Bill Summary for Bill Number HB10-1279

Date: 04/07/2010

Final
BILL SUMMARY for HB10-1279

HOUSE COMMITTEE ON BUSINESS AFFAIRS AND LABOR

Votes: View-->	Action Taken:
Moved amendment L.002 (Attachment I). The motion Moved amendment L.003 (Attachment K). The motion Moved to refer House Bill 10-1279, as amended, to	PASS PASS PASS

01:43 PM -- House Bill 10-1279

Representative McFadyen, prime sponsor, presented House Bill 10-1279 concerning the ownership of a license to sell alcohol beverages at retail and allowing a grocery store to apply to transfer ownership and change location of a retail liquor store license and to convert the retail liquor store license to a liquor-licensed drugstore license. Beginning January 1, 2011, grocery stores may apply to state and local licensing authorities for conversion of a retail liquor store license to a liquor-licensed drugstore license. A grocery store business may obtain an unlimited number of licenses to operate in multiple locations. The new license allows a grocery store to sell full-strength beer, wine, and hard liquor. Conditions of the conversion include:

the retail liquor store and the grocery store must be within the jurisdiction of the same local licensing authority;
the grocery store obtaining the license may not be located within 1,000 feet of another retail liquor store within the jurisdiction of the same local licensing authority; and
at the time of application, the grocery store must provide evidence that its revenue from food sales during the prior 12 months have been at least 51 percent of its total revenue.

The grocery store would pay an application fee to both the state licensing authority and the local licensing authority. The local license fee for a transfer of ownership, change of location, and conversion of class of license may not exceed $5,000.

01:54 PM

Representative McFadyen explained that the bill lays out a process not a mandate. The bill gives all the power to the retail liquor store and it is up to them whether they would like to sell their license or not. Representative McFadyen displayed a poster board with a map showing retail liquor stores operating in the neighborhood of liquor-licensed grocery stores and provided a hard copy of the map to the committee (Attachment E). She also talked about a diagram illustrating the 1,000 foot radius required under the bill.

02:01 PM -- Dan Clayton, Real Estate Director, Denver Division, Safeway, testified in support of the bill. He talked about states that have similar laws to the one outlined in House Bill 10-1279 and how they work. Mr. Clayton talked about instances in other states where the grocery store and the liquor store were unable to come to an agreement and thus the liquor store continues to stay in business. He also talked about the situation where Safeway has bought out lease agreements as well.

02:07 PM

Representative Casso asked about Wyoming and whether they have the 1,000 foot rule. Mr. Clayton explained they do not have the 1,000 feet rule, just a limit on the number of licenses. Representative Stephens asked about the sale of alcohol to minors and how Safeway prevents that from happening. Mr. Clayton explained that later testimony will cover that issue. Representative Liston asked some questions about the other states' laws regarding the proximity of stores and whether a store owner can wait and negotiate to sell years down the road. Representative Kerr asked whether Safeway owns the land where their stores reside. Mr. Clayton said they do own about 50 percent of the land where their stores reside. Representative Kerr asked what protections there are for the liquor stores who are leasing their space from the grocery store. Mr. Clayton said the adjacent retailers usually own their land and explained that a sale only occurs if both parties agree. Representative Liston asked what protections the liquor store will have during negotiations. Mr. Clayton responded.

02:16 PM -- David Reitz, representing Safeway, testified in support of the bill and talked about his experience working in the liquor enforcement business in Colorado as well. He said the bill allows a current liquor retail licensee to transfer its license to a grocery store if both parties agree and puts in place a thousand foot barrier, which came from the City and County of Denver's zoning laws for liquor stores. Mr. Reitz brought up the public safety issues that were brought up by the Liquor Enforcement Division, including preventing the sale to minors. He talked about his involvement in preventing the sale to minors in grocery stores. Mr. Reitz talked about an amendment that would require employees to be 21 in order to sell alcohol. He directed the committee to the page that talks about rules to prevent the sale of alcohol to minors contained in Attachment E. He also talked about the number of sale-to-minor violation hearings there were in 2009.

02:27 PM

Representative Balmer asked about the current grocery stores that have liquor licenses in the state and the number of violations there have been at those stores. Mr. Reitz responded and responded to Representative Balmer who asked how long 18 year-olds have been able to serve alcohol. Representative Stephens asked a question regarding the age of those selling the alcohol. Mr. Reitz explained that the average age of clerks selling alcohol in Virginia, which has the 21-year-old requirement, is 35. Representative Liston asked about liquor enforcement regarding the sale to minors. Mr. Reitz explained the sale to minor compliance check protocol. Representative Liston asked what happens to the clerk who violates the law. Mr. Reitz said some will terminate the employee and some will not, and explained it is about 50-50. In addition, the clerk typically faces a $500 fine and is required to go through a liquor class.

02:36 PM -- David Spohr, representing Safeway, testified in favor of the bill. He talked about the craft beer industry in Oregon and their success at grocery stores in that state. Representative Liston asked about a number of e-mails he received from the craft brewers that state they would not be able to sell their product in the grocery stores or that they would sell too much and then drive them all out of business. He also asked who makes the decision of what types of products are sold in each store. Mr. Spohr says he is the ultimate decider, but he receives input from employees at the stores too.

02:53 PM -- Eric Lucero, representing Safeway, testified in support of the bill. Mr. Lucero talked about the store's system and its checks for identification and age when a consumer buys alcohol. He said they must ask for identification from every consumer that purchases alcohol no matter what their age. Representative Liston asked whether the liquor section of the Safeway that currently sells liquor in Colorado is closed off at night. Mr. Lucero said the liquor store is open from 8 a.m. to midnight and showed a picture of the store that can be found in Attachment E. He also talked about the training store employees must complete before they can work as a checker and sell liquor. Representative Liston asked who is able to check out liquor. Mr. Lucero responded. Representative Bradford asked who has access to the Thank You stickers at Safeway showing you purchased an item. Mr. Lucero responded.

A couple of letters of support for Safeway stores were distributed (Attachment F).

03:05 PM -- Laura Harris, representing the Liquor Enforcement Division, Department of Revenue, was available to respond to questions and addressed the fiscal note. Representative Liston asked some questions, as did Representative Balmer regarding the fact that grocers can buy liquor in bulk and put the liquor stores at a disadvantage.

03:11 PM -- Mike Laur, representing the Beer Drinker's Guide to Colorado, testified against the bill. He said their mission is to promote craft beer in Colorado. Mr. Laur talked about craft brewers' negotiations with large stores, like grocery stores, to stock their beer and that they are asked to go through the corporate office.

03:26 PM -- Ron Vaughn, representing Argonaut Wine and Liquor, testified against the bill and distributed a handout that included pictures of various grocery store liquor sections (Attachment G). He listed a number of issues he has with the bill. He talked about some ballot initiatives that have failed similar to the bill and prior years' legislation concerning liquor. Representative McFadyen clarified that this bill differs from the bill she carried last year. Representative Middleton commented on other states that sell liquor in grocery stores and their preventative measures. Representative Stephens asked Mr. Vaughn whether he has met with local law enforcement about his concerns.

03:36 PM -- Jeanne McEvoy, representing the Colorado Licensed Beverage Association, testified against the bill. Ms. McEvoy talked about safety and read from a poll regarding the consumers' preference regarding the sale of alcohol in grocery stores. She read some additional statistics from ACNielsen regarding alcohol. Ms. McEvoy addressed the amendments as well.

03:51 PM -- Laura Long, representing Bristol Brewing Company, testified against the bill and said the bill will hurt the craft brewing industry in Colorado. Representative Balmer asked Ms. Long if the bill passes, whether she would be interested in selling her product to the grocery stores or not. Ms. Long responded. A discussion ensued on grocery stores selling local craft breweries' beers. Representative Liston asked why the grocers do not carry her beer now and whether it is due to the fact that they are unable to sell full strength beer. Ms. Long said the negotiations she attempted to make with the grocery stores were made in anticipation of the bill passing last year. Representative Rice weighed in and explained the issues the craft brewers were expressing. Representative Priola also commented. A discussion ensued regarding craft brewers.

04:06 PM -- Pat Karns, representing himself as a distiller, testified against the bill and talked about the number of regulations placed on distilleries.

04:11 PM -- Rajiv Shukla, representing Village Square Liquor, testified against the bill.

04:14 PM -- Mark Thomas, representing liquor store owners, testified against the bill in its current form and suggested possible amendments that he believes would improve the bill.

04:19 PM -- Alan Lewis, representing Vitamin Cottage, also known as Natural Grocers, testified against the bill. He talked about the effects the bill would have on small businesses.

04:25 PM -- Grant Bauer, representing Western Distributing, testified against the bill and distributed a picture of the back of a grocery store where stock is held (Attachment H). He talked about how easy it is to walk into the back of a store where the stock is, including liquor. He talked about the effects the bill would have on wholesalers. Mr. Bauer explained that from a wholesale side, the bill is dangerous to youth and society, will cause wholesalers to reduce employees and salaries, and will eliminate many varieties of great brands. Representative Stephens asked a question about the liquor stores that would remain in business under the bill. Mr. Bauer responded.

04:37 PM -- Tong H. Kim, representing himself as the owner of Bonny Hy-Land Liquor, testified against the bill and talked about the prior year bills that have been attempted.

04:42 PM -- Tefery Brhame, representing himself as a liquor store owner in Commerce City, testified against the bill. He talked about the negative effects the bill would have on his business.

04:46 PM -- Alem Syoyam, representing himself, testified against the bill and said the prior witnesses covered most of his testimony but wanted to add a couple of points. He said the large grocers do not need help from the legislature, the small liquor stores do.

04:49 PM -- Russ Wright, who provides security for Liquor Mart in Boulder, testified against the bill and talked about his experience with discouraging sales to minors at a Safeway. He said he feels clerks are not aggressive enough to enforce the identification requirements and gave some examples of situations he has observed.

04:54 PM -- Bob Moody, representing the International Council of Shopping Centers and NAIOP, the Commercial Real Estate Development Association, testified against the bill. Representative Priola asked a question regarding the consumer traffic through stores now and under the bill.

05:01 PM -- Dan Kim, representing himself as a liquor store owner and others who were present room, testified against the bill and talked about other states that allow grocery stores to sell liquor.

05:03 PM -- Mulugeta Gessesse, representing himself, testified against the bill and talked about the effects it will have on small liquor stores.

05:09 PM

Representative McFadyen talked about Amendment L.001 and Representative Priola added that Amendment L.001 is included in Amendment L.002 (Attachment I).


BILL:	HB10-1279
TIME:	05:10:57 PM
MOVED:	Priola
MOTION:	Moved amendment L.002 (Attachment I). The motion passed 8-3.
SECONDED:	Stephens
		VOTE
	Balmer	Yes
	Bradford	Yes
	Casso	Yes
	Kerr A.	No
	Liston	Yes
	Middleton	Yes
	Priola	Yes
	Soper	Yes
	Stephens	Yes
	Gagliardi	No
	Rice	No

Not Final YES: 8 NO: 3 EXC: 0 ABS: 0 FINAL ACTION: PASS

05:20 PM

Representative Casso distributed a handout from Mothers Against Drunk Driving (Attachment J). He discussed Amendment L.003, which would require clerks who sell alcohol to be 21 years of age (Attachment K).


BILL:	HB10-1279
TIME:	05:31:07 PM
MOVED:	Casso
MOTION:	Moved amendment L.003 (Attachment K). The motion passed 10-1.
SECONDED:	Stephens
		VOTE
	Balmer	Yes
	Bradford	Yes
	Casso	Yes
	Kerr A.	Yes
	Liston	Yes
	Middleton	Yes
	Priola	Yes
	Soper	Yes
	Stephens	Yes
	Gagliardi	No
	Rice	Yes

Not Final YES: 10 NO: 1 EXC: 0 ABS: 0 FINAL ACTION: PASS

05:35 PM

Representative McFadyen gave some closing remarks on the bill. Representative Gagliardi expressed her concerns with the bill. Representative Stephens also gave some remarks on the bill. Representative Soper also commented on the bill and mirrored Representative Gagliardi's comments. Representative Liston and Representative Kerr also commented on the bill as well. Representative Priola clarified the amendments that were adopted. Representative Rice commented on the bill as well and talked about the current liquor licensing system.


BILL:	HB10-1279
TIME:	05:49:56 PM
MOVED:	Casso
MOTION:	Moved to refer House Bill 10-1279, as amended, to the Committee on Finance. The motion passed 6-5.
SECONDED:	Balmer
		VOTE
	Balmer	Yes
	Bradford	No
	Casso	Yes
	Kerr A.	No
	Liston	Yes
	Middleton	Yes
	Priola	Yes
	Soper	No
	Stephens	Yes
	Gagliardi	No
	Rice	No

Final YES: 6 NO: 5 EXC: 0 ABS: 0 FINAL ACTION: PASS

05:51 PM

The committee adjourned.