By Greg Bird
With Tuesday’s election behind us, and the voters choosing to allow alcohol sales in the county, attention can now turn toward what comes next.
It will take 60 days following the election for the county to become officially “wet,” and in that period the Fiscal Court must establish an ordinance outlining the rules and regulations to sell alcohol.
To get an idea of what is to come, one must sift through the various, and often confusing language of Kentucky’s alcohol laws. Contained in Kentucky Revised Statutes (chapters 241, 242, 243, and 244) as well as Kentucky Administrative Regulations chapter 804, the laws governing how and where alcohol can be sold can be difficult to get through.
McCreary County Judge Executive Jimmie Greene said he will be seeking guidance from the state ABC Board in establishing the rules for the County.
Following is a brief summary of certain statutes that will likely play a part in just how alcohol sales are handled locally.
The Fiscal Court will have to pass an ordinance defining what legalized alcohol sales will be allowed, and what licenses and fees can be assessed. The ordinance can be as broad or narrow as they desire. Ordinances from other counties and cities in Kentucky range from 10 pages to upwards of 50.
Under KRS statutes the Judge Executive has the authority to appoint an Alcoholic Beverage Control Administrator, but the Fiscal Court will determine the salary. That position will be responsible for issuing and renewing all county licenses related to alcohol, collect fees, and inspect local businesses with a license to ensure they are following the laws.
The ABC Administrator will have full police powers, and can enter and search any establishment without a search warrant.
The Judge Executive can also appoint any clerks or inspectors to assist the ABC Administrator if needed, but again, the Fiscal Court will set the salary.
Based on the overall population as of the last census, McCreary County will be permitted about seven retail liquor licenses, meaning only seven establishments will be able to sell beer, wine and spirits over the counter as package sales.
There is no such limit on establishments such as groceries or gas stations to sell beer only, as that restriction was removed when the laws were changed two years ago. The only rule for such businesses is they will be required to keep at least $5,000 of inventory of food, groceries or other products on hand.
All businesses that wish to sell alcohol must apply for a license from the state and the county as well, and must meet strict requirements to do so.
By the drink
State law is a little unclear on what establishments can serve alcohol by the drink, as opposed to package sales.
It appears restaurants with certified seating capacity over 50 are eligible to apply for a by the drink license for beer, wine and spirits. KRS statute 241.010 states such establishments must derive at least 70 percent of their revenue from food sales. There are additional provisions for hotels with a restaurant with seating over 100 to obtain a license if 50 percent of revenue is derived from food sales. At this time it is unclear if other provisions exist, but restaurants wishing to serve beer-only may be allowed.
There is no limit on those types of licenses that can be issued.
It is also unclear if the laws will allow stand-alone establishments, such as bars and taverns, but it appears holders of quota-package sales licenses may be eligible for an additional license to allow for sale of beer by the drink on premises.
In addition to requiring state licenses, the county can also implement local liquor licenses for businesses wishing to sell alcohol. Those licenses are good for one year, and must be renewed every 12 months. Fee’s for licenses are established by state law, and range from $200 to over $1,500 – depending on the type of license.
Additionally, the County can impose a regulatory license fee on all businesses that are licensed to sell alcohol.
The maximum limit for the fee is five percent of gross receipts of alcohol-related sales. That fee can only be used for the salary of the Alcoholic Beverage Administrator, any assistants to the position, expenses for administration and additional police coverage.
That will be a tricky area for the County to navigate initially, as there is no precedent for how much alcohol sales will be in the first year. The County will have to estimate not only the total cost of administration, it will also have to guess at total retail sales for the first year. After the initial 12 months have elapsed, and annual reports are in, the County will be able to better predict revenue and adjust the regulatory license fee accordingly.
Any excess fees collected beyond the costs incurred must be refunded to the businesses by law.
There will be a lot of questions, and plenty of red tape to cut through before the first drink can be served.