A win for wet communities in Arkansas

November 2012 was an important time for Benton County. Thanks to the financial generosity of a small number of individuals interested in moving our county forward, we successfully obtained the number of signatures necessary to allow our voters to be heard on whether our county should be wet or dry. Overwhelmingly, Benton County voted to become wet.

Unfortunately, given the complexity of the state’s liquor laws, the vote to turn Benton County wet was only part of the battle. While the wet vote authorized many improvements, such as the ability to open liquor stores, sell beer and wine in restaurants without being a private club and purchase beer and wine at wholesale, difficulties remained.

Most notably, to authorize the sale of liquor-by-the-drink for on-premises consumption, additional local option elections were necessary. In particular, Arkansas law required the provisions of the law that authorized on-premises consumption of liquor-by-the-drink were “effective only in cities and counties, or portions thereof, in which the manufacture or sale of intoxicating liquor is not prohibited as a result of a local option election held pursuant to Initiated Act No. 1 of 1942, and in which the sale of alcoholic beverages for on-premises consumption has been approved by a majority vote at a referendum election as herein provided.”

Because of this requirement, to continue selling mixed drinks, restaurants in Bentonville, Rogers, Siloam Springs, Lowell, etc., were required to continue operating private clubs, maintain separate entities, purchase alcohol at retail liquor stores, and pay tax on their purchases unless their communities proceeded to hold and win local option elections that authorized on-premises consumption. Given the number of thriving communities in Benton County, as well the significant rural areas, this process would have been expensive, labor intensive and lengthy.

In 2013, the General Assembly partially solved the issue by passing Act 1008, which Gov. Mike Beebe later signed, relaxing the requirement of a local option election by allowing a city or town to authorize by ordinance the sale of alcoholic beverages for on-premises consumption if the city or town was located in a county that (1) became wet after Nov. 1, 2012, and (2) had 100 active Alcoholic Beverage Control Division permits.

This change in the law allowed multiple Benton County cities to pass ordinances authorizing on-premises consumption, which they did, in fact, do.

More changes were in store in 2015. In Act 383, the state added property owner’s associations with populations of 5,000 or more to the list of communities that could pass ordinances authorizing on-premises consumption in the event they were located in counties that became wet after Nov. 1, 2012.  At the same time, the prerequisite that the county have 100 active Alcoholic Beverage Control Division permits was eliminated altogether.

These changes left a landscape whereby communities located in counties that became wet after Nov. 1, 2012, could authorize on-premises consumption of liquor-by-the-drink by ordinance, while communities in counties that became wet on or before Oct. 31, 2012, were required to hold local option elections. The number of counties affected was more than three dozen, and there were many affected communities in each.

This year, by the passage of Act 875 and approval by Gov. Asa Hutchinson, communities of every kind in all wet counties will be treated the same. Act 875 deleted the requirement that a county had to become wet after Nov. 1, 2012, and it added the rural areas of the county to the list of communities that can pass an ordinance authorizing on-premises consumption of liquor-by-the-drink.

As a result, more than 100 communities in the state may now consider whether they would like to authorize by ordinance on-premises consumption of liquor-by-the-drink.
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Editor’s note: Marshall Ney is a partner with Friday, Eldredge & Clark LLP in Rogers. The opinions expressed are those of the author.