Local liquor stores sue state, claiming Colorado licenses favor big-box stores like Costco, Walmart and Target

Four Denver-area liquor stores say the state is illegally issuing too many liquor licenses to large, out-of-state grocery and big-box stores and are suing in an effort to have those licenses yanked.

The lawsuit filed late last week in Denver District Court targets “liquor-licensed drugstores,” such as King Soopers grocery stores, Costco, Walmart and Target. The lawsuit claims the state Liquor Enforcement Division isn’t following a state law that restricts the owners of businesses with pharmacies to eight liquor licenses.

In one example, the lawsuit said the Vanguard Group, an investment firm, has ownership interest in at least 29 different liquor-licensed drugstores operated by multiple companies, including seven King Soopers and eight Costco stores. The cap on the number of licenses applies to “owner, part owner, shareholder, or person interested directly or indirectly in a liquor-licensed drugstore.”

The owner or someone with an interest in a retail liquor store is allowed up to two additional liquor store licenses, the lawsuit said.

“The State of Colorado’s Liquor Enforcement Division is blatantly and illegally benefiting large, out of state publicly traded corporations like Kroger, Albertsons and Amazon’s Whole Foods while simultaneously discriminating against smaller, privately owned Colorado liquor stores,” Steven Silvers, a spokesman for the plaintiffs, said in a statement.

The retail stores are suing the Colorado Department of Revenue and the Liquor Enforcement Division, which is in the revenue department. The stores are Applejack Wine & Spirits in Wheat Ridge; Heritage Wine and Liquor in Englewood; Bevy’s Liquor World in Littleton; and Bevy’s Liquor World in Parker.

Revenue Department spokeswoman Elizabeth Kosar said Tuesday that the agency doesn’t comment on pending litigation.

The lawsuit also claims the state isn’t complying with a prohibition against issuing liquor licenses to businesses with pharmacies if they have an interest in other alcohol-related enterprises: restaurants, manufacturing and distribution.

The retail businesses sued after state officials failed to respond to two requests for a review of their complaints, according to the lawsuit. The Liquor Enforcement Division said in a Nov. 21 email to attorneys representing the liquor stores that the agency was investigating the allegations and would “appropriately consider any oversight action that may result from our findings.”