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HomeMy WebLinkAbout2017-04-20 Liquor Adjudication Board Minutes COUNTY OF HAWAII DEPARTMENT OF LIQUOR CONTROL LIQUOR ADJUDICATION BOARD THURSDAY, APRIL 20, 2017 DEPARTMENT OF LIQUOR CONTROL, MEETING ROOM WEST HAWAII CIVIC CENTER, 74-5044 ANE KEOHOKALOLE HIGHWAY, BUILDING B, 2ND FLOOR, KAILUA-KONA, HAWAII I. Call to Order The meeting was called to order by Chair Bryan Lindsey at 10:07 A.M., in the Meeting Room, Department of Liquor Control, West Hawaii Civic Center, 74-5044 Ane Keohokalole Highway, Building B, 2nd Floor, Kailua-Kona, Hawaii. The following members were present and constituted a quorum: Adjudication Board: Bryan Lindsey, Chair Sidney Fuke, Vice Chair Geraldine Giffin, Board Member Riley Smith, Board Member Others Present: Gerald Takase, Director Brandon Gonzalez, Administrative Officer Renee Schoen, Assistant Corporation Counsel (Department) Craig Masuda, Deputy Corporation Counsel (Board) Stacie Waltjen, Licensing Tech I Nyssa Aoki, T/A Secretary to the Board Lindsey: Good morning everyone, I'd like to call this hearing for the Liquor Adjudication Board to order. At this time we'd like to ask everyone silence their mobile devices and we'd like to begin with introductions starting immediately to my left. Giffin: Geraldine Giffin, Board member. R. Smith: Riley Smith, Board member. Lindsey: Bryan Lindsey, Chair. Masuda: Craig Masuda, Counsel for the Board. Fuke: Sidney Fuke, Board member. Gonzalez: Good morning Brandon Gonzalez, Administrative Officer. Schoen: Good morning, Renee Schoen, Assistant Corporation Counsel, on behalf of the Department of Liquor Control. Aoki: Good morning, Nyssa Aoki, T/A to the Secretary. Waltjen: Good morning, Stacie Waltjen, Licensing Tech. Takase: Gerald Takase, Director. Lindsey: Thank you. II. Approval of Minutes Lindsey: The December 8, 2016 minutes were circulated via email/mail on April 12, 2017. May I get a motion to approve? R. Smith: So moved. Giffin: Second. Mr. Smith moved that the minutes of the meeting held on December 8, 2016, be approved as circulated; seconded by Ms. Giffin. Lindsey: It has been moved and seconded. All those in favor say "Aye." The Board members voted "Aye." Lindsey: All those opposed? There was no opposition by the Board members. Lindsey: Chair votes "Aye." Motion carried. The motion was carried unanimously. III. Hearings Lindsey: We'd like to proceed with our first hearing on Case No. 2017-003, entitled In the Matter of Accusation Against Margarita Village, LLC, dba Margarita Village Mexican Cantina will now be taken up. Will the parties and Counsel please identify themselves and state who they represent? 3. CASE NO. 2017-003 (10:00 A.M.) In the Matter of the Accusation Against Margarita Village, LLC, dba Margarita Village Mexican Cantina, located at Hilo, Hawaii. APRIL 20, 2017 - LIQUOR ADJUDICATION BOARD MINUTES 2 COUNT I Informal Hearing (Alternative II) on violation of Rule 3-1-S of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control of the County of Hawaii, State of Hawaii, liquor (Natural Light Beer) from other than a wholesale dealer or licensed manufacturer. COUNT II Informal Hearing (Alternative II) on violation of Rule 3-1-S of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control of the County of Hawaii, State of Hawaii, bringing their own liquor (Natural Light Beer) onto the premises. COUNT III Informal Hearing (Alternative II) on violation of Hawaii Revised Statutes Section 281-40, as amended, having or keeping any unauthorized liquor, for sale or consumption, on or in connection with the licensee's licensed premises, by having a thirty-pack of"Natural Light Beer" that was not provided from a wholesale dealer or licensed manufacturer. COUNT IV Informal Hearing (Alternative II) on violation of Rule 3-1-S of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control of the County of Hawaii, State of Hawaii, liquor (Crown Royal Whiskey and/or Patron Tequila and/or Smirnoff Vodka) from other than a wholesale dealer or licensed manufacturer. COUNT V Informal Hearing (Alternative II) on violation of Rule 3-1-S of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control of the County of Hawaii, State of Hawaii, for bringing Crown Royal Whiskey and/or Patron Tequila and/or Smirnoff Vodka onto 'the premises without records detailing the purchase from a wholesaler or licensed manufacturer. COUNT VI Informal Hearing (Alternative II) on violation of Hawai'i Revised Statutes Section 281-40, as amended, for having or keeping any unauthorized liquor(Crown Royal Whiskey, and/or Patron Tequila and/or Smirnoff Vodka), for sale or consumption, on or in connection with the licensee's APRIL 20, 2017—LIQUOR ADJUDICATION BOARD MINUTES 3 licensed premises, on its premise that was not provided from a wholesale dealer or licensed manufacturer. COUNT VII Informal Hearing (Alternative II) on violation of Rule 3-1-S of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control of the County of Hawaii, State of Hawaii, liquor (a thirty-pack of "Natural light Beer") from other than a wholesale dealer or licensed manufacturer. COUNT VIII Informal Hearing (Alternative II) on violation of Rule 3-1-S of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control of the County of Hawaii, State of Hawaii, bringing their own liquor (Natural Light Beer) onto the premises. COUNT IX Informal Hearing (Alternative II) on violation of Hawaii Revised Statutes Section 281-40, as amended, for having or keeping any unauthorized liquor(Natural Light Beer), for sale or consumption, on or in connection with the licensee's licensed premises, that was not provided from a wholesale dealer or licensed manufacturer. Ryan Williams, President, was present. Schoen: Good morning, Renee Schoen, Assistant Corporation Counsel, on behalf of the Department of Liquor Control. Williams: Ryan Williams, on behalf of Margarita Village, LLC. Lindsey: Thank you. Assistant Corporation Counsel, would you please read the Complaint and Accusation and the answer to the complaint? Schoen: Thank you. Mr. Chair, the Licensee states that he is willing to waive the reading of the nine counts contained in the complaint. He has responded with Alternative II, which means that he admits the allegations and waives a right to a hearing and appeal, but is requesting an informal hearing so he can explain the circumstances surrounding the violation. Lindsey: At this time, we will entertain a motion to find the Licensee in the violation of the charge. Giffin: I so move. R. Smith: Second. APRIL 20, 2017— LIQUOR ADJUDICATION BOARD MINUTES 4 Ms. Giffin moved that the Licensee in Case No. 2017-003, be found in violation of Rule 3-1-S of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control of the County of Hawaii, State of Hawaii and Section 281-40 of the Hawaii Revised Statutes, as amended; seconded by Mr. Smith. Fuke: Just to clarify, this will be for all nine violations? Giffin: Counts. Schoen: Yes. Lindsey: All those in favor say "Aye?" The Board members voted "Aye." Lindsey: Those opposed, "Nay?" There was no opposition by the Board members. Lindsey: Chair votes "Aye." Motion carried. The motion was carried unanimously. Giffin: Mr. Chair? Lindsey: Yes? Giffin: Is this point for discussion before we proceed or should I wait? Lindsey: I believe he is going to do his presentation now. Is that correct? Schoen: Yes. Giffin: All right. Williams: I'd like to take this opportunity to offer an explanation as to the circumstances surrounding the violation and explain the steps that I've taken to correct the problem and make sure it never happens in the future. First, in regards to the beer that was on the premises, I'd just like to acknowledge that it was very stupid and wrong on my behalf. What had happened in that week, there was some sort of tournament in town, for volleyball, and a lot of"uncles" were visiting Keaukaha at the time and we didn't carry the product of Anheuser-Busch, Natural light, in a can. The "uncle", sort of, really demanded and insisted that we make that beer available for them to drink. So, against my better judgment, I made the decision to get a couple of containers of that beer for them until we could add that product to our inventory, until we could order APRIL 20, 2017 - LIQUOR ADJUDICATION BOARD MINUTES 5 properly from Anheuser-Busch the following week. I know there are two counts. The second count, they came back a few days later and found the product on the shelf. But I just want to say that the product was already there on the day of the first violation. I didn't purchase after the fact, is what I'm saying. I didn't disrespect what the Investigator had said to me and purchased later. I should have turned over all of that to him at the time and admitted what had happened. I was in a shocked state of mind, so I didn't do what I should've done in that moment. I'm not to trying to justify that this is the circumstance to what had happened. I have since added that product to our inventory and order from Anheuser-Busch from now on. In terms of trying to avoid future situations like this, we have made it a point to interview customers to find out what kind of products they may want available so we can have them if we need to. And in regards to the liquor that we had, at the same time in December, we decided to run a "Happy Hour" special for Patron and Crown. I had placed an order with the distributor and printed out some flyer and table tents to promote that "Happy Hour" special, and the delivery for some reason never came the day we were expecting it. When I called the distributor to see what had happened, they said one of the items was out of stock so the total for the order went below what they considered to be the minimum requirement for a delivery. They essentially cancelled the order and didn't send it. They said I could come to Kawaihae to pick up the order but I didn't have access to a vehicle at the time. The woman suggested if there was a place I could grab a couple of bottles to get through to the next week. So again, "stupid me", I did that. But, the following week the proper order came. The steps that I have taken to avoid this problem in the future, is have made arrangements for them to add a second delivery day, therefore, if there is a problem we can correct it and they can deliver it in a couple days later. I've given my personal cell number to the drivers and people in the office so if there is a problem, they can call me and take care of it right away. I just want to say this is a very serious situation and I promise to not let this happen again in the future. Lindsey: Do we have any questions from the Board? Giffin: My question, I think you answered. I really wanted to know why. Why did you do this? Williams: Yeah, stupid, really. In regards to the beer, especially, it's a kind of a minor beer, nothing major. The interaction between the "uncles", especially in Keaukaha, is kind of intimidating at times, especially being a white person in Keaukaha. I gave into something I shouldn't have. Fuke: I have a question, Mr. Chair, but not so much for Mr. Williams, but for the staff. What is the purpose behind that requirement? Does it relate to income generation? Takase: We go way back to the way the system is set up. I think you folks have been to conferences where they explain the three-tier system: manufacturers, wholesalers, retailers. That's the way we're set up and that's the way our laws are set up to make them buy from the wholesalers. It's two-fold. One, so we can keep track of sales and the way we usually would keep track of sales by the retailers is to compare their sales APRIL 20, 2017— LIQUOR ADJUDICATION BOARD MINUTES 6 versus what they are ordering form the wholesalers. This isn't the first instance of a retailer doing that. We've had other ones in the past, where a lot of time, maybe similar situations, they are short or they don't have the item so they run to the store and get it. We see other operations where they make a considerate effort to bypass the wholesalers. Typically, we'll get notified by the wholesalers because suddenly they see their product in there and they know they're not buying from them. That's usually the bigger problem; that they're not following that mechanism. With Costco here, it has actually created a problem. I'll admit that sometimes Costco is cheaper than what the wholesalers are selling. I can understand why they do it, I guess, but that's the world they live in. They have to abide by these rules. Fuke: So it's a protection for the wholesalers, in a way? Takase: That could be one. Secondly, they are paying their fair share in gross revenues. If they don't buy it from the wholesalers, they don't report it at all in sales and that becomes a bigger problem. Fuke: I can see if you can purchase things on consignment and you don't utilize it and return, then that's fine. But I would imagine, in situations like this, you can't purchase the alcohol on consignment or can you? Takase: I don't know. I think they can. They can return unopened liquor. Especially with beer, it has a shelf life. So if they don't sell it the wholesaler will take their returns. Like I said, there are two instances where they just run out because they didn't get their orders in on time or they had a big rush on a certain product. That's the first instance and it's probably not as bad as the second instance where there is a considerate effort to buy liquor, say from Costco and avoid the process. But, we haven't seen too much of that anymore because the wholesalers are really the ones who notify us. Fuke: So, in this situation where he purchased a 30-pack from KTA, and the second one you couldn't figure out whether you purchased it or if it came from your house. It doesn't matter; if you purchased the beer from an establishment or you brought it from your home to supplement your business, it's still not legal? Takase: Yes, it has to be through the wholesaler. It's also to ensure product quality. I don't think we see it too much here. On the mainland, there are places of counterfeiting where they will take out the product and put something else in it and try to sell it with Crown Royal. I think most times the patrons are sharp enough to know that it isn't what they ordered. Fuke: Another question I had, the report said you confiscated the beer. What happened to the confiscated beer? Takase: It's still in the evidence locker. Fuke: And how long are you folks going to keep it? APRIL 20, 2017—LIQUOR ADJUDICATION BOARD MINUTES 7 Takase: Until this case is finished. Fuke: Then it goes back? Takase: No, they'll probably just destroy it. Fuke: Okay, thank you. Lindsey: Anymore discussion? R. Smith: I had a question. You know in your explanation of the hard liquor, you said that you made an order but it wasn't delivered? Williams: Correct. R. Smith: And in the report from the Investigator, they said they had only supplied you with the product in 2016 after this incident. So you hadn't ordered these products previously from Southern Glazers? Williams: [Inaudible] R. Smith: No, like new products for inventory for your business? Williams: Yes. R. Smith: Are these products that you carry now? Williams: Yes. Giffin: Because of the "Happy Hour" promotion? Williams: Right. R. Smith: So, have you worked with Southern Glazer's previous to December 8th? Or was that the first time you had ever dealt with them? Williams: A while ago we did. We had an account with them. We just hadn't ordered from them in a while. R. Smith: It just seems unprofessional of them to take your order and then cancel the whole order without informing you they didn't have the product. Williams: I was confused by it as well. But I guess they have a minimum required for a delivery to go though. They said they place the order in their system and if the inventory isn't in stock, it doesn't print out at the warehouse for it to go on the truck for APRIL 20, 2017 — LIQUOR ADJUDICATION BOARD MINUTES 8 deliver. Which is why when they take an order now, I confirm that everything is in stock. I actually call in the morning if we are expecting a delivery to verify that it's on the truck. The deliverer has my personal cell number so if there is a problem he can call me and we can address it. Lindsey: Any more discussion? Fuke: Couple more. Is this your first violation of anything regarding the liquor regulations? Williams: Regarding this, yes. Fuke: Have there been any other type of violations? Williams: A couple of years ago, there was an incident where a friend of mine had drank too much and we offered to give her a ride home at the end of the night. Fuke: I remember that. It was past closing time but she was just in the bar. Williams: Right. Aside from that, I believe we've been in really good standing for over 12 years now. Lindsey: I think Counsel is going to cover that with us. Fuke: The other question I had is totally irrelevant, but I'm a little curious, So, you sided with the so called intimidation factor and that's why you had to get the 30-pack of Natural Light. Once the Inspector [sic Investigator] came and said he was going to shut you down, what was the reaction of your so called "uncles?" Williams: They weren't happy. But there were still a couple of cases that we had bought so there was still product for them. Like I said, in the moment, I wish I had admitted and turned everything over to the Investigator. I was just in a very stunned, maybe, shocked state of mind. Fuke: So you were there? Williams: Yes, I was there. Fuke: And they continued to party? Williams: Yes. Fuke: Without the Natural Light? Williams: Like I said, there was still product there so they did continue to drink. APRIL 20, 2017 — LIQUOR ADJUDICATION BOARD MINUTES 9 Fuke: Product, being like non-Natural Light, but other products? Williams: No, it was the Natural Light. Like I had said, I had bought a few cartons of it. The Investigator confiscated the one carton that he saw we had. Lindsey: Any more questions? If none, we will ask Counsel to please review the Report from the Department of past violations and recommendations of penalty. Schoen: Yes, Mr. Chair. As the Licensee stated, there was a previous violation on August 22, 2014, related to violation of Rule 3-8-B, patrons remaining on the premises after 2:00 A.M. He does claim that he has been in good standing for the past 12 years. Actually, there was a violation in 2006, for possession of consumption of liquor within the premises after business established by the Commission. There was also a violation of Rule 3-6-C, failure to pay timely payment of percentage fees and also another violation in 2005, for failure to file report of Initial Report of Gross Liquor Sales. The Department is recommending a fine be imposed for each Count of$1,000. The fines for Count I, II, IV, V, VII and VIII, be suspended. And fines for Counts III, VI, and IX, be imposed for a total of$3,000. We are asking that the suspension of the fines be on the condition that no further violations occur within 12 months of receiving the Decision and Order and payment of the $3,000 that is being imposed, immediately, be paid within 30 days of receipt of Decision and Order. The license in this case was issued temporarily on November 12, 2003. Lindsey: Is there any discussion on the penalty? Fuke: I just had one clarification. Renee, the suspension and the reduction would be predicated upon no similar violation of any other infraction of the rules? Schoen: Yes, no further violation within 12 months and payment of$3,000. Fuke: So that's any violation? Schoen: Any violation. R. Smith: Renee, I had a question. Looking at the Investigator's Report, there were problems that occurred on December 8th and problems that occurred on December 10th Are those two different violations? If you're found guilty first, is the second one found on the 10th a subsequent violation that would maybe have a higher penalty? Schoen: No. R. Smith: Is it all one violation? Schoen: The violations are all by date. If you look at Counts I, II, III, IV, V and VI, they are for December 8, 2016, and Counts VII, VIII and IX, is for December 10th APRIL 20, 2017— LIQUOR ADJUDICATION BOARD MINUTES 10 Gonzalez: Brandon Gonzalez, Administrative Officer. It is not a prior violation until they are found in violation by you folks and a penalty is imposed. Because the penalty is happening at one time, even though the date of the action is a different date, it's not a prior because no penalty was imposed. Good question. Fuke: Another question. Is the Licensee aware of what the Counsel is recommending? Williams: Yes. Fuke: And what is your position on that? Williams: I'm not trying to get away with anything. I do accept any penalty that is decided. Fuke: So you accept what has been recommended? Williams: I do. Fuke: Bottom line, the recommendation is a payment of$3,000 within 30 days provided further that there is no other infraction of the liquor rules? Schoen: That is correct. It sounds like a lot, but the Department is being generous being that the maximum amount of penalty could be $2,000 for each count, under HRS 281-40. Fuke: Mr. Chair, I move that we accept the Counsel's recommendation for the penalties. Giffin: Second. Mr. Fuke moved that the Licensee in Case No. 2017-003, be assessed a penalty in the amount of$1,000.00 for each count for a total of $9,000.00. That for Counts I, II, IV, V, VII, and VIII, ($6,000.00), be suspended for twelve (12) months from date of service of the Decision and Order, on the condition that there are no further violations of any kind during that period. That the penalties for Count III, VI, IX are imposed and that the Licensee is assessed penalties of$3,000.00, to be paid within thirty (30) days of receipt of the written Decision and Order; seconded by Ms. Giffin. Lindsey: It has been moved and seconded. Any discussion? There was no discussion from the Board members. Lindsey: Hearing none. It has been moved and seconded. All those in favor say "Aye." APRIL 20, 2017—LIQUOR ADJUDICATION BOARD MINUTES 11 The Board members voted "Aye." Lindsey: Those opposed say "Nay." There was no opposition by the Board members. Lindsey: Chair votes "Aye." Motion carried. The motion was carried unanimously. Schoen: Mr. Chair, I ask that Case No. 1 be called. Lindsey: Moving on to Case 2017-001, entitled In the Matter of the Accusation Against Samantha Smith, doing business as Edible World Institute, will now be taken up. Will the parties identify themselves and state who they represent? 1. CASE NO. 2017-001 In the Matter of the Accusation Against Samantha Smith, dba Edible World Institute, located at Kailua-Kona, Hawaii. Informal Hearing (Alternative II) on violation of Hawai'i Revised Statutes Section 281-3, as amended, sale of liquor without a valid license. Samantha Smith, Founder and President, was present. Schoen: Mr. Chair, Renee Schoen, Assistant Corporation Counsel, on behalf of the Department of Liquor Control. S. Smith: I'm Samantha Smith. I represent Edible World Institute. We're a non-profit here in Kona. Schoen: Mr. Chair, the complaint alleges that on or about the 5th day of November, in the County and State of Hawaii, the non-licensee, Samantha Smith, doing business as Edible World Institute, while providing a venue for the "Ladies Artesian Market" event, did sell liquor without a valid license, in violation of HRS Section 281-3. Ms. Smith has chosen Alternative II, in answer to the complaint, which is a stipulation, waiver and a request for an informal hearing. Lindsey: The Chair at this time will entertain a motion to find the licensee in violation of the charge. R. Smith: So moved. Fuke: Second. APRIL 20, 2017—LIQUOR ADJUDICATION BOARD MINUTES 12 Mr. Smith moved that the non-Licensee in Case No. 2017-001, be found in violation of Section 281-3 of the Hawaii Revised Statutes, as amended; seconded by Mr. Fuke. Lindsey: It has been moved and seconded. At this time I'll call for a vote on the matter. All those in favor say "Aye." The Board members voted "Aye." Lindsey: Those opposed say "Nay." There was no opposition by the Board members. Lindsey: Chair votes "Aye." Motion carried. The motion was carried unanimously. Lindsey: We will now open it up for discussion. Schoen: Mr. Chair, I believe Ms. Smith is here and she wants to present her position on the violation. S. Smith: First of all, thank you very much for everybody putting time in this morning to provide a forum for explanation. Sitting here today with all of you in attendance, certainly realize the process of alcohol in the community is a big responsibility and in no way do I want this violation to reflect anything other than my utmost respect for the impact that alcohol can have. I'm here to be better about the way that my organization handles that responsibility so thank you for the hearing. I will say that on that evening, I attempted to make sure that we were in compliance with the information that I received from the Liquor Commission, from calling them to find out how to handle a donation based service. In executing that, I realized we did not do a very good job of expanding the information to the servers, the hostesses, and the folks who were at the front of that event to welcome folks into the door. We wanted to set a range where people would consider donating to the organization and the events that we have at the Edible. All are in an effort to build a licensed kitchen facility, which will facilitate the mission of the Edible, which is to teach young people about food and cooking from local farmers and from this local resource that we have. We are very diverse in whom we entertain collaborations with and a part of that is to service the community in a way that helps them enjoy the events and really supports the effort. The alcohol was a gift from Kona Brewery, which is one of our great local organizations. That was a surprise that they were going to do that for us. Even though we had an opportunity to seek a special permit, we did not have the time to do that because it's a 10-day filing and process for APRIL 20, 2017 —LIQUOR ADJUDICATION BOARD MINUTES 13 that. In executing that, we put out a sign that said $5 and set up a kiosk to manage the crowd. We actually had a very good turnout at that event. We imagined it would be a crowd of about 200, which turned into a crowd of about 500. We put that separate kiosk up in order to follow some of the required procedures. We especially made sure we checked ID's and tagged folks, whether it was with a stamp or an arm band. We also tried to limit the amount of alcohol that was consumed by one person. When the Commission officers arrived, they promptly asked questions to one of the folks in charge of the kiosk of checking ID's. The answers obviously were not reflective of the information I had gotten from the Liquor Commission. I say it is my fault for not making certain that the information was clearly understood by all. We are a donation based establishment offering, at that point, offering alcohol to the attendants. Considering the gift of the donation was so generous and such a good prize, we really had nothing to lose that evening. In an effort for folks who were making an effort to help us, that effort was not in compliance. I take full responsibility for not extending the information far enough and clearly enough and that is the unfortunate circumstances that brings me here today. Lindsey: Do we have any questions from the Board? R. Smith: I have couple of questions. Looking at the report here, it talked about a prior visit in April of 2016, where the Investigator explained what the rules were. Sometime prior to this situation, the rules you have to follow were explained to you. S. Smith: Yes, sir. In fact, I do believe that the prior visit was regarding an event that was "B.Y.O.B." We were chilling their wine or beers and opening and pouring it for them. We labeled all the bottles. It was supposed to be a somewhat formal event. Instead of wanting them to feel like they had to get up, we had volunteers pouring for them. The Commission told me that if you're staff is pouring, that is a violation. That was the extent of our conversation and what we were doing. That is what precipitated my call to the Commission to find out a little bit more about what to do next after we got this great donation from Kona Brew. R. Smith: I guess my question is, this report talks about a three-course dinner, creole fusion, and optional beverages available. That's not consistent about what you just said about people bringing their own and you guys serving. You guys were selling. S. Smith: There is a wine shop, just around the corner from us, Westside Wines. Alex is a great part of our community now and upping the quality of the shopping experience in town. We set up a purchasing agreement with Alex. We wanted him to pair the menu with food and wine. He offered a wine program that we communicated with our attendees to match with their meals. We encouraged them to buy those wines because that's a relationship that enhances what we do. We are within 200 yards of each other. APRIL 20, 2017—LIQUOR ADJUDICATION BOARD MINUTES 14 It was more of a business-to-business availability. That's why we said it was available. We were ignorant on a lot of it. R. Smith: So, you weren't selling it? S. Smith: We weren't selling it. I did know that we couldn't sell. R. Smith: The other question I had was, when the Investigator was there, in his report he talked to Forrest and he asked, "If a person if a person did not make a donation of $5, would they be able to still get a glass of beer or wine?" The answer was no. S. Smith: Right. R. Smith: So you were selling it. If you were giving it for free, then you wouldn't have been selling it, but if you charged them, required a donation, you would be selling it. S. Smith: That's exactly right. I think they were all answering in support of the effort, but that wasn't the right answer. That was me not stressing enough the idea of a donation. It means that we were not too worried about it. If we were worried about it, we would have done the right thing and gotten a license. I think sometimes when folks are on the ground; they start to think that everyone is trying to get something for nothing. That is just the nature of people. But, we don't need it and that is probably our violation right there. R. Smith: I guess my concern too, the day before, you talked to Director Takase about what the rules were and he suggested since you don't have a license, you can ask for a donation, but you can't require a donation. Your signage and staff member that was providing liquor was saying you had to make a donation. Clearly a violation here. S. Smith: Communication is an art form that is being refined. I am refining on a daily basis. Sometimes you think people understand you from a perspective that you mean to speak, but without breaking down these things in elementary format and especially considering we are governed by somebody or something or body, that it's not about us. That is not how we think. It is my responsibility. I realize that I need to understand what the Commission wants from people in this community that handle alcohol and to let my staff know. We attempted to be great at this by asking for the help that was being donated. The Commission/officers did acknowledge we were working with some other of the local bartenders, who all had blue cards and it was because I wanted experience in the room. We're better now and we have events on the books right now. We have a great relationship developing with both the Waimea Brew House and the Kona Brewpub who are really supportive of youth programs and work in this town. We are better poised to take advantage of how to make that happen, especially considering our focus cliental. APRIL 20, 2017—LIQUOR ADJUDICATION BOARD MINUTES 15 Lindsey: Thank you. Fuke: I have some questions for Gerald. I recall at the Kona Theatre where they used to have special licenses just to sell drinks, it mentions something that it's a 10-day period before you can get the special license. How long does it usually take to get the special license? Takase: We can probably do it in the same day. But she was calling me on Thursday or Friday and the event would be for the next day. Fuke: So you would say about a week? Is there a fee associated with securing the special license? Takase: We give the first four for free. After that, there is a $20 fee for each event. Really, if they come in with their paperwork complete, we can issue it immediately. Fuke: Is there a training requirement on the product, servers and that stuff? Takase: No, there's not. Fuke: From that standpoint, how often do you have these fundraising activities? It seems like this is going to be a biannual or multiple times during the course of the year. You're not only going to be working with Kona Brew but also with the one in Waimea. Maybe you could apply for these special licenses in advance. You know when you're going to have these events and you could elect not to exercise the special event license if you just want to do purely donations as the Director suggested. Or alternatively, if you would like to charge, you would have that option. Takase: I did talk to Samantha just prior before the meeting started today. We went over her options. I think she understands what a donation is and what the event should've been. And I think she's trying to say she didn't communicate that well with her underlings. When they were asked, they said they had to pay the $5 or else they were not getting any more drinks. She told me she made a lot more by having the donation out there. They suggested $5 but people were dropping more. I told her if she gets her paperwork in, she can get special licenses from us. Fuke: Getting back to these special licenses, how do you exercise control over minimizing underage serving, for example, or excessive serving? Takase: They don't have to go through formal training like our regular licensees. We rely upon them. They will appoint someone and it doesn't need to be a blue card holder. A lot of times, they will seek someone who does work in a bar and they will try to "police" those things. It's the way it's set up. It's not really made for enforcement as we would with a normal Licensee. You folks could all just be the servers at an event and you really wouldn't have any formal training. We don't usually have any problems because you usually have to pay to get into the event. APRIL 20, 2017- LIQUOR ADJUDICATION BOARD MINUTES 16 Fuke: The other thing is, they go to Kona Wine Market, they don't have a license and buy the wine. Alex is a very good wine pairer. They can't pour it? Or only the person who purchases can pour it? Takase: No, they could pour it for them. What you're explaining in the first event, that probably would've been okay. Special licensees do not have to buy from a wholesaler. The can buy from a wholesaler but they are given authority to go straight to the retailer to purchase liquor. Fuke: I guess if you have your fundraiser, your special dinners and meals; you have the arrangement with Alex, it would be OK to "B.Y.O.B." They would be in a position to serve. The person who purchases would also be able to serve the beverage that they purchased? Takase: Correct. Looking through the minutes, I suspect what they were talking about in the first one, they thought the $25 included alcohol. That's why they were telling them they couldn't be involved in it. S. Smith: I will say that he has clarified that advertising alcohol is a violation. I do believe that is why it came up as well. That would be the deal of the century. R. Smith: Based on this experience and what you've gone though and how seriously we all take this, what are you going to do the next time you have an event? S. Smith: I have already established a core group of servers who work events that are not "B.Y.O.B.", but are about being able to use the donations that come through the brewpubs. One of them also is a person who is used to "eyeballing" excessive drinking and has been employed around the Coconut Grove Marketplace for a number of years as a bouncer. I have just gotten a lot more careful about how that comes together. R. Smith: Are you planning on getting a special license? S. Smith: I am planning to utilize all opportunities to be legal and compliant. R. Smith: I take that as a yes? S. Smith: Yes, definitely, yes. R. Smith: Okay, I'm good. Lindsey: Any further discussion? If not, we'd like Counsel to give the Report from the Department. Schoen: Mr. Chair, the Department is recommending a $1,000 fine with $900 suspended on the condition that no similar violations occur within 12 months of APRIL 20, 2017— LIQUOR ADJUDICATION BOARD MINUTES 17 J.-- receiving the Decision and Order and payment of$100 fine within 30 days of receipt of the Decision and Order. Our recommending does take into account the seriousness of the offense of selling liquor without a license, but it also recognizes the fact that Ms. Smith does represent a non-profit organization. Lindsey: The Chair requests a motion to accept the recommended penalty. R. Smith: So moved. Fuke: I second. But, you're saying with $900 suspended? Mr. Smith moved that the non-Licensee in Case No. 2017-001, be assessed a penalty in the amount of$1,000.00 with $900.00 to be suspended for twelve (12) months from the date of service of the Decision and Order, on the condition that there are no similar violations (HRS 281-3) within that period; and that $100.00 is to be paid within thirty(30) days upon receipt of the written Decision and Order; seconded by Mr. Fuke. Schoen: Yes. R. Smith: And again, just to clarify, if there is a further violation in the next 12 months, the $900 is due? Schoen: No similar violation. So, in other words, selling without a license. Lindsey: Motion has been made to suspend $900 of$1,000. Chair asks all those in favor say "Aye." The Board members voted "Aye." Lindsey: All those opposed say "Nay." There was no opposition by the Board members. Lindsey: Chair votes "Aye." Motion carried. The motion was carried unanimously. Schoen: Mr. Chair, the Decision and Order will be prepared and served upon the non-Licensee. The fine will be due within 30 days of receipt of Decision and Order. Lindsey: Thank you. Schoen: Mr. Chair, may we please go on to Case No. 2? APRIL 20, 2017— LIQUOR ADJUDICATION BOARD MINUTES 18 Lindsey: Hearing on Case. No. 2017-002, In the Matter of the Accusation Against Tropics Tap House Kona, LLC, dba Tropics Tap House Kona, will now be taken up. 2. CASE NO. 2017-002 (10:00 A.M.) In the Matter of the Accusation Against Tropics Tap House Kona, LLC, dba Tropics Tap House Kona, located at Kailua-Kona, Hawaii. Informal Hearing (Alternative I) on violation of Rule 4-2-R of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control of the County of Hawaii, State of Hawaii, failure to comply with conditions set upon this liquor license by the Liquor Commission when amplified music on its premises continued after 10:00 p.m. Lindsey: Corporation Counsel, would you please read the Complaint and Accusation and the answer to the Complaint? Schoen: Yes, Mr. Chair. On or about the 18th of November, 2016, in the County and State of Hawaii, the Licensee, Tropics Tap House Kona, LLC, doing business as, Tropics Tap House, did fail to comply with conditions set upon its liquor license when amplified music on its premises continued after 10:00 P.M., in violation of Rule 4-2-R of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control. The condition was that the amplified music shall end at ten o'clock. The Licensee has chosen Alternative I, admitting to the allegation, which stipulates that disciplinary action may be taken without its presence, and waiving its right to a hearing and appeal. Lindsey: Thank you. Chair requests a motion to find the Licensee in violation of the charge. Fuke: So moved R. Smith: Second. Mr. Fuke moved that the Licensee in Case No. 2017-002, be found in violation of Rule 4-2-R of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control of the County of Hawaii, State of Hawaii; seconded by Mr. Smith. Lindsey: It has been moved and seconded. All those in favor say "Aye." The Board members voted "Aye." Lindsey: All those opposed say "Nay." There was no opposition by the Board members. APRIL 20, 2017— LIQUOR ADJUDICATION BOARD MINUTES 19 Lindsey: Chair votes "Aye." Motion carried. The motion was carried unanimously. Schoen: Mr. Chair, the license was issued on January 8, 2016. There are no previous violations. The Department is recommending a $1,000 fine and that is consistent with violations of license conditions as it relates to sound and noise. We are asking that they pay the $1,000 within 30 days of receipt of the written Decision and Order. Failure to pay would subject them to additional penalties including an Order to Show Cause to prove fitness to hold a liquor license. Lindsey: We will now open discussion for the Board. Fuke: Renee, the violator elected to choose Alternative I, so is he just pleading guilty? Schoen: Yes. Fuke: Is he aware of what the recommended penalty is? Takase: Mr. Fuke, no, I don't believe they were told. Schoen: We have had other cases for noise violations and similar violations were imposed. Fuke: For this Licensee? Schoen: Not for this Licensee, but for others. R. Smith: I think my question is for Gerald. Is this the location that used to be Drysdales? Takase: Yes. R. Smith: So the people that live below have regularly come here to complain about the noise from the prior Licensee? Takase: Yes. So if you recall, when they got the license, there were people from the community that came and that was one of their stipulations that was agreed to between the Commission and the Licensee; that music would end at ten o'clock. We were notified by the police. The $1,000 fine is pretty typical for the first violation. We look at past violations, not only for this Licensee but for other situations like this. We try to be consistent. A Licensee may not know specifically what we're going to recommend but if they review the past ones, they should know. We don't report it out to all Licensees but our records are open to all Licensees. It's not to say that we can't be inconsistent, but there will typically be reasons presented as to why we got away from the norm. APRIL 20, 2017—LIQUOR ADJUDICATION BOARD MINUTES 20 Fuke: Correct me if I'm wrong. There was a situation at the Sheraton Keauhou where there was a family who came in for dinner and the guy was playing music beyond ten o'clock. The neighbors across the bay made a complaint then the music stopped. Didn't we suspend a portion of the fine? Takase: Yeah. Fuke: Or I think this situation is a little different because the police had to come and the guy was playing music up until midnight, two hours after close time; whereas the Sheraton restaurant musician was only about 15 minutes over. Takase: I think this last Sheraton one was actually a $1,000 fine. Previously, we had a $1,000 fine and suspended $500. In this case, there are two reasons. One, yes he was playing longer. Two, the managers on duty knew nothing about any conditions on their license. Fuke: Thank you. Lindsey: I'd like to call for a motion on the penalty. Fuke: I move that we accept Counsel's recommendation. R. Smith: Second. Mr. Fuke moved that the Licensee in Case No. 2017-002, be assessed a penalty in the amount of$1,000.00 and that$1,000.00 is to be paid within thirty (30) days of receipt of the written Decision and Order. Failure to pay within thirty (30) days shall subject the Licensee to additional separate penalties including an Order to Show Cause to prove fitness to hold a liquor license; seconded by Mr. Smith. Lindsey: It has been moved and seconded. Is there any discussion? There was no discussion from the Board members. Lindsey: Hearing none. All those in favor say "Aye." The Board members voted "Aye." Lindsey: Those opposed say "Nay." There was no opposition by the Board members. Lindsey: Chair votes "Aye." Motion carried. APRIL 20, 2017—LIQUOR ADJUDICATION BOARD MINUTES 21 The motion was carried unanimously. Lindsey: We're going to Case No. 4, a hearing on Case No. 2017-004, In the Matter of the Accusation Against Tropics Tap House Kona, LLC, dba Tropics Tap House Kona, will now be taken up. 4. CASE NO. 2017-004 In the Matter of the Accusation Against Tropics Tap House Kona, LLC, dba Tropics Tap House Kona, located at Kailua-Kona, Hawai'i. Informal Hearing (Alternative I) on violation of Rule 3-6-C of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control of the County of Hawaii, State of Hawaii, failure to submit percentage fees due for the license year. Schoen: Yes, Mr. Chair. The Department states that on our about the 17th day of January, 2017, in the County and State of Hawaii, Tropics Tap House Kona, LLC, doing business as Tropics Tap House Kona, did fail to submit its payment of percentage fees due for the license year in violation of Rule 3-6-C of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control of the County of Hawaii, State of Hawaii. The Licensee has chosen Alternative I. Lindsey: Chair would like to request a motion to find the Licensee in violation of the charge. Giffin: So moved. Fuke: Second. Ms. Giffin moved that the Licensee in Case No. 2017-004, be found in violation of Rule 3-6-C of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control of the County of Hawaii, State of Hawaii; seconded by Mr. Fuke. Lindsey: It has been moved and seconded. All those in favor say "Aye." The Board members voted "Aye." Lindsey: Those opposed say "Nay." There was no opposition by the Board members. Lindsey: Chair votes "Aye." Motion carried. The motion was carried unanimously. APRIL 20, 2017- LIQUOR ADJUDICATION BOARD MINUTES 22 Lindsey: Counsel, would you please give us the recommendation? Schoen: Yes, Mr. Chair. This is the same Licensee that we just discussed. The date of the issuance of the license was January 8, 2016. The Department is recommending a $2,000 fine and that they pay the percentage fee of$1,860 that still remains outstanding. The fine represents the apparent disregard of the applicable laws and rules. We are asking that they pay the $3,860 within 30 days receipt of written Decision and Order. Failure to pay that will subject them to additional separate penalties including an Order to Show Cause to show fitness to hold a liquor license. Lindsey: Chair will now entertain a discussion. Fuke: I was surprised because their total gross sales were over $2 million. Is that correct? Takase: No, that must be a typo. Schoen: $212,581 from July 2016 through December 2016. Fuke: I'm looking at the October 14, 2016 letter. It says the TFGS, Total Final Gross Sales, prior license year was $202 million? Takase: No, that's for all the Licensees. Their total gross sales for the year were $235,000. Fuke: Of the $202 million? Takase: Yes. If you look at this formula, that's how we calculate their percentage fees due. "EE" is the Departments expenditures. We take that minus out the basic fees we've collected in the year and the carry-over we had. We minus that from our expenditures and divide our expenditures by the total gross sales. It gives each Licensee a percentage total. Last year, the percentage fee worked out to .0079 percent, under one percent. Based on their reported sales of$235,000, their share is $1,860 for the year and that's how we generate our funds. Lindsey: Are there any more questions? R. Smith: Renee, I had a question. It seems like this is a problem Licensee at numerous locations. Is this an indication that they're going out of business? Takase: They're doing a good business; I don't know that they're going out. They have poor management, but it's really poor ownership. We have been dealing with the owner and every time we've notified him he says he's going to take care of it but there's no follow though. That's the reason for such a high fine. We've given him lots of chances. We need to get his attention. APRIL 20, 2017— LIQUOR ADJUDICATION BOARD MINUTES 23 R. Smith: My concern is; if your business is struggling, you don't have enough resources to pay your bills, you probably you would pay the government first and your vendors last, right? It seems like the people that have the most control over him to stay in business, he's ignoring, repeatedly. Lindsey: At this time, I'd like to request a motion on the penalty. Fuke: I move that we accept Counsel's recommendation of the $1,000 penalty. Payment to be made when? Schoen: No, no, it was $2,000, plus payment of the outstanding $1,860, for a total of $3,860. Fuke: Within 30 days? Schoen: Yes. Fuke: What would be the alternative in the event of non-payment? Suspension of license? Revocation? Takase: Yes, we will follow this one very closely and if he does not pay, we will come in with an Order to Show Cause. One for another violation for failure to pay and secondly, probably to suspend his license, which is rather severe. We want to give him notice that it will probably be the next step. He's making money so I assume he can get the money to us. Once they find out we're going to shut them down, things start to happen quickly. It's not only him at that point, but he's going to have to lay off his employees and I want to avoid that step. But if we can't get his attention, then we will follow through with that step. Fuke: So in that letter that goes out to say the motion is accepted, he will be fined $2,000 and pay the $1,860 within a 30-day period, will you also indicate at that time that failure to make that payment could result in suspension or revocation of the license? Takase: Yes. R. Smith: I guess we already had one situation with a noise complaint where they got fined $1,000. This one is $3,860 and we have a couple more. Schoen: There's one more. R. Smith: Is there lack of being present here an indication they don't care? It would just seem that if someone were fining them $5,000-$6,000; you'd show up. To ignore us seems like they don't care. Fuke: They also had hired an attorney right? APRIL 20, 2017— LIQUOR ADJUDICATION BOARD MINUTES 24 Takase: Keith Kiuchi was representing them, previously. R. Smith: Okay, I'll second. Mr. Fuke moved that the Licensee in Case No. 2017-004, be assessed a penalty in the amount of$2,000.00 and pay the percentage fee of $1,860.00 that still remains outstanding. The sum of$3,860.00 is to be paid within thirty (30) days of receipt of written Decision and Order. Failure to pay within thirty (30) days shall subject the Licensee to additional separate penalties including an Order to Show Cause to prove fitness to hold a liquor license; seconded by Mr. Smith. Lindsey: It has been moved and seconded that the Licensee in Case No. 2017-004, be assessed a penalty of$3,860. All those in favor say "Aye." Fuke: Just to clarify, the penalty was $2,000 and he had an arrear of$1,860? Takase: Yes. Masuda: The payment is $3,860. Lindsey: All those in favor say "Aye." The Board members voted "Aye." Lindsey: Those opposed say "Nay." There was no opposition by the Board members. Lindsey: Chair votes "Aye." Motion carried. The motion was carried unanimously. Lindsey: A hearing on Case No. 2017-005, entitled In the Matter of the Accusation Against Tropics Ale House LLC, doing business as Tropics Ale House, will now be taken up. 5. CASE NO. 2017-005 In the Matter of the Accusation Against Tropics Ale House LLC, dba Tropics Ale House, located at Waikoloa, Hawaii. Informal Hearing (Alternative I) on violation of Rule 3-6-C of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control APRIL 20, 2017—LIQUOR ADJUDICATION BOARD MINUTES 25 of the County of Hawaii, State of Hawaii, failure to submit percentage fees due for the license year. Schoen: Mr. Chair, the Department states that on or about the 17th day of January, 2017, in the County and State of Hawai'i, Tropics Ale House LLC, doing business as Tropics Ale House, did fail to submit its payment of percentage fees due for the license year in violation of Rule 3-6-C of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control of the County of Hawaii. The Licensee has chosen Alternative I, stipulated to exercising its right to a hearing and appeal. The Board will take disciplinary action against the Licensee without its presence. Lindsey: Chair will request a motion to find the Licensee in violation of the charge. R. Smith: So moved. Fuke: Second. Mr. Smith moved that the Licensee in Case No. 2017-005, be found in violation of Rule 3-6-C of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control of the County of Hawaii, State of Hawaii; seconded by Mr. Fuke. Lindsey: All those in favor say "Aye." The Board members voted "Aye." Lindsey: All those opposed say "Nay." There was no opposition by the Board members. Lindsey: Chair votes Aye. Motion carried. The motion was carried unanimously. Lindsey: Is there any discussion? Takase: Maybe I can give some background. This is the same owner. He owns another Tropics, this one is in Waikoloa at the Beach Club; the old Beach Golf Course. Fuke: So in this case here, he's already in arrears of$5,720? Takase: Yes. Schoen: Mr. Chair, the license was issued on September 15, 2014. There was a similar violation within the last three years on November 16, 2015. It was a failure to submit payment for percentage fees for the license year. We did extend that due date APRIL 20, 2017— LIQUOR ADJUDICATION BOARD MINUTES 26 and ultimately, the percentage fee was paid on December 14th of 2015. The Department is recommending that they pay the outstanding amount of$5,720 and a fine will be imposed of$2,000. The fine represents a disregard of the rules, an applicable cause. We are asking that the payment of$7,720 be made within 30 days of receipt of the written Decision and Order. Failure to pay that within 30 days will subject them to additional separate penalties including an Order to Show Cause to prove fitness to hold a liquor license. Fuke: I move that we accept Counsel's recommendation. R. Smith: Second. Mr. Fuke moved that the Licensee in Case No. 2017-005, be assessed a penalty in the amount of$2,000.00 and pay the percentage fee of $5,720.00 that still remains outstanding. The sum of$7,720.00 is to be paid within thirty (30) days of receipt of written Decision and Order. Failure to pay within thirty (30) days shall subject the Licensee to additional separate penalties including an Order to Show Cause to prove fitness to hold a liquor license; seconded by Mr. Smith. Lindsey: It has been moved and seconded. All those in favor say "Aye." The Board members voted "Aye." Lindsey: Those opposed say "Nay." There was no opposition by the Board members. Lindsey: Chair votes "Aye." Motion carried. The motion was carried unanimously. Lindsey: A hearing on Case No. 2017-006, entitled In the Matter of the Accusation Against Tropics Ale House, LLC doing business as Tropics Ale House, will now be taken up. 6. CASE NO. 2017-006 In the Matter of the Accusation Against Tropics Ale House LLC, dba Tropics Ale House, located at Waikoloa, Hawaii. Informal Hearing (Alternative I) on violation of Rule 3-6-A.1 of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control of the County of Hawaii, State of Hawai'i, failure to submit Initial Report of Gross Liquor Sales. APRIL 20, 2017-LIQUOR ADJUDICATION BOARD MINUTES 27 Schoen: The Department alleges that on January 31, 2017, in the County and State of Hawaii, the Licensee, Tropics Ale House, LLC, doing business as Tropics Ale House, did fail to submit its Initial Report of Gross Liquor Sales in violation of Rule 3-6-A.1 of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control of the County and State of Hawaii. The Licensee has chosen Alternative I. The court [sic Board] may proceed with disciplinary action in their absence. Lindsey: Chair requests a motion to find the Licensee in violation of the charge. R. Smith: So moved. Fuke: Second. Mr. Smith moved that the Licensee in Case No. 2017-006, be found in violation of Rule 3-6-A.1 of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control of the County of Hawaii, State of Hawaii; seconded by Mr. Fuke. Lindsey: It has been moved and seconded. All those in favor say "Aye." The Board members voted "Aye." Lindsey: All those opposed say "Nay." There was no opposition by the Board members. Lindsey: Chair votes "Aye." Motion carried. The motion was carried unanimously. Schoen: Mr. Chair, the license was issued on September 15, 2014. There was a previous violation of failure to submit payment for percentages due for the license year, on November 16, 2015. The date was extended by the Director and the fee was ultimately paid. We are recommending a $100 fine, pursuant to Rule 1.12, and we are asking that the $100 be paid within 30 days of receipt of the written Decision and Order. Failure to pay that fee within 30 days would subject the Licensee to additional separate penalties including an Order to Show Cause to prove fitness to hold a liquor license. Lindsey: Chair calls for a motion on the penalty. R. Smith: So moved. Fuke: Second. Mr. Smith moved that the Licensee in Case No. 2017-006, be assessed a penalty in the amount of$100.00 and that $100.00 is to be APRIL 20, 2017- LIQUOR ADJUDICATION BOARD MINUTES 28 paid within thirty (30) days of receipt of the written Decision and Order. Failure to pay within thirty (30) days shall subject the Licensee to additional separate penalties including an Order to Show Cause to prove fitness to hold a liquor license; seconded by Mr. Fuke. Lindsey: Any discussion? R. Smith: I have a question. Is the violation that they didn't submit a report? Gonzalez: Correct. R. Smith: And the other violation is where they didn't pay what they owed? Gonzalez: Correct. R. Smith: So this is just a piece of paper which would substantiate how much they owed? That's why the fine is so low? Gonzalez: The paper is important because the information helps us determine what they are going to owe at the end of the year. By our structure, they could've chosen Alternative IV. We do have certain types of offensives, for example the changing of Board members and Officers where there is a fine schedule. The first offense is $100, the second offense is $200, and anything after you guys can set the fine. That's why she said pursuant to Rule 1.12. Lindsey: It has been moved and seconded to accept Counsels recommendation. All those in favor say "Aye." The Board members voted "Aye." Lindsey: Those opposed say "Nay." There was no opposition by the Board members. Lindsey: Chair votes "Aye." Motion carried. The motion was carried unanimously. Lindsey: We will move on to a hearing on Case No. 2017-007, entitled in the Matter of the Accusation Against Tropics Tap House Kona, LLC, dba Tropics Tap House Kona will now be taken up. APRIL 20, 2017—LIQUOR ADJUDICATION BOARD MINUTES 29 7. CASE NO. 2017-007 In the Matter of the Accusation Against Tropics Tap House Kona, LLC, dba Tropics Tap House Kona, located at Kailua-Kona, Hawaii. Informal Hearing (Alternative I) on violation of Rule 3-6-A.1 of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control of the County of Hawaii, State of Hawaii, failure to submit Initial Report of Gross Liquor Sales. Schoen: Yes, Mr. Chair. The Department is asking that the Complaint be amended to reflect a date of January 31, 2017, rather than January 31, 2016, which is a typographical error. There is no prejudice to the Licensee. Their license was issued in 2016. It is clearly a typographical error. We are asking that the Complaint be amended. Fuke: So moved that the Complaint be amended. R. Smith: Second. Mr. Smith moved that the Complaint and Accusation in Case No. 2017-007, be amended to reflect a date of January 31, 2017; seconded by Ms. Giffin. Lindsey: It has been moved and seconded that the Complaint be amended. All those in favor say "Aye." The Board members voted "Aye." Lindsey: Those opposed "Nay." There was no opposition by the Board members. Lindsey: Chair votes "Aye." Motion carried. The motion was carried unanimously. Schoen: Thank you, Mr. Chair. With that, the Department alleges that on or about the 31st day of January, 2017, in the County and State of Hawaii, the Licensee, Tropics Tap House Kona, LLC, doing business as Tropics Tap House Kona, did fail to submit its Initial Report of Gross Liquor Sales in violation of Rule 3-6-A.1 of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control of the County of Hawaii, State of Hawaii. They have chosen Alternative I. Lindsey: Chair requests a motion to find the Licensee in violation of the charge. APRIL 20, 2017— LIQUOR ADJUDICATION BOARD MINUTES 30 Giffin: So moved. Fuke: Second. Ms. Giffin moved that the Licensee in Case No. 2017-007, be found in violation of Rule 3-6-A.1 of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control of the County of Hawaii, State of Hawaii; seconded by Mr. Fuke. Lindsey: It has been moved and seconded. All those in favor say "Aye." The Board members voted "Aye." Lindsey: Those opposed "Nay." There was no opposition by the Board members. Lindsey: Chair votes "Aye." Motion carried. The motion was carried unanimously. Schoen: Mr. Chair, the license was issued on January 8, 2016. The Department is recommending a $100 fine according to Rule 1.12, Stipulated Penalty. We are asking that they pay the $100 within 30 days of receipt of the written Decision and Order. Failure to pay within 30 days shall subject the Licensee to additional separate penalties including an Order to Show Cause to prove fitness to hold a liquor license. Smith: So moved. Fuke: Second. Mr. Smith moved that the Licensee in Case No. 2017-007, be assessed a penalty in the amount of$100.00 and that$100.00 is to be paid within thirty (30) days of receipt of the written Decision and Order. Failure to pay that fee within thirty (30) days would subject the Licensee to additional separate penalties including an Order to Show Cause to prove fitness to hold a liquor license; seconded by Mr. Fuke. Lindsey: Any discussion? There was no discussion form the Board members. Lindsey: Hearing none. All those in favor say "Aye." The Board members voted "Aye." APRIL 20, 2017 —LIQUOR ADJUDICATION BOARD MINUTES 31 Lindsey: Those opposed "Nay." There was no opposition by the Board members. Lindsey: Chair votes "Aye." Motion carried. The motion was carried unanimously. Lindsey: We're going to move on to a hearing on Case No. 2017-008, entitled In the Matter of Accusation Against Kona Retail Ventures, LLC, dba Kona Marine General Store & Deli, located at Kailua-Kona, Hawaii, will now be taken up. 8. CASE NO. 2017-008 In the Matter of the Accusation Against Kona Retail Ventures, LLC, dba Kona Marine General Store & Deli, located at Kailua-Kona, Hawai'i. Formal Hearing (Alternative III) on violation of Rule 3-6-A.1 of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control of the County of Hawaii, State of Hawaii, failure to submit Initial Report of Gross Liquor Sales. Schoen: Mr. Chair, on or about the 31st day of January, 2017, in the County and State of Hawaii, the Licensee, Kona Retail Ventures, LLC, doing business as Kona Marine General Store & Deli, did fail to submit its Initial Report of Gross Liquor Sales, in violation of Rule 3-6-A.1 of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control of the County of Hawaii, State of Hawaii. Mr. Chair, there was no answer filed in this case. The Department did make several attempts to get them to answer. We are asking the Board to proceed anyway and the Board is authorized to proceed under Alternative III, which states if the Licensee or party fails to appear at the hearing after being duly notified, a contested case may proceed in their absence. We are prepared to show the efforts the Department made to contact the Licensee in this case. I can do that orally or have a witness; whatever the Board prefers. Lindsey: Would you please make a statement for us? Schoen: Yes, Mr. Chair. The Complaint in this case was served on March 28, 2017. The answer was due on April 24, 2017. The Department made several attempts. They called the Licensee on April 5th and even visited them on April 6th. The Administrative Officer spoke with someone there and reminded them that an answer was due. I also have for the Board the Departments Exhibit List, including Exhibits related to this Licensee. One of my Exhibits does document efforts made by the Department to contact the Licensee. We are asking that you proceed. APRIL 20, 2017— LIQUOR ADJUDICATION BOARD MINUTES 32 Fuke: Ms. Schoen, would you please present your case? Schoen: Would the Board prefer to have offer proof or have a witness? I do have Exhibits and I do ask the Board accepts the exhibits into evidence. Exhibits were presented and distributed to the Board members by Ms. Schoen. Schoen: While you all are looking at that, Exhibits A through E, all relate to the Licensee in this case. Exhibit A shows the department's attempt to get an answer from the Licensee. Exhibit B depicts email communication to the Licensee regarding its Initial Gross Liquor Sales requirement; the date it was due. Exhibit C shows additional time given to the Licensee to avoid any violation for failing to provide that. Exhibit D documents additional time and a last chance given to the Licensee. Exhibit E is the actual Notice of Violation issued to the Licensee, including the violation report related to Rule 3-6-A.1. It's the Departments position that we have more than adequate evidence to show that the Licensee failed to submit its report on January 31, 2017. Lindsey: The Chair would like to ask the Board if there are any questions regarding the Exhibits? R. Smith: I have a question about the Licensee. Where is this physically located? Where is their business? Gonzalez: HonokOhau Harbor. It's the Kona Marine General Store & Deli. You go all the way to the end, by the fuel dock. Fuke: Are they still operating? Takase: The fuel dock is operating, but the deli is closed. Fuke: And the liquor license was for the deli that has been closed? Gonzalez: Yes. R. Smith: So that's consistent as to why they're not responding, because they shut down their retail operations. Gonzalez: Well, they have been in discussion with the Department up until March. They have been trying to facilitate a transfer for the sale of the site. They had a buyer, but the purchaser is coming in for an original license, if I recall. Takase: Kona Marine was shutting down. He did have a subsequent purchaser who was coming in and was originally going to do a transfer. But, he lost touch with the owner as well. Rather than trying to prop up the old business, he decided to just come APRIL 20, 2017—LIQUOR ADJUDICATION BOARD MINUTES 33 in for an original on his own. We need their Initial Gross Sales but more importantly, we need their closing reports to close them out and have them pay their fees. Fuke: I move that we accept the Exhibits into evidence as present by Counsel. Smith: Second. Mr. Fuke moved that the Board accepted the Exhibits into evidence as presented by Counsel; seconded by Mr. Smith. Lindsey: It has been moved and seconded that we accept the Exhibits. All those in favor say "Aye." The Board members voted "Aye." Lindsey: Those opposed say "Nay." There was no opposition by the Board members. Lindsey: Chair votes "Aye." Motion is carried. The motion was carried unanimously. Lindsey: We would also like to entertain a vote in finding this Licensee in violation. R. Smith: So moved. Fuke: Second. Mr. Smith moved that the Licensee in Case No. 2017-008, be found in violation of Rule 3-6-A.1 of the Rules and Regulations of the Liquor Commission of the Department of Liquor Control of the County of Hawaii, State of Hawaii; seconded by Mr. Fuke. Lindsey: All those in favor say "Aye." The Board members voted "Aye." Lindsey: Those opposed say "Nay." There was no opposition by the Board members. Lindsey: Chair votes "Aye." Motion carried. The motion was carried unanimously. APRIL 20, 2017- LIQUOR ADJUDICATION BOARD MINUTES 34 Schoen: Mr. Chair, the temporary license was issued on March 18, 2010. There was a previous violation in 2012, failure to submit its payment of percentage fee due for the license year. The Department is recommending a $100 fine in accordance with Rule 1.12, a stipulated penalty and that they pay the $100 fine in 30 days of receipt of the written Decision and Order. Fuke: I move that we accept Counsel's recommendation. Smith: Second. Mr. Fuke moved that the Licensee in Case No. 2017-008, be assessed a penalty in the amount of$100.00 and that $100.00 is to be paid within thirty (30) days of receipt of the written Decision and Order; seconded by Mr. Smith. Lindsey: It has been moved and seconded. Is there any discussion? There was no discussion from the Board members. Lindsey: Hearing none. All those in favor say "Aye." The Board members voted "Aye." Lindsey: All those opposed say "Nay." There was no opposition by the Board members. Lindsey: Chair votes "Aye." Motion carried. The motion was carried unanimously. IV. Unfinished Business Lindsey: We will move on to Unfinished Business. Fuke: Getting back to this, we know that the business is closed; the only outstanding obligation this company would have would be paying the $100 fine? Takase: Yes, they will owe us some fees. Whether we collect it or not; I don't know at this point. Giffin: But the new potential purchaser would not be responsible for any of that stuff? Takase: Not as a new purchaser. If they were going to take it as a transfer, they would need to make sure that the license is brought current. Fuke: Thank you. APRIL 20, 2017—LIQUOR ADJUDICATION BOARD MINUTES 35 V. New Business Lindsey: Do we have any new business? None. Moving on to Announcements. VI. Announcements Meetings of Liquor Adjudication May 18, 2017, 10:00 A.M., location TBA. June 15, 2017, 10:00 A.M., location TBA. Takase: Mr. Chairman, you can see on there the next two meetings are for May 18th and June 15th. We only have one case pending so we will probably cancel the meeting in May. Typically June 30th, is our license renewal date. If we don't have a lot of pending cases, we will probably cancel that as well. The next time we shall see you folks is looking like July, the third Thursday. R. Smith: So, we assessed a lot of fines today and I think some of them are questionable if we are going to get anything from them. Will the Department give us an update on the collections? Takase: I think in most cases we will. R. Smith: Even Tropics? Takase: Yeah, Tropics will. If they don't, we will be back before you for them. VII. Adjournment Lindsey: Any further business? If none, Chair calls for the meeting to be adjourned. Fuke: Move to adjourn. R. Smith: Second. Lindsey: Meeting adjourned. Meeting adjourned at 11:43 A.M. raid Takase Director The April 20, 2017, meeting minutes were approved as circulated via email/mail on July 13, 2017, by the Liquor Adjudication Board of the County of Hawaii, on July 20, 2017. APRIL 20, 2017—LIQUOR ADJUDICATION BOARD MINUTES 36