Liquor license bid process could hurt small businesses - KOTA Territory News

Liquor license bid process could hurt small businesses

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Liquor licenses in Rapid City used to be divvied up on a first come first serve basis at 500 dollars each.

But a city ordinance changes that process to award the licenses to the highest bidder.

The last license in Rapid City sold for more than 25 thousand dollars.

"I couldn't see paying more than 1,000. That's a big chunk of change," said Delight Pepper, Manager at Boyd's Liquor Mart.

That's a big chunk of change that Pepper says many small business owners can't afford.

"So unless you're wealthy or a big chain you're out of luck going into business," said Pepper.

Pauline Sumption, Rapid City's Finance Officer, said Rapid City only has 47 packaged liquor licenses; a limit imposed by state law based on population.

And last year when companies affiliated with the same group bought three at once, the City Council decided to change how the licenses are distributed.

"It was more to even the playing field," said Sumption.

So the process changed from first come first serve, to a sealed bid process.

Sumption says the 47th and final license went to Fresh Start Convenience stores regional chain for more than 25 thousand dollars; beating Target's bid of ten thousand dollars.

Pepper says that's a price tag that would be devastating for small businesses.

"I don't think they would have made it if they had to come up with that kind of money," said Pepper.

"On the flip side if there's a mom and pop that wants to get out of the business their license may have become more valuable because of that, so they can make a profit off of their license now," said Sumption.

But Pepper says the bidding process is a competition the mom and pop shops will ultimately lose.

 "Those big corporations are going to be the only ones who are going to be able to go into business. I just think it's kind of not fair," said Pepper.

Sumption says the concept of a bidding war is not new; Spearfish has had a similar process in place for years.

In fact Walmart in Spearfish paid more than 100 thousand dollars for its liquor license.

And if you're wondering where the profits go- Sumption says it goes into the city's general fund; which helps support city services, such as police, fire and roads.

 

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