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Business owners concerned over Idaho liquor laws

| July 29, 2014 9:00 PM

IDAHO FALLS (AP) - State laws limiting the number of liquor licenses have created a lucrative resale market, but some people are concerned that the regulations are stunting economic growth.

Idaho's liquor regulation has resulted in a scarcity of licenses, which in turn has caused business owners to resell licenses at exorbitant prices, the Post Register reported.

According to state officials, liquor license owners wait at least seven years, on average, and pay $375 per year to be on the list before they can purchase a license from the state for $750. In just two years, they can then resell the license for more than $300,000, depending on the market. The state's Alcohol Beverage Control gets 10 percent of the resale of all licenses.

"I think it's wrong for someone to be making money off liquor by just being the middle man," said Kevin Settles, who owns three licenses in western and northern Idaho.

Settles said he has seen speculators purchase licenses just for the reselling profits.

Over the years, an Idaho Falls family has bought and sold multiple liquor licenses while also pursuing other businesses with liquor licenses to sign over their establishments.

According to public records obtained by the Post Register, Larry Reinhart bought a liquor license for $125,000 and then leased it to another business owner. He sold that license one year later and picked up a second license. His sons, George and Jason, are second and third in line for a liquor license in Idaho Falls. And Larry's wife, Debra, owns a license that she can legally sell in 2016.

Idaho municipalities are given liquor licenses based on a quota system based enacted 14 years after the end of Prohibition. That means cities and counties are allotted one liquor license for every 1,500 residents.

The law was intended to limit the availability of liquor, along with complying with the Idaho Constitution's embrace of "temperance and morality."

Idaho Falls businessman Eric Isom says the lack of licenses is a deterrent for national restaurant chains.

"Most of your national chain restaurants won't operate without one, and if they don't have ready access to one, they will go somewhere else," Isom said.

Senate Majority Leader Bart Davis said the regulation causes problems but there's not enough support to change it.

Amending the law would result in a drop in the value of licenses, which some estimate could total as high as $100 million, and reimbursing license holders would be out of the question, Davis said.

"The current standard does create problems, there is no doubt about it, but if you are a person who purchased a license under that standard, which is a very large investment, then the state changes the standard, you have already denuded the value of that person's license," Davis said.