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Wyoming’s Other Liquor Problem (Part 2)

We have discussed how Wyoming’s alcohol regulatory system limits new small business opportunities without effectively deterring destructive behavior attributable to alcohol. The state rankings of alcohol abuse measured by DUI arrests per capita and binge drinking rate highlight some similar rural states that have combined market-friendly liquor licensing with lower levels of alcohol abuse.

West Virginia and Utah are the only two among the ten most responsible drinking states in both binge-drinking and DUI measures. Wyoming isn’t top ten in either. Unfortunately, Wyoming tops the chart in one category – drunk driving arrests per share of population. Therefore, market-oriented liquor license regulations in West Virginia or Utah do not necessarily lead to more irresponsible or dangerous behavior than exist under Wyoming’s current licensing regime.

Utah uses an inherently anti-business model by limiting package liquor sales to state-owned liquor stores. Wyoming is more supportive of small business and entrepreneurs; allowing private ownership of package liquor stores. However, the population quota system used to protect these stores from competition created a valuable, artificial asset for license holders and created a barrier to any serious reform effort.

West Virginia, however, provides a broader range of permits to either sell or serve alcoholic beverages. Unlike Wyoming, West Virginia treats sales for on premise consumption (such as in a bar, restaurant, or tavern) differently than sales for off-premise consumption (typically from a package liquor store). The state also treats wine differently than liquor and provides a variety of cheaper, specialty licenses for the sale of only beer and wine. Retailers can also obtain wine for resale directly from private, licensed distributers instead of relying on a state-owned wholesale liquor warehouse.

Even though any significant reform needs to recognize the asset value current licenses represent for license holders, and their business lenders, there are some steps that Wyoming could take to expand small business opportunity in the area of alcohol service and sales. These steps are similar to laws in place in a rural state that does not experience the higher levels of irresponsible alcohol-related behavior experienced by Wyoming.

  1. Separating licensing of sales for on and off-premise consumption to allow new bars, lounges, or clubs to open without forcing closure of an existing store or establishment.
  2. Reducing or eliminating the incremental population threshold for additional licenses in cities and towns.
  3. Increasing the flexibility allowed under the existing alternative licenses by allowing, for example, restaurant license holders to also serve alcohol at catered events (with appropriate server training).
  4. Modernizing treatment of wine retailers by categorizing them closer to beer retailers than distilled spirits sellers.
  5. Treating wines less like distilled spirits or high-proof beverages and more like beer by:
    1. Allowing a special wine-only or beer/wine only off-premises license, and
    2. Considering direct wholesale access for sourcing wines and/or craft beers instead of funneling wine sales through the state-owned liquor warehouse.

Each of these steps can expand business opportunities for the private sector. They are used in other states that have lower levels of alcohol abuse and licenses can still be conditioned on appropriate employee training.

Additionally, any reform can be phased in over a period of years to help existing license holders recapture the cost of their current licenses. Prohibition era decisions do not justify stifling small businesses nearly 90 years later. It is time to move beyond those Prohibition era regulations and allow more new small businesses to open in growing Wyoming cities in the 21st century.

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Friday, 21 July 2017
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