'Cabaret' law would benefit from 'tweaks'
Pub Date: 9/1/2007
At the 2006 Montana Tavern Association Convention, one of the main items of business was to develop a legislative solution to relieve some of the pressure building on the state's liquor license quota system.
The result was SB 140 which created 116 new restaurant beer and wine "cabaret" licenses for growing quota areas such as Billings, Bozeman, Missoula and Kalispell. It also clarified the lottery process used to award the licenses to applicants when there were more applications than licenses available.
The quota system has been in place in the state since the 1940s and serves a widely desired social end: to control the availability of alcohol, an idea surely embraced by anyone who believes in close regulation of alcohol.
Based on experience, as a society we wisely long ago understood that the unchecked proliferation of alcohol outlets was socially detrimental. So the laws regulating the system sensibly stipulate that new licenses on-premise alcohol outlets should become available in incorporated cities and towns only when population increases warrant it.
One of the tasks of the 2007 MTA convention will be to evaluate the results of the cabaret license legislation. A couple of notable improvements could be made to the law.
First, the laws says those who have sold a license within a year of the drawings may not apply. Fair enough'; no one should be allowed to cash-out their conventional license, then immediately cash-in on a cabaret license. That would simply be too disruptive to the market.
But the law did not prohibit current license holders from applying, as we now believe it should have. These cabaret licenses were meant for those who wanted to add beer and wine service to a restaurant venue, not for current operators.
Neither did the law forbid anyone or even entire families current license holders or not from applying willy-nilly in every jurisdiction where the new cabaret licenses are being issued. This completely bastardizes the intent of the law, which is to get new beer and wine licenses into the hands of those already operating restaurants or earnestly intending to do so.
Instead, we saw examples of rampant speculation where certain families applied everywhere, one such family tying up at least for the short term 13 licenses, another family, 11 and one couple, 6. That's about 25 percent of the licenses that were made available.
The law needs to be changed to stipulate that an applicant may only apply in one quota area per lottery cycle.
These speculators, however, will hopefully find their schemes have yielded little or nothing. They will have to make application, go through the rigorous investigations and pay the $5,000, $10,000 or $20,000 fees to lay hands on a license.
Then they will have to put it into use themselves within the year or forfeit it. Finally, they will have to if they have any sense acquire liquor liability insurance...and on and on.
Unfortunately, a restaurateur who earnestly might like one of these licenses will have to sit on the sidelines until the speculators walk away from their lottery "win."
Thank goodness the legislation allowed for preferences to be taken into account for those who've already operated a restaurant for one year or more and for those who've applied unsuccessfully in the past. So most of the licenses in the truly needful quota areas will ultimately be put to good use augmenting fine dining.
It should gravel good citizens that, when so many worked so hard in such good faith to improve economic opportunity for many while also preserving the assets of those who've already invested, a minority will invariably operate in bad faith to exploit whatever chinks they can find in the good intentions of the majority.
Source: The Montana Tavern Times, September, 2007, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.