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No wine for Cody

2004 May 4
by Skip Sauer

Licensing restrictions create (1) monopoly rents, and thereby (2) political opposition to their removal. At least that’s what I tell my students in microeconomics. This story about a hearing to issue a liquor license in Cody, Wyoming could not provide better confirmation of both points.

There will be no new sports bar on 1328 Beck Ave. in Cody – at least not one that serves beer and wine to the billiards-playing customers – and a high-end wine store will not fill the empty building at 1420 Sheridan.

Plans for the two prospective businesses were hampered Monday when the Cody City Council opted to hang on to its single remaining unassigned liquor license.

The neighborhood is being well-served as it is, local business owners told the council.

Representatives from Eastgate Liquors, Whiskey River and Cooter Brown’s voiced opposition in a public hearing. Becky Nose of the Proud Cut Saloon said the Liquor Dealers Association also was against the move.

“We all have a large investment in our businesses, and it is a distinct disadvantage to have direct competition in that area,” said Mark Westerhold of the Silver Dollar Bar.

Councilman Joe Bush also inquired about the sports bar’s proximity to residences and churches, as Wyoming state law does not provide for distance requirements.

This is not the first time the license has been sought by prospective business owners. Cody has held on to the retail liquor license for four years.

The number of licenses a city has available is based on its population. Cody received its 19th license after the last census.

“According to the 2000 census, the population had risen to such a degree that the city was eligible for one more under state law,” City Manager Laurie Kadrich said.

The city is also allowed an unlimited amount of restaurant liquor licenses, of which there are eight.

But the retail license is the more valuable of the two, as it can be bought from the city for $1,000 and sold on the market for around $30,000.

The difference in price suggests the rents are rather modest, but all the same, this is a textbook example of the political economy of licensing. My condolences to the wine drinkers of Cody.

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