New Liquor License Law Affects Utah

Utah Liquor License LawA new law that went into effect on July 1st changes the way liquor licenses change hands in Utah. In a state with some of the strictest liquor laws in the country, liquor licenses can now be sold on the open market in Utah.

This change directly contrasts proposals for liquor license quota elimination in other states that have quota limitations. Previously in Utah, liquor licenses had no monetary value and had to be returned to the Alcoholic Beverage Control Commission to be reallocated. Now, under the new law, these licenses will have a monetary value and can be sold for whatever the market will bear.

Open Market Liquor License Sales

While liquor licenses can now be sold on the open market in Utah, there are conditions that must be met. According to the Associated Press article, “New Liquor Rule Eases Famously Strict Utah Limits,” buyers must qualify under a set of guidelines and pay $300 in state fees, and sellers must pay off any debts of the business. Additionally, the new bar must remain in the same county.

As with the push to eliminate the quota system in states that use it, there are those that are for and against the new law. Quoted in the Associate Press article, Bridget Gordon, Salt Lake City pub owner, said, “I think it’s a good move for us because we’ve been in the Dark Ages for such a long time for liquor laws.”

On the other hand, Steve Demarest who’s planning to open a restaurant and bar said he’d rather wait for a free, government-issued license: “It just makes more sense for me to wait it out. I’m a small business owner, and I don’t have that kind of money to spend on a liquor license.” He anticipates his wait won’t exceed a year, but it may take a new census report to generate more licenses. As with other quota states, Utah issues licenses based on population counts.

Utah Liquor License Values

On the open market, liquor license values in Utah could have a value of $10,000, $100,000 or $1,000,000 depending on who wants to buy it.

Sen. John Valentine, R-Orem, chief sponsor of the bill (S.B. 4001) believes the sale of liquor licenses was already occurring behind closed doors and that this new law creates greater transparency. He said, “It’s consistent with my philosophy that you allow the market to govern, but you don’t hide it. You make it so that everybody can see what’s going on.” (Quoted in Deseret NewsNew law allows Utah liquor licenses to be bought and sold.”)

Hospitality industry representatives have been opposed to the new law, worried that only large companies with deep pockets would be able to create new establishments in the state or would hold them to artificially inflate values.

This new liquor license law in Utah creates the same marketplace that occurs in other states with quota systems, and as with those states, there are obviously two sides to the argument.