A few weeks ago, a small classified advertisement was placed in the miscellaneous category of the Caymanian Compass offering a restaurant/retail liquor licence for sale.
The asking price for that licence – which costs $2,500 per year – was CI$60,000.
If the seller gets, or perhaps already got, his or her selling price, that would have to be considered an excellent investment.
And that’s the problem.
A liquor licence should not be an investment commodity, but simply a permission to operate a certain kind of business in the Cayman Islands.
The only reason this secondary market that pays huge profits for selling liquor licences exists is because of the moratorium on the issuance of new licences.
For whatever reason, the Cayman government feels that it is best to control the number of liquor licences granted, rather than letting the laws of economics determine how many liquor-selling premises there are.
Perhaps there’s a fear the little guys will get pushed out of business if new, well-funded, high-quality establishments could be opened at will.
But we live in a free-market society, and there’s no good reason to protect the little guys selling alcohol if we’re not protecting the little guys selling groceries, hardware, hamburgers or garden vegetables.
Regardless of the reasons for the moratorium, it’s being used for different purposes. Those purposes are for the benefit of only a handful of people, and to the detriment of the society as a whole.
We’re a tourism destination and having a liquor licence moratorium is not facilitating new ventures here.
Even more importantly, anyone who would buy a liquor licence on the secondary market for $60,000 would have to pass that expense on to the consumer. That means we all pay more for our beer, plus more for our food and soft drinks, too.
With the cost of living as high as it is here now, we don’t need some artificial economic factor like a liquor licence moratorium creating a black market that costs us all more money.
What’s more, when someone makes a hefty profit on the sale of a liquor licence – which they might have purchased for profit speculation in the first place – the Government is not gaining a thing.
At least when a real estate speculator makes a nice profit, Government derives revenue from stamp duty.
Instead, our liquor licence seller laughs all the way to the bank, and we’re left to cry in our beer.
It’s time to lift the liquor licence moratorium once and for all.