee is in accord with the intent and purpose of H.B. No.
1622, H.D. 1, as amended herein, and recommends that it pass
Third Reading in the form attached hereto as H.B. No. 1622, H.D.
1, S.D. 1.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Judiciary,



                                   ______________________________
                                   AVERY B. CHUMBLEY, Co-Chair



                                   ______________________________
                                   MATTHEW M. MATSUNAGA, Co-Chair

 
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