R Street Testimony in Support of NH HB 276, Establishment of Tavern License

Testimony from:
Robert Melvin, Senior Manager, State Government Affairs for the Northeast Region, R Street Institute

In SUPPORT of House Bill 276: “Establishing a liquor license where beverages, wine, and liquor can be sold without food.”

April 29, 2024

Senate Commerce Committee

Chairman Innis and members of the committee,

My name is Robert Melvin, and I am the Northeast region director at the R Street Institute. The R Street Institute (RSI) is a nonprofit, nonpartisan public policy organization. Our mission is to engage in research and outreach to promote free markets, and limited, effective government in a variety of policy areas, including those governing the sale of alcohol. This is why we have a strong interest in HB 276.

At the R Street Institute, our work includes analysis and promotion of sensible alcohol reforms that balance consumer choice, free enterprise, and public safety. We are also one of the only independent think tanks in the country that analyzes alcohol laws and regulations. HB 276 would establish a new liquor license—called a “Tavern License”—permitting the sale of alcoholic beverages without food. Under current New Hampshire law, a restaurant or bar with an on-premises beverage and liquor license with annual food sales below $75,000, must have at least 50 percent of its sales from food, and the other half can be from alcohol.^[1] Those with annual food sales above the $75,000 threshold are exempt from this required sales ratio.^[2] By establishing this new liquor license, the Live Free or Die State, will be going a long way to improve the current antiquated alcohol laws governing on-premise sales.

The standards at restaurants and bars stipulating a minimum of 50 percent of sales come from food or nonalcoholic beverages for those with sales below $75,000 can be problematic, and create compliance challenges. Restaurants with food sales above the $75,000 threshold are exempt from this food-to-alcohol ratio. Food and drink establishments that sell alcohol, but fail to meet these arbitrary sales numbers or ratios, face penalties such as financial sanctions, as well as the revocation or suspension of their liquor licenses.^[3] Regrettably, restaurants and bars can easily run-afoul of the law for trivial issues, such as failing to meet monthly sales of the ratio standards, even if they are in compliance for the whole year. Moreover, reporting errors, and late submissions of reports also can raise violations. Even factors outside of their control, such as declines in sales because of supply chain issues or unexpected events can lead to issues for restaurants.  

New Hampshire is one of the “control” states, where both the sale and distribution of alcohol are administered by the government.^[4] This raises the concern that when there is a state budget gap, the New Hampshire Liquor Commission (NHLC) could raise those prices to help fill that budget shortfall. In such a situation, if liquor prices were raised, restaurants would face increased compliance pressure and would have to respond by raising food prices just to keep the ratios legal. In effect, it could act as a stealth tax on food in New Hampshire with even those who don’t imbibe being forced to cover the costs. Thankfully, by creating a tavern liquor license New Hampshire is taking a step toward preventing this type of regulatory absurdity. Under this new alcohol permit, restaurants and bars that obtain one would not be coerced into hiking prices for patrons just to comply with a box-checking exercise in bureaucratic theater.

Another important consideration is that by establishing this new license for bars and restaurants, consumers could see greater choice in the establishments that cater to craft cocktail enthusiasts, like cocktail speakeasies, music clubs, and whiskey bars. Currently, these businesses are scarce in New Hampshire primarily because it’s practically impossible to meet the food-to-alcohol ratio if you are selling higher-end spirits like The Macallan M, which costs around $6,750 per bottle.^[5]

Restaurants and bars stand to benefit from this legislation, as they will no longer be at the mercy of an arbitrary requirement that necessitates lengthy bookkeeping to track alcohol and food sales, with the burden of proving adherence to regulations or facing consequences. Additionally, this wouldn’t be a completely new concept, as there are already a plethora of unique liquor licenses that permit the vending of alcohol without food sales, such as those for hotels, airports, and train cars.^[6] Adopting this measure would make the state’s alcohol laws more coherent.

As you review HB 276, I encourage you to consider the benefits of this simple reform. It will control dining costs, encourage the growth of craft cocktail establishments, and simplify some of the burdensome administrative requirements for restaurants. For these reasons, I strongly urge your support of HB 276.

Thank you,

Robert Melvin

Northeast Region Director, State Government Affairs

R Street Institute

rmelvin@rstreet.org