Distilled: Idaho Liquor License Laws A Tall Order For Business Owners

Jan 23, 2018

In Idaho, the state controls how many liquor licenses are available and only releases new ones when populations rise enough to warrant. While entrepreneurs say a skyrocketing secondhand market for licenses stifles new local businesses, state officials say their hands are tied until sweeping reform happens.

The saying goes that rules were meant to be broken, but in the case of Idaho liquor licenses, it would seem rules were meant to be exempted.

There are special liquor licenses for golf courses, ski resorts, equestrian facilities, airport restaurants, clubs, convention centers, tribal lodges … the list goes on.

Alcohol Beverage Control office manager Nichole Harvey says the secondary liquor license market is driven by the going rate brokers sell them for. Currently, a license for Boise runs about $180,000.
Credit Matt Guilhem / Boise State Public Radio

It would take Nichole Harvey at least a minute to get through all 13 specialty licenses available to niche businesses. The office manager for the Alcohol Beverage Control wing of the Idaho State Police says all of those are in addition to the basic license needed to open up a watering hole in the heart of town.

Harvey says the current quota system tying each new license to a population increase of 1,500 went into effect in the 1950s. According to her, it was done, “in an effort to limit the number of liquor licenses within incorporated cities. And that, is where we are today; those laws haven’t changed much.”

The last time Pocatello got a new license was 1975. It was 1972 for Ketchum. With short supply and high demand, there’s a thriving off-the-books marketplace for licenses – especially in Boise.

In the City of Trees’ downtown, just a stone’s throw from the capitol building, Chris Mitchell is behind the bar at Saint Lawrence Gridiron making a couple old fashioneds. The Kentucky transplant manages the restaurant and says like many establishments in Boise, Saint Lawrence leased their liquor license from a broker.

“We asked him, ‘Hey, are we good to renew for the next year?’ You know, because we had a yearly agreement,” Mitchell recalls. “He said yeah, we were. And then, the day of, he said we weren’t and sold it to the Marriott.”

Overnight, the restaurant that prides itself on its cocktail program couldn’t serve liquor.

There’s a wait time of five to eight years in Boise for a new license issued by the state that’ll cost $800. Meanwhile, on the secondary market, they’re available immediately for around $170,000 to $180,000.

Saint Lawrence Gridiron manager Chris Mitchell pours an old fashioned at the restaurant and bar near the statehouse. Mitchell says when the establishment suddenly lost its leased liquor license in the summer of 2017, the business took a $100,000 hit due to lost of sales and closures. He says the situation also cost him some employees that couldn't be retained as the restaurant scrambled to find a new liquor license.
Credit Matt Guilhem / Boise State Public Radio

“Liquor licenses in Idaho are kind of way above national average for the size of the market,” says Mitchell. “I mean, in Chicago you’re looking at $4,500 for a two year. Idaho you’re looking at $180,000 – is the going rate right now – which makes it hard for small craft cocktail places or small restaurants to generate that kind of capital.”

Mitchell says Saint Lawrence got a temporary license from the state to serve beer and wine. After a few weeks, the temp expired and the establishment went completely dry. Eventually, they found another license to lease, but Mitchell figures the whole ordeal lost the business probably around $100,000.

He believes the system of licenses as commodities stifles new small bars or eateries from opening in the state capital.

“For people who are even doing pretty well financially – relatively, the associated cost of starting that up, compared to what you’ll make in the long run, yeah, it’s definitely prohibitive; having to deal with that definitely puts a damper on it,” says Mitchell.

In Meridian, back at Alcohol Beverage Control, licensing specialist Kelsey Woodward says there’s a backlash to getting rid of the state’s quota system – so many people have bought in and given the licenses their premium status. Plus, the state gets a 10 percent transfer fee every time a license changes hands. With around 30 transfers per year in Boise, that adds up to about $500,000 going to the state’s general fund annually.

When it comes to explaining Idaho’s alcohol rules to entrepreneurs looking to start a bar or restaurant here, Woodward says it’s frustrating.

Kelsey Woodward is a licensing specialist with Alcohol Beverage Control. As a regulator, it's her job to navigate businesses through the process of getting a liquor license. If an entrepreneur is looking to open a bar in a market with limited or no licenses available, she says aside from advising them to try getting one on the secondary market, her hands are tied.
Credit Matt Guilhem / Boise State Public Radio

“My hands are tied,” she says. “It’s the law, and there’s nothing that I can do. I mean I would love to see these businesses come here and help us grow … I mean, I really just don’t know.” She lets out a strained laugh as she says: “It’s kind of one of those hard things for me to tell people that this is how we have it set up here.”

Woodward’s colleague, Nichole Harvey, is equally hamstrung.

“Until there’s some reform that helps businesses, whether that be for economic development or just the idea of loosening those liquor licenses in certain areas or maybe all areas of Idaho, I just think that we are bound by what’s written in the book, and we just go, ‘These are the statutes,’” says Harvey.

Proposals that would’ve overhauled the distribution of licenses didn’t get traction at the statehouse in 2017 or 2009.

In the meantime, both women say they’re making good progress getting through the roughly 50-deep Boise waitlist. They’re quick to point out there’s no quota for beer and wine permits, and alcohol licenses are readily available in Nampa, Star and Ammon.

This story is part of the KBSX news series, "Distilled."

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