Source: The Montana Standard

There’s a new group forming that hopes to change the laws that govern the state liquor license quota system. Specifically, the group would like to eliminate the current quota method of allocating certain liquor licenses.

Good luck with that.

Gov. Brian Schweitzer addressed the Montana Tavern Association in Butte last week and the one thing he emphasized was that he will not tamper with the quota system.

According to the state Liquor Control Division, Montana uses a quota system for licensing based on population numbers.

In Missoula, for instance, one new all-beverage license is granted for every 1,500 residents, according to a recent story in The Missoulian.

However, Missoula has more all-beverage licenses than its quota allows because 26 licenses were grandfathered in when the system was adopted in the 1970s.

The city’s population would have to increase by 39,000 residents before a single new all-beverage license could be issued, the report said.

Restricting the number of liquor licenses artificially inflates their value and leads to big differences in price from one location to another, according to Greg Carter, owner of the Broadway Wine Co. in Missoula and vice president of Fair Liquor Laws Inc.

The last all-beverage license sold in Missoula, he said, went for $750,000.

Speaking to The Standard’s editorial board last week, Schweitzer was adamant in maintaining the quota system.

“I’ve committed to you, we’re going to hang onto that quota system,” he said. Montana has a set certain number of liquor licenses available, and acquiring them is a competitive process.

Often times you see a mom and pop tavern of four walls and little else. The building may not be worth $20,000, but the liquor license is the investment. Many tavern owners bank on the sale of their license for retirement, the governor said.

Doing away with the quota system would decrease existing taverns’ values, which would be unfair to their owners, who paid premium prices for licenses, Schweitzer said.

“It’s a market,” he said. “For every willing buyer there’s a willing seller. You spend the extra money to buy riverfront property because of its value. If everyone had access to riverfront property, you’d lose your investment.” We can understand the frustration of new restaurant owners in Montana who are unable to buy or afford a liquor license, or even a beer or wine license. It does appear that the inflated prices are a hindrance to opening new business in the state. In Missoula, for example, an Olive Garden restaurant stopped plans to build because a beer and wine license is unavailable.

It really comes down to the public wanting change to bring in more restaurant businesses to the state.

Fair Liquor Laws, Inc. plans to lobby the 2007 Legislature to look at the liquor license laws.

One option, if the laws were loosened Carter says, is that future revenues from liquor license sales would compensate current license holders if the value of their liquor license drops.

It sort of sounds like the wolf predation problem, where a fund compensates ranchers for cattle killed by wolves. But in this case, unless there is an agreement with the powerful Tavern Association, not much will change in this arena. The wolves will still have the run of the place.

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This entry was posted on Friday, September 22nd, 2006 at 1:32 pm and is filed under Distribution Laws. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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