Staff previews rules to let liquor licensees lease premises under HB 1701; public hearing set for Aug. 12

Daniel, a director's office staffer, previewed a CR102 he will ask the board to approve to implement 2nd Substitute House Bill 1701, which allows liquor licensees to lease real or personal property — including parts of operating premises — to other liquor licensees.

Under the proposed rule language Daniel described, licensees could, for example, rent a separate space in a building to another bar or restaurant while continuing to operate their own business in the remaining area. Breweries, wineries and distilleries would also be expressly allowed to lease separate space to retail liquor licensees. Daniel said the law clarifies that leasing of "kitchen space" refers to the physical space and does not change rules that govern food-service operations.

Daniel said the CR102 would add one new rule and amend two existing rules to define key terms (lessor, lessee, lease), require submission and retention of lease agreements consistent with recordkeeping requirements, and add references to the contract-kitchen rulemaking. He also said the draft would require licensees who lease kitchen space to secure liquor storage and would prohibit lease provisions that require advertising or sales of specific products.

Procedural timeline Daniel gave: a public comment period will be open until Aug. 12 and a public hearing is scheduled for 10 a.m. that day. Assuming the hearing proceeds, staff expect to request approval to file the final rule language at the Sept. 2 board meeting with final rules in effect by Oct. 3, subject to the board's action.

No vote was taken at the caucus; the matter will return to the full board for formal action.