The High Cost of A Liquor License In New Mexico
Monday, December 2, 2013
New Mexico has some of the most expensive liquor licenses in the country. Recently, a retail license typically used to sell alcohol at a store, sold for nearly $1 million.
Since the end of Prohibition, states have grappled with how to regulate the sale of alcohol. Some retain laws that have not changed much in the last 80 years.
New Mexico has some of the most expensive liquor licenses in the country. The state’s last liquor license, a retail license typically used to sell alcohol at a store, sold for nearly $1 million. The laws that regulate the availability of these licenses take a toll on the state's economy.
In New Mexico, owning a full service liquor license, which includes distilled spirits, is like sitting on a goldmine. The demand is high and the supply is low. New Mexico is one of about 25 states that operates under a quota system, meaning the number of liquor licenses is limited.
"The more people that want it, the more valuable it is, the harder it is to get," said bar owner Marci Dickerson.
Dickerson is the lucky owner of four licenses in Las Cruces, New Mexico's second largest city. She is lucky because scoring a full-service license is like closing on your dream home. People like Dickerson hire so-called "liquor brokers" who hunt for available licenses like hungry real estate agents.
In New Mexico there are a total of 1,411 licenses that are part of the quota. These do not include beer and wine licenses, which are cheaper and easier to purchase.
"The state is not creating any more licenses," Dickerson said. "You have to purchase those licenses from someone else who has them."
Dickerson is a homegrown entrepreneur, owner of the largest catering company in southern New Mexico. She carries herself like a woman in charge atop a pair of black heels. She is currently on a waiting list to buy a fifth license, which will likely cost at least $400,000. For that price, Dickerson said she could open three restaurants in neighboring Texas about 45 miles away.
"It makes it much, much harder to open one of these facilities and create new jobs and create a new tax base," Dickerson said.
New Mexico is among the poorest states in the nation and is highly dependent on government jobs. The current governor has been pushing to make the state more business friendly. In December, a new state-appointed task force will start brainstorming a complete overhaul to the current liquor laws.
But change will not be easy. Current license owners do not want their investment to lose value, but that leaves others in a difficult position.
Gilbert Gomez owns The Brown Derby Nightclub in the town of Santa Clara. He bought the place 24 years ago, and it's now the last bar standing in his hometown. The Brown Derby is where Gomez got his first job out of high school. He celebrated his wedding in the adjacent dance hall. His two daughters did the same.
But now Gomez is 69 years old. He wants to sell the bar and retire, but the law will not allow it.
"Being the last remaining license…we cannot sell it," Gomez said. "The law prohibits it from being transferred to outside the municipality."
In a town of less than 2,000 people, selling a bar that is tied to an asset worth hundreds of thousands of dollars is unlikely. The price of a liquor license in tiny Santa Clara is about what you would pay in San Francisco, California. It is like Gomez is sitting on a retirement check he cannot cash in.
The high cost of a license makes opening a full service bar in rural New Mexico practically a philanthropic endeavor.
On a Sunday afternoon a group of locals in Hillsboro cracked open a beer on the porch of an antique shop. Only about 80 people live full time in this village, nestled at the foot of the Black Range mountains. A decade ago their local bar, the S Bar X, shut down. Sue Bason remembers it fondly.
"Some of the cowboys would be there at 10 o'clock," Bason said. "Some of them would have their horses out in front. In those days it was like a family bar."
Locals describe the S Bar X as the community living room. Children would play under the pool table. There were pumpkin carvings at Halloween and luminarias at Christmas. The mailman would stop to ask for directions and ranchers popped in looking for day laborers.
When the bar closed, the local economy took a hit. Since then, the population in Hillsboro dropped nearly 25 percent.
"We basically have no young people that have moved into this town to really keep it going," Bason said.
Now the adopted home of some Hillsboro residents is a lonesome dive 30 miles away off a two-lane highway. It's called the Nut Bar. Some Sundays musicians gather there to play. Among them is Mary Wilton, the Hillsboro postmaster. She said she misses the S Bar X.
"Well it wasn't so much the bar," Wilton said. "It was just everybody having a place to be together. Whether you drank or not you went there. It was just so much fun."
Under current law there is little hope that small communities like Hillsboro will ever get their neighborhood bar back.