California liquor quotas -- what's the history? (Los Angeles, Napa: buy, taxes)

[bouncing]

I saw in a newspaper that many cities in California have "too many" liquor licenses. I had always thought California as having pretty liberal liquor laws, so I was surprised to read that there are quotas on the number of licenses that can exist.

So why are there cities over the limit? Did the ABC ignore the quota at some point in the past, or is the quota a new thing? What happened and why isn't it happening now?

[bhcompy]

its not so much about the liquor as it is about money. liquor is a very lucrative under the table business when it comes to both licenses and what liquor is being said

[MIKEETC]

BACKGROUND:

The Department of Alcoholic Beverage Control (ABC) in California regulates the number of alcohol licenses by issuing a limited number of licenses within a census statistical area known as a census tract. Go here for more info about census tracts: Census Tracts and Block Numbering Areas

The physical size of a census tract varies as it is based on population density. For example (these numbers are for illustrative and easy math purposes), let's say the maximum size is 10,000 persons, the greater the number of people in a given area, the smaller the physical size of the census tract. Picture these scenarios if a census tract is limited to a maximum of 10,000 people:

a) If the population density is 10,000 per two square miles, then the census tract will have a physical area of 2 square miles.

b) If the population density is 10,000 per one square mile, then the census tract will have a physical area of one square mile.

c) If the population density is 10,000 per 0.25 square mile, then the census tract will have a physical area of 0.25 square mile.

Note that at no time is the population measurement changing - only the physical size. Also, if I recall correctly, these population numbers are based on the most recent census (in this case, the one conducted in 2000).

What this translates into: a more densely populated area will have more census tracts. For example, an exurban city may have two (2) census tracts, a suburban city may have five (5) census tracts, and an urban core city may have twenty (20). This approximates to a population of 20,000; 50,000; and 2,000,000 persons, respectively.

ABC issues licenses according to census tract. For illustrative purposes, let's say they only issue 20 per census tract which means that for every 10,000 persons there are 20 liquor licenses. Using the above examples, Scenario A would have 20 licenses per 2 square miles, Scenario B would have 20 licenses per 1 square mile, and so on. The result is you or I driving around in Los Angeles will find a lot of establishments within a smaller area selling alcohol while out in Victorville we will drive around and wonder, "Where can a guy buy some beer around here...?" This addresses the bolded part of your statement below:

Originally Posted by bouncing

I saw in a newspaper that many cities in California have "too many" liquor licenses. I had always thought California as having pretty liberal liquor laws, so I was surprised to read that there are quotas on the number of licenses that can exist.

Does this mean that the number of liquor licenses per census tract is only going to be twenty and that's it? No. ABC allows local jurisdictions to determine, through a process called a Public Convenience or Necessity (PCN), that the number of licenses is not sufficient and to "override" ABC's limits, i.e. over-saturate the census tract. An applicant for a license can have the local jurisdiction review his request to override the limit and approve it under the rationale that doing so will be for the public's convenience and/or is necessary.

Figure also that a business-friendly city will be more lenient on the alcohol license restrictions. Also, because the census tract boundaries do not necessarily coincide with city boundaries, it is not unusual for a city council to approve a request because, although there might only be 20 allowed in a census tract, if the part of the city where that census tract overlaps only has 2 and the neighboring city has 18, the city leaders reviewing the request are only concerned about the two licenses in their city. The other 18 are of limited-to-no concern because it is not in their city and, therefore, not their responsibility to police, regulate, collect taxes on, etc. Imagine every city thinking like this. This addresses your statement below:

Originally Posted by bouncing

So why are there cities over the limit? Did the ABC ignore the quota at some point in the past, or is the quota a new thing? What happened and why isn't it happening now?

Lastly, there are different types of licenses (on-site sales/onsite consumption; on-site sales/off-site consumption; beer and wine only; general (including liquor); etc.). Go here: California ABC - Licensees Types

I cannot remember if ABC limits the number of licenses per category (so that only xx number of each are allowed) or if they bundle them all together (so that only xx number of all types combined are allowed).

I hope that helps. Sorry the answer is so looooooong...

[bhcompy]

on-premise licenses are independent of off-premise.

[MIKEETC]

Originally Posted by bhcompy

on-premise licenses are independent of off-premise.

I think so, too. So using my magic 20 number, there could be 20 on-premise and 20 off-premise licenses issued.

~Mike (guessing this part)

[bouncing]

Originally Posted by MIKEETC

BACKGROUND:

The Department of Alcoholic Beverage Control (ABC) in California regulates the number of alcohol licenses by issuing a limited number of licenses within a census statistical area known as a census tract. Go here for more info about census tracts: Census Tracts and Block Numbering Areas
...
I hope that helps. Sorry the answer is so looooooong...

Thanks for the very informative post.

One last question. You said the local authorities can override quotas based on public convenience or necessity. The article I was reading said that a group from Napa Valley was seeking legislation increasing the number of hard on-site liquor licenses in the area. Why wouldn't the local government be able to just override the quota? Why would it go before the state?

[MIKEETC]

Originally Posted by bouncing

Thanks for the very informative post.

You're welcome.

Originally Posted by bouncing

One last question. You said the local authorities can override quotas based on public convenience or necessity. The article I was reading said that a group from Napa Valley was seeking legislation increasing the number of hard on-site liquor licenses in the area. Why wouldn't the local government be able to just override the quota? Why would it go before the state?

Hmmm...I don't know . As Napa Valley is California's wine country, there may be restrictions that don't apply, and conditions that are not present, anywhere else in the state and therefore warrant special review. In the absence of more info about this case, any further analysis I make would be pure speculation. Do you have any more information?

[bouncing]

Originally Posted by MIKEETC

You're welcome.



Hmmm...I don't know . As Napa Valley is California's wine country, there may be restrictions that don't apply, and conditions that are not present, anywhere else in the state and therefore warrant special review. In the absence of more info about this case, any further analysis I make would be pure speculation. Do you have any more information?

Sorry, I don't. Anyway, thanks again for the great summary.