STAND. COM. REP. NO. 1877

Honolulu, Hawaii

RE: H.B. No. 546

H.D. 2

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirtieth State Legislature

Regular Session of 2019

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Health, to which was referred H.B. No. 546, H.D. 2, entitled:

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

begs leave to report as follows:

The purpose and intent of this measure is to:

(1) Allow a small craft producer pub licensee to manufacture not more than 125,000 barrels of malt beverages on the licensee's premises during the license year;

(2) Allow brewpub licensees and small craft producer pub licensees to conduct certain activities at satellite locations;

(3) Clarify the definition of growler; and

(4) Allow brewpub licensees and small craft producer pub licensees to obtain a direct wine or beer shipper permit.

Your Committee received testimony in support of this measure from the Hawaiian Craft Brewers Guild, Kauai Beer Company, Maui Brewing Co., Beer Lab Hawaii, Lanikai Brewing Company, Big Island Brewhaus, Honolulu BeerWorks, Kaua‘i Island Brewing Co., and one individual. Your Committee received testimony in opposition to this measure from the Hawai‘i Alcohol Policy Alliance and three individuals. Your Committee received comments on this measure from the City and County of Honolulu Liquor Commission and Hawaii Food Industry Association.

Your Committee finds that small craft breweries typically start with investing in a manufacturing location to begin production of their craft beer with a smaller, retail satellite location to follow, usually in a different county. Craft beer producers often want to sell their canned and bottled retail products at the second outlet where no manufacturing takes place. Requiring a retail site to hold a manufacturing license when no craft beer production occurs there is an extremely costly and complicated process. This measure addresses inconsistencies in existing law to ensure that a business manufacturing on one island can sell its products on another island under the proper license.

Your Committee further finds that the popularity of growlers, a type of container used to transport beer, continues to increase. Although growlers were originally made from glass, they are now made from a wider range of environmentally friendly reusable or recyclable materials. This measure simplifies and standardizes this term by defining growler to mean a recyclable or reusable container not to exceed one gallon.

Your Committee additionally finds that existing law already allows direct shipment of wine into and out of the State, but not beer or liquor. Restricting local manufacturers from delivering authentic Hawaiian products to out-of-state supporters can further limit local manufacturing and tax revenues for the State. This measure achieves parity across all categories of beverage alcohol and increases the viability of local, small craft breweries.

Your Committee has amended this measure by:

(1) Clarifying that certain licensees may participate in the direct shipment of all forms of liquor, rather than just wine or beer;

(2) Inserting an effective date of July 1, 2019; and

(3) Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Health that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 546, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 546, H.D. 2, S.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection, and Health,

________________________________

ROSALYN H. BAKER, Chair