Major overhaul of liquor laws takes effect in New Mexico

Jul. 1—POJOAQUE — The wall behind the two cash registers at Kokoman Fine Wines and Liquor will never look the same.

Hundreds of small bottles of alcohol commonly known as miniatures, minis or shooters have long filled up the stack of shelves, one of the last images customers saw before they paid for their booze and left the store.

But no more. By Thursday, all the miniatures should be gone and gone for good, not just at Kokoman but at liquor stores across New Mexico.

Under a liquor law reform bill that takes effect July 1, the sale of miniature bottles of alcohol for off-site consumption has been outlawed in the state. But the ban only applies to bottles containing 3 ounces or less, allowing liquor store owners to get around the prohibition by selling slightly bigger bottles of alcohol known as ponies.

The ban on minis and Quick Fix, or synthetic urine, by liquor store owners is the most tangible sign of the new law, but the sweeping legislation includes multiple other provisions that sponsors of the bill expect to play out in the months and years ahead.

"This was a very complex bill dealing with the biggest reform of liquor laws in 60 years in our state," said Sen. Daniel Ivey-Soto, an Albuquerque Democrat who was the main sponsor of the legislation in the Senate.

The new law lifts restrictions on Sunday, Christmas Day and Election Day alcohol sales. It also permits home delivery of alcohol with food orders, part of an effort to create a new revenue stream for businesses that took a financial hit because of the coronavirus pandemic. The age to serve alcohol is no longer 19 but 18 under the new law.

'New equity and opportunity'

Perhaps the most significant provision allows restaurateurs to purchase alcohol licenses at a much more affordable price than had been available in the past.

Making liquor licenses more accessible to new and existing business owners — $10,000 for a restaurant license to sell beer, wine and spirits — generated the most pushback during the 60-day legislative session earlier this year.

License holders, some lawmakers and the New Mexico Restaurant Association raised concerns it would hurt existing owners, some of whom invested hundreds of thousands of dollars to obtain their licenses. But others said it would give new and existing food and drink establishments a chance to get their foot in the door while also protecting owners of so-called legacy licenses.

"The bill ... infuses new equity and opportunity into the state's liquor licensing process, making licenses more affordable and accessible overall while providing for a significant tax deduction among other protections for existing license holders in recognition of their investment," the Governor's Office said after Gov. Michelle Lujan Grisham signed the legislation into law in May.

Rep. Moe Maestas, D-Albuquerque, the lead sponsor of the bill, said the law has reduced a "tremendous barrier" to get into business.

"Decades ago, state-issued liquor licenses became commodities to be bought and sold on the open market," he said. "The last two sold for $500,000 each. ... Now, restaurants can get a liquor license for $10,000, which is amazing."

Restaurant licenses in New Mexico used to be limited to beer and wine service only. Restaurants that wanted to serve spirits needed to obtain a dispenser-type license, which cost between $300,000 to $500,000 on the secondary resale market.

"This was a major impediment to economic development especially in smaller towns in New Mexico that don't have many dispenser licenses available," the state Regulation and Licensing Department wrote in an informational guide. "The new 'restaurant with spirits' will provide restaurants new opportunities to improve their financial margins, and spur growth within the hospitality sector."

At least 60 percent of sales must come from food, and restaurants have to close at 11 p.m. or when food service stops, whichever is sooner, to qualify for the $10,000-a-year license.

"One of the key considerations in adopting the new restaurant with spirits licenses was to draw a distinction so that, as a practical matter, restaurants don't operate or morph into bars," according to the department's guide.

Restaurants that already have a liquor license and don't stay open past 11 p.m. will be able to apply for the new license and put their existing license on the market, Maestas said.

"That's the most exciting part for me," he said. "As soon as all these lies and confusion work themselves out in the next month or two, then there will be two or three dozen liquor licenses on the market that will then become entertainment venues, comedy clubs, nightclubs, bars and taverns."

The bill also allows restaurants to pay $500 for a local distillers spirits permit.

"We wanted to throw a bone to the local distillers," Maestas said. "There's some great distillers here in New Mexico that just need a little nudge to grow their businesses."

Maestas described the reform of the state's liquor laws as a huge feat, saying existing liquor license holders "fight like hell politically to maintain their monopoly."

"It was a question of the people's interest finally, finally defeating this extremely powerful special interest, which is the liquor lobby," he said.

Ivey-Soto said he expects the new law will result in new restaurants opening "because they can get liquor licenses that they haven't been able to before" and a lot of existing restaurants to "step it up in terms of what they're doing" and become higher-quality food and drink establishments.

"We're not trying to create a bunch of new bars," he said. "We're trying to create a bunch of new gastronomical experiences."

Ivey-Soto and Maestas said the reforms hopefully will lead to what they called a "more mature" relationship that New Mexicans have with alcohol.

"In Boston, 73 percent of the liquor sold is by the drink; in New Mexico, 85 percent of the liquor sold is by the package," Maestas said. "We're a packaged-liquor state. We have liquor stores all over the place. Instead of having a drink [at a food and drink establishment] and going home and not drinking, we do the opposite. We go home and drink."

While New Mexico will always have a higher percentage of package sales because the state is so rural, Maestas said he's "looking forward to all these places opening up and just people enjoying the nightlife and entertainment like before."

Ivey-Soto said the new business opportunities may not materialize immediately.

"I think over time, not too much time, we're going to start to see some benefits that are going to happen," he said.

Ready to pony up

The ban on minis, though, resulted in an immediate change that left some liquor store owners scrambling to get rid of their inventory.

Sen. Linda Lopez, D-Albuquerque, proposed the ban as a last-minute amendment as part of an effort to combat drunken driving. Others also saw it as an anti-littering measure because scores of empty mini bottles end up on the street.

Liquor store owners say the ban doesn't accomplish much because they and their customers are switching to ponies, which are about twice the size of minis. That will just lead to people drinking more alcohol and bigger bottles of trash on the road, they said.

"I don't think [the ban] makes sense considering the fact that they're going to sell ponies in place of minis," said Eric Jinzo, who took advantage of the sales on minis at Kokoman in Pojoaque, which has been trying to unload about $65,000 in inventory since lawmakers approved the ban.

Customers "will just go to the bigger sizes," he said, adding the only way lawmakers would be able to curb drinking and driving is by banning alcohol altogether.

Lopez did not return a message seeking comment, but Maestas said the effect of the ban on minis, such as bigger bottles of trash on the road, remains to be seen.

Keith Obermaier, who owns Kokoman in Pojoaque, said he's already feeling the pinch of the ban on minis. He said he wasn't given enough time to sell off his inventory. The wall behind his cash registers was still full of minis — and sale signs — last week. A 50-milliliter bottle of Goldschläger, for example, usually goes for $2.99, but he was selling it for 99 cents. He usually charges $11.99 for a small bottle of DeLeón Platinum Tequila but slashed the price to $1.99.

Obermaier expressed frustration the ban was included in the legislation as a last-minute amendment without input from store owners or the public.

"We had a very high inventory of miniatures because the only way you could purchase them was buying whole cases and getting a better deal, so they let us buy it and then they made the law, and now they won't let us sell them or get rid of them where we could make a profit," Obermaier said.

"They're always telling you they're for small business, but I don't see it," he added. "I don't understand how they're for small business when they don't even talk to us."

Follow Daniel J. Chacón on Twitter @danieljchacon.