Day 16: End Liquor License Larceny
According to the Santa Fe Reporter:
Currently, there are a set number of liquor licenses available in New Mexico, based on the principle of one license per 2,000 people. That restriction dates back to post-Prohibition times. Beer and wine licenses for restaurants are separate, and there are different prices for bars than for retailers selling packaged alcohol.
Because of the limited number of licenses, they commonly go for $500,000 a pop or more-a prohibitively large sum for would-be new business owners.1
The article goes on to note that:
According to the Texas Alcoholic Beverage Commission website, a two-year packaged liquor retailer in Texas pays $1,500. By contrast, a recent packaged liquor license sold in New Mexico cost $750,000, according to the New Mexico Alcohol and Gaming Division. Retailers and bars pass that price on to consumers.2
All New Mexicans understand that the state has had and continues to have serious problems with alcoholism and drunk driving. On the other hand, our current licensing laws are extremely arbitrary and are not designed to address the real issue of problem drinking.
The current environment creates artificial scarcity and limits the ability of those of modest means to involve themselves in the business of serving liquor. In other words, it creates a cartel run by those who can afford to invest outrageous sums in liquor licenses. Current law, therefore, penalizes small businesspeople and their potential employees.
Rather than limiting liquor licenses based on an arbitrary population number in a way that has caused tremendous price inflation, New Mexico legislators should consider regulatory changes designed so the number of licenses enables their price to reach a market price similar to that of one or more surrounding states.
1Wren Abbott, “License to Sell,” Santa Fe Reporter, March 14, 2012, http://www.sfreporter.com/santafe/article-6618-license-to-sell.html
2Ibid.