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Colorado Retailers Prepare for Major Change

April 21, 2017

Last June, Colorado Governor John Hickenlooper signed a bill that would transform the state’s beverage retailing landscape. Senate Bill 16-197 (SB16-197), sponsored by term-limited Democratic state senator Pat Steadman of Denver, was a historic compromise intended to serve the interests of national chains, local retailers and Colorado consumers.

At the end of Prohibition, when each state determined its own laws governing the sale of beverage alcohol, Colorado decided that an individual or company could only hold a single retail license. The result was a competitive market that served as a catalyst for a vibrant economy of craft breweries, distilleries and wineries. SB16-197 changed that law, allowing pharmacy-licensed grocery stores to gradually phase in more liquor licenses, while giving independent retailers the chance to either compete in the new environment or sell their stores and transition out of the business.

Beginning this year, pharmacy-licensed grocery stores with one liquor license may apply for four additional licenses, provided they purchase at least two existing retail stores in the same area, including all stores within 1,500 feet (3,000 feet in towns with fewer than 10,000 people). The number of licenses allowed for grocery stores will increase gradually every five years, rising to 20 licenses in 2032 and an unlimited number in 2037. Also starting this year, current off-premise licensees may apply for another license plus additional licenses in 2022 and 2027 for a total of four, among other changes.

The law aims to give consumers the convenience of buying spirits, wine and full-strength beer while they’re shopping for groceries—a change the governor, most retailers and craft producers saw as inevitable—while protecting retailers who put money into in their businesses under the former laws from having their investments devalued overnight by a flood of new licenses. Market Watch recently caught up with several of the state’s major retail players to survey the new landscape.

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