State-imposed quotas drive Montana liquor licenses up to 750k

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It's a basic law of economics that restricting the supply of a certain commodity will drive up its price. According to an article in the Missoulian, restaurants in Montana are facing this brutal reality when it comes to liquor licenses:

"As Missoula's economy continues to rebound from the Great Recession, the prices of quota system-controlled liquor licenses here are also climbing back up. 

Three liquor licenses are for sale in Missoula for about $750,000 apiece, according to the local Multiple Listing Service. That’s a huge price for the privilege of selling spirits, and the market-driven prices are on pace to get back to the all-time high of just over $1 million they were fetching pre-Recession. 

Because customers pine for cocktails with meals, entrepreneurs who want to get into the restaurant game have to either make a huge investment up front just to get the permission slip or risk losing clients to competitors that can sell them that vodka tonic...

Montana’s quota system is a very old and complex conundrum that isn’t likely to be solved any time soon.

The state is one of only 17 so-called “alcohol control states” with a quota system on liquor licenses. Here, they were put in place in the 1940s to control the distribution after Prohibition was rolled back. The number available in any given city is now based on population metrics..."

Read the rest here.