SalemNews.com, Salem, MA

October 23, 2012

Liquor board cuts off Martino's

Peabody: Owner denied beer/wine license after selling all-alcohol license for $200K

By Alan Burke Staff writer
The Salem News

---- — Peabody Licensing Board members looked like they could use a drink as they listened last night to the reasons that Frank Martino of Martino’s Liquors deserves a beer and wine license despite selling his all-alcohol license to Trader Joe’s for $200,000.

They turned Martino down on a 1-2 vote, earning a promise from his lawyer, Jack Keilty, that he will appeal the decision to the Alcoholic Beverage Control Commission.

Earlier in the same meeting, the board quickly approved the license transfer to Trader Joe’s that assured Martino the $200,000. But Chairman Minas Dakos looked grim as he later read a prepared statement, saying in part, “If he is willing to sell the license after having it for only a year, seriously, how necessary was a full liquor package store license needed for this business? Apparently, it wasn’t.”

Dakos expressed doubt that the new license would be needed.

Members agreed that the arrangement Martino was seeking had brought unprecedented controversy.

“Just so you know, we’re getting all kinds of pressure from both sides,” Chuck Holden said. “We’ve never seen an issue where someone says, ‘I sold my valuable license, and now I want one that’s less valuable.’”

He asked, “What benefit to the city of Peabody is it for us to give you a license?” He wondered at the reaction of the “average” Peabody resident to this extraordinarily lucrative swap of an asset issued by the city for a nominal fee barely surpassing $2,000. “It’s a hard thing for people to grasp.”

The license given to Martino only became available because an increase in the city’s population brought a corresponding increase in the number of all-alcohol licenses that the city is allowed to issue.

Member Nancy Delaney acknowledged that others have sold licenses in the past, but usually as a prelude to retirement or going out of business. “Most people that sell them don’t come in to us afterward and say they want anything.”

An important part of Martino’s business, Keilty argued, was selling liquor to people who rent his Topsfield function hall, Topsfield Commons. Only recently did he find out he was being undersold by Kappy’s, which made selling hard liquor less important for him.

Keilty indicated that his client is a good citizen, leaving the board with no valid reason for denying him the available license.

Keilty also gave some insight into how Martino innocently found himself “in the right place at the right time.” After a change in state law made it possible for Trader Joe’s to sell liquor at more stores, the national chain came to Peabody inquiring, “Who got the last license?”

Discovering it was Martino, they reasoned, according to Keilty, that he would be more willing to part with his license than would a retailer like Kappy’s, which bases its entire business on selling alcohol.

Thus, Trader Joe’s made Martino an offer.

“His first answer,” Keilty said, “was no.” The lawyer later told reporters that this offer exceeded $100,000.

“But then they got to a price where it was attractive.” Until faced with this offer, Martino had no intention of selling, Keilty said. “It was never, ‘Oh, I’ll take the license and then I’ll sell it.’”

In one of his few remarks to reporters, Martino shook his head and said, “The offer was insane.”

Holden expressed concern that Martino seemed to be changing his business plan with regularity. He also worried that customers will mistakenly think they can consume the beer and wine at his establishment, which also provides deli products and where Martino intends to sell pizza.

Martino pledged that customers are advised of the rules and understand they cannot drink on the premises or in the parking lot.

Holden suggested granting the beer and wine license, but making it nontransferable. Keilty agreed to this, while hinting that such a prohibition might not stand up in court. In any case, both Delaney and Dakos voted against the motion.