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Proposition 126: Should Colorado restaurants be allowed to sell to-go cocktails forever?

Sherry Wertz, photographed in 2021, said a law allowing restaurants to sell beer, wine or cocktails with delivery and takeout meals did not hurt her sales at Liquor World, and she thought the law was a good way to help restaurants hurt by lost business during the COVID-19 pandemic. Jerry McBride/Durango Herald
Proposition 126 also would let third-party delivery services, like Uber Eats and DoorDash, deliver alcohol

During the pandemic, the ability to order a couple to-go margaritas with your takeout dinner helped boost Colorado restaurant’s revenues at a time when restrictions on in-person dining devastated local eateries and their staff. That ends in July 2025.

Proposition 126 would keep it going. It would also let third-party delivery services, like DoorDash and Instacart, deliver alcohol to customers on behalf of grocers, liquor stores and other alcohol-licensed businesses.

Here’s what you need to know about Proposition 126.

What it would do

Pretty much anywhere that sells beer, wine or liquor to consumers would be able to offer delivery through a third-party delivery service, including grocery stores, liquor stores, wineries, bars and restaurants.

Many restaurants and alcohol retailers already are delivering alcohol to customers. But they must use their own staff.

Proposition 126 would change two pieces of Colorado’s alcohol laws to permanently allow restaurants and bars to offer alcohol to go and for delivery, and to let licensed alcohol retailers use third-party services to deliver beer, wine and liquor to customers starting March 1, 2023.

The measure would add some guidelines. The third-party services would be required to get a delivery permit. They would also have to submit proof of liability insurance and their drivers would have to complete a certification program. Delivery drivers would also have to be at least 21 years old.

Liquor and grocery stores would also no longer be limited to how much revenue could come from alcohol delivery, currently limited to 50% of annual revenues. Restaurants and bars, however, would still be allowed to sell only two bottles of wine, 12 cans of beer and 1 liter of spirits per delivery or takeout order.

According to the Department of Revenue, if Proposition 126 passes, the state would need to hire 1.2 full-time employees and it would cost the state $120,000 a year to process applications and conduct compliance checks. But those expenses would likely be paid for from delivery permit fees. Local governments may have to invest in additional enforcement if the measure passes.

The arguments for

Convenience is the leading reason proponents cite in advocating for the passage of Proposition 126.

But it’s not just convenience for consumers, who won’t need to leave their home for a six-pack. It’s also about convenience for retailers, who can tap third-party delivery services to make alcohol deliveries instead of having to use their employees.

Proponents of the measure say it will especially benefit small liquor stores who may not have enough workers to offer deliveries. Current law also requires stores to provide company-owned or leased vehicles, and not all stores can afford that, let alone have the staff to make deliveries.

“In a few weeks, Coloradans will have an opportunity to vote to help 6,000 small liquor stores and mom-and-pop restaurants that can’t use delivery now due to challenging regulations grow their businesses with the help of third-party delivery,” said Michelle Lyng, a spokeswoman for proponents, which include Instacart and King Soopers.

Offering to-go alcohol did wonders for the state’s restaurants, which were permitted to sell takeout and delivery booze during the pandemic. The industry anticipates this will buoy restaurants statewide as they continue to recover from pandemic-era restrictions and closures.

Restaurants and third-party delivery services have not mixed well, especially in the pandemic. High fees for delivery and third-party delivery companies taking orders without a restaurant’s permission often had customers blaming the restaurants for a poor experience. In Colorado, the state legislature passed a law last year to prevent third-party services from taking orders without the restaurant’s consent.

But there’s enough benefit here that the Colorado Restaurant Association threw its support behind the measure, said Denise Mickelsen, CRA’s communication director.

“While third-party delivery companies are known for charging high commission rates on restaurant orders, operators that utilize their services stand to benefit from the additional revenue generated by adding to-go alcohol to an order of food,” Mickelsen said. “Proposition 126 adds another revenue option for restaurants through third-party delivery, and we support any measure that adds to Colorado restaurants’ financial sustainability.”

The Colorado Restaurant Association, which supports Proposition 126, said that in a July 2022 survey of members, 75% would opt for third-party delivery.

“If third-party delivery companies can deliver alcohol with our food, that helps us continue providing deeper hospitality to our customers who wish to have their food delivered,” said Daniel Ramirez, co-CEO of Los Dos Potrillos, a Denver-area Mexican restaurant, and a board member of the restaurant association.

Los Dos Potrillos felt the pain of the pandemic disruptions and, like other restaurants, began offering curbside pickup for the first time. Being allowed to sell to-go margaritas and other drinks to go helped the local chain not just survive COVID, but thrive. It plans to open two more locations next year, including a fast-casual restaurant in Northglenn with a drive-through pickup window.

“It’s not just about the sales,” Ramirez said. “It’s the fact that people actually enjoyed having the experience of margaritas with their food in the comfort of their home. That was the number one thing: How can we continue offering that experience for our customers?”

The arguments against

Opponents of Proposition 126 worry there won’t be enough safeguards and that minors could have easier access to alcohol.

Right now, liquor stores have all sorts of rules to follow to keep their liquor license. That onus would be on third-party delivery services if the measure passes. They’ll be responsible for ensuring their drivers refuse delivery to intoxicated customers or anyone who won’t show proof of being at least 21.

But will they? That’s a challenge for a large national company to handle local enforcement, said Chris Fine, executive director of the Colorado Licensed Beverage Association, which represents small liquor retailers and opposes Proposition 126.

“There are huge consequences to that liquor store, to Argonaut, to Morgan’s or whomever (for violations),” Fine said. “They’ll have either a loss of license, a suspension of license and a gargantuan fine or all three. That is a death knell to a small business. Do you think that Instacart or DoorDash is going to lose any type of license? Sure, they might fire the gig worker, but they’ve got more of them. Big deal.”

Currently, stores that use their employees for deliveries are liable if there is a violation. Under Proposition 126, stores aren’t liable once the alcohol leaves their premises.

A handful of other states have allowed DoorDash and other third-party services to deliver alcohol. New Jersey began permitting services this month.

One big thing you should know

Whether Proposition 126 passes or not, Coloradans will still be able to get alcohol delivered at home.

Liquor stores have been permitted to deliver alcohol since 1994 and wineries since 1997. Grocery stores and convenience stores began delivery in 2019.

You should also know that Proposition 126 isn’t the only measure on the November ballot that would change Colorado’s alcohol laws.

Proposition 124 would let liquor retailers open more locations in the state.

Proposition 125 would allow retailers who have a license to sell beer, such as grocery and convenience stores, to also sell wine starting on March 1.

The players and the money

More than $11.3 million has been raised by Wine in Grocery Stores, the committee pushing for the passage of Propositions 125 and 126.

The group has received funding from large grocery chains like Albertsons Safeway, Whole Foods Market and Kroger, which owns King Soopers. Convenience store chains like 7-Eleven and Circle K are also funding the effort to pass Proposition 125.

The group also received money from Instacart and DoorDash, which support of Proposition 126.

Most of the committee’s spending is going toward advertising in support of Propositions 125 and 126.

Keeping Colorado Local, an issue committee run by independent liquor stores fighting Propositions 124, 125 and 126, has raised about $500,000.

“These are gargantuan tech companies,” Fine, who leads the Colorado Licensed Beverage Association, said of the groups bankrolling Proposition 126. “Whether it’s Instacart, Uber Eats, DoorDash, Amazon, all of these companies are really kind of at a genesis of why this is coming up today. Their goal is to deliver you a car battery and broccoli and three bottles of wine.”

Colorado Sun staff writer Jesse Paul contributed to this story.

Read more at The Colorado Sun

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