Idaho Liquor Licensing Reform Long-Overdue

The Idaho State Liquor Division’s continued enforcement of an antiquated liquor licensing law has many local businesses feeling like Prohibition never ended.

“It’s hard surviving in a small town,” lamented Dennis Dunann, owner of Alpine Wines Bistro in Driggs, Id. Unable to acquire a liquor license as a result of state-sanctioned license restrictions, he has lost customers as a result: “I have women that come in…for a glass of wine but her husband wants a gin and tonic, and that’s when they leave.”

Dennis isn’t the only business owner struggling because of this arcane law. First passed in 1947, the state’s liquor license statute only allows for one business per 1,500 city residents to receive a liquor license. Businesses that lie outside of city limits are completely prohibited from receiving a liquor license.

Unless, of course, a business owner happens to have enough bureaucratic buddies, political clout, and time to journey to the state capitol and personally lobby the Idaho House of Representatives for a special exemption from the law.

Over the years, dozens and dozens of deferential (or preferential) exceptions to both the city license quota and rural license ban have been signed into law out of consideration for various special interests, further muddling an already restrictive statute.To appear impartial, the exceptions have been written in such narrow terms as to render many of them laughably absurd. For example, in order to grant an exception to Clark House, a historic bed and breakfast on Hayden Lake, the Legislature passed an amendment lifting the rural license ban on any hotel that “has been in existence for at least 75 years and has been on the historic register for a minimum of 10 years, is situated within 500 yards of a natural lake containing a minimum of thirty-six thousand 36,000 acre feet of water when full with a minimum of 32 miles of shoreline, and is located in a county with a minimum population of 65,000.” 

In response to the burgeoning list of ridiculously tedious exceptions, the state’s governor has called for fundamental reform of the entire liquor licensing system. Governor Butch Otter asserted in 2008 that “his patience was fraying with such ‘tortured exceptions’ expanding where drinks can be served,” and proposed an “overhaul to shift license control to local governments.”

The governor proposed a reform bill in 2009, and though it cleared the State Senate, the recalcitrant House of Representatives defeated the bill by a 42-28 vote. To this day, local business owners must “go on bended knee to the capitol to seek a special accommodation” in the form of a special exception.

Just since the beginning of 2013, three new proposals for additional exceptions have been introduced in the House State of Affairs Committee. One of these proposed exceptions would permit additional licenses in the ski resort town of Driggs. Resort towns are testimonies to the economically-damaging effects of the current liquor licensing policy. While Driggs has nineteen restaurants, including Dennis’ Alpine Wines Bistro, its permanent population of 1,600 allows only two restaurants to serve liquor.
Driggs Mayor Dan Powers stresses that with fewer amenities in comparison to other resort towns, Driggs cannot keep up with the economic competition, pointing to the fact that “We don’t get another license until we hit 3,000. We would have to almost double in size.”

Besides the inefficient legislative processes and economic burdens brought on by Idaho’s liquor licensing laws, there are questionable legal implications as well. Because there is no law standardizing which cases are deemed worthy of exceptions, each exception is essentially the result of “popularity contest” votes taken by the state legislature. Nothing prevents legislators from narrowly tailoring an amendment (as noted in the Clark House example) in order to intentionally grant one ski resort town an exception and deny that same exception to another town, even if the two towns have the exact same populations.

This practice of the government picking winners and losers in the marketplace has gone on far too long. Supporters of economic liberty across the Gem State hope state lawmakers “gin up” and reform its arbitrary and outdated liquor license policy.

— Robert Fountain
Robert Fountain is a Maffucci Fellow at the Institute for Justice

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