By Ronnie Ellis
CNHI News Service
FRANKFORT — For some, it’s simply a question of economic development and a market large enough to accommodate as many as 10 liquor retail licenses in Somerset, which last August voted to allow liquor sales.
But for the five companies which were granted licenses authorized by current state regulations it’s about fairness – or rather what they see as unfair competition.
Tuesday, lawmakers on the legislature’s Administrative Regulations Review Subcommittee sided with those who think voters assumed there would only be five licenses when they voted to approve alcohol sales in the Pulaski County seat.
Now Gov. Steve Beshear will get to decide the matter.
Last August, Somerset voters approved liquor sales in the town of about 11,000 in the heart of the Lake Cumberland tourist area. The rest of Pulaski County, with a population of about 64,000, remains dry, as do neighboring counties whose residents may also patronize retail liquor outlets in Somerset.
Under state law and regulations, the Alcohol Beverage Control Board typically – but not always – awards licenses based on a general formula of one license for every 2,300 residents. Using that calculation, Somerset would receive five licenses.
Following the election there were 17 applications for licenses with only five being granted by the ABC Board.
But the city of Somerset and its mayor, Eddie Girdler, in February complained to Pulaski Fiscal Court and the ABC Board that the decision to award only the five licenses was “arbitrary and capricious.”
According to a February story in the Commonwealth-Journal, Girdler said a high-volume retailer – Liquor World which has stores in Richmond and Manchester – was prepared to invest as much as $5 million in a Somerset shopping center to open one of its stores there. But Liquor World did not receive one of the five licenses.
The ABC Board decided to amend the regulation to allow 10 licenses, according to Commissioner Freddie Higdon and legal counsel Steve Humphress.
They pointed out that since 1983 when the state began using the one license per 2,300 residents formula, only two cities voted to go “wet” in the next 25 or so years. But in the last five, 22 cities have approved such referenda, and often those cities can support more than the number of licenses produced by the formula, especially wet cities in otherwise dry counties.
Humphress said the board has in the past awarded all of a county’s potential licenses to wet cities in dry counties, citing Bowling Green as an example. He and Higdon said there were no objections to the change at a public hearing, and economic studies indicate the city can support more than five licenses.
Additionally, Higdon said, if the board allotted licenses based on Pulaski County’s population of 64,000, as it did in Bowling Green, there could be as many as 23 licenses in Somerset.
But several lawmakers objected, led by Rep. Jimmie Lee, D-Elizabethtown, and Rep. Tommy Turner, R-Somerset.
Lee said it was unfair to the five businesses which had invested money based on their calculation they each would face competition from only four other outlets.
His argument was endorsed by three of the five retailers: Wildcat Beer Wine and Spirits; First Stop Party Supply; and Apple’s Wine and Spirits, all represented by Louisville attorney Jason Nemes. (The other two licenses were awarded to two national drug store chains, Rite-Aid and Walgreens.)
Nemes said it was widely understood at the time of the referendum that only five licenses would be granted, and doubling that number to 10 “is a fraud on the people of Somerset.”
Turner agreed. He said he personally opposed allowing liquor sales in Somerset, “but what is important is what the people voted for. The people voted for five, so that’s what I support.”
Girdler told the committee he supports a higher number of licenses to help the community grow and prosper and said there was never any promise of only five licenses.
But he also seemed to single out Turner, which didn’t sit very well with the other lawmakers. When Girdler said “everyone knows a representative who lives in the county” opposed the vote, Subcommittee Chair Sen. Ernie Harris, R-Crestwood, admonished him not to personalize his comments.
The subcommittee then voted unanimously with one member passing to find the regulation deficient. That sends the question to the governor, who can still implement the regulation which could then only be overturned by a vote of the full General Assembly when it convenes.
Liquor World was also denied a license last year in Corbin, and its CEO, Wesley Morgan of Richmond, filed suit against the board over how it awarded licenses there.
According to Charlotte Perdicaris, with First Stop Party Supply, Liquor World is the reason Girdler and the board attempted to increase the number of licenses.
“This is all about Liquor World,” she said after Tuesday’s hearing. “They did not get a license and we did. That’s what this is about.”
Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at email@example.com. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.