Comments on Liquor Commission Rule Changes

April 16, 2013 in 2013, Issue

Comments on the Proposed Rule Amendments

Bill Comerford

Spokesman for the Hawaii Bar Owners Association

10 Marin Lane, Honolulu, HI 96817

808-521-4712, 808-223-3997

bill@ejlounge.com 1/7/13

Thank you for the opportunity to provide commentary upon these rule amendments.

I fully understand that the efforts here are genuine with the intent to comply with existing or new law. As a representative of the Bar Industry I feel it is important to view the practicality and simplicity in new rules so their implementation becomes easier and compliance is understood. In that effort I ask what the purpose and intent of a rule so it achieves that goal and does not lead to future confusion in interpretation by licensees, investigators and the commission. Often times we see rules written for an intended purpose in the past evolving into enforcement for a different issue currently. This is often ill-fitting and thus leads to confusion and questions on both sides of enforcement and compliance.

Another big issue that arises is that often many rules and regulations are generated to control the fringes of the industry often the Hostess and Strip Club industry yet upon creation rules are then enforced upon the general industry often creating adverse circumstances for general operators within the industry. Essentially more regulation or rules impeding business that is of little issue to those businesses. I would seek that when creating these rules this is kept in mind.

Lastly I would ask that the commission recognize that Hawaii is a destination point for people from around the world and we often have a huge mixture of people in a room often not English speaking so it becomes important that the rules are simple enough to make the customers understand because they are the ultimate consumer within the industry and often those upon who the rules will be ultimately fall.

Thus we should seek rules that are clear, with defined purpose that can be understood and implemented within the industry and enforced with direction for the industry, community and government’s benefit. Given that I look at these rules from the licensee’s viewpoint to provide you that perspective.

I have listed the items of consideration in the rules in bold print and then my comments and questions in italics.

 

3-80-1.1 Definitions

Go-Go Dancer Pertains to certain Classes and does not effect the majority of regular licensees.

Manager Helps define the manager on duty yet brings to question the licensed hours?

Is it the licensed hours by definition of class or the hours operation opens? It implies the licensed hours which may not match the hours of operation. 6am when the bar opens at 10am

If it is past or before the hours of opening is the manager or bartender no longer a manager by definition?

Is there then no manager?

Who is the responsible party then?

What is the goal or purpose of this wording change and does this solve that purpose?

Employee

Bartender

What is the goal or purpose of this wording change and does this resolve that purpose?

Is this for conformity to bottle service or stacking issues?

 

3-81-17.53 License Fees; When and How Calculated; Refund offset (d)

What is the goal or purpose of this addition and does this resolve that purpose?

I would not object to using refunded fees to eliminate outstanding assessments and penalties for a non- operating license. However this should not set the precedent to use fees to relieve penalties and assessments in other circumstances.

Hopefully it would allow a cleaner transfer of license.

3-81-17.54 Gross Sales Reports

(a) (b)

This makes sense for audit purposes. It would also be wise to bring the poll of prices and the items for sale up to date and into the 21st century.

 

3-81-17.54 Gross Sales Reports

(f) Complimentary drinks

Is the reporting of Complimentary drinks necessary to track?

Reporting value at four times liquor purchased amount, is this necessary to report for audit purposes? It requires more bookkeeping on a daily, monthly and annual basis. Can one report the overall numbers? Are estimates acceptable? If the business is within the expected norm why are we forcing more accounting upon the operator? What degree or percentage is considered acceptable?

Is this directed at certain problem licensees but is being asked of all licensees?

If understood it can be implemented when going forward but extremely difficult when working backwards.

 

3-81-17.54 Gross Sales Reports

(g) Wholesale licensees gross sales reporting

Is this a greater demand for accounting upon the wholesaler?

Is it reasonable to ask for additional interim gross sales reports? If so what would be the circumstances?

 

3-81-17.55 Additional License Fees on Gross Sales

(a)

I do not understand how this edit by removal would help in the transfer of license. Could some background be provided?

 

3-81-17.55 General Right of Inspection

What is the purpose for this General Right of Inspection?

For Audit? / For Inspection? / For Investigation?

What items can they reasonably ask for? Time cards / blue cards / purchase records / sales records etc?

What else can they ask for to inspect?

 

Three Versions of Proposed Amendment

3-81-31.8 Recorking

Attempts to conform recorking rule to statutory changes in HRS281-31(t)

V1 based on classes

V2 with meal service

V3 any license any time?

What classes do you want this to cover? Why add others or all licenses?

How will the LC enforce other open container rules?

Is it not illegal to bring alcohol into the licensed premise?

Can a licensee deny the patron the ability to bring in a container?

Why are we adding beer and liquor?

Lots of conflict here

 

3-82-38.5 Registration of Employees

(b)

Key here is what is the difference?

4 years from passing exam and completing training?

(f)

Why is the 2 year rule involved when working a different license?

3-82-38.5 Semi-annual Submission of Employee List

OK

3-82-38.9 Licensee and Manager in Charge of Premises

(d) successful completion of the server training (b)

Once again why a 4 vs 2 year term to retake exam?

Questions within section of rules

Why a purpose of Cabaret in definition? Nightclub vs hostess situations?

Why must all regular operations comply to rules designed for hostess situations?

Registration cards being held by employee vs business. You fine the business so why can’t we control their presence on location?

3-82-38.25 Restrictions or Conditions on Licenses

(b) Conditions place upon transfer

This can severely limit an operations profitability or transferability. This could also limit the ability to sell. How do landlords feel about these limitations and restrictions?

How many licenses go empty after these restrictions are imposed? Do they open again or remain ghost venues?

3-82-38.26 Bottle Service for On-Premise Consumption

Service of Wine or Distilled Spirits in its original container is permitted at premises licensed for on-premise consumption. The seal of the original container shall be broken at the time of service.

Beer was included in one or more versions above but not here

Service is by staff or customers?

Does this allow for removal under recorking?

Many conflicts here.

3-82-41.3 Management or Operating Agreements

This appears to replace completely the payment of fees upon transfer. Does that appear under a new section number?

Understanding the need to regulate certain hostess and other operations I hope this section does not overly impede agreements as this is often a tool to assume failing operations in the effort to keep them alive for transfer.

It is also a tool for many larger operations to lease their operations to management companies.

If notification is necessary I should hope a hearing would not be necessary and it should remain administrative unless there were very outward circumstances that would necessitate such a hearing.

 

3-83-53.1 (a) (1) (xv) License Applications; Notice of Hearings; Affidavits

Applications for new Restaurant lIcenses: Some difficulties here

How can one provide a financial report for a new business that has not existed yet?

How can one show a percentage of revenue if there has been no revenue?

Regarding a business plan to determine if the applicant can remain in the percentages, unfortunately nobody can predict the future. No operator will deny liquor service to keep within government labels. Sales are sales and thus income, it is counterintuitive for an operator to deny an influx of income.

Why are we differentiating here? What is the desire of the Liquor Commission? Do you want to see licensees apply for the proper license? They don’t know what the future will bring. Is it a difference as to granting the license as a restaurant or a bar when they both have the same classification of Dispenser General, pay the same fees and operate under the same hours?

Is this classification for classifications sake? What differences are involved? Would it be easier to assume they will be a bar and grant them a general license to be classified after sales are recorded?

Why differentiate? Is it because of the neighborhood?

This is attributed to Audit purposes, is there a rational here that I am not seeing?

 

        1. Renewal of Existing Licenses

(h)

This is a new requirement to be a business in good standing. Though recognized that it is good business practice to remain in good standing why is the license contingent upon the licensee submitting a certificate? Simply put, if one government body requires the certification of another why is the business the responsible party and why must he pay for it? Will the certificate be available on line or does a businessman have to stand in line to obtain it with a certified stamp as in a tax clearance? Do we know these procedures?

 

      1. Architectural requirements / alteration of licensed premises

(c)

Permanent Increase requires neighborhood board notification.

OK, does that mean temporary extensions are exempt from that notification?

(e)

Inspection after granting an increase, a final inspection required before use. Will this inspection be timely? Is this necessary or more bureaucratic impediment? Is this more in the realm of building inspectors?

3-84-72.2 Premises Lighting; Doors

Any person other than an on-duty employee, thus excluding off duty employees.

This phrase is strictly for your own viewpoint as to keeping the doors unlocked. This defies safety and security of the staff and looks from only an offense perspective. There are many occasions when staff that is not on duty may be at the location before it opens for employee meetings, etc.

Though good intentioned to clarify circumstances this wording only complicates matters and will lead to misinterpretation of the rule if not now when intent may be obvious but later.

Please take a serious look at this section and make it conform better to real circumstances.

        1. Quality of Liquor

Dispensing only from original container;

Why? To prevent switching of liquor? Poor for good.

Does this reflect strictly liquor? Wine? Beer? Is any decanting allowed?

What if someone buys 1.75 ltrs must he dispense from them?

 

        1. Conduct of Employees

(f)

No Employee while on duty shall engage in violent, quarrelsome, disorderly, lewd, immoral, or unlawful conduct on the premises.

This leaves a lot of interpretation.

Who determines what is violent, quarrelsome, disorderly, lewd, immoral, or unlawful conduct; the inspector, the Commission, the Administrator, the District Court, the Supreme Court?

Is a dirty joke lewd? Can a bartender no longer tell a dirty joke behind the bar?

If an employee is struck must he remain nonviolent at risk of life and limb?

Does this greatly increase the possibility of lawsuits?

Who is this enforced upon ,the business or the employee? Will you cite the business and owner for an individual’s actions?

What if a manual exists outlawing such behavior but the employee acts anyway?

This is a shady area to define and will cause more interpretive problems.

        1. Solicitation of Business outside of Premises

Within a twenty foot radius

Why a definition of this distance? Will it be from the doorway or farthest extant of premises?

What is the purpose of this section? Does this promote the desired actions or just limit where they occur?

        1. Stacking of Drinks

This definition only compounds the matter and does not solve the issue.

Quite honestly after reading multiple times I still don’t understand it.

It appears nobody drinking a pint of beer can have a shot with it? Standard pours for draft beer are 16 ounces. This definition ignores that. Most bars have moved to draft to ease the bottle deposits.

Trying to inform tourists from around the world is like trying to convince the UN this is a good thing.

Keep it Simple “ No more than two drinks in front of you at any one time.” If you see a violation by a customer don’t enforce it, educate. If you see a violation by staff do the same but give a warning, if you see it persisting at that location then enforce.

The last call provision for pitchers or any pint is nearsighted at best. Where is there a definition of last call? Each bar has its own interpretation and enforcement of the matter and that is how it should be, we don’t need an official definition of last call because each bar is different.

 

3-85-91-12 Licenses under Safekeeping

This section is common sense and should meet no disapproval.