What Is the Fairest Way to Overhaul Liquor Licensing?

On Saturday night at Black and Blue, I was talking liquor licensing with Larry Porter and Noel Jones. Larry said I had it wrong, and liquor licenses *only* go for around $80,000, not $250,000.

I forget where I saw the $250,000 figure, but $80,000 seems too low. Here’s Lynn Olanoff from earlier this year, writing about an “economic development liquor license” application in Bethlehem:

The Lombardos plan to renovate a former Bank of America building into a contemporary bistro called The Mint. The family had planned to spend $80,000 on a liquor license but found liquor licenses in Lehigh County were going for at least double that, said Jim Scants, a legislative aide to state Sen. Lisa Osceola, D-Northampton/Lehigh/Monroe, who represented the family before city council.

While Northampton County has 26 available liquor licenses, Lehigh County only has three, making them sell at a premium amount, Schantz said.

And here’s a Chris Baxter joint also from earlier this year:

Municipalities used to have to prove a license would adversely affect the “welfare, health, peace and morals” of the community or its residents. But Kriedeman said that language was removed from the liquor code to give local officials more leeway.

Council’s blessing could prove lucrative for Biundo. If approved by LCB, he could buy the economic development liquor license for $50,000, about a third of the cost of a regular liquor license. The LCB issues only two such special licenses per county per year.

These are both in Lehigh County, where there is a relative scarcity of licenses, so I suppose Larry could be correct about prices in Northampton County.

Regardless, $80,000 for a liquor license is really insane. I think there’s a strong case to be made that this is a drag on the pace of development and downtown revitalization.

Arbitrarily limiting the number of bars and restaurants that can serve alcohol is bad for the craft beer industry; it reduces competition in the bar and restaurant industry; and it results in nuisance bars.

I’m not sure what to do about this. I certainly don’t want to see people like Larry, who have played by the state’s arcane rules, have their assets devalued. But by the same token, I want to see the state move to a system where liquor licenses do not become assets in the first place. How do you get from here to there?

A commenter suggested a plan that I think sounds fair, but I would like to get more input on this. What would be a fair way to uncap liquor licenses without soaking current license holders?

I’d really like to see licenses go for a flat rate of around $2000. What if the proceeds from all new license purchases first went toward paying back current license holders before going to the general fund? Or you could exempt license holders from taxes until they’re made whole. That’s hardly a panacea if we’re doing this in the name of competition, but I really can’t see any other way to get it done.

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