Daily Independent (Ashland, KY)

January 19, 2013

Plenty of regulations if Greenup votes wet

Carrie Stambaugh
The Independent

GREENUP — Should voters in Greenup County approve Tuesday’s ballot measure to allow alcohol sales in the county, there won’t be a proliferation of neon-signed shacks selling booze on every corner.

And while that is the picture some Greenup Countians who oppose alcohol sales on moral grounds have been painting, regulators say that is just not true.

If alcohol sales are allowed in the county, businesses would have to comply with a mass of state regulations in addition to local ones. Local public officials would have significant control over who gets a license to sell booze and where.  

Sunday sales would also be prohibited throughout the county. “The state default law is that there is no Sunday sales,” explained Stephen Humphress, general counsel for the Kentucky Department of Alcohol Beverage Control.

In the 60 days following the vote, the time period mandated by the state before sales could start, the county and each of its eight cities would have the opportunity to set its own local Alcohol Beverage Control administration and pass local ordinances setting license fees, taxing rates and other regulations for alcohol sales.

“They don't have to but if they don't, they can't get any licensing fees from it,” said Humphress. “They regulate locally the licensees, we regulate them too on the basis of the state level. In my opinion that is the best type of situation, when you have more people regulating them, and making sure everyone is complying with the laws.” 

Under the web of state alcohol laws, Humphress explained, if Greenup County does go wet, the type of alcohol sold and its delivery method — by the package or drink — will vary from place to place within the county as set by state statutes.

Six different types of licenses would be available in Greenup County, but in limited numbers in many instances. In addition, only certain licenses can be obtained and used in certain areas of the county based on population and city status.

Retail liquor package licenses, or LP licenses, and Liquor Drink, LD licenses are limited by quota based on the county’s population. LP licenses are issued on a ration of 1/2,300 residents, while LD licenses are issued on a ratio of 1/2,500 residents.

According to the U.S. Census Bureau, the county has a population of 36,856. Therefore, 16 LP licenses would be available and 14 LD licenses. However, according to KRS 243.230(3), LP licenses may be issued for businesses located within an incorporated city, and may also be issued to businesses not inside a city if “substantial aggregations of population would otherwise not have reasonable access to a licensed vendor.”

The standard is different for LD licenses, which are most closely associated with bars, according Humphress. Licenses for liquor by the drink establishments are only available in first, second and third class cities, he explained.

Flatwoods is the county’s only third class city. Under the statute, a fourth class city  could eventually get licenses, but it would need to hold a second, separate election to do so. The quota of licenses would then be shared countywide.

Russell is Greenup’s only fourth class city and previously allowed liquor by the drink sales in restaurants seating at least 100 patrons and deriving 70 percent of their proceeds from food. It went “moist” in 2009 but, to date, no business has ever applied for a license to do so.

If voters in Greenup approve going “wet,” Russell would still maintain its monopoly on restaurant liquor by the drink sales.

Restaurant Drink, or RR licenses, allow for the sale of wine and liquor in restaurants but getting them, would require additional action by the Greenup Fiscal Court.

“They are allowed to authorize by ordinance a restaurant drink license,” said Humphress. “KRS 242.185 sections 1 to 5. That allows the county to put in an ordinance that restaurant and hotel drinks are allowed in the county. That is the cousin of a liquor drink license. It authorizes liquor and wine by the drink and is only available in hotels and restaurants,” he said. “If an ordinance is not passed, then they are not available.”

If an ordinance is passed, restaurants would be required to have a capacity of 100 seats and make 50 percent of gross receipts from the sale of food. There would be no quota on these licenses and they would be available countywide.

Several other types of licenses would be available immediately, however, to restaurants and establishments in the county and do not have quotas.

Restaurant wine by the drink licenses would allow restaurants, seating 50 people and making 50 percent of gross sales from food, to sell wine by the drink.

Retail malt beverage (beer) licenses, allowing the sale of these beverages by the drink or package would also be available immediately. These licenses would be available to stores that sell gas as long as they maintain an inventory of $5,000 worth of food. They also allow for beverages to be served on the premises.

In addition, temporary licenses are permitted for beer, wine and spirits. Temporary liquor licenses are not permitted and these licenses are available only for temporary events such as fairs, festivals and carnivals. They may not be issues for more than 30 days and require defined premises for consumption.

In addition to state regulations on licenses, ABC officials have even more leeway to control alcohol sales in the county, according to Humphress.

Licenses can be refused for a number of reasons including: “any reasonable reason, which the administrator deems sufficient, including: public sentiment in the area, number of licensed outlets in the area, potential for future growth, type of area involved, transportation available and financial potential of the area. ABC Administrators also have discretion to restrict the location of licensed premises so they “are not too close to schools and so that licensed premises do not saturate an area.”

However, Humphress explained by email that case law has established, “mere speculations of what might happen in the future are not sufficiently reasonable grounds to deny a license.”

CARRIE STAMBAUGH can be reached at cstambaugh@dailyindependent.com or (606) 326-2653.