When Mary Longfellow spent a dearly earned $375 to apply for a liquor permit in 1969, her husband, Harley, jokingly told her she wouldn't live to see it.

Forty years ago, she had hoped to sell hard liquor at the Canters Inn in Lewiston, which Harley built in the 1950s. Her now-dead husband's prognostication proved correct. Mary died in the early 1990s.

The family still owns the building and the land, and just a few weeks ago Idaho's alcohol-licensing agency notified them that they were next on the list for a Lewiston license.

The Longfellows' predicament highlights a state system that lets actual innkeepers languish on the state waiting list while letting so-called speculators reap potentially huge profits on multiple licenses in a kind of liquor-license lottery.

"In '69 ($375) was a lot of money," said Gary Longfellow, the youngest of Mary's six children. "That was a very good weekend at the bar in those days. Dad was pretty bummed she spent the money, and told her she was nuts - she'd never see the permit. She didn't, but we kids did.

"Mom would be telling Dad, 'I told you so. I knew we'd finally get one.' "

A few hundred bucks may have been a lot of money in the 1960s, but a liquor license is worth a whole lot more today. One license in Lewiston - which gets few new licenses under the state's population-based quota system - recently sold for $160,000.

Idaho issues one new liquor permit for every 1,500 in population increase in each city. The system was set up in response to Section 24 of the Idaho Constitution: "The first concern of all good government is the virtue and sobriety of the people, and the purity of the home," the Constitution says. "The Legislature should further all wise and well directed efforts for the promotion of temperance and morality."

Many still believe strongly in that sentiment. But other Idaho lawmakers and business people say the system is inherently flawed because it makes what should be a state privilege into a valuable commodity.

"The law specifically states that owning a license is a privilege. Over the years, and I mean decades, it has been interpreted as a property right," said retired state Sen. Hal Bunderson. "People include these licenses in their estates. They can sell them for whatever the market will allow."

PAYING THE PRICE

Other than paying to be on the sometimes-painfully slow state waiting list, the only way to get a permit is to purchase an existing license on the pricey private market. The wait isn't always 40 years; in faster-growing cities like Nampa or Boise, the wait is typically five to 10 years.

Treasure Valley restaurants like Market Limone and SixOneSix paid tens of thousands of dollars for licenses to speculators - people who get on the waiting list multiple times with the intention of selling the licenses as soon as they legally can.

Such transactions are the only timely way a new business can get a license, said Laurel MacKinnon, the entrepreneur behind Nampa's Belle District and the popular Market Limone.

"(The waiting list) takes years to have your license come up," MacKinnon said. And once a license is issued, getting financing, suppliers and a location ready within the 180-day deadline would be difficult, too, she said.

It was simply easier to get her business ready and then buy a matured license, she said.

State liquor documents show MacKinnon paid more than $11,000 for one license and more than $60,000 for another. MacKinnon said she paid a "fair market price" determined by "supply and demand," and isn't looking to change the system. She got involved in the liquor-license market, she said, because she was "looking to open a business."

MacKinnon paid Twin Falls pharmacist Daniel Fuchs more than $60,000 for one of his liquor licenses.

In 2005, Fuchs and his brothers opened Chelsea Bug's Bar, Rockin' Ryan's Pub, Jokin' Jacob's Saloon and Brooke's Bar. The bars were in small retail spaces in Nampa as place-holders while their liquor licenses "matured" to the point where the Fuchses could legally sell or lease them.

These so-called "closet bars" adhere to the letter, if not the intent, of state law, said Lt. Bob Clements, who runs Alcohol Beverage Control for the Idaho State Police and oversees Idaho liquor law enforcement.

Idaho code gives new licensees 180 days to open a business. Then the license holder must sell liquor by the drink - or at least make it available - for eight hours a day, six days a week for six months. After two years, the license can be transferred, leased or sold. The state gets a 10 percent cut of any sale price.

Back in 2005, Fuchs declared his intent to open high-end restaurants - such a declaration is required to get a license. He never opened traditional bars or restaurants. Fuchs' name still appears on the state waiting list 23 times for licenses in cities like Sun Valley, Hailey, Ketchum, Twin Falls and Bellevue.

Of the four licenses Fuchs received, two went to MacKinnon. Fuchs sold another of those licenses for more than $60,000 to Fiesta of Nampa and leased out the fourth. Fuchs did not return several messages left at his Twin Falls home.

"I haven't seen some of those people (who get multiple licenses for bars) open up a single one yet," said ABC's Clements. "How come those four businesses that were opened up in Nampa, how come he doesn't own a restaurant or bar in Nampa now?"

Clements also says it is unlikely that Richard Hoyle of Eagle intends to open 48 restaurants across the state.

But Hoyle, under the corporate name Hoyle Investment, is on the state's waiting list for 48 permits. Hoyle did not return phone calls seeking comment. Though Hoyle is close to the top of the list for several permits, he may not see them: Idaho law excludes anyone convicted of a felony in the past five years from obtaining a license. A multiple-felony-count insurance fraud case against Hoyle is slowly making its way through Idaho courts.

Boise attorney Brian Donesley was waiting for 37 permits, under his own name and a corporate name, Priority LLC. Donesley said he had no idea he'd applied that many times. He said he just looked for good opportunities when he started applying for licenses in 1997. At the time, he said, he intended to open a chain of restaurants across the state.

On Wednesday, Donesley told the Idaho Statesman he had cancelled 14 of those applications because he is no longer interested in pursuing them.

Liquor permits can be good investments. In fact, Statesman classifieds recently listed several for sale in the Treasure Valley, including one in Boise for $150,000.

The state charges one-half the annual cost of a permit - from $300 to $750, depending on population - to get on the list.

SHOULD SPECULATORS BE ALLOWED AT ALL?

The system is already slow, but speculators make it too difficult to expand existing legitimate businesses or open new ones, said John Forsberg, co-owner of Kahootz Steak and Alehouse in Meridian.

Forsberg said he'd like to get a liquor permit and open another restaurant, but he doesn't want to wait five years. And buying a license on the open market is out of the question, he said.

"It seems like you are buying into a corrupt system when you are doing that," Forsberg said. "Is it right that some speculator, who has no intention of running a restaurant or selling liquor by the drink, that they should be able to pay a few dollars and put their name on a list and wait five years and have someone pay them $70,000 for something they did five years ago?"

Forsberg said he'd like Idaho to move to a system like California's, which issues permits to those who qualify without a wait list.

"The bottom line is the government still collects taxes on every drop of liquor sold," Forsberg said.

"Why should the state be in the liquor business? That should be up to free enterprise to take care of it and regulate it."

Other states like Oregon and Washington issue permits to all qualified applicants, too. But those states have adequate enforcement, said ABC's Clements.

"Either (Idaho lawmakers) have to fix the system the way it is or open up the quota system," Clements said. "We go through about 4,000 license applications per year. There are 4,000 premises statewide, and I have two enforcement officers for the whole state."

A NAGGING STATE ISSUE

Idaho Gov. Butch Otter said he wanted the state to take a look at the existing system, and he set up a special commission in early 2007. Ultimately, the commission did nothing.

Bunderson, who describes himself as a teetotaler who knows too much about liquor, contends the liquor-permitting system limits Idaho's economic development and the hospitality industry. But if the law is changed and existing permits are devalued, he said, the state could be sued for taking value away from the existing licenses.

Donesley, the Boise lawyer who works with bar and restaurant owners, said ABC's rules are so convoluted and the organization so difficult to work with that he'll never realize the licenses he's waiting for. In the years he's been on the list, he said, he's "perfected" and sold one license for $25,000 in Star.

"I'm speculating on a business opportunity. Just like, welcome to America. That's what this is about. I play by the rules, and my clients play by the rules," Donesley said. "Any negative implication about being a speculator ... please don't confuse me with the masters of Wall Street."

Donesley ran Alcohol Beverage Control as a gubernatorial appointee in the early 1980s. He contends the state system is fundamentally sound and that ABC and Clements intentionally make the process unnecessarily complicated. Clements and ABC hope to create a bottleneck for licenses that will force the state to do away with the quota system altogether, Donesley said.

Clements acknowledges he wants the system changed - to make it simpler to administer, easier to enforce and less vulnerable to speculation.

There is some "low-hanging fruit" that could improve the system and discourage speculators, said former Sen. Bunderson. The state could impose limitations on who can apply for a permit. It also could connect a permit to a specific person in a corporation that is valid until that person dies, he said. Or the state could take a 90 percent cut - instead of the current 10 percent - of any licenses sold or transferred.

"We can fix it if there is political will," Bunderson said. "There are ways to do it if you are careful ... and get broad-based approval."

Now that Lewiston's Gary Longfellow is getting his family's long-delayed license, he doesn't want to see the system change. His family will soon own a valuable asset.

"I don't want everyone to have one now," he said. "I want them to buy it from us. If they do change the system, then the value of our liquor license goes down. That's the big problem with changing."

Kathleen Kreller: 377-6418