Former Del. Tim Hugo, R-Fairfax, whom Gov. Glenn Youngkin appointed chairman of the authority’s board of directors early this year, asked this month for a pause in the regulatory process. The process had begun in part in response to an executive directive that the governor signed on his first day in office to require state agencies to reduce the regulatory burden on Virginia businesses by 25%.

Hugo acted in response to a half-dozen calls he said he had received from legislators of both parties and concerns raised by Jerry Cable, owner of The Tobacco Company Restaurant in Richmond’s Shockoe Slip, about the legality of the proposed regulations under state laws that limit liquor licenses to businesses that sell food for consumption on their premises, traditionally with service to customers seated at tables.

However, the proposed regulations have strong support from the Virginia Restaurant, Lodging & Travel Association, which said it has worked with dozens of businesses and advocates — including a restaurant association created by Cable — to update regulations to reflect the way mixed-drinks already are licensed and served in restaurants in the state.

In an interview Tuesday, Hugo said, “Out of respect for the General Assembly, I just wanted everybody to get together to work out their differences.”

Hugo said a meeting is being scheduled next week between the opposing restaurant groups, but acknowledged that the delay could derail the regulatory process and force it to start over if the ABC Board doesn’t adopt the proposed regulations by Jan. 3. Once adopted, the regulations would go to the governor’s office and Department of Planning and Budget for further review and public hearing.

Tom Lisk, a Richmond lobbyist for the restaurant, lodging and travel association, said in a statement to the Richmond Times-Dispatch on Tuesday, “If the VA ABC does not act by the end of the year, the two years of work invested by all of the stakeholders will be for naught, requiring VA ABC to re-start the regulatory review process from the beginning, resulting in a further delay of these changes by another year or two.”

Cable: ‘What they’re doing is against state law’

Many of the changes are technical, but the heart of the dispute are provisions that would formally change the definitions of meals, food preparations and restaurant settings, which Lisk said already have shifted under ABC guidance to reflect changes in the way people dine out. Those changes would recognize mixed-drink sales in food halls, airports, even movie theaters, where traditional table service isn’t practical.

“Even with these changes, all Mixed Beverage Licensees will need to provide seating at tables and service of complete meals prepared on the premises in order to have the privilege to sell mixed drinks,” he said.

Cable and the fledgling Virginia Restaurant Association, which he registered with the state in 2021, say the proposed regulations would go much further than state law allows and would require approval by the General Assembly and governor.

“What they’re doing is against state law,” Cable said Tuesday. “What they’re doing is a real detriment to the state of Virginia and ABC restaurants.

“This is a General Assembly matter, not an ABC Board matter.”

Cable, whose Tobacco Company Restaurant has been a dining spot for legislators since it opened in 1977, made his concerns clear to Hugo and a number of state legislators, who called the ABC chairman to ask for a delay.

“It would be a pretty big change in the law,” said Sen. Creigh Deeds, D-Charlottesville, who confirmed that he had called Hugo on Cable’s behalf.

Matt Benka, a lobbyist for the restaurant association created by Cable, contends that the proposed changes could override state code to make it much easier for a wide range of businesses to get a mixed beverage license in a state that doesn’t allow bars that sell solely alcoholic beverages without food service.

“I don’t think the average taxpayer of Virginia wants a bar on every street corner,” Benka said.

He said the proposed changes could “lessen the value of a mixed beverage license” by granting them to businesses that don’t operate full restaurant kitchens or table service.

“There’s no way for ABC to say ‘no’ if these regulations get in place,” Benka said.

Ongoing political issues for ABC 

Lisk, whose association represents more than 1,000 restaurants in Virginia and an additional 3,500 that are part of national chains, said the regulations would not change requirements that restaurants have tables of some sort for dining, that food be consumed there and not taken out, and meet the state’s “food to beverage ratio” of 45% to hold a license for mixed beverages.

“Consequently, these proposed changes will not allow hot dog stands, convenience stores and other similar businesses to obtain mixed beverage licenses,” he said.

At the same time, the proposed regulations do reflect changes in how mixed drinks are sold and the way people dine out. For example, the proposed regulations would allow licensed restaurants to sell “ready to drink cocktails” — purchased through state ABC stores — to go.

Under ABC guidance to license holders in 2016, the definition of meals and food preparation “acknowledge that today’s consumers seek out a variety of food options when dining out, including pizza, pasta, meal sales, etc., rather than the traditional steak, potato & vegetable that was considered a meal when liquor-by-the-drink was first adopted in Virginia in 1968,” Lisk said in his statement.

The regulatory showdown is the latest political challenge facing ABC, which was created as a state agency in 1934 at the end of Prohibition and transitioned to a semi-independent authority on Jan. 1, 2019. The authority is under pressure from Youngkin to increase sales and profits for the state’s general fund budget, and it just lost its first CEO, Travis Hill, who stepped down this fall.

Hugo hopes to resolve the dispute and adopt the proposed regulations in a virtual meeting in December, but first he wants the rival groups to meet next week “to see if there’s a middle ground.”