After nearly eight hours of testimony about cruising and queer culture, the Arizona State Liquor Board's decision on a gay bar that has caught the attention of leather folks across the country ultimately came down to something far less provocative: corporate paperwork.

A hearing over Barracks Phoenix—a proposed leather bar in Phoenix's Melrose District—quickly spiraled into a discussion about the definition of "cruising," leather culture and whether businesses can use sex to market themselves before board members finally returned to the question they were actually there to answer: Did bar owner Matthew Moody properly remove his former business partner from the company?

The result was less a liquor board hearing than an impromptu lesson in queer history. Patrick Kelly, owner of the adult store Off Chute Too, and Moody spent much of Thursday explaining leather culture, correcting misconceptions and defending queer spaces before a state regulatory board.

By the end of the day, the Arizona State Liquor Board approved a Series 6 liquor license for Barracks Phoenix, which plans to open across from Fry Bread House on Seventh Avenue. But the approval came with one condition: Moody has 90 days to completely remove former business partner Richard "Scott" Murchison from the company's ownership structure.

The hearing, however, rarely stayed focused on corporate law.

Much of the testimony centered on Murchison's former ownership of Barracks in Cathedral City, California, where a four-month undercover investigation by the California Department of Alcoholic Beverage Control between late 2023 and early 2024 resulted in 66 administrative allegations involving public sexual activity, nudity and lewd conduct.

Moody never owned or managed the California bar, but Murchison's connection to it initially prompted the Phoenix Police Department to recommend denying the Arizona liquor license.

To resolve those concerns, Moody and Murchison filed paperwork with the Arizona Corporation Commission on April 28 removing Murchison as an officer and director of Barracks Bar Phoenix Inc., leaving Moody as the company's sole listed director and manager. Phoenix police later withdrew their recommendation, concluding there was "no basis for denial." The Phoenix City Council also declined to protest the application.

One thing, however, remained unchanged: Murchison was still a shareholder.

That became the central legal issue before the board.

One opponent's lawyer, Michael Raine, repeatedly returned to the California allegations as a proxy for a broader debate over queer culture.

Leather bars have long served as sexually expressive spaces, often hosting kink events, screening pornography and, in some states, providing designated play areas. Opponents argued those aspects of leather culture meant Barracks Phoenix would inevitably violate Arizona liquor laws.

Arizona's LGBTQ+ bars, however, have historically operated under far tighter scrutiny. State liquor laws prohibit sexual activity and sexually explicit performances inside licensed establishments. While enforcement has often varied elsewhere, Arizona's queer bars have long navigated heightened attention over sexuality in ways many straight venues have not.

That history extends beyond Arizona. In Seattle, police recently raided several gay bars over alleged sexual conduct, prompting protests from LGBTQ+ advocates who argued queer spaces continue to face disproportionate enforcement.

The only formal protest came from Raine's client Stuart Shoen, heir to the U-Haul fortune. Through his company, 18 SAC LLC, Shoen challenged the license on location and personal qualification grounds. Shoen owns the neighboring property, where he stores his and his family’s vehicles, and argued a sex club would negatively affect property value. He disputed that he would take issue with a gay bar, generally.

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His attorney spent much of the hearing attempting to tie Barracks Phoenix to the California allegations. He introduced promotional material from a Chicago leather event advertising an "Orgy in Progress" and repeatedly cited cruising and leather culture as evidence the Phoenix business would engage in illegal activity.

Moody countered that the materials reflected leather community culture—not Barracks Phoenix's operating plan. At one point during the hearing Moody — who has a background in marketing — seemed to address Shoen, directly, on the door hangers: “That wasn’t for you,” he said. “You don’t get it.”

Raine also introduced a LOOKOUT and Phoenix New Times article as an exhibit, questioning Shoen about reporting that referenced Moody's attorney's allegation that the remaining objections reflected an underlying bias. 

Shoen testified that the article and subsequent social media attention damaged his reputation, denied the allegations of prejudice and said they contributed to concerns about his personal safety.

At several points, the hearing drifted into explanations of cruising, the hanky code, and leather traditions as board members sought to understand the terminology. As the hours passed, though, it became increasingly clear the board's biggest concern wasn't queer culture.

It was ownership.

Board questioning revealed Moody and Murchison originally formed Barracks Bar Phoenix Inc. as equal owners. Although Murchison resigned as an officer and director, no stock transfer or buyout had been completed, leaving him as a 50% shareholder in the corporation applying for the liquor license.

He also retained a 50% ownership interest in Manly Media Group LLC, which owns the building where Barracks Phoenix plans to operate and serves as the property's landlord.

Raine argued those interests meant Murchison still qualified as a controlling person under Arizona liquor law despite no longer holding a management role.

Acting Chair Lynn Shulman repeatedly reminded those in attendance that the board's job was not to referee debates about leather culture.

The question, she said, was whether Murchison had actually left the business or merely stepped aside on paper.

Board members also noted the significant community support for Barracks Phoenix. The Melrose District neighborhood association, local business owners and dozens of residents submitted letters backing the project, describing it as an important LGBTQ+ gathering space that would breathe new life into a long-vacant building. Aside from Shoen's company, no other qualified protests were filed.

Eventually, in a 5-1-1 vote, the board approved the liquor license while requiring Moody to fully divest Murchison from Barracks Bar Phoenix Inc.

To satisfy that condition, Moody must complete the legal transfer or elimination of Murchison's ownership interest within 90 days and provide documentation showing Murchison no longer holds any financial, ownership or shareholder stake in the company.

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