It started as a simple idea: Create legislation allowing restaurants to deliver wine and beer with food orders, particularly during the coronavirus pandemic.
It became part of a larger effort — what several lawmakers called a “herculean” task — to modify the state’s liquor license laws, which last underwent a major change in 1981.
Following three hours of debate Tuesday, the House of Representatives voted 41-27 in favor of an amended version of House Bill 255, a sweeping reform bill designed to allow potential restaurateurs to purchase a license at an affordable rate to serve spirits with dinner. The bill, which also allows alcohol deliveries with food, now goes to the Senate for consideration.
The bill had bipartisan support — it is sponsored by two Democrats and two Republicans — and bipartisan opposition.
HB 255 would allow restaurants to buy annual liquor licenses for somewhere between $2,500 and $10,000, depending on the size of the business.
In the past, such a license would have cost an average of $350,000 — compared to about $1,150 annually for a license to sell beer and wine. Unlike beer and wine licenses, the state has a limited number of liquor licenses that can be sold and leased. Annual state renewal fees range from $300 to more than $10,000, depending on the volume of sales.
The new legislation would give longtime restaurant liquor license holders an annual tax break of $50,000 for four years. Retail license holders would get a $25,000 tax break for four years.
In addition, thanks to an amendment introduced by Rep. Jim Townsend, R-Artesia, any business owner who purchased a license before June 30 of this year would no longer have to pay license renewal fees.
Over 710 restaurants in the state have a license to serve liquor.
Supporters said the legislation would eventually do away with a decades-old system in which people who paid hundreds of thousands of dollars for liquor licenses years ago hold a monopoly on the bar and restaurant business because newcomers can’t afford to buy in — especially because the state’s limited supply of licenses has led to steep increases in their value.
Critics say the measure unfairly hurts those longtime businesses, many of which are mom and pops.
Rep. Moe Maestas, D-Albuquerque, one of the bill’s sponsors, said the argument has always been “the crux of the problem.”
“This argument has prohibited us from opening up this market for 39 years,” he said.
The idea, he said, is to open up the industry to newcomers who would bolster the state’s tourism and hospitality economy while building up family-owned businesses.
“This will save our restaurant industry, boost our tourism industry and enhance our hospitality industry and get our economy going as soon as possible,” Maestas said.
To help pay for the tax breaks, consumers would pay an extra 2 percent tax for alcohol purchases.
Several lawmakers spoke about concerns they have heard from current liquor license owners in their districts.
“These folks are petrified,” said Rep. James Strickler, R-Farmington. He cited a restaurant owner in his town who recently purchased a high-priced liquor license.
“Talk about bad timing,” Strickler said. “He’s on the hook.”
Others, including Rep. Gail Armstrong, R-Magdalena, said the measure’s timing is poor because so many restaurants have been partially or fully closed for nearly a year as the COVID-19 crisis continues.
“I understand that you are trying to fix something, but I’m a little concerned that at this point in time, when most restaurants are not open more than 25 percent [capacity] — if open at all — how this is going to work and why do you think it would create economic development?” she asked Maestas.
Rep. Rebecca Dow, R-Truth or Consequences, agreed and told Maestas she doesn’t think the 2 percent consumer tax is a good idea at this time. Townsend also questioned that provision.
Some lawmakers said the $200,000 tax break was too good of a deal. Others said it does not go far enough.
Maestas said those who own liquor licenses may still benefit from selling them. The state will review the effect of the measure on license values, he added. “We’re all committed to doing that.”
Dozens of liquor license owners voiced opposition to the bill during a committee hearing earlier this year. Almost no one spoke in favor of it at that time.
Carol Wight, CEO of the New Mexico Restaurant Association, wrote in an email Tuesday her association had not yet taken a stance on the bill.
One issue that was addressed only briefly during Tuesday’s debate was the state’s problem with drunken driving. New Mexico has long ranked near the top of national lists for the number of DWI arrests. Based on data compiled by the DWI Research Center in Albuquerque, Santa Fe had 194 DWI-related crashes in 2019, the most recent data available.
Maestas said he hopes the delivery aspect of the legislation would dissuade people who have been drinking at home from getting in their vehicles to go buy more liquor. And his bill requires restaurants with liquor licenses to close at 10 p.m. and serve no more than three drinks to any patron.