Colorado’s new liquor law (the “Law”) has the potential to benefit chain grocers more so than any other group of stakeholders. However, chain grocers should be aware of the changes and adjust their business strategies accordingly to ensure they are able to avail themselves of the potential benefits.
Current Restrictions
Presently, grocery stores under common ownership can receive only one single license to sell full-strength beer, wine, and liquor in the state. The remaining grocery locations in the chain are limited to selling “3.2” beer.
Restrictions if Passed
Immediately, the number of grocery stores allowed to sell full-strength liquor would jump to five per chain. This number would increase to 8 in 2022, 13 in 2027, 20 in 2032, and, beginning in January 2037 all caps would be removed. However, any chain location looking to sell full-strength alcohol would need to purchase the licenses of any purveyors located within a radius of 1,500 feet. In towns with populations under 10,000, the radius extends to 3,000 feet. If there are not any competing licenses in the specified radii, a chain grocer would be required to purchase at least 2 licenses in the local jurisdiction.
Additionally, the distinction between 3.2 beer and regular strength beer would be eliminated by 2019. As a result, all grocery stores would gain the ability to sell full-strength beer by 2019, regardless of whether they procured a liquor license.
All current liquor-licensed locations would be grandfathered into the new Law.
Strategic Considerations
- Know Your Location: Is the population of the town where you are located greater or less than 10,000? If greater than 10,000, are there any liquor stores currently operating within 1,500 feet of your location? If less than 10,000, are there any liquor stores currently operating within 3,000 feet of your location?
- Know Your Budget: Determine whether you currently have the funds available to purchase liquor licenses or locations. Determine what types and volumes of products you can currently accommodate when the Law goes into effect. Will you need to expand your location? Will you need to increase insurance coverage?
- Know Your Market: Begin conducting research to determine what types of products your current clientele and individuals residing in the proximate area desire most. Is there a market for hard liquor? For craft beer? If so, for what types?
- Know How to Comply: In addition to the new allowances, grocery stores will be subject to a litany of specific regulations, including prohibitions on selling alcohol below cost, storing alcohol beverages off-site, self-checkout and checkout by minors. Consult with your attorney and create a company-wide compliance policy to ensure you are in violation.
- Make a Plan: Whether or not you intend to purchase other licenses, purveyors, or locations, addressing the above and putting together a plan of action to execute if the Law goes into effect will allow your business to capitalize on the changes. Although implementation may be slow, early movers can expect to reap significant returns for planning ahead.