Nonprofit liquor license rule has been law since 2008

What was thought to be a change is really enforcement of existing law according to department director Mukai

Department of Liquor Control Director Glenn Mukai addresses the controversy over special liquor licenses Wednesday during a Liquor Control Commission meeting. Mukai said the department is not changing any county rules but rather complying with existing state laws. • The Maui News / COLLEEN UECHI photo

WAILUKU — Department of Liquor Control Director Glenn Mukai said Wednesday that the department isn’t changing any of its rules for nonprofit liquor licenses — it’s just complying with state laws that have been in place since 2008.

Mukai was responding to a recent outcry from nonprofit directors over requirements to get special licenses for one-day events. While nonprofits were exempt in the past, state law requires them to follow the same steps as other applicants, he said.

“Criminal background checks, all necessary clearances from government agencies, listing of all officers and directors . . . are required by state law,” Mukai told the Liquor Control Commission. “The commission can adopt rules that are more restrictive but not contrary to state law.”

There is no mention of background checks in the section on class 10 special licenses in the state’s liquor laws. However, another section does say that “county liquor commissions may request a criminal history record check of an applicant for a liquor license.” The state Department of the Attorney General did not respond to a request for clarification Wednesday.

Nonprofits are frustrated, saying the rules will cost them additional time, money and staffing that they simply don’t have. Last month, directors began circulating a petition in protest. In the past, the petition explained, nonprofits applying for the special license only had to describe the event and the primary people within the organization.

Liquor Control Commission Chairman Robert Tanaka acknowledged frustration with special license rules but said “the commission’s hands are pretty much tied here because we cannot change state law.” Nonprofit officials have said the rules will cost them more money and time. • The Maui News / COLLEEN UECHI photo

But now nonprofits need to start submitting full personal history and background checks for all officers and board of directors members. They also have to get inspections and signoffs from departments like fire and health that normally review commercial events. For nonprofits that often hold fundraisers at small private properties, the rules seemed over the top.

“Most of these nonprofits are staffed by a very skeleton and small crew of people who are very, very dedicated and are volunteers,” former nonprofit board member and restaurant manager Tim Garcia told the commission Wednesday. “Every dime that is being taken out by some of these new rules, whether it be background checks and the cost of doing all that . . . all of these are costs that are going to go straight to the bottom line of every single nonprofit on Maui.”

And the law on special licenses doesn’t apply only to nonprofits – political parties and candidates are included as well.

Mukai explained that over the past year, the department has been trying to update its laws. When a special investigator came from the attorney general’s office to look into a nonprofit event earlier this year, it was “a wake-up call” for the department to make sure it was up to speed with all of the state’s liquor rules.

Nonprofits had been exempt from requirements like background checks, but that law was repealed in 2008, Mukai said. But Maui County hasn’t been enforcing it since then. Garcia pointed out that he’d been on three different boards since 2009 and was never asked for fingerprints or a background check.

“Because the department was never requiring it at the time, even though they were mandated by the Hawaii Revised Statutes,” commission chairman Robert Tanaka told Garcia. “So you were lucky. But now because of investigations and whatever’s been happening, we’re required to go by (state law).”

Even if nonprofits have no choice, Habitat for Humanity Executive Director Sherri Dodson said she’s frustrated that the department didn’t reach out to nonprofits beforehand.

“It’s sort of just the way they did it,” said Dodson, who’s also the treasurer of the Maui Nonprofit Directors Association. “That’s kind of the sore spot for everybody these days, (that it was) all of a sudden, without advance notice.”

Dodson said that while it makes sense to do background checks on those distributing alcohol at events, board members aren’t the ones serving drinks.

“It just seems that when you’re talking about a single, charitable event, it shouldn’t be that difficult,” she said. “It’s so hard to raise money for nonprofits anyway in Hawaii. The government’s always telling us, ‘You need to be more self-sufficient,’ but the government’s the one putting up these barriers for us to even have a fundraiser.”

Deputy Director Mark Honda said that the department contacted all special licensees on file and held a workshop on May 24. When asked if the department could do anything to help nonprofits, such as offering a six-month adjustment period, Honda said he couldn’t answer that.

“We are regulated by state law, and the state has that requirement,” Honda said. “The law is the law, and we are supposed to follow it.”

Last Thursday, the department installed a new fingerprint scanner, which Mukai said he believes will make it faster and easier to do background checks. In Maui County, checks are good for two years, but if new federal rules go into effect, they’ll be effective for life because the government can update the person’s criminal history, Mukai said.

Going forward, First Deputy Corporation Counsel Ed Kushi suggested that the department bring the commission a form on special licenses.

“If the commission feels obligated to change the requirements, I think it’s within their jurisdiction,” Kushi said. “Your argument about state law and what the commission does is going to be taken under consideration. But at this point in time, I believe the commission should review what you guys are requiring from the public. So we can start from there.”

“Then if we have to go to the state Legislature and request a change, we will, if it’s not fair,” Tanaka said.

* Colleen Uechi can be reached at cuechi@mauinews.com.