INDIANAPOLIS — Indiana's quota system for alcohol permits unfairly restricts competition among stores, an Indianapolis attorney told a legislative commission looking at reform of the state's laws.
"I would argue that the quota is inappropriate," Alex Intermill, attorney with Bose, McKinney & Evans, said Friday.
Intermill has represented Ricker's convenience stores and Dollar General in seeking alcohol licenses.
"The quota system has created a very simple supply-and-demand economics, based on quota and population, that has driven up prices and kept competition down. ... Competition is good for consumers, but the quota system prevents that," Intermill said.
The argument has been heard in Indiana since the late 1980s when a state sunset report indicated that permit quotas created a higher margin of profits for alcohol permit holders than other trades in Indiana. Quotas, the report found, protected permit holders from competition.
The Legislature sets quotas by population. For example, there can be one package liquor store permit per 8,000 residents inside city limits. Cold beer can only be sold in package liquor stores.
Grocery stores, which cannot sell cold beer, are limited to one permit for each 1,500 residents but can be anywhere in a county.
Once a quota is full, it can be increased following a change in population verified by the U.S. Census Bureau.
Commission member state Rep. Terri Austin, D-Anderson, asked whether it was proper for the state to limit applicants on how many permits they hold.
"We can't say to someone you can't have more than one permit. On the other hand, how might we ensure that folks don't buy those up and just sit on them so that then they have a monopoly for whether it is package liquor or beer and wine or whatever in a community?" Austin asked.
Intermill said that current process allows a permit buyer to place a license in escrow for five years. He suggested that if the permit is not in use after five years it could go back up for sale.
Also creating unfair practices are Indiana's relatively recent new permits that bypass quotas in order to spark development in riverfront or economic redevelopment districts, said Brad Cohen, co-owner of Arni's Restaurants.
"Is our system broken?" Cohen asked.
"By changing the alcohol permit quota system and increasing the number of permits allowed in our community, you're devaluing our already existing permits and devaluing our single highest asset," he said.