Liquor License Debate Creates a Waiting Game

liquor license debate creates waiting gameThe liquor license debate in Massachusetts as to whether or not the quota system should be overhauled and license issuance be completely controlled at the local level has created a waiting game. And that waiting game can quickly stifle economic growth and development – the very heart of the argument to eliminate the quota system.

Overhauling the liquor license system in Massachusetts is part of Governor Deval Patrick’s proposal: “An Act to Promote Growth and Opportunity,” according to Boston Magazine’sCommittee to Discuss Governor’s Economic Development Bill.”

Development Can’t Move Forward

On one hand, proponents argue that economic development can be spurred by shopping centers and similar construction or revitalization that includes restaurants… restaurants with the ability to serve alcohol. The quota system obviously caps the number of available licenses.

Secretary of Administration and Finance, Glen Shor said, “We have heard from developers who cannot start construction because lenders are refusing to finance projects until they know the project will have an adequate number of liquor licenses in place.” (Quoted in’sGov. Patrick Pushing to Lift Liquor License Cap.”)

So developers (and their financers) are waiting to see how the argument pans out and who wins.

Prospective Buyers Are Waiting

Prospective restaurateurs and pub owners are also waiting to purchase any available liquor licenses. They’re obviously waiting to see if a better deal is on the horizon and if they might have the opportunity to acquire a liquor license at drastically reduced prices if the quota system is abolished or even altered. Can you blame them?

These prospective buyers aren’t simply independents who are considering launching a new neighborhood eatery or pub. In some cases, there are national chains that are now hesitant to pursue opening an establishment in various locations throughout the commonwealth… waiting to see how the argument pans out and who wins.

Concerns About the Asset Value of Current Liquor Licenses

Finally, existing restaurant and pub owners may be putting renovation or expansion plans on hold, worried that a change to the system could devalue their existing liquor licenses – very likely the asset they are using as collateral for loans and operating expenses.

With a possible change to the system, financers that have loaned money with liquor licenses as collateral will be hesitant to continue doing so, fearing the license could be devalued and the loan ending up in default. Both current license holders and their banks are waiting to see how the argument pans out and who wins.

In the meantime, this waiting game created by the liquor license debate is doing nothing for economic development and growth.