Wyoming Liberty Group
Is The City of Cheyenne Open to Business?
The Cheyenne City Council’s decision about allowing a retail liquor license owner to sell his license to Cheyenne’s Sam’s Club is about more than liquor policy. It is really a referendum on whether Cheyenne is open to business. Perhaps not. The Council Finance Committee recommends that the Council block the sale. This is a signal to investors that the City is willing to flex its muscle to protect favored locals at the expense of outside investors.
But City Council members who oppose the transfer skate on thin ice. The 21st Amendment to the U.S. Constitution gives broad authority to states to regulate the transportation, importation, and delivery of intoxicating liquors in ways that would otherwise violate the U.S. Constitution’s so-called Dormant Commerce Clause. This Clause reserves exclusive power to regulate commerce among the several States to the U.S. Congress (U.S. Constitution, Article I, § 8, Clause 3) – except in the case of alcohol However, this authority is limited to the 21st Amendment’s core concern of promoting temperance. Courts have explicitly held that a state liquor law cannot “ever be motivated by mere economic protectionism.”
Opponents of the proposed liquor license transfer to Sam’s Club in Cheyenne base their arguments on the very economic protectionism that the U.S. Constitution prohibits. Some Cheyenne City Council members appear willing to disregard the Constitution once again and accept local calls for economic protectionism. This is a dangerous road to go down for several reasons.
First, Wyoming state law does not support Cheyenne’s economic isolationists’ attempt to favor favorites . Wyoming state law does not require retail liquor license owners to be local residents. In fact, the Casper’s Sam’s Club store currently owns a retail liquor license just like the one Cheyenne’s Sam’s Club store is now trying to buy. Cheyenne cannot hide behind state law.
Second, Cheyenne does not have a written ordinance that prohibits out-of-town ownership of retail liquor licenses. That means that City Council Members are not even working with an objective rule when debating whether an out-of-town business should be able to own a retail liquor license. This notion of an unwritten rule or policy violates the very core of our rule of law principles. Even if the city could adopt a policy excluding out-of-town ownership of retail liquor licenses, the City has not applied the rule consistently. For example, the retail liquor license for Old Chicago restaurant is owned by a company from Broomfield, Colorado.
Third, the Cheyenne City Council’s decision will be a message to other potential businesses that might think about investing in Cheyenne. The City of Cheyenne spends taxpayer money for membership in Cheyenne LEADS, the business recruitment organization that tries to lure out-of-town business to relocate to the Cheyenne area. How might other potential businesses view the Council’s refusal to let a national business buy a retail liquor license in the face of local requests for economic protection? What are the unintended consequences of this decision? Trader Joe’s is obviously not going to consider a Cheyenne location. But if it were to consider Cheyenne, how would the council treat that corporate chain that is partially known for its wine selection? So, even as the Cheyenne City Council throws money at corporate welfare and business recruitment with one hand, the Council uses the other hand to push these same businesses away. This is how a local government that plays favorites ultimately causes more economic harm than good.
Finally, even if the City Council is trying to protect the investment that liquor retailers have made in scarce retail liquor licenses, rejecting Cloud 9 Liquorland’s request to sell its license to Sam’s Club undermines that effort as well. Removing out-of-town buyers from the potential market for existing retail liquor licenses simply shrinks the market and will force down the value of the licenses held by the very opponents who are arguing against the sale.
The fact that Cheyenne’s City Council has the power to approve or reject a business deal for purely subjective reasons points to one of the many significant flaws in Wyoming’s antiquated liquor licensing system. This discussion over whether to protect local businesses from a national corporation that operates under a completely different business plan than local corner liquor stores should never happen. One of the reasons that America’s constitutional framers decided to replace the Articles of Confederation with the Constitution was to put a stop to economically destructive protectionism by individual states.
Nevertheless, Cheyenne’s ongoing debate about protecting local favorites shows that Cheyenne’s City Council appears willing to flirt with disaster despite clear Constitutional protection for interstate commerce against threats of mere economic protectionism like that requested by opponents of Sam’s Club’s request to buy Cloud 9 Liquorland’s retail liquor license.
The entirety of Wyoming Liquor Law favors crony capitalism. From monopolistic beer wholesalers to the state itself controlling the distribution of wine and spirits. Competition was never the intention.