Average Montana Liquor License Set for Auction Cost Almost $300,000
"You might own the building, and the building is worth less than the liquor license"
The average cost of a Montana liquor license up for auction is $275,472, Montana Department of Revenue (MDR) data shows.
Lobbyist David Herbst told The Montana Chronicles the high prices of liquor licenses in Montana are “a classic example of a false scarcity created by government.”
Herbst said the cost of a liquor license in Montana is based on a “calculation of population per area rather than upon supply and demand and what consumers want.”
“There might be somebody in Bozeman who would start a tavern, a brewery, or a distillery, but rather than going to test the marketplace for the thing that they want by starting it, they have to buy one of the limited supply of alcohol licenses, or they have to enter into some sharing agreement with somebody who already has one,” he added.
Herbst said when a person has a liquor license in Montana as a property, they can sell it for more money.
“If you're a business owner in Belgrade that has one of these licenses, this is your retirement plan,” Herbst said. “You might own the building, and the building is worth less than the liquor license.”
He added that in Montana's small towns, “sometimes” the wealthiest business is a tavern.
“Montana likes their booze, and with a government-created limited supply. They can be much more extractive out of their economy [and] charge more than they otherwise might,” Herbst explained.
John Iverson, a government affairs consultant for the Montana Tavern Association (MTA), told The Chronicles there are three common types of liquor licenses in Montana: an all-beverage license, beer and wine license and restaurant beer and wine license.
Iverson said all-beverage licenses are based on a population-based quota.
According to Iverson, people who have beer and wine licenses can sell beer and wine with or without food. This license is also issued on a population-based quota.
The restaurant beer and wine license, also known as cabaret licenses, is determined by the number of “beer and wine licenses that the quota system allows,” Iverson said. To utilize this license, according to Iverson, a place needs to be “65 percent of your sales have to be food sales,” and a place has to “sell someone food before you can sell them alcohol.”
According to Iverson, liquor licenses are “so expensive” because they are the “licenses that are selling in the valuable markets because those are the markets that are growing.”
Montana treats alcohol licenses like private property, according to Iverson.
“I can sell you my license. Now you have a license. As long as the state deems you're suitable for a license,” he explained.
Currently, 53 liquor licenses are available for auction in Montana as of Friday, January 10.
The lowest cost license is $5,000, and the highest is $2,350,000.
Iverson added that Montana has many liquor licenses available at no cost beyond the licensing fee.
As an example, Iverson cited Gallatin County. Bozeman is in Gallatin County. He called Bozeman “the hottest alcohol market in the state by far.”
Iverson said that if people are five miles outside Bozeman city limits, they can get a liquor license for free.
“There's 21 all beverage with gaming retail alcohol licenses available for any applicant that wants [and] that meets the standards. It will cost them no additional costs beyond the licensing fee,” the MTA consultant explained.
Iverson said that when looking at this graphic (pictured above), the row that says “GALLATIN CO” refers to “the population in Gallatin County, except for the populations that occur in incorporated towns.”
The incorporated towns in Gallatin County are Bozeman, Belgrade, Manhattan, Three Forks and West Yellowstone. Iverson said these populations are based on 2023 numbers.
Iverson explained that because the Gallatin County population doesn’t live in the county’s incorporated towns, the quota system allows them to have 68 licenses. Only 47 of them have been issued.
“There [are] 21 currently available per application at no cost. They're not being auctioned off,” Iverson said.
The chart shows that there are three pending applications for these licenses.
Another county Iverson cited for all beverage liquor licenses on the chart was “YELLOWSTONE CO.”
“The quota is 56 and they have 17 issued. There [are] 39 available. The state isn't going to auction that there are 39 available that nobody wants. There's no value to it,” Iverson said.
He added that these variations don’t mean a liquor license is always free.
“Some of these are in markets that the department has determined has a value, and so they are currently or plan to hold an auction to sell it,” Iverson explained.
For example, Iverson said that if the quota increased by one point, an auction would occur to see who would buy it. If nobody buys it, another auction will occur, with the license being set at a lower price.
“If nobody buys it, then they'll hold an auction and set a lower price. The term we use is it's on the shelf, and it's just there. We treat it like it's a physical thing, but it's obviously not. So, we say it sits on the shelf at any point. Anyone can apply for it if they meet the licensing criteria,” he said.
Iverson added that counties can exceed the quota. For example, Bozeman’s determined number of all-beverage liquor licenses is 41, but there are 55 of them.
Another example is Butte, where the quota for all-beverage liquor licenses is 27, but it has 78 in total.
“As Bozeman increases, more licenses go in. They pull those licenses out of other markets that are over quota, like Butte,” the MTA consultant said.
“The markets that are shrinking are shedding licenses out, and the markets that are growing are receiving licenses in,” he added.
Iverson said that the system is “working quite well because as the population grows in Bozeman, more licenses come in to serve that public.”
Previously, the state gave out new liquor licenses in Montana based on a lottery system. This changed in 2017 when Gov. Steve Bullock moved the new liquor license system to an auction style.
Iverson said Montana has a population-based quota for incorporated cities and county-based population-based quotas. Montana set these quotas in 1947.
“The quota system refers to the limited amount of licenses that may be issued in incorporated cities and towns and countywide. This limit is set in law and varies by license type. Before the quota is met, the initial price of a license is generally between $200 and $800. Once the quota is met, no new licenses may be issued until the incorporated city/town or county grows by an amount specific to that license type,” according to Montana law.
Herbst, the former president of the Americans for Prosperity-Montana, said this was progressivism's peak era.
“What they did is they regulated the hell out of it right off the bat by establishing what they call three-tier laws and alcohol licensure. The whole argument was you don't want to just open things up to the dog-eat-dog world of capitalism. You have to make sure it's controlled so that people don't overconsume alcohol,” he said.
After Prohibition ended, states were given a choice between being a license state or a control state.
In a license state, the government regulates “private businesses that are licensed to sell alcoholic beverages, the MDR says.
Montana is considered a “control state,” which means that a state regulates the sales and distribution of alcohol in a state. Sixteen other states in America do it and counties in four states with control jurisdictions.
According to MDR, “the state is the only wholesaler for distilled spirits and fortified wine, but private companies are the wholesalers for beer and table wine.”
Iverson said that these quotas were set because the public at the time “was demanding them.”
He explained America was “just off of Prohibition,” and many people opened up a tavern.
“The public said there are too many of these; we don't want this much. We want to strike this balance of having alcohol available, but we don't want it on every single street corner,” the MTA consultant said.
Iverson compared it to “a percentage of Montanans that are clamoring for a limitation on the number of marijuana dispensaries.”
Iverson said it is “a mirror image of what's happening in the marijuana thing right now.”
“Montana's entire alcohol code is trying to strike a balance. We’re not going to have wide open, open market, unfettered access to alcohol,” he added.
Herbst said people should “decide what they’re going to do with their life.”
“If they can't go to a tavern, they're going to go buy a case and go home. That's not better. You're not out with other people. You're not talking to anybody else. You're out at home drinking because everything is expensive in the bars,” he said.
Iverson said that the cost of these licenses is a “thing people should be aware of,” but the other side is if there is a “rational basis” for Montana’s system.
“Should the state limit the availability of on-premise alcohol? And when you look at every objective measure. The answer is that we should. And if anything, if the system has failed, it has failed by allowing too many on-premises locations, not too few,” explained Iverson.
Iverson said that Montana has a lot of alcohol outlets on a per capita basis.
MDR says Montana has 2,452 on-premise licenses as of Fiscal Year 2021. When divided by the state population of 1,137,233, Montana has “alcohol outlets” 215.6 options per 100,000 people.
According to Vinepair, as of 2023, Montana ranked fifth in the country for “Gallons of Ethanol Per Capita.” New Hampshire ranked first.
Another example Iverson cited was drunk driving. According to Forbes, Montana is the worst state in 2025 for drunk driving. Almost 44 percent of traffic deaths in the state are due to drunk driving, Forbes reported. Also, Montana has the “11th highest number of DUI arrests per 100,000 licensed drivers (450.50).”
“People would suggest that more alcohol outlets would be good for the economy. And perhaps they would be for some people's economies, but there's also a cumulative negative impact of alcohol outlets,” he said.
Iverson said Montana’s system for determining liquor licenses works because there is a “control system” and a " free market " within it.
“Because Montana's consume so much alcohol, these licenses have gained some value,” he added.
Herbst, who hosts a podcast called Human ReAction, said he is skeptical “that government is the social arbiter that keeps us moral and making good decisions with our lives.”
“I just don't think that at all. I think government is the least moral institution in our society. They're the ones that are actually exploiting people by using the system,” he said.
- - -
Zachery Schmidt is the founder of The Montana Chronicles. If you have any tips, please send them to montanachronicles@proton.me.