Colorado liquor laws are complicated but pro-business.

• Author: Romig, Suzie
• Position: STATE of the STATE

Point a finger at 1933 and the 21st Amendment to the U.S. Constitution for the tangled mess of liquor laws in Colorado.

Yet, as imbibers who visit other states know, the Centennial State does not have the corner on the market for complicated liquor laws and distribution systems. Following the repeal of Prohibition, each of the states established customized liquor rules and regulations.

"It's amazing how different the laws are. The states sort of set up their own fiefdoms, and overtime, it's grown depending on influences," says Scott Van Ness, an instructor at the University of Colorado at Colorado Springs who specializes in supply chain management. "If you were to compare liquor to more efficient supply chains, it wouldn't be very competitive. One thing that complicates it in Colorado is 3.2 (percent fermented malt beverages)."

Across America the highly regulated liquor industry is generally dominated by a three-tier system that separates producers, wholesale distributors, and retailers of beer, wine and spirits. Van Ness says the supply chain is less effective in states such as Utah, with a more bureaucratic model of both 3.2 or lower alcohol beverages and state-run liquor stores.

Liquor commerce across state lines with the disparate laws makes multi-state distribution challenging, with some counties and cities scattered across the U.S. that are still "dry" or have mixed sales, Van Ness explains.

"Colorado is a perfect model in that it really protects the local industries, including local liquor stores and Colorado alcohol producers, "Van Ness says. "However, from an overall efficiency supply chain perspective, there are better economies of scale in some other states'liquor distribution models."

The quarrel to expand full-strength liquor sales into grocery and convenience stores has been debated in the Colorado legislature for years and is now brewing once again. Currently four other states--Utah, Kansas, Oklahoma and Minnesota--also have restricted sales that include 3.2 percent alcohol by weight.

John Carlson, executive director of the Colorado Brewers Guild trade association, passionately believes Colorado has the best and most "rational" liquor law model in the country. The proof, Carlson submits, is that Colorado is the land of opportunity for beer startups, with 314 brewers currently licensed.

"Colorado has provided crucial access to market for its brewers, vintners and distillers,"Carlson says. "A thriving industry has formed since...