All bars in New Mexico have been closed since March under the Governor’s pandemic health care orders resulting in severe economic consequences. House Bill 8 was introduced for consideration by the 2021 New Mexico Legislature by New Mexico State Representative Dayan Hochman-Vigil, a Democrat from Albuquerque. The legislation would make significant changes to New Mexico’s liquor laws.
HB 8 would allow restaurants, grocery stores, liquor stores, craft distillers, small brewers and bars to offer “home delivery” of bottled alcoholic spirits. Under the legislation, restaurant deliveries would be limited to beer and wine sales that would require a minimum food purchase of $25.00. All the other liquor sales businesses would not have a food sale restriction or a purchase quantity requirement.
HB 8 would create a new type of license that would allow restaurants to serve hard liquor, and not just wine and beer, without the purchase of an expensive dispenser license. If House Bill 8 were to pass, bars owners would be allowed to take alcohol delivery orders without opening their establishment. The argument made it would provide a stream of revenue for the struggling industry during the pandemic. The new license would allow restaurants to pay a yearly fee of $3,000 to the state to sell liquor.
NEW MEXICO HOUSE COMMITTEE TABLES HB 8
On February 6, 2020, the following article written by reporter Robert Nott with the Santa Fe New Mexican was published by New Mexico Political reports, with link following the article:
HEADLINE: “NEW MEXICO HOUSE COMMITTEE TABLES SOME PROPOSED LIQUOR LICENSE CHANGES”
BY ROBERT NOTT, SANTA FE NEW MEXICAN
“Members of a House committee on Friday tabled two bills that would change the way liquor licenses are distributed in New Mexico after several license holders spoke in opposition, arguing the measures would render their licenses, some worth hundreds of thousands of dollars, nearly worthless.
One of the measures — House Bill 8 — would allow restaurants to deliver beer and wine with food orders.
The House Commerce and Economic Development Committee’s decision to delay the bills might have had little to do with the concerns of the liquor license holders.
Several similar bills are making their way through the Legislature, and it’s not uncommon to see lawmakers delay action on a measure as they work to draft a single piece of legislation they believe has the best chance of gaining approval and getting to the governor’s desk for a signature.
“They’re not gone,” said Rep. Antonio “Moe” Maestas, D-Albuquerque, who is chairman of the committee. “Those brains have morphed into one big giant brain.”
Maestas, along with other lawmakers on the committee and members of the public who spoke in favor of the measures, said it’s time to update the state’s liquor license laws, which have not undergone a significant change in 40 years.
While a beer and wine license for a restaurant costs up to $1,150 a year, including fees for Sunday sales, according to the state Regulation and Licensing Department, there is a limited number of liquor licenses available in New Mexico. A license for a new business must be bought or leased from another owner and can sell for $350,000 for a restaurant or bar, or more than $1 million for a retailer.
Under some of the bills being considered during the session, a restaurant could buy a license to serve liquor for as little as $25,000, with annual renewal fees of around $3,000.
The proposed change does not sit well with long-term restaurant and bar owners who paid far more for their existing licenses.
“Allowing people to get in at much less than what I got in for just doesn’t seem equitable,” said Mike Cheney, owner of the Win Place and Show bar, a package store and dance hall in Ruidoso. Cheney said he and his wife paid $600,000 for their liquor license just a few years ago.
Advocates for the legislation — including Alicia Keyes, Cabinet secretary of the Economic Development Department, who spoke during Friday’s hearing — say it is a necessary move. They argue the state’s outdated liquor license laws make it hard for new restaurants to afford a license or, if approved, to take part in any home delivery services of beer and wine.
The proposed legislation could lead to more businesses and jobs in a state hit hard by the COVID-19 pandemic.
In addition, advocates say, restaurants struggling with financial hardships from the pandemic can drum up more business by bringing their products to people self-isolating in their homes.
“This provides an option for a new type of restaurant to open, and safe delivery [of food and alcohol] will provide more revenue,” Keyes told the committee.
“These changes make a lot of sense even without the pandemic,” she said, noting more and more people are becoming accustomed to home delivery services for a variety of goods.
Maestas and other legislators began discussing a need to revise the state’s liquor license laws last year as businesses in the restaurant and hospitality industry either scaled back operations or closed temporarily — or for good.
There are over 700 restaurants with liquor licenses in the state. That does not include bars, clubs or microbreweries.
State law allows a license-holder to lease it to another business or sell it.
But state law also prohibits the government from buying back licenses or even partially compensating longtime license owners for any drop in value, Maestas said at Friday’s hearing.
“There’s no question it will disrupt the entire market of liquor license,” he said of the measure.”
But if something is not done now, he said, eventually those licenses will cost $1 million, making it virtually impossible for new restaurants wanting to serve alcohol to get into the game.
Maestas introduced a separate bill that would offer limited tax breaks to existing license-holders to mitigate their potential losses. He said the bill will get a hearing sometime next week.
The link to the article is here:
COMMENTARY AND ANALYSIS
The sale of liquor in the state is one of the most highly regulated industries in virtually all states. Licenses usually have ongoing qualifying mandates for renewal and at times have terms as to how long the license is effective and must be renewed. There is a liquor license revocation process in place, such as revoking a license if liquor is sold to minors. Normally, licenses issued by a state do not give vested property rights to those individuals who apply for and issued the license to be able to sell or transfer on the open market. Dispenser licenses are viewed as “speculative investments” that accrue in value, and that was never the intent of the legislature.
The biggest problem with the existing New Mexico state liquor control laws is that they create the problem of granting a “property right” to those who were originally issued state licenses by allowing them to be sold or leased on the open market. The state did so for the sole purpose of putting a cap on the number of liquor licenses in order to avoid the proliferation of liquor businesses in a county, city or neighborhood. It was a good idea at the time and was intended to have an impact on the state’s alcohol abuse problem and DWI rates.
If New Mexico Governor Michelle Lujan Grisham and the New Mexico Legislature truly want to encourage economic development and help locally owned businesses, liquor license reform must be included in the equation. It is likely such reform will require sweeping changes to level the playing field for all that want to apply for liquor permits.
Its encouraging that HB 8 was tabled for now in that other legislation is being written that will indeed be far more likely to achieve liquor licensing law reform
Links to related blog articles are here:
Liquor License Reform Requires More Than Home Delivery Sales; Abolish “Dispenser Licenses” That Give Property Rights; Return To State Licensing As Giving Permission And Not Giving Property Rights
John B. Strong Guest Column: Revisiting Liquor License Reform