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HB 164 NEW LIQUOR DISPENSER LICENSES

Current Location: HCEDC
Referrals: HCEDC/HJC

[2] HCEDC/HJC-HCEDC

HB 164 PDF  |  HB 164 FIR


Scheduled on - Date:  Time:   Location:

1/25/2021 [2] - Sent to location House Commerce and Economic Development (HCEDC)
Synopsis:

 House Bill 164 (HB 164) requires the director of the Alcoholic Beverage Control Division of the Regulation and Licensing Department to annually offer to issue new dispenser licenses in an amount equal to five percent of the total number of dispenser licenses issued. It provides for a sealed bid process to award opportunities to apply for a license and removes the limit on the number of dispenser licenses that can be issued. HB 164 removes the lottery process for issuing new licenses and provides for a fee.

Analysis:

 House Bill 164 (HB 164) creates a new section of the Liquor Control Act that requires the director of the Alcohol Beverage Control Division (ABCD) to issue new dispenser licenses in an amount equal to five percent of the total number of dispenser licenses issued in the preceding year through a competitive sealed bid process. It specifies the process for these sealed bids including electronic applications and an irrevocable letter of credit or similar guarantee to fulfill the bid. The offer process is public and requires one or more witnesses with the highest bidder having the first opportunity to file an application. HB 164 requires the state to return the irrevocable letter of credit to the bidder if the license is not issued for any reason other than denial of the license. In the case of denial, the state may keep a fee equal to five percent of the total bid which will be deposited into the General Fund (GF).

HB 164 amends Section 60-6A-18 NMSA 1978 by referring only to retailer’s licenses and removing the limits on the number of dispenser licenses. 
It makes this same change in Section 60-6A-19 NMSA 1978 when referring to these licenses.  

In Section 60-6B-2 NMSA 1978, HB 164 removes the sections concerning a random selection method for new applications (lottery) to conform to the change to the bid process in the new section.

It makes technical changes throughout the bill where applicable.

HB 164 would be effective 1 July 2021.

Amendments:

Current Law:The number of dispenser licenses is limited. When there are new applications for the limited number of licenses a random selection method (lottery) is used.

Bill Comments:
Position: Serious Concerns   Priority: High
ICBA/NM has serious concerns regarding any actions taken by local or state officials that could impact the value of licenses held by New Mexico Community Banks as collateral for commercial loans.

It is only logical to assume that a sudden devaluation of the value of liquor licenses would cause New Mexico banks (and other lenders) to seek alternative or additional collateral to shore-up commercial loans that have been made. In extreme cases of under-collateralized loans, it is conceivable that loans could be called (the borrower asked to pay the debt in full) due to the bank’s asset to debt ratio requirements for commercial loans being out of alignment.

While ICBA/NM takes no position on the public policy issue surrounding reform of New Mexico Liquor Laws, we urge extreme caution due to financial impact that will surely occur in the marketplace.