A Brief Summary of Current Colorado Liquor Laws:

To fully understand the current ballot initiatives, it is critical to know the current liquor laws. Retailers can have one of three licenses: a Retail Liquor License (RLS), a Liquor Licensed Drug Store (LLDS), and/ or a Fermented Malt Beverage (FMB) license.

A Retail Liquor License allows a licensee to sell beer, wine, and spirits, but they cannot sell more than 20% of anything else within their store. This is the classic liquor store license that all the local independent retailers hold: examples include Applejack Wine and Spirits, West Vail Liquor Mart, and Proof Wine and Spirits in Denver. The vast majority of these licenses are owned and operated by local purveyors. The 20% maximum provision allows sales of mixers like soda and tonic, lemons and limes, glassware, and other related products, but prevents these licensees from becoming a fully fledged grocery or big box store. Current law allows any individual or entity to hold a maximum of 3 of these licenses, expanding to 4 in 2027. Under current law, these license holders can never expand beyond 4 stores.

A Liquor Licensed Drug store, is a license that can only be held by an entity that has a pharmacy and a full time pharmacist staffed. In practice, these licensees are big box stores such as WalMart, Costco, and Target and grocery chains such as King Soopers and Safeway. A small independent store operator could never afford to have a pharmacist, and in addition, there is a back dated provision only allowing entities that held this license before 2016 to hold this license- this prevents any new competition whether it is a local store or an out of state retailer coming to Colorado. These licenses are allowed to sell beer, wine, and spirits, as well as any other goods including drugs, so long as the entity has a pharmacy. Entities holding this type of license are currently allowed 8 licenses to sell beer, wine, and spirits. In 2027 this number of allowed stores will expand to 13, then 20 in 2032, and eventually they will be allowed unlimited stores in 2037. The big box stores that hold these licenses have virtually unlimited resources. This big money has helped them enact – through the state legislature – a system that has allowed them to expand and grow while limiting similar growth and expansion of the competition: independent, local, and small businesses.

A Fermented Malt Beverage (Beer) License is a beer license. This is the license held by many big box stores, grocers, and convenience stores that allows them to sell beer. This license used to be the 3.2% alcohol beer license, but it was converted to a full strength beer license through Senate Bill 197 (SB 197) signed in 2016 and enacted in 2019. Currently there are no limitations on the number of FMB licenses an entity can have.

Radius Restrictions: SB197 also introduced a radius restriction to prevent liquor stores from opening next to other liquor stores. The current radius restriction is 1,500 feet between stores holding RLSs and or LLDS. In effect, this means that if a big store like WalMart wants to sell wine and liquor in addition to beer in one of their stores, they must buy out any store within 1,500ft. This prevents WalMart from simply swooping in and putting a small liquor store in its shopping center out of business. Most of these small stores have leases with personal guarantees meaning that a landlord could technically seize their personal assets, including their house if the small store defaulted on their lease, which will be very likely if wine is allowed in grocery stores uncheked, as wine is a much greater profit center than beer for most if not all liquor stores. Additionally, the business owner would have to lay off all their employees and would lose their primary (or maybe only) source of income. Having a radius restriction in place forces stores like WalMart to pay a “fair” value to the entrepreneurial owners of nearby small stores if they want to expand their alcohol offerings.

The radius restriction is fair for all: it prevents big box stores from putting small stores out of business if and when they decide to sell liquor, and it also prevents larger liquor stores with more resources from engaging in predatory business practices by opening new locations near existing stores. When SB197 passed, many liquor licenses lost value as grocery stores became allowed to sell beer and in some instances wine and spirits. The radius restriction helps create and protect some value for every licensee.