Politics & Government

Good or bad? Liquor license quotas protect existing stores from competition.

The Kentucky Alcoholic Beverage Control Board heard from opponents and proponents of its proposal to eliminate liquor license quotas.
The Kentucky Alcoholic Beverage Control Board heard from opponents and proponents of its proposal to eliminate liquor license quotas. gkocher1@herald-leader.com

Independent liquor store owners said Thursday that they’re against repealing the limit on the number of retail package stores.

Barbourville liquor store manager Gary Williams told the Kentucky Alcoholic Beverage Control Board that the proposed regulations will put a hardship on small business people.

“We cannot compete with the buying power of huge corporations,” such as Kroger and Walmart, he said.

Under the current system, the number of liquor 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 for drink sales.

But the ABC board said market forces rather than arbitrary quotas should determine the number of businesses competing in a community.

Of the 24 speakers who addressed the board, only one, J.D. Chaney of the Kentucky League of Cities, favored the changes.

“By and large, most of the city government officers are eager to see some change,” Chaney said. “… Most states, I think, use the market to regulate proliferation of the industry.”

But to change the rules now would be a betrayal to voters who relied upon population limits to help them decide whether to vote for or against alcohol sales in local referendums, said Bill Meter, who owns a liquor store in Owsley County. The limitations on the number of stores helped him sell reluctant voters on the idea of alcohol sales in that formerly dry county.

Matt Mills, owner of Liquor Vault in Williamsburg, explains why he is opposed to proposed changes to state alcohol regulations.

“There’s no way we would have sold this in Owsley County without having these quotas,” Meter said. “I made promises and I’m not even a politician. I had to go to them and say, ‘Look, the state is going to protect you. It’s not going to be unlimited licensing.’”

Furthermore, Meter said the only risk he assumed as a liquor store owner was if a population increase led to perhaps one more competitor.

“I was willing to accept that risk,” Meter said. “I’m not willing to accept the risk that everybody gets a store. … Our risk we assumed was on the quota system. That’s the business model that’s been in place.”

Karen Lentz of the Kentucky Association of Beverage Retailers agreed.

“Voters counted on a system that has been in place for half a century,” Lentz said.

She said the proposed regulations should be withdrawn because ABC does not have statutory authority to make such changes without lawmakers amending current law.

Written comments on the proposal will be accepted by the ABC through Jan. 31. The legislature’s Administrative Regulations and Review Subcommittee is tentatively scheduled to consider the regulations at its Feb. 12 meeting.