Could anyone dream up a more complicated, less rational way to license the sale of alcohol in bars and restaurants than we have in Montana? A system that restrains trade, penalizes growing economies and encourages drunken driving?
The Legislature declared there should be a “quota” – a limit on how many places can sell alcohol. Quotas were set in 1947 to “promote temperance” and “create orderly markets.”
Yet 70 years later, we have a “quota” that varies wildly by location. Some cities have twice as many licenses per resident as others do.
Licenses issued before 1947 were grandfathered and remain in use. There is no quota at all for beer licenses at places more than 5 miles from city limits.
Veterans’ posts and fraternal lodges have no quota – if their national organization existed before 1949. Other exceptions include golf courses, airports, selected resorts, certain tour boats at least 40 feet in length and some junior hockey contests.
We have a license system that creates money for a few and does nothing for the rest of us. Licenses are treated like private property. They can be worth up to hundreds of thousands of dollars.
True, part of license value exists because gambling privileges are available only to license holders. But wherever the value comes from, we taxpayers receive none of it. Does any of this “protect us” from drinking too much? Arguably, it has the opposite effect. Montana is one of the hardest drinking states, often leading the country in fatalities from drunken driving.
The quota system creates valuable property rights and therefore hostility to reform. The license lobby opposes legislation that “goes too far” and threatens those high-value licenses.
Fine restaurants and rib joints alike do better if they can serve beer or wine, and these are places that produce fewer DUIs. Yet these are exactly what Montana’s quota system discourages.
This system is not about temperance. It’s about limiting competition.
So, what is to be done? There are three options. One is a voter initiative. However, updating Montana’s quota system may require more details than can fit on a ballot.
Another option is a lawsuit. While the state has clear authority to regulate liquor sales, it’s less clear the courts would agree Montana’s quota system is truly about public health and safety.
Still, the Legislature holds the best promise for an orderly transition. A halfway solution is a targeted change to quotas on restaurant beer and wine licenses. Only nine quota areas (including Kalispell and Whitefish-Columbia Falls) are squeezed by this quota, but those are where new economic activity is.
The overall solution would be to buy out all existing licenses. We’d have to calculate how much license value is due to alcohol sales and how much to gambling. The regulation of gambling would need to be changed without disrupting current arrangements.
Not easy. But if “promoting temperance” and “creating orderly markets” is what the quota is about, why accept this crazy system?
Paul Cartwright is a former Helena city commissioner