Will Coloradans vote to loosen beverage alcohol restrictions?

The beverage alcohol industry in Colorado is on the brink of reform — or it will be if Coloradans vote in favor of Initiatives 96, 121, or 122 this fall. All three ballot measures seek to loosen restrictions on beverage alcohol sales or deliveries.

Initiative 96 would loosen restrictions on retail liquor store (RLS) licensees; Initiative 121 would expand the fermented malt beverage (FMB) off-premises retailers license that permits grocery stores and convenience stores to sell beer; and Initiative 122 would enable RLS, FMB, and liquor-license drugstore (LLD) licensees to use third-party delivery services.

Colorado used to cap RLS licenses at one per business but began easing restrictions on RLS licenses in 2016 with the enactment of Senate Bill 16-197. Among other changes, the measure gradually increases the cap on RLS licenses from one to up to four per business by January 1, 2027. Currently, a retailer can have up to three RLS licenses.

Should Initiative 96 pass, the limit on RLS licenses will incrementally increase as follows:

• Up to eight licenses by December 31, 2026
• Up to 13 licenses by December 31, 2031
• Up to 20 licenses by December 31, 2036

• Unlimited licenses on or after January 1, 2037

The declared purpose of Initiative 96 is to “create a more level playing field for the different business types that sell alcohol for off-premises consumption by allowing an equal number of licenses for drugstores, grocery stores and liquor stores.” This, the initiative declares, will “foster competition, create jobs, increase selection and consumer choice, and lower costs for Coloradans.”

At the very least, it will allow businesses with the financial means to do so to expand retail operations in the state.

Under current law, wine and spirits can only be sold by a retail liquor store licensee or liquor-licensed drugstore. Convenience stores and grocery stores in Colorado cannot sell wine.

Initiative 121 would create a new fermented malt beverage and wine retailer license. This would allow grocery stores, convenience stores, and other FMB licensees to also sell wine for off-site consumption and to conduct wine tastings. It wouldn’t authorize the sale of spirituous liquors.

Local licensing authorities could reject an application should an applicant fail to establish that they would conduct tastings without violating certain provisions or creating a public safety risk to the neighborhood. A local licensing authority could also establish their own application procedures and charge a “reasonable application fee.”

If Initiative 121 is approved and takes effect as written, the state would start accepting applications for the new fermented malt beverage and wine retailer license on March 1, 2023. Existing FMB licenses would convert to the new retail license to sell fermented malt beverages and wine on March 1, 2023, “without any further action by the state or local licensing authority or the licensee.”

Initiative 122 would allow retailers licensed to sell alcohol for on-site or off-site consumption to use a licensed third-party alcohol delivery service. It would also change current law to permanently allow alcohol takeout and delivery by bars and restaurants (aka, cocktails to go), which would otherwise expire in 2025.

Under current law, RLS, FMB, and LLD licensees are permitted to deliver alcohol to customers via their own employees and vehicles, or by a delivery service “acting as an agent of the licensee pursuant to a written agreement.” However, licensees cannot conduct a delivery-only business or deliver alcohol via a third-party delivery service like DoorDash or Instacart. (See Regulation 47-426 for additional details.)

The proposed delivery service permit would enable a licensee to use independent contractors and third-party providers for beverage alcohol delivery services. The delivery service permit would be separate from the licensee’s existing license.

The person or business wishing to provide beverage alcohol delivery services would also need to obtain a delivery service permit in order to deliver alcohol beverages from an RLS, FMB, or LLD licensee to a consumer.

Beverage alcohol deliveries can only be made via employees or independent contractors of a business licensed to deliver alcoholic beverages. The deliverer must be at least 21 years of age and have completed a certification program meeting “the standards established by the state licensing authority.” 

Alcoholic beverages cannot be delivered to anyone under 21 years of age, anyone appearing intoxicated, or anyone who fails to provide proof of identification. And alcohol deliveries can only be made during times when the licensee is allowed to sell alcoholic beverages.

Delivery service permittees would be able to accept orders by telephone, internet, or other electronic means. Yet licensees would be required to maintain control “over the ultimate receipt of the payment from the consumer.”

In addition to allowing more entities to make beverage alcohol deliveries, Initiative 122 would remove the limit on the percentage of gross sales revenues a licensee may receive from alcohol beverage deliveries. It would also allow a technology services company to provide a digital network application connecting consumers and licensed retailers for the delivery of alcohol beverages without obtaining a third-party delivery service permit. 

All three initiatives will be on Colorado’s November 8, 2022, ballot.

You can learn more about third-party alcohol delivery service providers in our blog series, Alcohol Marketplaces 2.0, by Jeff Carroll, general manager of Avalara for Beverage Alcohol, and Rebecca Stamey-White, partner at Hinman & Carmichael LLP. Visit the Avalara Tax Desk for additional articles about beverage alcohol regulations in different states.