A Colorado House bill that would alter liquor licenses for mostly large grocery stores so that they can only sell beer and wine, not spirits, cleared the Business Affairs and Labor Committee on a 6-5 vote April 4.

The bill has caught the attention of Tri-Lakes area liquor store operators.

“Absolutely I hope that this passes,” said Ricardo Arellano, co-owner of Cork & Bottle, a liquor store in Monument. “I think it will give mom & pops a fighting chance.”

House Bill 1373 comes just two years after Proposition 125, a 2022 ballot measure narrowly passed by voters that allows grocery and convenience stores to sell wine, which makes up the majority of sales in liquor stores.

“Now, with wine being available in the grocery store, we’re taking a pretty big hit,” Arellano said. “In fact, we’ve shrunk down the size of our wine selection to try to make better use for that space.

“What used to be 50% of our sales 15 years ago is now 12-13%.”

Ricardo’s father, Eloy, invested in his business and spent countless hours growing it only to see the rules changed after the fact. He said the sale of liquor by grocery stores would put many locally owned outlets out of business.

The 30 stores that could be affected by the new legislation are operated by Safeway, King Soopers, Costco, Walmart, Target and Sam’s Club. All but one (in Grand Junction) are located along the Front Range. It would also affect five drug stores that are not grocery stores in Denver, Limon, Aspen, Oak Creek and Fort Collins.

Ricardo Arellano pointed out that grocery stores can play the long game. By selling on very narrow margins, they can undercut the small liquor stores and rely on other products to make up for the lost profit. He said those narrow margins will disappear once much of the competition is put out of business.

“They can wait it out until everybody else closes,” Arellano said. “And then they get all of that business.”

The debate goes back to 2016, when the “Grand Compromise” was agreed on between small liquor stores and certain grocery and convenience stores, which were then threatening to go to the ballot to ask voters to allow the grocery stores to sell beer.

The compromise meant grocery stores that wanted to sell alcohol had to buy out any liquor licenses within 1,500 feet of the grocery store.

Proposition 125 changed that to 500 feet for the beer and wine-selling stores.

Owners of independent liquor stores and members of Colorado’s craft beer and spirits industry from around the state gathered on the steps of the Capitol before the hearing to show support for the new legislation.

The rally was put on by Colorado Independent Liquor Stores United (CILSU), which represents over 1,500 stores throughout Colorado.

Rep. Judy Amabile, who sponsored the bill, said the bill is vital to helping small businesses thrive.

“What I am interested in is making sure that we have a robust economy, and a big part of that is small businesses,” she said. “The vitality that they add is that they spend money that they make in your community.”

Meanwhile, opponents of HB 1373 claimed the measure would abolish the system set up under the compromise.

But that compromise has been shredded long ago. When grocery stores got full-strength beer passed, wine was supposed to be off the table until around 2026. Instead, deep-pocketed interests funded a petition drive to put it on the ballot in 2022. That measure passed by a narrow margin.

Arellano has heard the same rumors that other retailers and distributors have heard. That rumor says that those same interests will be attempting the same thing with liquor and spirits around 2026.

While opponents of HB 1373 argue that the bill would go against voter wishes and the grand compromise, small liquor stores argue that they didn’t have the money to fight a ballot measure and instead agreed out of obligation to a phased-in approach for grocery stores to sell everything, according to several small liquor store business owners.

By 2030, there will be no limitations on what a grocery or convenience store can sell, giving the liquor stores time to adjust to the market changes.

HB 1373 also addresses grocery store display practices, requiring beer and wine retailers to display their alcohol beverages in a single location, as well as prohibit those stores from selling alcohol beverages with greater than 14% alcohol by volume.

An amendment to the bill would make the alcohol limit for wine 17%, since many wines are higher alcohol content than 14%. It would not change the 14% limit on other alcohols.

Currently, some of the grocery stores temporarily display wine and beer in “end caps” — those shelves at the end of an aisle that may be shelved further from the actual alcohol section.

These “end cap” displays raise serious safety, theft, youth access and alcohol abuse concerns, according to the Colorado Independent Liquor Stores United.

The measure would also eliminate a limit on the amount of liquor a restaurant, for example, could buy from a liquor store.

Restaurants buy their alcohol wholesale, but sometimes run out and want to supplement their supplies from a liquor store, instead of waiting two weeks for a wholesaler to restock. Current state law caps the annual purchase limit at $2,000.

“Wine and beer in grocery stores are not going away,” co-sponsor Rep. Naquetta Ricks said.

If something doesn’t happen in the next year to help the small liquor businesses, she said, the landscape of alcohol in Colorado will change to only large businesses.

Colorado Rep. Chad Clifford said he was a ‘yes’ vote on the bill, saying he went to eight liquor stores near him and heard a unanimous agreement that they were struggling and needed the help of HB 1373.

Denver Gazette reporter Kyla Pearce and Colorado Politics reporter Marianne Goodland contributed to this report.