Last call for liquor licenses

South Dakota State Roundup

Published March 1, 2008

The state recently experienced what an economist might call the ill effects of rationing—in this case, liquor licenses.

State law caps the number of liquor licenses issued by a city or county based on population. Several state lawmakers recently attempted to undo the license cap, which they argued hindered local economic development, particularly in tourism areas.

The bill was shot down in a legislative committee because lawmakers could not deal with an unintended consequence. The cap on liquor licenses effectively created spiraling demand for them: Some restaurant owners reported paying in the low six figures for their liquor licenses. Uncapping liquor licenses would have seriously undercut the value of existing ones, which was deemed unfair to license holders.

Ronald A. Wirtz