Guest columnist Dennis Helmus: Liquor license quotas a matter of economic justice 

By DENNIS HELMUS

Published: 02-22-2023 4:15 PM

‘Wanted: More liquor licenses” was a headline in the Feb. 7 Gazette regarding Northampton Mayor Gina-Louise Sciarra’s request to the Legislature for additional all-alcohol licenses to “strengthen the recovery of the city’s downtown dining and restaurant businesses.”

It begs the question as to why Northampton must beg the state to provide a sufficient number of licenses to determine its economic goals. It is clear restaurants and bars, in addition to being employers, help a community as an important tool of economic sustainability and social interaction. The ability to serve a cocktail or glass of beer or wine is often the difference between success or failure for these businesses. Especially in this time of pandemic recovery.

Massachusetts is one of 17 states where the number of licenses is capped by a formula tied to population (MA is 2,000 people per license). We are a restaurant and bar destination city, so the number of people served exceeds what the formula cap is tied to.

In no quota states, liquor licenses cost a few hundred dollars in registration fees. This forces restaurant and bar owners in Massachusetts to look for liquor licenses on the secondary market. Northampton’s so-called “license lottery” applies only to certain licenses no longer in use when they revert to the city to be reissued. Other all-alcohol licenses can be sold by establishments and have gone for six figures in the past.

The City Council must pass a resolution for our representative and senator to introduce, co-sponsor or support a bill that allows the number of all-alcohol liquor licenses to be controlled locally. Further, make these licenses non-transferable so that they cannot be bought or sold as an asset of the restaurant if closed or is sold. These are tools for economic justice.

Restaurants and bars should compete on a level playing field based on price, service, is the food good — not on whether they are allowed to serve alcohol vs. a restaurant that can’t. Power must be shifted to communities, so they control their economic destinies. Numerous bills have been filed over the years, but they rarely make it past committee (where bills often languish) or relegated to the Committee on Consumer Protection and Professional Licensure.

Quota systems create barriers to entry, forcing aspiring restaurateurs to take on more debt, or surrender more of their business to equity investors, just to get off the ground. A system created in 1933 after the ending of Prohibition is inane, arcane, antiquated, costly and inefficient.

Streamlining the process to allow communities to make their own decisions about what the right number of licenses is for that city without begging Beacon Hill is a common-sense issue. Although local-option bills are crowding the legislative calendar, representatives and senators are willing to shoulder the burden (as they should) and take credit for helping, as bills are rarely turned down.

Article continues after...

Yesterday's Most Read Articles

Next 5-story building cleared to rise in downtown Amherst
‘Our hearts were shattered’: Moved by their work in Mexico soup kitchen, Northampton couple takes action
Hampshire County youth tapped to advise governor’s team
Amherst-Pelham schools look to address school absences with new plan
Northampton School Committee takes stand for budget increase during emotional meeting
Amherst regional superintendent candidate stresses inclusion, broad expertise

A 2017 task force appointed by Treasurer Deborah Goldberg (whose office oversees the Alcoholic Beverages Control Commission) was assigned to study that law and concluded, “Given the number of cities and towns filing legislation seeking more licenses … it appears that the 1933 density formula no longer makes sense.”

The report added, “Quota critics further argue that the legislative process to secure additional licenses is time consuming, unnecessary, and often results in a loss of real estate development projects seeking alcohol licenses.”

Nothing has changed, except of course, that more local petitions are filed year after year requiring 200 legislators to consider the simple question of whether Northampton needs seven extra all-alcohol licenses. When licenses are scarce — and those that are transferable remain a scarce commodity — they are, of course, valuable and, therefore, expensive.

But again, that can and should be an issue to be solved at the local level. What works for Boston may not be right for Northampton, but isn’t that for Northampton to decide? The license quotas make a lot of money for specific groups of people. Economists call this legitimate racket “regulatory capture.”

The pandemic forced lawmakers to take a fresh look at everything from election laws to health care, so this relatively small change — this legitimate relinquishing of legislative power — could make a big economic difference in communities across the state and for a speedier economic recovery. Justice Oliver Wendell Holmes once said: “It is revolting to have no better reason for a rule of law than that, so it was laid down in the time of Henry IV. It is still more revolting if the grounds upon which it was laid down have vanished long since, and the rule simply persists from blind imitation of the past.”

I’ll drink to that.

Dennis Helmus lives in Northampton.]]>