In 2016, the legislature passed Senate Bill 197, which is the largest overhaul of Colorado’s alcohol regulations since prohibition.
For more information on SB 197 from CO Liquor Enforcement Division, please click here.
May 11, 2016
Colorado Liquor Compromise
Today the Colorado General Assembly made history with the passage of SB 16-197, referred to as the Colorado Liquor Compromise.
After numerous failed attempts by grocery and convenience stores to pass legislation to repeal Colorado’s 3.2 beer sales and expand “Liquor Licensed Drug Stores” beyond the current allowable 1 license, a group called “Your Choice Colorado” formed. Walmart, Target, King Soopers, and Safeway provided funding for the effort. The group began pushing ballot measures to allow all grocery stores to sell full-strength beer and wine starting on July 1, 2017. Walmart, King Soopers, and Safeway have pledged to donate approximately $8 million each for a total of at least $24 million to run the campaign. Target recently joined the effort along with the Colorado Retail Council so additional funds will be coming in.
The package liquor stores formed their own issue campaign “Keep Colorado Independent,” which is funded by the liquor retailers to fight against the grocery store ballot measure. That group has raised $4.5 million and hopes to raise $8M-$10 million to oppose “Your Choice Colorado”. The latest polling they have done shows the grocery store ballot measure at approximately 50% support and 50% opposed.
Polling done separately by the Convenience Stores (C-Stores) and the Distilled Spirits Council of the United States (DISCUS) indicated the likelihood of passage of the ballot measure at 60%. DISCUS was extremely concerned with the disparate treatment of spirits in the “Your Choice Colorado” measure, so they counter-filed with two measures; one of which would add full strength beer, wine and spirits in grocery stores starting on July 1, 2017. The C- Stores didn’t appreciate being left out of the removal of 3.2 beer restrictions, and as a result they filed a ballot measure requiring the elimination of 3.2 beer sales anywhere.
Since there was uncertainty on whether the ballot measures would pass or fail, Senator Pat Steadman introduced a bill that would: attempt to protect many liquor retailers; slow down the ability for grocery stores to sell alcohol; and motivate interests to remove their ballot measures. The Colorado Licensed Beverage Association, Coloradans for Safety, DISCUS, Korean Licensed Beverage Association, Craft Distillers Guild, Wine & Spirit Wholesalers of Colorado, Colorado Beer Distributors, Craft Brewers Guild and other organizations within the alcohol industry worked with Senator Steadman on making SB 16-197 as strong as possible. SB 16-197 received strong support, passing in the Senate with a bi-partisan vote of 31-4-0 and passed out of the House on a vote of 57-7-1.
Safeway/Albertsons & Kroger remain concerned about the bill, threatened several late night amendments and orchestrated an unsuccessful filibuster attempt. However, they have not lobbied in opposition, which provides our coalition with the belief that after the Governor signs the bill they may drop their ballot measures. Walmart and Target have pledged to withdraw all financial support from the “Your Choice Colorado” group. The C-Stores have pledged to drop their ballot measure, as has DISCUS. Financial support for those measures will be directed against the Safeway/Albertsons, Kroger effort if they do not withdraw.
Summary of Senate Bill 16-197:
1) Liquor Licensed Drug Stores (Grocery Stores with a Pharmacy that can sell beer-wine-spirits):
- No “liquor licensed drug store” with more than 20% of its gross retail sales coming from food products, may be issued license within a 1500 foot radius of another retail liquor license (i.e. liquor store) and no new retail liquor license may be issued within a 1500 foot radius of another existing retail liquor license or liquor licensed drug store regardless of jurisdictional boundaries. In cities or towns with a population of 10,000 or less, the radius restrictions increase to 3000 feet.
- Any current retail liquor license within the radius restrictions of a proposed liquor licensed pharmacy must first be purchased by the grocery store chain and transferred to the proposed liquor licensed pharmacy.If there are no retail liquor licenses within the 1500 or 3000-foot radius, a proposed liquor licensed drug store must still purchase and transfer two (2) retail liquor licenses within the local jurisdiction before being approved. All current liquor licensed drug stores shall be grandfathered into current law.
- Summary:Each grocery store chain will be allowed to have a total of twenty (20) liquor stores licenses over the course of the next 20 years (compared to 1 today). However, the grocery store chain must first purchase all current liquor stores within a 1500-foot radius of a grocery store that wants to have a liquor license before the grocery store is able to receive a license. If there are no retail liquor licenses within the 1500-foot radius, the grocery store must still purchase two (2) retail liquor licenses within the local jurisdiction before being allowed to have a liquor license.
2) Number of multiple liquor licensed pharmacies:
- All liquor-licensed pharmacies in existence as of January 1, 2016 may expand to
- A total of five (5) licenses in 2017
- A total of eight (8) licenses in 2022
- A total of thirteen (13) licenses in 2027
- A total of twenty (20) licenses in 2032
- Beginning in January 2037, liquor licensed pharmacies may have an unlimited number (this gives 20 years for marketplace to adjust and for retailers to recoup investments)
- All stores:
- Are required to go through local needs and desires approval from local government
- Cannot allow self-checkout for alcohol sales
- Must designate a local alcohol purchase manager to purchase locally produced products
- Cannot sell alcohol below cost
- Cannot “bulk purchase” across multiple stores – all stores buy individually from a wholesaler
- Cannot store alcohol beverages off of the licenses premise
- Must have a licensed wholesaler make all deliveries to the specific liquor licensed pharmacy
- Must have a single manager handling all alcohol purchases
- Employees under 21 cannot touch or sell alcohol
- Must pay Cash upon Delivery
- Discrimination in Wholesale sales prohibited
3) 3.2 Beer:
- Beginning on January 1, 2019, the law that defines “3.2 beer” is eliminated and all beer, regardless of alcohol content will be treated equally.
- Between July 1, 2016 and January 1, 2019 there will be no changes to the existing 3.2 beer statute or the 3.2 licenses.
- Between July 1, 2016 and January 1, 2018, the Colorado Liquor Industry Working Group (an industry group made up of distributors, retailers, law enforcement, MADD, convenience stores, grocery stores, LED, wholesalers, etc.) will meet and make recommendations to the Colorado Legislature on how the transition away from 3.2 beer sales and 3.2 beer licenses to “full-strength beer licenses” should occur and what laws and rules need to be put in place in order to have a fair and equitable transition on January 1, 2019. In addition, the Working Group will also make suggestions regarding the sale of “growlers” in liquor stores and how “tastings” can occur on a retail liquor license.
4) Portability of Retail Liquor Licenses:
All retail liquor license holders as of January 1, 2016 will have “liquor license portability” (inside or outside their current jurisdiction) giving them the ability to move their retail liquor license for up to 3 years with local govt needs and desires approval.
5) Retail Liquor License Sales of non-alcoholic products:
On July 1, 2016, all retail liquor licenses will be allowed to have up to 20% of their business be the sale of non-alcohol products. The current state list of permitted items is eliminated.
6) Multiple Retail liquor stores licenses:
- Only licensed current retail liquor stores as of January 1, 2016, may acquire:
- A total of two (2) licenses in 2017
- A total of three (3) licenses in 2022; and
- A total of four (4) in 2027
- All stores must go through local government needs and desires approval
7) Withdrawal of Proposed 2016 Ballot Measures:
- In exchange for this historic compromise, the liquor retailers (CLBA and Coloradans for Safety), Walmart, Target, Colorado Convenience Store Association and the Distilled Spirits Council of the United States will agree to remove their current 2016 ballot measures, oppose any other 2016 liquor related ballot measure and agree in concept that this legislation represents the transition of Colorado’s liquor industry until 2037.
- The protections in SB 16-197 will still be in place even if they move forward with the ballot measure and it passes. That’s why SB-197 is so important.