Politics & Government

A liquor store ‘on every other corner?’ Kentucky moves to scrap limits on licenses.

The liquor selection at Parlay Social in Lexington, Ky., Tuesday, December 8, 2015.
The liquor selection at Parlay Social in Lexington, Ky., Tuesday, December 8, 2015. Herald-Leader

Retired Southern Baptist minister Donald R. Cole of Webster County fears “a bar or liquor store on every other corner and a package store in every drug store” if new alcohol regulations proposed by Kentucky take effect.

“The more alcohol sales you have, the more social problems you have,” said Cole, executive director of the Louisville-based Kentucky League on Alcohol and Gambling Problems, formerly known as the Temperance League. “We don’t need these new regulations that are one more step toward the deregulation of the alcohol industry in Kentucky.”

The Kentucky Alcoholic Beverage Control Board last month filed proposed administrative regulations that would repeal rules that limit the number of licenses available for retail package liquor stores and by-the-drink sales of liquor.

The number of licenses is limited based on the population of a given community — one license per 2,300 people for package stores and one license per 2,500 people for drink sales.

Perry Colliver, owner of Route 11 Liquors in Mt. Sterling, opposes the changes.

“I’ve been in this business 40 years, not a millionaire, but have made a decent living,” Colliver said. “Now the state wants to come along and end the quota system, saying they want to expand the market. The pie for this business is so big. If you have more stores, the pie will get smaller for people like me.”

State Rep. C. Wesley Morgan, a Republican from Richmond who operates four Liquor World stores in Central and Eastern Kentucky, said he thinks the proposed change “will get a ton of opposition.”

“You either regulate the alcohol industry or not,” Morgan said. “This goes towards deregulation and hurts existing businesses.”

The board, in an impact and analysis statement, said “eliminating quotas may encourage entrepreneurship, foster creativity for new business models and create jobs.”

“The board believes that market forces rather than arbitrary quota limits should determine the number of businesses competing in a community,” the analysis stated.

The board also said elimination of the quota system provides “equitable treatment of all alcoholic beverage licenses.”

It noted that there are no quotas for licenses on malt beverage package sales and malt beverage drink sales but there are quotas for the license types that authorize distilled spirits and wine package sales and distilled spirits and wine drink sales.

The impact study said there is no similar limitation on the more than 40 other existing license types administered by the state Department of Alcoholic Beverage Control.

In those cases, economic factors have determined the number of businesses that a community can support, officials said.

“In some larger metropolitan areas, market competition has already reduced the number of competing businesses below existing available quotas so that quotas serve no purpose in those jurisdictions,” the analysis said.

The study said the legislature has enacted laws since the 1980s that allow many businesses, such as hotels and restaurants, to obtain non-quota drink licenses and the lack of quotas has not resulted in over-saturation.

Another benefit of the new regulations, the impact study said, will be to ease the burden on limited licensing staff and create a lighter work load for local governments’ ABC administrators

The ABC Board said it does not anticipate increased costs from the new regulations and could not say how much revenue they will generate for state and local governments.

ABC spokeswoman Elizabeth Kuhn said in an email that the safeguards built into the current quota licensing system will not go away as a result of the proposed changes. Applicants will still be required to go through a vetting process to receive a license, and the local ABC administrator and the state ABC will still have discretion to issue or deny a license, she said.

Kuhn said the state ABC will hold a public hearing on the proposed changes at 10 a.m. Thursday at its office at 1003 Twilight Trail in Frankfort. Written comments will be accepted through Jan. 31.

The legislature’s Administrative Regulations and Review Subcommittee, which reviews regulations, is tentatively scheduled to consider the ABC regulations at its Feb. 12 meeting.

Cole, the retired pastor, said drug stores now can sell liquor and wine but but many have not gotten licenses because historically, the ABC has given new quota licenses to independent package store owners rather than drug stores.

“Without the quota license regulation, every drug store can become a package liquor store,” he said.

Cole said opponents should “flood the ABC Board, the governor and our legislators with comment letters opposing the repeal of the quota system for package store and by-the-drink alcohol sales licenses.”

Gov. Matt Bevin’s press office did not respond to a question Friday about Bevin’s opinion on the issue.

Cole noted that legislators can pressure the governor to withdraw the change, but they do not have much jurisdiction over ABC administrative regulations other than passing legislation to put the quota system into law.

Jack Brammer: 502-227-1198, @BGPolitics