With roughly 350 breweries across the Centennial State, beer in Colorado is big business. And although it is still unclear what shape the details will take, it seems Colorado residents may soon have easier access to some of their favorite brews.
But the effect on small business, some argue, might not be so positive. On May 11, the final day of the 2016 session, the Colorado Legislature passed an 11th-hour bill that will expand sales of full-strength beer and wine to grocery and convenience stores. The issue pits grocery store owners against liquor store owners and craft brewers, and leaves Colorado’s own brewery-founding Gov. John Hickenlooper — for now — somewhere in the middle.
For years, legislators had tried to strike a compromise that would allow the sale of full-strength beer and wine in grocery stores, much the same as most other states — but to no avail. The current Prohibition-era law allows only the sale of beer with 3.2 percent alcohol, known as “near-beer,” in grocery and convenience stores. Suds swillers have to go to a liquor store for spirits, wine and beer with a higher alcohol content, which includes almost all craft brews.
An organization called Your Choice Colorado decided to present the issue to voters with Ballot Initiative 104. The organization claims 3.2 beer is a vestige of the era before the drinking age was bumped from 18 to 21 years old nationwide, and that it needs to be changed.
YCC is in the midst of a full-out effort to allow full-strength beer in grocery stores, and it plans to collect about 150,000 signatures to ensure it meets the 92,000 required to get on the ballot on Election Day, according to YCC Campaign Manager Georgie Aguirre-Sacasa. The initiative asks voters whether food stores with at least 3,000 square feet of indoor sales area and at least 20 percent of its annual gross income from the sale of food should be allowed to sell wine and full-strength beer. Aguirre-Sacasa says the measure would benefit the consumer because beer and wine prices would become more competitive and therefore cheaper. Lining the grocery store coolers with beer and wine would also mean one-stop shopping convenience.
“In terms of Colorado revenue, it will mean more jobs. Grocery stores will expand, so we are excited about that,” she said. “Costs will go down by about 18 percent for beer and wine.”
But the measure was undermined earlier this month when, after years of trying, the legislature passed Senate Bill 197 with just hours to go in the 2016 session. The bill passed the Senate and House with overwhelming support, 31-4 and 57-7, respectively. The bill would allow a limited expansion, phased in over several years, of liquor, wine and full-strength beer sales at more grocery and convenience stores. The sale of full-strength beer would be delayed until 2019 and there are limits on grocery sales within 1,500 feet of a current liquor store.
YCC called the compromise a ruse that voters won’t fall for and vowed to either take legal action or continue its campaign for the ballot initiative in November.
“Your Choice Colorado will continue to give voters the ability to make their voices heard amidst this broken system — whether through a legal challenge to this sloppy bill or as planned, taking it to the ballot in 2016,” reads the organization’s most recent statement regarding SB 197.
Whether by bill or by ballot, not everyone agrees that expanding sales of beer and wine to grocery and convenience stores is a good thing.
“If the Walmarts of the world come in and start selling beer and wine, they are going to crush these small businesses and they are going to go out of business,” said Jennie Peek-Dunstone, a spokesperson for Keep Colorado Local. The organization is opposed to changes in Colorado’s liquor laws, which it claims would undermine safety (by making it easier for underage kids to purchase or steal alcohol) and give chain stores an advantage over local, independent businesses. “We have a system right now that is working really well. Why would we change that so large grocery stores can make more money?”
At the heart of this argument is another of the state’s rules dealing with the sale of alcohol. Liquor license holders are only allowed one location at a time, thereby preventing any one person from opening more than one store and gaining a monopoly on the industry. Each and every Colorado liquor store is essentially a small, local business. It also means only one chain store (like Target, Walmart or Safeway) location in the state can have a liquor license and sell full-strength beer.
Peek-Dunstone says this law is one reason why Colorado’s craft brewers have been able to thrive. In order to distribute their products, small brewers have had to forge dozens of individual relationships with liquor store owners throughout the state. Opponents of the bill say large grocery store chains will want to have a homogenous selection of beer at all of their stores, but small craft breweries won’t be able to produce enough beer to supply them all. If liquor stores are forced out of business, it would leave nowhere for small-and medium-sized brewers to sell their suds.
Aguirre-Sacasa says that particular fear is unfounded.
“That (grocery stores) are going to be carrying only the big beer companies is just false,” she said. “They know Coloradans love their beer.”
The Colorado Brewers Guild, a nonprofit trade association that promotes and protects the Colorado craft brewing industry, is officially neutral on SB 197. But the organization is tacitly opposed to the measure (and the ballot initiative) and in favor of the status quo. Telluride Brewing Company is a member of CBG and TBC President Tommy Thatcher is vice president of the guild.
“Any change in the law that restricts access to market for the bulk of Colorado craft brewers is not a good thing,” CBG Executive Director John Carlson said in an email. “Our current system gives start-up brewers a chance to go to market and grow. Both the bill and the ballot (measure) put this in jeopardy from what we enjoy today.”
Carlson said that larger packaging brewers (Coors and Budweiser, for example) will likely have a better chance of success than smaller ones (think: Telluride Brewing Company and Durango’s Ska Brewing) in a new market that includes grocery and convenience store sales. He added that the recently passed bill 197 offers more time to transition to the new market than does the proposed ballot initiative 104, which is a good thing. But ultimately, the laws currently on the books — no matter how seemingly outdated — are the exact thing that have allowed craft beer culture to thrive in recent years throughout the state, he said.
“The current regulatory environment has made Colorado the state of craft beer,” Carlson said. “When something is not broken, why fix it? There may be a slight convenience factor for big brand alcohol consumers, but many good jobs will be lost and beer choice will ultimately be reduced.”
Jason Gordon, who owns Montrose’s The Liquor Store, agrees. Gordon’s mom Ginny owns Telluride’s Bottleworks. With a location next to a Walmart Supercenter, Jason Gordon worries his store won’t be able to compete when the new law goes into effect. The economy of scale commanded by large retailers would be an unfair advantage, he said.
“(The grocery stores) are going to end up putting a lot of places out of business,” Jason Gordon said. “There’s certainly going to be a very large impact.”
Large grocery stores like Walmart, King Soopers and Safeway have been the focus of discussion around the bill and proposed initiative, but even some small grocers say they would benefit from the measures. Tom Clark is the owner of nine small grocery stores on Colorado’s Western Slope and in eastern Utah. Clark wouldn’t have the option of selling alcohol at a couple Clark’s Markets locations — Blanding, Utah is a dry town and the terms of his lease in Aspen don’t allow him to sell alcohol — but he says he would pursue obtaining multiple liquor licenses for his other stores, particularly those in resort towns like Telluride. Clark currently holds one liquor license: for Clark’s Market in Norwood.
Clark says the issue is about customer convenience, and that allowing shoppers to buy food and alcohol in one place only makes sense. Sometimes people don’t know what kind of wine they want until they peruse the produce section for the entrees they plan on cooking, he said.
“As far as the customer is concerned, it’s a win,” Clark said. “I think it’s in the best interest of people. Prices would be low. To be able to add another product line to our stores is helpful… I’ve never heard of a grocery store saying they made a mistake.”
As of Wednesday, Gov. John Hickenlooper, co-founder of Denver’s Wynkoop Brewery, had neither signed SB 197 nor vetoed it. He told The Denver Post last week he doesn’t yet understand the bill. According to the Post, Hickenlooper has previously said he supports keeping liquor laws the way they currently are, which limits wine, liquor and full-strength beer to liquor and specialty wine stores only.
Jason Gordon says if YCC continues pushing ballot initiative 104, he will continue efforts to educate consumers on the measure’s potential negative impacts. He is planning some wine and beer tasting events in Montrose this summer where he hopes to encourage people to support Keep Colorado Local.
“I certainly want to reach out to the local population,” he said. “There isn’t a lot of benefit to giving these corporations more profits that will most likely go out of state.”