Want to get a liquor license in Idaho? How long you could wait...or how much you would pay

BOISE, Idaho (CBS2) — Antiquated. Frustrating. Restrictive. Well-intentioned.

These are all words used to describe Idaho's current liquor laws, some of which date back to the 1940's on the heels of prohibition. In 1959, Idaho implemented a quota system for liquor-by-the-drink licenses, meaning the state controls (and limits) the number of licenses allowed in each incorporated city based on population.

"Temperance is in our constitution. So this is the best way the state had come up with controlling liquor in the state," said Brad Doty, Alcohol Beverage Control bureau chief. Alcohol Beverage Control is a division of Idaho State Police that oversees the licensing and enforcement of alcohol in the state.

But this quota system has also created some unintended consequences -- namely, by creating a profitable secondary market for liquor license sales and by limiting the number of small or private businesses that can enter into the state's marketplace. In recent years, there has been a push to reform the laws. So far though, no solution has stuck.

THE LAWS

By state law, each incorporated city can have two liquor licenses, plus one additional license for every 1,500 residents. Essentially, as a city's population grows, the state will issue additional licenses.

According to ABC, there are 899 incorporated city liquor licenses in the state of Idaho (which does not include wholesale or specialty liquor licenses for places like ski resorts, golf courses, etc...). In Boise, there are 150 active licenses, up from 146 in 2018. There are 61 active licenses in Meridian, 48 in Nampa, 25 in Caldwell, 15 in Eagle and 13 in Mountain Home. Back in 1959, Boise had just 39 establishments that sold liquor (although the quota only called for 23).

Often times though, demand for licenses outpaces the supply allowed by the state based on the quota/population equation. As a result, there are liquor license waiting lists in more than 70 cities in the state, some of which date back decades.

“It’s a challenge, and people get frustrated,” said Kari Cussins, a licensing specialist who oversees applications for all beer, wine and liquor licenses at the Alcohol Beverage Control Bureau. "But we don't control population. We don't create the laws -- our job is just to enforce them."

THE WAITLISTS

Each waitlist is different. In Boise, for example, the list was 79 names long in 2018. But in other cities like Nampa and Caldwell, there are still liquor licenses available for purchase based on the quota.

"The person at the top of the list [in Boise] has been on since the early 2000's," Cussins said. "It’s about 19 years they’ve been waiting.”

Some bars in Boise have played and (eventually) won the waiting game. But in more rural cities, where population growth happens gradually (if at all), there are names that have been on a waitlist for more than 40 years. There are also a few select cities that have over-issued licenses, meaning they have more licenses in use than are available by statute. The most likely reason for this, ABC says, is that these cities had these liquor licenses in place before the quota system legislation was enacted.

• Cities with a waitlist dating back to 1974-1976: Lewiston (1974), Pocatello, Lava Hot Springs, Ketchum, Hansen, Cascade, Blackfoot, Bellevue, Buhl, Wendell
• 1977-1981: Marsing, Idaho City, Crouch, Challis, McCall, Sun Valley, Sandpoint, Montpelier

Contrarily, the state of Idaho does not limit the number of beer and wine licenses sold.

THE SECONDARY MARKET

By state law, in cities with a population greater than 3,000, it costs $750 to apply to a state-issued liquor license (and that same amount annually to renew). Beer and wine licenses cost an additional $50.

But those guidelines get brushed aside in cities with liquor waitlists. Instead, because the demand is so high, the value of existing licenses can (and has) skyrocketed -- sometimes to hundreds of thousands of dollars.

"If someone wants to sell their liquor license, and there’s a demand for that liquor license then the secondary market tells us what those values are," Cussins said.

Alcohol Beverage Control says licenses can be purchased or transferred, and prices can vary from sale to sale based on the Fair Market Value of the previous three sales made in that same incorporated city. This process has helped license prices jump to an average of $177,000 in Boise. In Coeur d'Alene, the average license sells for $253,000. In Ketchum, that number is $273,000.

SHAKEN AND STIRRED

The debate over Idaho's liquor license quota laws has many angles to it. The current system has created a division -- primarily between people who want in on Idaho's liquor game, and those who are already playing it. As is, there are entrepreneurs and existing business owners who have no choice financially but to wait their turn for a license.

"Unless you've got a whole bunch of discretionary money sitting around that you are looking to spend, the only option right now is to put your name on the liquor license list," said Joe Ostermiller, a Boise resident who eventually hopes to open a craft cocktail bar.

Ostermiller applied for a license back in 2016. His name is now 26th on the list, which he said will thankfully work in his favor to give him time to prepare to open a business. However, he says there are others on the list who are missing out on a lucrative opportunity.

"I think it discourages, and definitely creates, at the very least creates a major challenge for local business entrepreneurs to get their foot in the door and get things going," he said.

In contrast, there are dozens of business owners in the Treasure Valley and beyond who have invested heavily in acquiring a liquor license, and who could lose out if the state decided to do away with the quota system.

"I honestly think that's part of the appeal and the value we have with these liquor licenses," said Dan Rockrohr, co-owner of the Cactus Bar. "If there's no quota system, then all I have is the building and the business. Right now my liquor license here is worth quite a bit of money because a lot of people want it."

When Rockrohr bought the Cactus Bar from his father, he bought the building, the business, and the liquor license.

"We paid dearly for it," he said of the license. "We still have a loan out."

Rockrohr and others agree that change is necessary, but the discussion gets more complicated from there.

THE PUSH FOR CHANGE

In recent years, there have been several attempts to reform the state's liquor license laws at the statehouse, but none have been successful.

"There are a lot of ordinary citizens that are really interested in having change, and that's a growing sentiment," said Sen. Jim Rice of Caldwell. "I think that that's going to drive change, it's just a question of how's it going to happen."

SenatorRice led the most recent charge in 2019, which would have allowed cities and counties to issue (or choose not to issue) liquor licenses instead of the state. Bars and nightclubs that weren't considered 'eating establishments' would only be able to purchase an already-existing state license, as they couldn't be issued one by the city or county.

Rice though, says dissatisfaction with the laws dates back more than 20 years.

"It has been an issue that’s been discussed for decades. At least since the 90’s," he said.

Ostermiller said one of the shortcomings of the most recent bill was that it would have limited the kinds of establishments that could open and be eligible for a liquor license from the city.

"I want to open a primary liquor establishment," he said. "I don't want a restaurant. I can't afford a restaurant, even after saving money while I sit on the list. So, that would have created a challenge for me and people like me. I would like to see legislation that doesn't financially block entry into the industry for the little guy off the street who just wants to get his foot in the door. Just as importantly, I don't want to see any legislation that would restrict the freedom of an entrepreneur to open a business type of their choosing, and forcing them to open a restaurant for example."

Lawmakers say there are several dimensions to the discussion that happens in the statehouse each year.

"There are people that don't want to change the current system because they think that it promotes temperance," Rice said. "You get people that are wanting to change the system but don't want to destroy the value of the existing licenses where there are shortages, and then you have a group that just wants to eliminate the quota system. Those dynamics have tended to keep us kind of in this situation where we're not getting change, even though I think the majority do want change."

"It's just a very tough topic of how you're going to compensate those with their license currently," Doty said. "Not only is it just the value of the license, but...an argument that I hear a lot too is, not only is it the value of my license but now my customers will have more options to go somewhere else you also lose that income as well."

HOW WILL THIS SHAKE OUT?

"It's really speculative on how soon, but I don't think we're far from something happening," Rice said of potential reform.

Despite the differences in opinion, people on both sides of the discussion say they want to be part of the conversation that leads to a solution.

"Somebody needs to take into account all the rural areas in Idaho and try to appeal to most everybody," Rockrohr said. "You can't appease everybody but write the most comprehensive bill you can for all of Idaho, not just Boise."

"Thas to be a concerted effort with an interim working group that actually goes around to the different parts of the state, meets with license-holders, talks to citizens, and works with the other legislators to come up with a plan that will work," Rice said. "I think that's the best path forward."

While it's uncertain whether that will happen, change seems inevitable. It's now just a matter of how and when.

"I think the longer it goes, the more likely it is that it will be a change that changes the quota system but doesn't preserve value in existing licenses," Rice said.

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