Getting beer into grocery stores in Colorado is going to be complicated

It could be a while before Coloradans see liquor store chains or the proliferation of craft beer on grocery shelves.

Liquor store owners and grocery chain operators don't expect alcohol sales in the state to look a whole heck of a lot different in 2017, despite their 11th hour compromise during the spring legislative session. Details related to the deal still need to be ironed out, and there's uncertainty about the industry's future.

A bill is expected to be introduced in 2017 to clarify the new rules for alcohol sellers, said Jeanne McEvoy, CEO of the Colorado Licensed Beverage Association.

"It's what we call a 'consensus bill.' Everyone in the industry was a part of drafting it, and we will all sing kumbaya and make those changes," McEvoy said.

Changes could include preventing liquor store owners from getting better deals on alcohol purchases by buying for more than one location at a time. That would protect smaller, single shops and ensure supermarkets and liquor store owners are playing by the same rules, she said.

The bill also calls for making sure existing liquor stores that move locations in the state follow new distance rules going into place in January.

"What's still the Damocles sword, if you will, is how we deal with the transition from 3.2 beer to full-strength beer in 2019," McEvoy said.

State legislators dodged a ballot fight over where beer could be sold in Colorado by passing SB 197 late in the session. The bill signed by the governor in June allows grocery stores to phase in the sale of full-strength beer starting in 2019.

Prior to the compromise bill, Colorado only allowed grocery stores to sell beer with as much as 3.2 percent alcohol by weight or 4 percent by volume. In a chain of grocery stores like King Soopers and Safeway, only one site in the state could sell full-strength beer, wine and liquor. These locations are called "liquor-licensed drug stores."

The new rules will allow grocery stores to sell full-strength beer, wine and liquor in up to five locations until 2022. The cap increases every five years until 2037, at which point the stores can have up to 20 locations.

The sites that currently just sell 3.2 beer can switch to selling any malt beverage including craft beer. It's unclear if each grocery store site will have to apply to sell full-strength beer, if they'll need approval from local city councils and governments or if there will be caps on how many stores transition at a time.

A working group is tasked with developing the rules and process for the transition by Jan. 1, 2018, said Meghan Tanis, spokeswoman for the Colorado Department of Revenue.

Grocery stores don't have to wait, but it's not going to be an easy process.

The grocery giant Costco called the new law "complex and challenging."

In January, Costco and other supermarkets with a liquor-licensed drug store can start applying to sell craft beer, wine and liquor at additional stores.

The new locations must be 1,500 or 3,000 feet — depending on the population of the jurisdiction where the license is located — away from other retail liquor stores or liquor-licensed drugstores. The new law also requires grocery stores to buy at least two liquor stores' licenses before opening a new liquor-licensed drug store.

"We are trying to understand the law and how we can best use it to serve our members," Costco said in a statement. "Once we understand all the law entails, we will decide our course of action."

King Soopers didn't immediately say if it plans to apply for new liquor licenses in 2017.

"We are open to opportunities that will allow us to provide more Coloradans with the convenience of one-stop shopping that would also include wine and spirits. King Soopers will evaluate those on a case by case basis," spokeswoman Kelli McGannon said in an email.

Safeway-Albertson's and Kmart didn't respond to inquiries from Denverite about their plans related to alcohol sales.

The state estimates a dozen new liquor-licenced drug stores will be licensed during the 2016-2017 fiscal year, Tanis said.

Uncertainty for liquor stores

Liquor store owners are keeping an eye on how the alcohol landscape changes in Colorado. They also have the option, starting in January, of opening a new location anywhere in the state that doesn't violate the new 1,500-to 3,000-foot distance rules.

"At this point, we are not planning on another store, but I think everyone is trying to figure out what the new laws will do to the market and what changes are going to come about," said Mat Dinsmore, owner of Wilbur's Total Beverage in Fort Collins.

Wilbur's is one of the largest liquor stores in the state along with Total Beverage in Thornton, Hazel's Beverage World in Boulder and Argonaut Wine & Liquor in Denver.

The owner of Argonaut, Ron Vaughn, said he doesn't have plans for a second location yet, but he's not ruling out expanding either.

"Nobody has come out in public and said, 'Yes, we're looking to do another store,'" Vaughn said. "It's still a gray area of what the new law actually means. Yes, you can have a new license, but all the rules aren't set yet."

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