The liquor license dilemma

Our daily paper has an intriguing story about liquor licenses. Mostly a bunch of people whining about the process. If I was in the state legislature I would present what they do in most states and have a yearly licensing fee for selling liquor.  I think it is ok to separate beer and wine from selling full on liquor, but I would combine the those two licenses into one and double that fee.

So how would it work?

• First I would eliminate who could have them, no waiting lists, etc. As long as your establishment was of a certain size and you could prove you were opening a viable business you could have one. Obviously free market competition would stop us from having a liquor bar on every corner.

• I would charge a yearly licensing fee. In larger markets like SF it would be much higher and based on population (like it kind of is now). For example the fee in SF would be $10K a year while in Baltic it would be much lower.

• Grandfathering license holders. This wouldn’t be for eternity, but I would set a time limit for phasing them out. How would that work? First, once a yearly fee is determined you would assess the value of the license you currently own. Each town would be the same within that town. Right now a new license is worth around $190K in Sioux Falls. So if the new licensing fee was $10K a year and you owned one of these licenses in SF you wouldn’t have to pay the fee for 19 years. But I would cap it at 20 years. In other words in 20 years after the new law takes place all of the old style of licenses would be null and void.

• The old licenses would NOT be transferable to another location but could be to a new owner at the same location with the same business model.

• I would give the option of selling the old license back to the municipality at 50% of the value if you wanted to get out of the bar business. I think this change alone would eliminate a lot of the old licenses. The new licensing fees would easily cover these costs for the cities.

Everyone who owns a license now complains they would lose there investment, but I think a plan like I suggested would still give value to that license. I also think that a ‘license’ shouldn’t be considered an investment anyway. It’s a frickin’ license. I think the way the system is set up now, you have a lot of the big guys hoarding the licenses, and that’s not fair. This would even the playing field and would actually produce better establishments based on service instead of how much money you have or the value of your liquor license. Think about it, what other license in SD is forever? There isn’t one that I can think of. Even your driver’s license has to be renewed every couple of years.

Is our state legislature brave enough to take such steps? Nope. They are more worried about protecting a certain class of people instead of fostering entrepreneurship. Besides, they are more concerned about God, Guns and Abortion.