The 6th meeting of the Interim Joint Committee on Licensing and Occupations was held on Friday, November 13, 2009, at 10:00 AM, in Room 129 of the Capitol Annex. Representative Dennis Keene, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Gary Tapp, Co-Chair; Representative Dennis Keene, Co-Chair; Senators Tom Buford, Julian M. Carroll, Perry B. Clark, Carroll Gibson, Denise Harper Angel, John Schickel, Dan "Malano" Seum, Kathy W. Stein, Damon Thayer, and Robin L. Webb; Representatives Tom Burch, Larry Clark, Ron Crimm, David Floyd, Dennis Horlander, Joni L. Jenkins, Adam Koenig, Reginald Meeks, Charles Miller, David Osborne, Darryl T. Owens, Ruth Ann Palumbo, Carl Rollins II, Sal Santoro, Arnold Simpson, Ron Weston, and Susan Westrom.
Guests: Geoff Russell, Chairman of Kentucky State Acupuncture Association, member of Kentucky Medical Licensure Board, Acupuncture Advisory Committee; Oliver Barber, attorney for the Kentucky Acupuncture Association; Eric Gregory, Kentucky Distillers Association; Daniel Meyer, Wine and Spirits Wholesalers of Kentucky, Inc.; Lowell Land, Kentucky Vineyard Society, Chuck Smith, owner Smith-Berry Winery and Vineyard, past-president Kentucky Vineyard Society.
LRC Staff: Tom Hewlett, Bryce Amburgey, Carrie Klaber and Susan Cunningham.
The minutes of the October 9, 2009, meeting were approved as submitted without dissent.
First on the agenda Representative Tom Burch presented BR 250, AN ACT relating to acupuncture, which has been prefiled. He said the bill changes the status of acupuncture from a certified professional to a licensed profession. In section 6, the penalty is changed for a person who practices without a license from a class A misdemeanor to a class D felony. Also, the requirement was changed to notify the patients primary care physician rather than consult with the physician if the patient's condition was uncontrolled hypertension, cardiac conditions and diabetes or other serious condition. Oliver Barber, attorney for the Kentucky Acupuncture Association, said he was available to answer questions regarding the bill. Geoff Russell, Chairman of Kentucky State Acupuncture Association, and member of the Kentucky Medical Licensure Board, Acupuncture Advisory Committee, told the committee that changing from certification to licensure would bring Kentucky in line with other states that license acupuncturists. He said the board is requesting modification of requirements to report to a physician for conditions such as diabetes or hypertension unless these conditions are uncontrolled. He said physicians, to date, have not replied to paperwork submitted to them and it is presumed that there is no objection to these patients with controlled diabetes or hypertension receiving acupuncture treatments.
Representative Floyd asked why it was necessary to change acupuncture from certification to licensure, particularly when a penalty increase was noted in the language of the bill. Mr. Russell said the disciplinary action is a result of a grey area in the law that allowed people to practice acupuncture without a national license. Mr. Barber said currently there is no punishment for practicing acupuncture without a license; however, the medical licensure board can request a cease and desist of individuals who are practicing without a license. Senator Tapp asked if licensure versus certification made a difference in the reimbursement rates received from insurance. Mr. Barber responded no. Representative Owens asked if the acupuncturist was required to consult with a physician or only to notify the physician of treatment. Mr. Russell said that there is a list of 10 conditions that require an acupuncturist to notify the patient's physician when they exist. Representative Burch said the medical profession has taken an interest in acupuncture and that this bill fine-tunes previous legislation. Representative Keene said he did not like changing the penalty from a class A misdemeanor to a class D felony. Mr. Barber responded that the penalty section of the bill could be changed.
Next on the agenda, Representative Susan Westrom addressed the committee regarding bourbon tasting legislation. She said this is important to the bourbon industry and the ability showcase the industry at the World Equestrian Games. Eric Gregory, President of the Kentucky Distillers Association, thanked the committee for the opportunity to address them regarding modernizing Kentucky's bourbon laws. He said the proposal would update laws regarding the promotional sampling of distilled spirits and modern marketing practices. He said Kentucky is the birthplace of bourbon, producing 95 percent of the world's supply. However, under current law Kentucky distillers are limited in their ability to showcase their products at tasting events outside the distillery grounds. Mr. Gregory said the proposal would allow distillers to conduct promotional sampling events only at locations that have a license to sell distilled spirits at retail. He added that the legislation does not allow sampling events in dry areas. The proposal clearly spells out guidelines for a sampling event, which would be regulated and enforced by the Kentucky Alcoholic Beverage Control Board.
Jerry Summers, Director of Community Relations for Beam Global Spirits and Wine added that Jim Beam had developed a "drink smart" program and felt that the legislation ensured that products were distributed in a responsible manner.
Dan Meyer, Executive Director and General Counsel for Wine and Spirits Wholesales of Kentucky, Inc. said the legislation was important to the spirits and wine industry. He said it gives the wholesalers and the distillers, who know their products the best, the ability to educate consumers while offering a sample of the products.
Representative Clark asked what the branded, non-alcoholic promotional items would be. Mr. Gregory said items such as key chains and commemorative bungs. Representative Floyd asked how the legislation ensured appropriate taxes are paid. Mr. Gregory said that the samples would be purchased through a licensed retailer, who would pay taxes on the products. Representative Crimm asked if the limit of three, half-ounce samples per day was per location. Mr. Gregory said, as much as it could be controlled, yes.
Last on the agenda, Lowell Land, owner of Acres of Land Winery and board member of the Kentucky Vineyard Society, told the committee the society would like to endorse a new license for wineries. He said that wineries that exceed production of 50,000 gallons per year should be eligible for another license with a cap of 250,000 gallons. He said the society did not want to inhibit any winery's potential to grow. He said the small farm wineries have benefited from the leadership of the General Assembly and help with legislation passed in 2006. He said there are currently 50 small farm wineries in operation. Mr. Land said there are three provisions in the current license that are very important for small farm wineries; the exemption from the 11 percent wholesale tax, the marketing assistance fund, and the tasting room. Mr. Land said the tasting room is very important to any winery and should be continued on the 250,000 gallon license. However, the issue of exemption from the 11 percent wholesale tax, if extended up to 250,000 gallons of wine, would allow more out-of-state wineries to come into Kentucky. He said this would potentially put Kentucky small farm wineries out of business. Mr. Land said that the owner of the Kentucky winery who is now able to produce more than 50,000 gallons of wine per year has said he is willing to pay the wholesale tax. He said this would be more revenue for the state in sales tax collected. Mr. Land said, in short, the society was asking for a new license for production over 50,000 gallons up to 250,000, that would eliminate the wholesale exemption and the cost share advertising, but keep the tasting room.
Senator Thayer said he was concerned that it was unfair to take away a tax exemption because someone was successful. Senator Webb asked if there has been a fiscal analysis done on the proposal of the exemption. Mr. Land said no. Representative Burch asked if raising the production volume to 250,000 would encourage other states to come to Kentucky. Mr. Land said other wineries are welcome to come in; however, if other larger wineries were allowed to come into Kentucky under the wholesale tax exclusion it would be problematic. Representative Clark asked if all the small farm wineries have been polled. He said he was concerned that creating marketing advantages for large wineries would put the small wineries out of business.
Chuck Smith, Smith-Berry Winery, commented that the board of the Kentucky Vineyard Society was made up of 12 members from all across the state, representing grape growers, farmers and winery owners. He said the board of directors are all in agreement with legislation for a new wine license.
Senator Thayer asked if there was a new license with a higher production cap, that continued to allow the first 50,000 gallons to be exempt from the wholesale tax, would it draw a significant number of wineries from out-of-state into Kentucky. Mr. Land said he did not anticipate wineries locating in Kentucky as much as wineries from other states getting a Kentucky distributors license and taking advantage of the exemption. Dan Meyer said it gives out-of-state wineries the ability to hold a license and have no physical presence in the state. Senator Buford said it would not take much for an out-of-state winery to have a presence in Kentucky and it would be hard to regulate the actual amount of wine being shipped in. Senator Tapp said Senate Bill 82 is working very well and said caution should be taken to avoid losing everything that has been accomplished. Mr. Land said the last thing the society wants to do is hurt the industry and they want to work with everyone.
There being no further business to come before the committee the meeting was adjourned at 10:55 AM.