Administrative Sanctions Against Colorado Liquor Licenses

• Publication year: 2001
• Pages: 61

30 Colo.Law. 61 Colorado Lawyer 2001.

2001, December, Pg. 61. Administrative Sanctions Against Colorado Liquor Licenses

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61

Vol. 30, No. 10, Pg.61

The Colorado Lawyer
December 2001
Vol. 30, No. 12 [Page 61]

Specialty Law Columns
Government and Administrative Law News
Administrative Sanctions Against Colorado Liquor Licenses
by Kurt G. Stiegelmeier

Violations of the Colorado Liquor Code ("Liquor Code") and its regulations1 ("Liquor Regulations") may give rise to criminal charges,2 civil liability,3 and administrative sanctions against the liquor license.4 This article discusses the administrative sanctions that may be imposed against the liquor license and the legal issues surrounding these sanctions, including the effects of transferring or surrendering the liquor license, determining the appropriate sanction, and administrative and judicial review of the sanction.5

Types of Sanctions

There are four types of sanctions that can be imposed against a liquor license. Each is discussed below

Suspension

The Liquor Code authorizes the liquor licensing authority to suspend any liquor license for up to six months.6 The Liquor Code does not expressly authorize licensing authorities to suspend or "hold in abeyance" any part of the license suspension on condition that the licensee refrain from or perform certain acts. However, the Liquor Regulations imply that there is authority to hold a portion of the suspension in abeyance.7 Holding some part of the suspension in abeyance has become a common practice.8 In many cases some part of the suspension is held in abeyance on condition that the licensee have no further violations for from one to two years. In some cases, a part of the suspension is held in abeyance on condition that the licensee or its employees complete certain remedial training

The Liquor Code does not dictate when or how the suspension must be served. Suspensions are sometimes structured so that they are served in increments rather than for a continuous period. In addition, suspensions are sometimes delayed to give the licensee time to prepare for the suspension. Suspension of the liquor license deprives the licensee of the right to sell, serve, and host consumption of alcohol beverages.9 However, suspension does not necessarily require the licensee to close or vacate the licensed premises. Unless otherwise ordered, a liquor store licensee may still occupy the premises to clean, stock, accept new inventory, and perform other tasks as long as alcohol beverages are not sold. Unless otherwise ordered, a restaurant or tavern licensee may remain open to serve food and provide entertainment as long as alcohol beverages are not sold, served, or consumed on the premises.

Fine in Lieu of Suspension

The state or local liquor licensing authority may impose a fine in lieu of all or part of the suspension if:

the decision has been made final;

the fine in lieu of suspension is imposed before the operative date of the suspension;

the suspension imposed is fourteen days or less;

the licensee petitions for the fine in lieu of the suspension;

the state or local authority finds that public welfare and morals will not be harmed and a fine will serve the purposes of the discipline;

the licensee's records are in sufficient order so that the loss of sales that the licensee would have experienced under the suspension can be determined with reasonable accuracy;

the licensee has not had his or her license suspended or revoked, nor paid a fine in lieu of suspension during the two years preceding the complaint to suspend the license; and

if the sanction is imposed by a local licensing authority, the governing body of the city or county has first adopted a resolution or ordinance accepting the practice of imposing fines in lieu of suspension.10

The Liquor Code and Liquor Regulations do not indicate whether this fourteen-day limit refers to the total number of days in suspension or only to the active days of suspension, which does not include the number of days held in abeyance. The Colorado Department of Revenue, Liquor Enforcement Division ("Division of Liquor Enforcement"), has stated that the fourteen-day limit refers only to the number of active suspension days and does not include the number of days held in abeyance.11 Thus, under the Division of Liquor Enforcement's interpretation, a licensee who has his or her license suspended for thirty days, with sixteen days held in abeyance and fourteen days of active suspension imposed, would still qualify for a fine in lieu of suspension.

The amount of the fine is 20 percent "of the licensee's estimated gross revenues from sale of alcohol beverages during the period of suspension."12 The Liquor Code and Liquor Regulations do not explain how this fine is to be estimated. In Denver, the practice is to examine the licensee's books for the preceding 180-day period, sum up gross revenues from all sales of alcohol beverages, divide by 180 to obtain an average gross daily revenue figure, multiply that figure by the number of days of suspension that the fine is taken in lieu of, and take 20 percent of that figure.13

For example: gross revenues for 180 days = $108,000 ÷ 180 = $600 x 14-day suspension = $8,400.

The fine can be no less than $200 and no more than $5,000.14 The Liquor Code and Regulations do not indicate whether these dollar limits should be applied per case or per count. The City of Denver has interpreted the dollar limits as a per count, rather than a per case limitation.15

Imposition of New Conditions

The Liquor Code does not expressly state that the licensing authority may impose new conditions on the license as a sanction. However, the Liquor Code contains language that strongly implies this authority. CRS § 12-47-103(9)(b) states that the licensing authority may refuse to renew a license on the ground that the licensee violated a special term or condition placed on the license in prior disciplinary...