Lawmakers pass limit on liquor sales at Colorado grocery stores — as industry presses Gov. Polis to veto it

Colorado lawmakers have overwhelmingly passed a bill that would stop any more grocery stores from selling hard liquor in the state. But the fight over the measure may not be over.

The House and Senate, with bipartisan majorities, have both approved Senate Bill 33, and it was sent to Gov. Jared Polis on Thursday. A group backing grocery stores and retailers that would lose out on the licenses has called on Polis to veto the measure over concerns about competition — and didn’t rule out pursuing a new ballot measure if he doesn’t halt the bill.

The bill is the latest turn in the state’s fights over liquor laws. If it becomes law, it would prohibit the state from issuing any more liquor-licensed drugstore licenses. That type of liquor license typically is held by large grocery stores that have pharmacies on their premises.

Backers of the new bill argue it would keep small liquor stores competitive after years of turmoil in the industry, particularly after grocery stores were allowed full-strength beer and wine sales. The bill does not affect beer and wine sales. A 2016 law allowed grocery stores with pharmacies to buy this specific license, but only if no retail liquor store operated within 1,500 feet of it.

“It’s the right thing to do for small business in Colorado,” Sen. Dylan Roberts, a Frisco Democrat and bill sponsor said of the bill. “Not only to help our independent liquor stores that employ locals, but also the craft brewers and craft distillers who can only get a foothold in the market if small independent liquor stores are open and thriving.”

He highlighted the broad support for the bill from urban and rural as well as Democratic and Republican lawmakers. Only eight members of the House and five senators voted against the measure, out of 100 in the General Assembly.

Coloradans simply don’t want children or people in alcohol recovery to have to wander past hard liquor every time they visit the grocery store, Roberts said.

He called this proposal a compromise compared to some prior volleys in Colorado’s liquor wars. Similar legislation attempted in prior years would have removed currently held licenses as well.

In 2016, Colorado lawmakers and then-Gov. John Hickenlooper struck a “historic compromise” to allow full-strength beer sales in major retailers. In 2022, voters approved Proposition 125 to allow wine sales in grocery stores.

According to USA TODAY, 20 states allowed the sale of all types of alcohol — including liquor — in grocery stores in 2023. The remainder have some limits.

There are 36 active drugstore licenses in the state, according to nonpartisan state analysts. They expect the bill will result in about two dozen fewer such licenses being issued over the next two years than otherwise would be expected, if it becomes law. Holders of existing licenses would be able to renew them.

Opponents of the bill argue it would put a limit on consumer choice and on small retailers looking to sell their licenses. Ray Rivera, who represents Coloradans for Consumer Choice, the chief opponents of the bill, said “Colorado is moving backward” if it prevents large grocers and retailers from selling liquor.

He points to voter support of the proposition to allow the sale of wine in grocery stores as proof that Coloradans want more convenience when buying spirits. It also gives small retailers an “off-ramp” if they’re trying to sell their licenses during tumultuous times.

“Lots of grocers and retailers in the state, and other partners, are going to say we’ve worked together to create a regulatory system that works for everyone — and now that’s changing,” Rivera said. “If the right for our members to acquire licenses in this fair environment goes away and this bill isn’t vetoed, then we may be forced to go to the ballot box.”

Polis hasn’t indicated how he may act on the bill.

In response to the veto request, spokesperson Eric Maruyama said in a statement that “the governor will review the final version of this bill when it reaches his desk.” The governor has 10 days from when he receives a bill during the legislative session to sign or veto it, or it becomes law without his signature.

Roberts, the senator sponsoring the bill, doubted a ballot measure would win anyway. If selling liquor in grocery stores is that popular, proponents of Proposition 125 would have included it on the ballot measure, he said. They didn’t, and it still passed in 2022 by fewer than 30,000 votes out of 2.4 million cast, he noted.

“They can go to the ballot,” Roberts said, “but I don’t think they’ll be successful because it’s not a popular idea to have Jack Daniel’s and Smirnoff right next to bread and cereal.”

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