Liquor license changes are promising

Thirteen years ago, we wrote an editorial that began, “Montana has a problem with the way it distributes liquor licenses.” Last week, the state Legislature took a big step toward solving that problem.

Actually, there have been several problems with the state’s lottery system for distributing liquor licenses. Because there were only a limited number of licenses available for each locality, it meant that the value of an existing liquor license won through the lottery was instantly inflated because of its value on the open market to developers eager to open bars and restaurants. That was an incentive for people to apply for a liquor license just so they could sell it later to the highest bidder.

Now, through a change in the law approved during the recent special session, the state will be able to pocket some of that extra revenue because licenses will now be available through an auction process rather than a simple lottery. If a big chain restaurant wants to build a store in Kalispell, they will now have a chance to bid for the liquor license directly from the state at what the chain considers a fair market value instead of hoping to win a lottery or finding a private seller. It should be a much more efficient system, and will benefit the state rather than private investors.

The other big change approved was drawing a line between localities in close proximity so that liquor licenses will no longer be shared across boundary lines. This will be a major benefit to Columbia Falls, for instance, which shared its liquor license pool with Whitefish. The practical effect of that was seeing liquor licenses migrate from Columbia Falls to the more upscale Whitefish market. Now Columbia Falls will score five new liquor licenses of various types over the next several years, which could help development in the city.

Probably still not a perfect system, but a significant improvement from what we have learned so far.