April 25, 2019

SB 16-197: Allowing Liquor-License Drugstores to Open Five Additional Stores on Same License

On April 22, 2016, Sen. Pat Steadman introduced SB 16-197Concerning the Retail Sale of Alcohol Beverages. The bill was assigned to the Senate Business, Labor, & Technology Committee.

The bill establishes a number of requirements with respect to the licensing of alcohol retailers, as well as establishing requirements for the distribution and sale of alcohol by licensed wholesalers, retailers, and their employees.

First, on or after January 1, 2017 and before January 1, 2027, a liquor-licensed drugstore (“LLD”) seeking to obtain an additional LLD license must apply to the state and local licensing authorities, as part of a single application, for a transfer of ownership of two retail liquor stores, a change of location, and a merger and conversion of the two retail liquor stores. A LLD licensee may make said application only if: (1) the LLD pays a minimum purchase price of $350,000 per retail liquor store to acquire ownership of the two licensed retail liquor stores; (2) the two retail liquor stores are located within the same local licensing authority jurisdiction as the premises for which the applicant is seeking a LLD license; and (3) the premises for which the LLD license is sought is not located within 2,500 feet of another licensed premises.

Further, in making its determination on the application, the local licensing authority may consider the reasonable requirements of the neighborhood. A local licensing authority may conduct a hearing on the application for transfer of ownership after notifying the applicant of the hearing at least 10 days before the hearing by posting – or directing the license applicant to post – a notice of the hearing in a conspicuous location on the licensed premises for a least 10 consecutive days before the hearing. A LLD applying for a license merger and conversion is ineligible for a temporary permit, and a local licensing authority shall not issue a temporary permit to a LLD that has acquired ownership of licensed retail stores in accordance with this section of the bill.  The state licensing authority shall establish fees for a transfer or ownership, change of location, and license merger and conversion not to exceed $1000.

Second, a LLD on or after January 1, 2017 shall have a least one permitted manager conduct the LLD’s purchase of alcohol from a licensed wholesaler. The state licensing authority may issue a manager’s permit to an individual who is employed by a LLD and who will be in actual control of the alcohol beverage operations, as long as the individual demonstrates that he or she: (1) has not been convicted of a crime involving the sale or distribution of alcohol within 8 years of submission of the application; (2) has not been convicted of a felony within 5 years of submission of the application; (3) is at least 21 years of age; (4) has not had a manager’s permit or similar permit revoked by the issuing authority within 3 years of submission of the application; and (5) is certified as a responsible alcohol vender. It is unlawful for an individual with a manager’s permit to be directly or indirectly interested in a licensed wholesaler, a licensed manufactured, or any business that has had its license revoked by the state issuing authority within 8 years of submission of the application for a manager’s permit. For each manager’s permit, an annual fee of $100 shall be paid in advance to the Department of Revenue. The state licensing authority shall also establish fees for applications for manager’s permits.

Third, an employee of a LLD who is involved in selling alcohol must obtain and maintain a certification as a responsible alcohol vender. An employee of a LLD who is under 21 years of age shall not have any contact with malt, vinous, and spirituous liquors (“liquors” or “liquor”) offered for sale. A LLD shall not store alcohol off the licensed premises. A LLD shall not comingle the liquors it offers with any other products, and the LLD shall shelve and display the liquors separately from other nonalcoholic beverages.

Fourth, a person licensed to sell malt, vinous, and spirituous liquors (“liquors” or “liquor”) shall: (1) not sell liquors at a price below the cost to purchase the liquors; (2) not allow consumers to purchase liquors at a self-checkout; (3) require purchasers of liquors to present a valid, government-issued identification verifying the purchaser is 21 years of age; and (4) not sell clothing or accessories imprinted with advertising, logos, slogans, trademarks, or messages related to alcoholic beverages. A person licensed on or after January 1, 2017, shall not purchase liquors from a wholesaler on credit, and shall effect payment upon delivery of the liquors.

Fifth, a licensed wholesaler: (1) shall make all deliveries of alcohol to LLD in compliance with the bill; (2) shall take orders for alcohol only from a permitted manager of a LLD; (3) may unload alcohol at a LLD’s loading dock at any time that the location is open to the public; (4) shall make available to all licensed retailers in the state all liquors and brands of alcohol sold by the wholesaler; and (5) may establish purchase requirements, unless the requirements have the effect of excluding a majority of licensed retailers from purchasing a brand of alcohol.

Seventh, in addition to selling liquors, a retail liquor store may sell, without limitation: nonalcoholic beverages; liquor-filled candy; snack food items; kegs and growlers; beer/wine/spirit-making kits and supplies; lemons, limes, cherries, olives, and other food items used in preparing or garnishing alcoholic beverages; clothing or accessories imprinted with advertising, logos, slogans, trademarks, or messages related to alcoholic beverages; lottery tickets; tobacco products; and other merchandise not related to the consumption of alcohol, but only if the annual gross revenues from the sale of such other merchandise does not exceed 20% of the store’s total annual gross revenues. A retail liquor store shall not sell retail marijuana.

Eighth, an owner, part owner, shareholder, or person directly or indirectly interested in a LLD may have an interest in (1) up to five additional LLD licenses if obtained on or after January 1, 2017 and before January 1, 2027, and (2) an unlimited number of additional LLD licenses if obtained on or after January 1, 2027. An owner, part owner, shareholder, or person directly or indirectly interested in a retail liquor store may have an interest in up to five additional retail liquor store licenses.

Tenth, it is unlawful for any licensed retailer: (1) to sell fermented malt beverages to any person between the hours of midnight and 8:00 AM (previously, midnight to 5:00 AM); (2) to employ a person who is at least 18 years of age but under 21 years of age to sell or dispense liquor, unless the employee is supervised by another person who is on the licensed premises and is at least 21 years of age; (3) if licensed as a tavern, retail liquor store, or LLD, to permit an employee who is under 21 years of age to sell liquor; or (4) if licensed as a LLD, to permit an employee who is under 21 years of age to have any contact with liquors offered for sale, or sold and removed from, the licensed premises of the LLD. It is not unlawful for a retail licensee or his or her employee to sell liquor to a consumer who is or reasonably appears to be over the age of 50 and who failed to present identification.

Lastly, the bill removes the requirement that a “fermented malt beverage” be no more than three and two-tenths percent alcohol by weight or four percent alcohol by volume. With respect to “malt liquors,” the bill replaces the requirement that the malt liquor contain no more than three and two-tenths percent alcohol by weight or four percent alcohol by volume with the requirement that the malt liquor contain “not less than one-half of one percent alcohol by volume.”

Max Montag is a 2016 J.D. Candidate at the University of Denver Sturm College of Law.