Audit Supports More Liquor Permits for Utah
A recent legislative audit made several strong recommendations for reforming Utah’s liquor laws, in particular the quota system for granting alcohol permits. The audit echoes reports that the current shortage of alcohol permits is stifling economic development and does not reflect the state’s changing population.
Utah is in the small minority of control states that grant liquor permits based on population. Of the states polled, the audit commission found that only two other states, Pennsylvania and Idaho, use a state-wide quota for liquor permits. Idaho allows one permit per 1,500 people for clubs and restaurants and has no quota for beer and wine. Pennsylvania allows one permit per 3,000 people regardless of permit type. In contrast, Utah allows one permit per 7,850 people for clubs and one permit per 5,200 for restaurants.
According to the audit, quota numbers have not changed since 1990. In the meantime, the state’s population has increased by 22 percent with significant demographic changes. For instance, the percentage of the state’s population that were reported to be members of the Church of Jesus Christ of Latter Day Saints, whose observant members do not consume alcohol, has shrunk from 70% in 1989 to 58% in 2009. Further, alcohol consumption rose 54% from 2001 to 2009. The audit also reports an increase in the number of people who are eating out. These changes make the state appealing to restaurant and bar development. Many restaurateurs, including large chains, have, however, expressed reluctance to develop businesses in Utah given the uncertainty over obtaining a liquor permit.
The audit recommends increasing the number of overall liquor permits, and in particular restaurant permits. As previously reported, a bill to allow current permit holders to sell their alcohol permits is being considered for the next legislative session, which begins in January. Another proposal would allow resorts to obtain one license to cover the range of alcohol services provided rather than the current system that requires a separate permit for each service. This could free up numerous additional permits; one resort alone reportedly holds 17 permits to cover its restaurants, bars and other services.
In response, the Executive Director of the Utah Department of Alcoholic Beverage Control suporrted the audit’s recommendations. The Utah Restaurant Association and Utah Hospitality Association also embrace such reforms. It is still unclear, however, whether the state legislature will support any of the recommended reforms. Stay tuned for updates.
More Liquor Permits Possible for Utah
Senator John Valentine (R – Orem) has announced that he intends to introduce a bill in the next Utah legislative session that would establish a property right in liquor permits, allowing restaurants with current liquor permits to sell them. Use of any purchased permit would be conditioned upon approval by the state liquor-control board. The intended bill will also convert about 25 of the 50 unused tavern permits (which allow only the sale of 3.2 beer) into restaurant permits. Senator Valentine currently has no plans to make any changes to the state’s club permits.
Utah limits liquor permits based upon population and ran out of restaurant and club permits earlier this year. The proposed legislation may help alleviate the resulting logjam if existing businesses that are struggling elect to sell or if other restaurants elect to stop serving alcohol. Questions remain as to whether the bill will pass. Legislators have expressed reluctance to increase the number of permits granted, so the proposed legislation may create a work around. The Church of Jesus Christ of Latter Day Saints, a major stakeholder in Utah’s liquor policy, also has yet to weigh in on the proposed change.
The proposed change is likely to put small and start-up restaurants at a distinct disadvantage to well-funded chains. Senator Valentine is quoted in a Salt Lake Tribune article as acknowledging this issue and indicated that some permits could be set aside for small businesses.
Attorneys in our Salt Lake City office are closely following this issue. Please send us an email here if you would like to receive regular updates.
Washington RESTAURANTS: Proposed Changes to Rules
WSLCB just issued a Notice of Rule Making that will amend rules that apply to retail licensees. While some of the proposed changes are organizational in nature – moving provisions from one chapter to another – there are a few key changes that restaurants should take note of. These changes will likely raise questions that will need to be resolved during the rulemaking process. The following reference the proposed text sections:
- The provision that allows restaurants to exclude minors from the premises during certain periods is removed – does this mean that minors must either always or never be excluded from a premises/area? WAC 314-02-030
- The description of “premises” for on-premises retailers (restaurant, bar, etc) includes the building in which the retail business is located – does this mean that if a restaurant is located in mall, the entire mall is the retail premises? WAC 314-02-010(16)
- The number of complete meals a spirits, beer and wine restaurant licensee must make available increases from four (4) to eight (8). WAC 314-05-035(1)
- Outside of the mandatory food service hours, a spirits, beer and wine restaurant must have certain foods available, and this list is expanded to include appetizers, salads, soups, and pizza. WAC 314-02-010(2), (11); 314-02-035
- WSLCB clarifies that all meals must be prepared on-site – no reheated or pre-cooked meals are allowed. WAC 314-02-035(1)(b)
- A “complete meal” can include hamburgers, sandwiches, salads, or fry orders (those are not included under the current rule)
- Beer and wine restaurants are required to operate five hours a day, five days a week (currently, no hourly requirements)
WSLCB is currently taking comments on the proposed rules. It is important to read these carefully and respond with any questions or concerns, as there can be implications for the industry that are not immediately recognized by the drafters. WSLCB welcomes the comments, and is open to revisions that are supported by law. You can find the details on how to respond here – comments are due by November 10, 2010. A public hearing will then be set, where you can voice any concerns in person.
If you have any questions about what these or other proposed rule changes can mean for your business, feel free to contact one of our alcohol beverage law professionals.
