Colorado alcohol-sales laws are changing in August; here’s a primer

Next month, Colorado alcohol-sales law will undergo some 30 changes affecting everyone from liquor stores to distilleries to caterers.

But after a final month of the 2024 session in which proposed changed in booze sales begat big debates, the host of changes actually happening will be surprisingly uncontentious.

Over the final five days of the session that ended on May 8, legislators rejected efforts to curb liquor sales at grocery stores and to charge new fees on such sales to fund alcohol-disorder-treatment programs, despite both bills having passed their first chambers. Instead, they passed by an overwhelming bipartisan margin a measure that enacts 31 changes recommended by a governor-created advisory group seeking ways to modernize and streamline licensing and sales laws.

“This bill is not the liquor bill of the past,” explained Micki Hackenberger, executive director of the Wine & Spirit Wholesalers of Colorado, as she stumped for the bill before the Senate Finance Committee on May 2. “There’s many changes that are boring, not controversial.”

A topsy-turvy end of session

That statement could not be said about the liquor-law landscape as a whole as that day, less than a week from the end of the session began.

At the same time, the House was getting ready to debate House Bill 1373, which sought to bar grocerrs from continuing to sell liquor at more than one location, sell high-alcohol malt beverages or display alcohol wherever they want in their stores. And the House Finance Committee had heard but not yet voted on Senate Bill 181, which sought to place fees on beer, wine and spirits sales that would approximate a 50% hike in excise taxes for large producers to generate $20 million a year for alcohol-abuse prevention and treatment.

The bills enflamed different interest groups. Grocers claimed that HB 1373 reneged on a 2016 law that had prompted them to invest millions of dollars in buying out licenses of local liquor stores in order to offer full alcohol sales at select locations. And alcohol producers from breweries to distilleries warned that the cost burden from SB 181, coming after four years of dipping beer sales, would cause some of them to reduce staff and limit expansion and would ward off some consumer sales.

“Zero-sum game” for alcohol interests

On May 4, however, the House Finance Committee rejected the arguments of supporters that the industry should foot part of the growing state tab for treatment of disorders that were caused by its products and killed SB 181 on a bipartisan 7-4 vote. Sponsors, facing increasing criticism that their fee was a tax, tried at the last minute to make the bill into a ballot measure seeking voter approval for a tax, but committee leaders rejected that effort.

And on May 7, a Senate committee killed HB 1373, which its supporters had called an attempt to save local liquor stores following a 2022 voter-approved change that allowed grocers to sell wine and had resulted in plummeting sales by independent retailers. The decisive vote in the 4-3 rejection came from Sen. Chris Hansen, the Denver Democrat who cosponsored SB 181 and said legislators were being asked to referee a “zero-sum game” between competing interests.

In the wake of those deaths, however, the two chambers passed by a combined vote of 93-5 SB 231, which was introduced with just a week left in the session and represented the consensus recommendations from 15 months of meetings on how to update alcohol law. The Liquor Advisory Group that produced the bill came from an executive order by Gov. Jared Polis after bill to create a similar group died on the penultimate day of the 2022 session amid another round of fighting among various alcohol-industry interests.

What the new law changes

The bill was “not looking to solve any problem” so much as it was aiming to tweak a host of lower-visibility rules that had caused problems for one or more segments of the industry, noted Senate Majority Leader Robert Rodriguez, a Denver Democrat and co-sponsor. Among the most significant things it will do when it goes into law on Aug. 7 are:

• Allow licensed retailers to sell alcoholic beverages on Christmas.
• Prohibit liquor-license holders from selling marijuana products.
• Allow alcohol retailers to renew their licenses every two year rather than every year.
• Let off-premises retailers conduct tastings and hold educational classes and allow all tastings to begin as early as 10 a.m.
• Permit distillery sales rooms to combine common beverages with their products to produce cocktails for on-premises consumption.
• Let breweries and distilleries operate two manufacturing facilities in noncontiguous locations within 10 miles of each other under one license, as wineries now can do.
• Create new licenses for shippers to sell the products of certain wineries and for catering companies to sell and serve alcohol on unlicensed premises during catered events — after the Colorado Department of Revenue finds sufficient revenue to support the program.

Alcohol bill survives a few controversies

The only provision in the bill that generated opposition was an allowance for on-premises retailers to buy as much as $7,000 a year worth of alcohol from retail stores rather than from distributors — a hike from the $2,000 annual cap in purchases they now have.

Restaurants and liquor stores both pleaded for abolition of the cap, both in SB 231 and in HB 1373 before its defeat, saying that such purchases are needed when bars run out of certain beverages and can’t get immediate restock from distributors. Several testified, in fact, that distribution has slowed significantly since the 2022 passage of Proposition 125, which allowed grocery wine sales, because grocer runs involve more time and attention from distributors.

However, unions warned of potential job losses at distributorships and distributors warned that abolition of the cap was a slippery step toward end of the three-tiered system that requires most alcohol to be manufactured, distributed and sold by different companies. So, sponsors stuck with the new $7,000 annual sales cap, though it can rise with inflation.

Closing times a future issue?

Only one consensus recommendation from the Liquor Advisory Group did not make it into SB 231 — a change to the requirement that all liquor-selling establishments now must close at 2 a.m. The group had recommended that they be allowed to stay open until 4 a.m. if they cut off liquor sales at 2 a.m., a proposal that previously had been floated unsuccessfully at the Capitol.

Democratic Reps. Javier Mabrey of Denver and William Lindstedt of Broomfield passed an amendment to the bill late on the next-to-last night of the session to allow for the staggered closings, to the ire of public-safety groups and Mothers Against Drunk Driving. But, with Senate sponsors saying they didn’t know if they could repass the bill with the change to it, they then took it out, even though both said they hope to raise the issue again in 2025.

One other significant change in alcohol-sales law did come about this session. And like SB 231, it was a largely consensus effort.

Another boost for booze sales

SB 20 makes permanent the ability for restaurants to serve to-go alcoholic beverages as part of pickup orders or those delivered by restaurant employees. Polis first allowed the practice shortly after the start of the pandemic in 2020 and legislators extended his order by four years in 2021; the newest effort puts it on the books for good.

Restaurant leaders called the allowance — which requires an additional, low-cost license from the state — a lifesaver at a time when state regulations limited sit-down business, but they say it’s continued to be needed as eating habits have shifted more to takeout. The bill from Democratic Sens. Dylan Roberts of Frisco and Nick Hinrichsen of Pueblo received only five “no” votes out of 100 legislators.

“Restaurants lost more than $3 billion in revenue during 2020 alone and have struggled with inflationary pressures, labor shortages and operational uncertainty ever since,” Colorado Restaurant Association President/CEO Sonia Riggs after Polis signed the law on May 10. “Alcohol to go from restaurants is a win-win; it’s extremely popular with the public and provides restaurants with a measure of confidence, knowing they can factor in this additional revenue stream as they make plans for the future.”