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5 Things You Need to Know About the New Alcohol Sales Law

Why the law allowing grocery chains to sell booze is causing so much buzz in Colorado. 

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A new Colorado law will change how residents can buy alcohol, marking one of the biggest shifts in liquor sales since the end of Prohibition—the country’s 13-year ban on “intoxicating liquors.”

Senate Bill 197, which was signed into law by Governor John Hickenlooper on June 10, allows Colorado grocery stores and other retailers to sell distilled spirits, wine, and full-strength beer at multiple locations. But don’t head to your local grocer just yet. While the law goes into effect on Friday, it will take 20 years to completely phase in, and consumers won’t see the first changes until 2017.

The law was designed this way for a reason, and it’s also why the bill was so controversial. Here are five things you need to know about the new law and how it will affect consumers and local businesses:

1. It’s a Compromise (For Now)

The law attempts to balance the needs of grocery chains, convenience stores, and independent liquor stores. Grocery and drugstore chains are currently allowed to sell liquor, wine, and full-strength beer in just one store in the state. Grocery and convenience stores can also sell “near-beer,” containing 3.2 percent alcohol.

Although Colorado legislators failed to pass similar legislation in the last several sessions, a potential ballot initiative to allow immediate sales of liquor, wine, and full-strength beer in grocery stores prompted a compromise on the phased-in approach that lawmakers passed in early May (more on that later).

“The well-worn debate to allow expanded sales of distilled spirits, wine, and full-strength beer at grocery stores continues to challenge the competing economic values of convenience to customers, job creation, and promotion of locally-owned businesses,” Hickenlooper said when he signed the bill on June 10, after weeks of consideration. “This bill is a laudable effort by the sponsors at compromise.”

2. The Law Both Helps And Hurts

There are strong economic arguments for and against the new law, much of which are laid out in an article from PolitiFact Colorado, a fact-checking website that rates the accuracy of claims by elected officials, candidates, and political activists. PolitiFact examined an ad from Your Choice Colorado, a coalition led by King Soopers and Safeway, that states that selling beer and wine in grocery stores is “good for everybody.”

According to research funded by these retail chains and authored by Dr. Jack Strauss, Miller Chair of Applied Economics at the University of Denver’s Daniels Business School, allowing grocers and drugstores to sell liquor, wine, and full-strength beer would create about 200 more grocery stores, 22,000 new jobs, and increase craft beer sales by $125 million.

On the other hand, a Summit Economics study funded by the Colorado Licensed Beverage Association (CLBA), an organization that represents local, family-owned liquor businesses, predicted that allowing booze in grocery stores would force the closure of 700 liquor stores, a loss of 10,000 jobs, and economic harm to craft breweries and wineries.

Both sides made fair points, PolitiFact concluded, rating the ad as half-true. “Independent economists say the proposal would increase competition, giving consumers lower prices and convenient one-stop shopping. But they acknowledge that liquor stores will be negatively impacted,” writes author Alan Gathright.

3. It’s a Detailed, 20-Year Plan

Some 1,650 independently owned liquor stores throughout the state would endure heavy revenue losses if the law changed overnight, Chuck Carlson, general manager and owner of Mulberry Max liquor store in Fort Collins and vice president of the CLBA, told 5280. “Twenty years seems like a long time, but in terms of trying to plan your family’s future and your business’ future, it’s not a long time at all,” he says.

The phase-in allows grocery and drugstore chains to sell liquor at up to five locations statewide in 2017, provided that they buy all existing liquor-store licenses within 1,500 feet of each store (or within 3,000 feet in jurisdictions with fewer than 10,000 people). By 2032, the stores can have up to 20 licenses. And in 2037, all licensing restrictions expire and free market competition takes over.

4. Say Goodbye to 3.2 Beer

The new law treats beer differently than wine and distilled spirits. Currently, Colorado is one of just five states (including Kansas, Minnesota, Oklahoma, and Utah) with a 3.2 percent beer provision. Starting in 2019, licensed grocery and convenience stores can ditch the 3.2 beer, which has a lower alcohol content, and start selling full-strength brews without restrictions.

Critics of 3.2 beer say it was more appropriate at a time when 18-year-olds could buy beer in Colorado, and when it was the only malt beverage available on Sundays—both of which are now repealed. This provision especially benefits convenience stores that only sell beer. “They really would just like to sell beer that people would actually like to buy,” Carlson said. “I totally get that.”

5. Not Everyone Is Happy About the Law

Some critics say the new law doesn’t go far enough to ensure consumer choice and free market competition. After Gov. Hickenlooper signed the law in early June, representatives from Your Choice Colorado said they would still consider a November ballot initiative that would allow all grocery and drugstores in Colorado to start selling liquor in 2017.

However, on Friday, the same day the law went into effect, the organization’s campaign manager Georgie Aguirre-Sacasa released a statement saying that they would no longer proceed with the 2016 ballot initiatives.

“With the legislation now in affect, we are working diligently to figure out how this law will impact both Coloradans and grocery stores,” Aguirre-Sacasa said. “While the bill isn’t perfect and we continue to believe that Coloradans deserve better, it does change the old status quo and will allow people more access to the Colorado craft beer and wine that they love.”

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