Could happy hour return to Mass.? Proposed measure would lift 40-year ban

BOSTON — It has been framed as a way to make Massachusetts “fun” and help revitalize downtowns across the state, but some sectors of the liquor industry claim the possible return of happy hour to the Bay State meddles with established business models and threatens the wholesale sector of the industry.

In attaching the amendment to the $2.86 billion economic development bond bill, Sen. Julian Cyr, D-Falmouth, who grew up waiting tables on the Cape in his family’s restaurant, said attitudes toward alcohol and its consumption have changed in the 40 years since the state banned happy hour.

Cyr acknowledges that there had been good reasons to enact the ban, including skyrocketing drunken driving fatalities. However, he contends that changing attitudes, coupled with a universal drinking age, ride-share services, enforced seatbelt use and stricter drunken driving laws, should prompt a reevaluation. Cyr said it now makes sense to allow restaurants and bars to offer discounted drinks during specific time periods.

“In the commonwealth, where costs are soaring statewide and young people are leaving at alarming rates, there are fewer opportunities for people of all ages to build community and enjoy the conviviality of our neighborhoods,” Cyr said. “Happy hour would not solve all of that, but opening the door to local-option happy hour will help Massachusetts reset itself as a place where people want to work and want to play.”

The senator believes the measure could entice the 25- to 40-year-olds who are migrating in droves due to the high cost of living, lack of affordable housing and perceived stodginess, to stay in the state. He called it a “fun factor,” noting that many of that generation have given up dreams of homeownership, wealth building and even finding food after 10 p.m. or vegan and vegetarian options.

“We’re the Athens of the U.S.,” Cyr said, referring to the large student population that floods the state to attend colleges and universities. “But they are leaving, not because there are no jobs, but because they can’t afford to live here, there’s not a lot to do and it’s not a lot of fun.”

The amendment, passed unanimously by the Senate with the development bond bill, would allow municipalities to opt in and establish parameters for their local businesses with the help and guidance of the state Alcoholic Beverages Control Commission. The amendment has not been addressed by the House.

But while legislators seem to endorse the idea, industry insiders are not so enthusiastic.

That business sector indicated it is more interested in mitigating the high cost of credit card payment processing fees charged by banks and the cost of health insurance premiums, just to name two.

“Happy hour is always a subject that generates a lot of discussion, and consumers want half-priced items, just as they would want half-price gas,” said Jessica Muradian, director of government affairs for the Massachusetts Restaurant Association. “Some restaurant owners are in favor, and even more are opposed. This is generally not something that restaurants are going around asking for."

In Worcester, Steel & Wire Cocktail Lounge at 124 Millbury St. said the proposal does not “specifically appeal to us; it’s not really our vibe.”

While co-owners Frank and Mara Inangelo said that they like the idea of allowing businesses to make the call on whether to have drink specials, they said, “We don’t see how the economics or liability of it would make sense.”

Rob Mellion, executive director of the Massachusetts Package Stores Association, said the Legislature made the move without any feedback from the industry.

“The Legislature is meddling in the industry without our feedback,” Mellion said, adding that it’s a move to deregulate the industry. “It’s concerning.”

Mellion pointed to the unintended consequences that the Legislature seems to have failed to consider, including the possibility that liability insurance costs will increase and what could happen to smaller players in the bar and restaurant field.

Massachusetts, he noted, has the strictest social-host laws in the nation and predicted that the return of happy hour would push insurance costs through the roof. The only winners, he said, would be the big alcohol industry pushing for more points of sale throughout Massachusetts.

“This creates a situation where small businesses are run over by larger, out-of-state chains,” Mellion said. He described a scenario where a local business feels compelled to offer reduced price drinks if the larger chain nearby has a happy hour.

Restaurants and bars make their profits on liquor markups, Mellion said, explaining that reducing the profit made on alcoholic drinks could doom small businesses to failure.

In discussing the proposal, Cyr also mentioned that alcohol sales are drivers for the industry; restaurants cannot afford to discount the cost of meals or save on labor costs. The only discount they can offer to attract more customers is on drinks.

Cyr envisions off-hour discounts and a Sunday-afternoon postseason happy hour in his district just as a way to get people in the door.

Critics speculate that the option could prompt a “race to the bottom” between restaurateurs, pitting them against each other as they offer more and bigger discounts until smaller businesses are forced to close.

Cyr said it’s a question of choice.

“This is a good tool, why don’t we use it to breathe life back into downtowns and main streets?” Cyr said.

In his critique, Mellion faulted the Legislature for “slipping the amendment” into the larger bill. Another amendment addressing alcohol regulations in the state that Mellion said was “slipped into” the development bond bill further deregulates the industry and allows Massachusetts farm brewers and distillers to sell their products at farmers markets.

The measure promotes vertical integration and would take the wholesale tier out of the equation, Mellion said, explaining that the state has a three-tier system — producers, wholesalers and retailers. Each has its own expertise and field of operations —producers are not allowed to sell their wares and wholesalers are the conduit for both producers and retailers. Separating the fields of operations, Mellion said, historically prevented monopolies where alcohol producers also controlled retail markets.

In criticizing the measure, Mellion said that federal fair trade regulations bar states from protectionism. Massachusetts cannot impose restrictions prohibiting out-of-state producers from selling alcohol at local farmers markets if locals are allowed the privilege.

“There was no debate, no feedback from the industry, on these two amendments,” Mellion said.

Cyr spent a half-hour discussing his proposal last week on “The Codcast,” a feature offered by Commonwealth Beacon.

“We are the last state with a happy hour ban, it’s time to look at that,” Cyr said.

Consumer spending in the hospitality and food service industry had dipped even before the COVID-19 pandemic. Now is the time, Cyr said, to find ways to bring people back to downtown.

He pointed to statistics from Illinois and Kansas after the return of happy hour in those communities, noting no marked increase in alcohol-related motor vehicle collisions, with drunken driving deaths down nationwide.

“This would support small businesses, especially restaurants,” Cyr said.