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  Comments (1) Total Thursday Apr. 24, 2014
Unfair Playing Field
Like I Was Sayin...
In 1947, Montana officials enacted a quota system that allowed one tavern with a liquor license for every 1,500 people. I wish I could travel back in time and tell them what a dumb idea that was.

Since their implementation, the state’s alcohol rules have been unfair. For one, established taverns were grandfathered in, so some municipalities have more than others. The quota system is wholly inconsistent and influenced by where you live.

It is fraught with other problems. In the early 2000s, savvy investors snatched up liquor licenses for a few hundred dollars on the outskirts of cities where they were in high demand. When that land was annexed into those cities, their value skyrocketed to hundreds of thousands of dollars. The Legislature closed this loophole, but it’s just another example of the system’s inequality.

Further proof is the way in which the quota system is stacked against small businesses that cannot afford an all-beverage license and are, thus, at a disadvantage to a larger chain that can (ironically, chain restaurants are also deterred by the lack of licenses). And this system, created by the state, has resulted in an unseemly turf war over who gets to sell alcohol and when.

It would be easy to criticize the Montana Tavern Association and claim it wants to stifle competition, but that would be misguided. Who can place blame on business owners for protecting their investments, some exceeding $1 million? It’s not their fault.

Meanwhile, many frustrated restaurant owners say they can’t compete without either a liquor license or cabaret license, which are much cheaper but can still fetch tens of thousands of dollars. They work to get around the rules. Some establishments, especially in cities like Missoula and Bozeman, reduce costs by housing multiple bars and restaurants under one roof and sharing the alcohol license.

The complex rules cannot simply be undone and the more license holders perceive their investments are being devalued the more defensive they become.

And as the Montana Legislature convened earlier this year, alcohol sales were once again an agenda item. This time it involved breweries and whether they were following agreed upon rules set in 1999. Under those regulations breweries can sell no more than 48 ounces per person, per day, and can sell alcohol on their premises from 10 a.m. to 8 p.m.

As Montana’s microbreweries have flourished, their “sample rooms” are attracting patrons who might otherwise head to bars. So, early in the Legislative Session, Rep. Jeff Welborn, R-Dillon, proposed a bill limiting on-premises sales to 10 percent of the brewery’s production. It has since been dropped, but craft beer blogger Alan McCormick, who hosts Growlerfills.blogspot.com and first drew attention to the legislation, told the Missoulian it would have affected two-thirds of the state’s microbreweries.

Two new breweries, one in Columbia Falls and another in Kalispell, are scheduled to open in 2013. Initially, both will sell the majority of their beer on premises. If Welborn’s bill, which was endorsed by the tavern association, had passed, it’s hard to imagine either would be able to open at all without seriously rethinking their respective business plans.

The system, not the liquor license holders, created this mess. In other states, bar and restaurant owners pay an annual fee for a license. And those states still tightly regulate an industry that needs oversight.

Changing the system is near impossible now. Perhaps the state could offer some sort of buy-out program to compensate license holders as a way to transition to something more equitable. But it’s difficult to foresee the Legislature agreeing to something like that, even as it’s difficult to imagine a worse system than the one we have now.
On 02-27-13, brewgirl commented....
The goal of the MTA is to eliminate the competition. The new bill that is coming, LC1429 being sponsored by Roger Hagan(R) and Rob Cook(R) will limit sales of beer in all taprooms, and force breweries to sell most of their product to distributors. The bars are in…
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