Utah's Alcohol Law Affects Hospitality Industry

The Utah government certainly isn’t making it easy to sell, much less enjoy, a cocktail or two. And it's making it ever more difficult to promote and generate sales and traffic in the state's bars, clubs and restaurants. 

With the passage of Senate Bill 314, which amends the Alcohol Beverage Control Act and went into effect July 1, there are now even more significant restrictions to Utah’s hospitality industry. In fact, the new law eliminates discount pricing for happy hour drinks while also limiting the number of bar and club liquor licenses; the quota system, based on Utah’s population, won’t go in effect until July 1, 2012.

Kenneth Wynn, former director of the Utah Department of Alcoholic Beverage Control and now a board member of Utah Hospitality Association, a non-profit group established to promote tourism, explains that because liquor “legislation comes out at the end of the session and there are no public hearings, they [the Senate] acted on it quickly,” passed it and signed it. As a result, the Utah Hospitality Association filed the lawsuit in order to get its voice heard.

The lawsuit names Gov. Gary Herbert, Attorney General of Utah Mark Shurtleff and Richard J. Sperry, Jeffrey Wright and Kathleen McConkie Collinwood, all members of the Utah Department of Alcoholic Beverage Control, and is asking Utah’s U.S. District Court to dissolve SB 314 within the next 60 days, stating that the bill violates free enterprise and establishes horizontal price fixing, ultimately restraining trade.

Wynn points out that the passage of this new law negatively affects Utah’s overall economy, resulting in “unemployment and more failing businesses.”

Without the ability to discount drink pricing, which drives guest traffic and overall sales of both food and beverage, bars and clubs will lose money because market competition is restrained; liquor prices would be "fixed" across the hospitality industry. This essentially makes it difficult for bars, restaurants and clubs in Utah to attract customers, especially tourists, during happy hours when they can't price competitively one day to the next against other establishments in the area, ultimately lowering profits, creating a stagnating economy and hurting Utah's vibrant tourism industry.

In fact, the complaint states that Utah's claims that liquor price maintenance promotes the state's interests under the 21st Amendment, which include "temperance, resale price maintenance" on liquor has "no significant effect upon the consumption of alcoholic beverages or upon temperance."

Though many hospitality pros in Utah tend to point to The Church of Jesus Christ of Latter-Day Saints, the influential Mormon church headquartered in Salt Lake City, as the source of Utah's conservative approach to alcohol sales and service, Wynn notes that the Church, in fact, has nothing to do with recent legislation or the passage of SB 314.

Instead it's the philosophy of non-drinkers, Wynn explains, who believe that consumption of alcohol leads to underage drinking, drinking and driving and overconsumption that result in unduly harsh restrictions in the hospitality and alcohol industry.

“What we’re hoping to accomplish is to open the dialogue," Wynn says of the hospitality association's lawsuit. "If they say happy hours result in increase consumption, show us the numbers. If they say the availability of liquor encourages more people to drink, buy and consume more, then show us the numbers.” Wynn also notes that, thus far, Utah's state government hasn't been able to show any facts or figures that support the enactment of these harsh laws.

In response to Wynn and the Utah Hospitality Association's lawsuit, Vickie Ashby, public information officer for the Utah Department of Alcoholic Beverage Control said that her "department doesn't make the laws," explaining it's the department's job to carry out the laws that are enacted, not make or change them in any way.

Beyond that, Ashby remained tightlipped about Utah's Hospitality Association lawsuit, which names three Utah Department of Alcoholic Beverage Control commissioners, commenting that once the department commissioners are served, they will rely on their attorney - the Utah Attorney General, who also is named in the lawsuit - and follow his advice.

The stringency of Utah’s alcohol laws has ebbed and flowed over years, with the state being among the more restrictive control states; Utah's approach has historically been to ultimately highlight abstinence over educating consumers and operators on responsible sales and moderate consumption. If the Utah Hospitality Association doesn’t prevail in this case, Utah’s bar, restaurant and club industry will face an uphill battle for years to come.

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