Peabody liquor licensing authorities sent Frank Martino away empty-handed Monday night, questioning his sincerity to operate a package store in the city.
The main reason for the Licensing Board's reticence to grant Martino a license was because he just sold his full liquor license for a tidy profit less than a year after receiving it from the city (at a fraction of the cost), and was now asking for a new license to replace that one.
That did not sit well with board members; in fact, it was yet another unique factor to the situation -- Martino sold his license for $205,000 to Trader Joe's.
"We've never had somebody give up a license and the same day ask for another one," said board member Charles Holden.
He noted that the board was receiving an unprecedented amount of commentary from the public and other city officials, coming on both sides of the issue. He said Martino did nothing illegal selling the license, but just took full advantage of how the law works.
Chairman Minas Dakos read from a prepared statement, noting the city was granted just one additional full liquor package store license by the state after the 2010 census. He said Martino applied for it (in 2011) and he felt issuing the license to Martino was "definitely in the best interests of the city."
"If he is willing to sell this 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," wrote Dakos.
"If this was such an integral part of the business, would you sell off your most valuable asset?" mused Holden once the hearing was over.
For his part, Martino and his attorney John Keilty both said Martino never intended to sell his license.
Keilty said Trader Joe's came, unsolicited, to Martino with an offer and the first response was "no, absolutely not," but Trader Joe's persisted. Keilty said later that first offer was more than $100,000.
"They pressed and pressed and pressed to get that license," he said. Eventually they came back with an offer too good to pass up.
At the same time, Martino said, he was struggling with hard liquor sales. He realized larger retailers, such as Kappy's, were buying liquor in bulk at deep discounts and consequently were able to resell it to customers at about the same price he was purchasing it for from the same distributors.
That was mainly affecting his market for wedding parties, he said. Martino is actually his own largest customer in a way -- couples who rent out his Topsfield function hall for their nuptials often take the suggestion and purchase their alcohol from Martino's Liquors. He said individual sales at the store only account for about 15-20 percent of business.
Martino said other venues in the Boston area are also customers on consignment and his shop does a lot of catering work.
In both types of sales, Martino said, he was having more success with unique brands of fine wines and small brewery beers -- products that Kappy's didn't sell -- and customers were asking for more food options, such as pizza, which would go better with beer.
"It turned out that business model changed somewhat," Keilty said.
Still, board members argued Martino should have just turned in his license to the city and asked to downgrade to a beer and wine license, as other establishments have done in the past.
Holden noted that package stores usually sell their liquor licenses when they're going out of business, not just when they're taking the hard liquor off the shelves.
Dakos said even if he was in that same situation, he would never have sold to Trader Joe's because the license was integral to his own operation.
"For me, it means it must not have been important to business," he said.
Holden, a local business owner himself, said he was on the fence on either side of the argument. Board members said they didn't hold anything personally against Martino.
Holden was willing to offer a concession and put a condition on the new license that it be non-transferable from that location, but Dakos and board member Nancy Delaney disagreed, voting "no."
Without any further motions offered, Martino's request was effectively rebuffed.
The board approved the transfer to Trader Joe's earlier that evening and Martino therefore now has no alcohol license for Martino's Liquors, unless an appeal is filed within the coming days.
Keilty told reporters he would indeed file an appeal with the state Alcoholic Beverages Control Commission on the basis that the board's rejection was unwarranted. He said Martino was a "fit" businessman to run a package store and that should have been the board's main consideration.
He also said he wasn't sure the board could legally place such conditions on a regular license -- making it non-transferable usually just happens when an extra license is granted to a community for a sole purpsose by an act of the state legislature.
"[The business] was designed for what I did, but the offer was insane," Martino said, referring to Trader Joe's.