By Cole Boehler
The lotteries to award new-issue restaurant beer and wine "cabaret" licenses will take place August 7 and 8 rather than July 31 as was initially announced. All licenses will be awarded through a lottery system since in nearly every case more applications were received than licenses were available.
Shauna Helfert, administrator of the department of revenue's liquor division, said some details were still in flux as of July 16 when she spoke to the Montana Tavern Times.
Tentatively, Helfert said, lottery drawings would take place the morning of Aug. 7 in Billings for Billings and surrounding area communities, and in Bozeman for Bozeman and surrounding communities that afternoon. On Aug. 8, the drawings will take place in Helena in the morning and Missoula in the afternoon.
Check the department web site
and click on "restaurant beer and wine licenses" at the top left of the home page for exact time and place or phone 406-444-6900.
The number of licenses originally thought available, based on outdated census estimates, have been increased based on the latest July 1 census data. Initial notices advertising the licenses did feature a disclaimer noting license estimates could change based on updated data.
In addition, a number of improper applications have been disqualified.
Applications will be drawn one-by-one and a sequential list posted at the drawings. But some applications will receive a preference for already operating a restaurant and/or for having applied previously and been unsuccessful, Helfert explained.
So the drawing list will be re-ordered with preferences taken into account.
For example, if the first three applications drawn have no preference points, but the fourth one does, that application will be moved into the number one slot and the rest moved incrementally down the list. An applicant who has two preference points, for currently operating a restaurant and for having applied unsuccessfully in the past, would move up and past applicants with no preferences or even those with a single preference point.
The object behind legislation requiring consideration of preferences was to give business owners who have a proven stake in the marketplace an edge and to discourage pure speculators.
Helfert did admit, however, that evidence of some speculation exists, citing a preponderance of Bozeman applications from California residents with Asian surnames as a sign that some speculators nevertheless have entered the lotteries.
Montana Tavern Association Government and Legal Affairs Counsel Mark Staples said of the cabaret license applications and drawings, "I do honestly believe that the number of applicants that will be found to be valid and qualified will ultimately be much closer in line with the number of licenses offered.
"This is the same kind of thing that happened with the package liquor stores some years back and when the dust cleared, the wheat separated from the chaff and the legitimate, qualified business proposals were identified, the outsized numbers that first manifested were shown to be mostly all hat, no cattle.
"I believe the same will be the eventual reality here," Staples said.
Staples also pointed out, and Helfert confirmed, that many incorporated cities that were issued cabaret licenses in the first go-round eight years ago still have some available on the shelf.
Any incorporated city not listed in the accompanying table has cabaret licenses currently available simply by application and purchase, most notably Butte (19 available) and Great Falls (22) where demand is relatively low. Other larger communities with licenses available are: Lewistown, 8; Laurel, 11; Havre, 13; Miles City, 13; Polson, 3; Ronan, 1; Glendive, 5; Dillon, 3; Livingston, 8; Libby, 2 and Sidney, 5. A total of 102 communities have unused cabaret licenses.
When cabaret licenses first came into being, there were 304 available; 136 had been awarded and four were pending, leaving 164 still available as of last April.
See the chart for a list of the communities whose population increases have warranted new licenses, the number available, the number of qualified applications received and the number of applications that have one or two preferences.
Drawing orders could also change if some drawn applications are subsequently disqualified for failure to meet all requirements, Helfert said. Drawing rankings cannot be sold or transferred, she added. Nor can changes to business entities applying be made, such as adding stockholders or partners.
She also pointed out a successful applicant, even if a speculator, still has many hurdles to clear to obtain a license. Montana's notoriously rigorous licensing approval process will apply. That includes thorough background and financial investigations of anyone who may have a financial interest in the license (all individuals with a financial interest must have been listed on the original application or it will be disqualified).
In addition, successful applicants must file an application within 30 days of notification, must pay a $5,000, $10,000, $15,000 or $20,000 fee depending upon the number of seats in the contemplated restaurant, must put the license to use within one year of having been awarded it and, if sold, it cannot be moved for one year.
Some applications were disqualified when it was discovered it was in fact the same individual or individuals, or the same applicants behind different business entities, that had submitted multiple applications, Helfert said.
The "cabaret" licenses are allowed for businesses with a service bar only, to serve beverages with meals only, and to serve between the hours of 11 a.m. and 11 p.m. with not less than 65 percent of revenues derived from food sales. The licenses do not allow gambling.
Current license holders or those who had sold a license within the previous year were barred by statute from applying.
Helfert said a successful applicant who promptly submitted a complete application and met all qualifications could theoretically have a license within 60 to 90 days of the drawings.
Source: The Montana Tavern Times, August, 2007, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.