New law allows Utah liquor licenses to be bought and sold
SALT LAKE CITY — State liquor licenses could soon become high-priced commodities.
A new Utah law that takes effect July 1 allows licenses to be bought and sold on the open market under certain conditions.
"This becomes real property," said state Alcoholic Beverage Control Commission member Jeff Wright. "It could have a value of $10,000 or $100,000 or $1 million depending on who wants to pay for it."
The Department of Alcoholic Beverage Control staff briefed the commission on the new law Tuesday.
"This changes the market dynamically and drastically," said David Gladwell, alcohol commission chairman.
Utah law previously prohibited a liquor license holder from selling the permit to another person or business. Licenses had no monetary value and had to be turned in to the commission to be reallocated.
Sen. John Valentine, R-Orem, said the sale of licenses already goes on behind closed doors. Businesses have found ways to transfer licenses to new owners without going through the state application process.
"It's a transparency issue for me," 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."
According to the law, which Valentine wrote, the commission would approve qualified license sales. The license could be used at new location but must remain in the same county. A new permit holder must open for business within 30 days to prevent people holding licenses to drive up the value.
Valentine said financial arrangements must be disclosed to the commission and would be subject to the state's open records law. The seller must also give the buyer a list of creditors and notify any creditors about the deal.
The commission issues several types of licenses, which carry various application fees. A full-service restaurant license goes for $2,200, while a club or bar license runs $2,750.
Restaurant licenses are usually readily available, but there's often a waiting list for club licenses. On Tuesday, the commission granted three club licenses in a pool of 15 applicants.
"Getting a license today could be like winning the lottery," said Dave Morris, the owner of Piper Down pub in Salt Lake City.
"It basically makes you license a commodity item," he said of the new law. "It opens up licenses to the market. Whatever the market will bear is what your license is worth."
Morris, president of the Utah Hospitality Association, said liquor license sales already take place in other states. He said he knows a bar owner in Montana who paid $1 million for a license.
The Department of Alcoholic Beverage Control is working on rules to put the law in place including the application process, fees and notification of creditors. It intends to discuss the particulars in a meeting next month.
Valentine said he will be watching closely to see how the new law works and whether it needs tweaking before the Legislature meets next year.
"I don't think, after an initial flurry, we're going to see much change," he said.
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