For a city council trying desperately to develop downtown Casper and diversify the city’s economy during an energy downturn, it should have been a dream come true.
Six entrepreneurs arrived at a council work session armed with presentations on new businesses, including a speakeasy-style bar and lounge, a huge expansion of a popular local restaurant, a pub that would allow patrons to make their own microbrews and more.
The council didn’t need to offer tax breaks, cheap property or any of the other accommodations that cities often provide to land a new business.
All the presenters needed was the right to sell liquor — and not in a roadhouse or dive bar but in various creative ways, including “bottled cocktails” and offering dozens of craft brews from around the state on tap.
The plans likely could have represented millions of dollars in new investment for downtown and the Old Yellowstone District. But the half-hour presentations were all in pursuit of a single retail liquor license that had become available in the city after a recent increase in population.
“We shouldn’t be in this position,” said council member Kenyne Humphrey. “Everyone has great ideas.”
Wyoming law is what put the council that position. State statue caps the number of full liquor licenses municipalities can issue based on population. City manager V.H. McDonald said Casper has 37 licenses, including the one issued Tuesday night to Old Yellowstone Garage owner John Huff.
“Liquor licenses are a valuable commodity,” Huff said in an interview before the successful applicant was announced.
The inability to grant licenses to all qualified applicants forces many entrepreneurs onto the private market, where a $1,500 license can change hands for $300,000, Councilman Charlie Powell said. Business owners who have paid big bucks for a liquor license are the leading opponents of reforming the population restrictions, despite all seven city council members present on Tuesday calling for a change.
“I don’t believe we need any more liquor licenses,” said Pat Sweeney, who owns the Wonder Bar and Poor Boys Steakhouse. Sweeney said he was surprised council supported changes to the caps.
“Hopefully, they’ll put in the budget to increase police,” Sweeney said, arguing more bars would lead to an uptick in crime. “I thought there was a hiring freeze… but maybe that’s incorrect and we’ll be able to hire a bunch more police.”
While Sweeney and other licensees are concerned about protecting their investments, economic experts say the current formula stifles growth and development in cities around the state.
“I can’t happen to think of many other industries, other than electricity and basic utilities, that has a restriction on who can get in the business,” said Anne Alexander, an economics professor at the University of Wyoming.
Alexander said limiting the number of licensed establishments primarily hurts the entertainment industry, including restaurants, bars and music venues. The restrictions also mean young professionals are less likely to be attracted to a region lacking the cultural scenes they increasingly gravitate toward.
“There’s not a sound economic reason for having such a restricted number,” Alexander said.
Tom Johnson, chief performance officer at the Wyoming Business Council, shared similar concerns. Johnson recently conducted a study of legislation affecting craft breweries, a growing national industry that has been held back in Wyoming because of regulation.
“It doesn’t take a genius to figure out that with a limited number of licenses, that certainly creates an artificial market,” Johnson said. “The market necessarily isn’t determining who’s successful.”
While Sweeney said there was no need to increase the number of licenses, he also acknowledged that a primary concern was maintaining the value of the two licenses he bought at market value.
“Reimburse me somehow for my investment,” Sweeney said. “If you want to open it wide up, unlimited licenses, then that’s not fair to those who have invested and put our hard-earned dollars to work.”
Sweeney suggested that a property tax reimbursement could help compensate existing owners if the number of licenses was expanded.
Shelley Ross Saxer, a law professor at Pepperdine University, said the current licensees might have a case against the government if the value of their licenses were diluted by an expansion, though it would be a long shot.
“It’s a government-created market where the government may cause you to lose value,” Saxer said. “Somebody could make a claim, but I don’t think it would be successful.”
Poplar Wine and Spirits owner Mike Reid agreed that licensees would be unlikely to see any kind of compensation.
“It’ll probably never happen,” said Reid, who is also the legislative chairman of the Wyoming State Liquor Association.
Reid said the lobbying group is working on a fix to expand available licenses without angering current owners. Current law allows licensees to make their licenses inactive and “park” them for three years; if they change the name of their corporation they can extend that another three years.
“Let’s stop parking the licenses,” Reid said. He believes there are as many as five inactive licenses in Casper and that forcing the owners to either open an establishment or sell would relieve some of the pressure.
Whether through Reid’s fix or another method, momentum is building against the existing system. The Wyoming Association of Municipalities has a committee working on the issue and will be ready to present its results in September, a representative said.
Meanwhile, council members were adamant that those frustrated by the restrictions ought to appeal to their state legislators.
“What our state liquor laws do is crush creativity and entrepreneurial spirit,” said councilman Shawn Johnson. “You have to beg the government, and that’s not the way it should be.”