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It’s time to privatize state liquor stores


Of America’s 50 states, 18 are control or monopoly (as of 2005), meaning that their citizens can buy alcoholic beverages, including wine, only in state-owned stores. This is a result of the Repeal of Prohibition, when Congress decided on a states-rights approach, as opposed to a national policy, for governing the sale of alcohol.

The system of state monopoly stores has never worked well, depriving consumers of choice and, in many instances, resulting in drab, poorly run venues. It’s odd, too, that so many monopoly states are solid Republican, given that party’s traditional defense of free markets and suspicion of Big Government. For many complicated reasons (not the least of which is that the public hasn’t clamored for an end to monopoly control), changing the system was never high on anyone’s agenda.

That has now changed, for a simple reason: The economy. Nearly every state in the union is bankrupt or close to it. Governors and state legislatures are desperately seeking new sources of revenue. Loathe to raise income taxes, they’re looking at “creative financing,” such as fee and license hikes. Some officials in control states also are thinking what once was the unthinkable: privatizing alcohol sales.

In Washington State, lawmakers have introduced a bill “that would have Washington get completely out of the liquor business, allowing an unlimited number of people to buy licenses to sell liquor, as is done in California.” The idea is that, by selling the state’s warehousing facilities, and by allowing the market to determine prices, Washington could nearly double the $320 million alcoholic beverages brings in annually.

Down in Mississippi, which is suffering from its worst budget crisis since the Great Depression, Republican Gov. Haley Barbour has called for legislation “to privatize the wine-sale functions” of the state’s Alcohol Control Division. In Vermont, a state Senator has introduced a bill “to disband the department of liquor control.” In Virginia, “Bob McDonnell, Virginia’s new Republican governor, made privatization of his state’s liquor stores a key plank of his campaign last year,according to the Wall Street Journal, which also reports that McDonnell’s idea “is opposed by the Virginia Assembly of Independent Baptists.” And in neighboring North Carolina, the state’s Republican candidate for Governor, Pat McCrory, similarly “said it’s time for North Carolina to get out of the liquor business.”

Sounds like a road to Damascus moment for Repubs. One of the reasons opponents are against this entirely rational, self-interested plan to privatize alcohol sales is that minors would supposedly have easier access to liquor. If you think about it, that’s a bogus argument. It presupposes that a state store employee is less likely to sell liquor to a minor, and that a private store employee is more likely to. It seems to me the chances are about equal in both cases, and incapable of resolving further.

It’s time for America to do away with state-run liquor stores. I mean, where are we, the U.S. or Syria? It would harm no one, and will help financially embattled states raise a little extra cash. I am calling on all politicians in control states to put their money where their mouths are. Are you in favor of market-based capitalism, or of the heavy, controlling hand of government?

  1. Not going to happen in PA, Clerks union is too strong as wellas $500million being sent to the state coffers from 6% sales tax, 18% liquor tax and profits.

  2. Wouldn’t the state(s) still receive their tax revenue? I don’t see how privatizing would change that at all… and one assumes that these stores would still need clerks…

  3. Kelly, I think they believe tax revenues would go up because there would be more places to buy wine, hence greater sales.

  4. Justin McInerny says:

    Don’t want to vent too much but you have hit close to home. Montgomery County, Maryland is also a control jurisdiction. The rest of Maryland is not, except for another tiny county on the Eastern Shore. Montgomery County is one of the wealthiest, best educated places in the US and its population is larger than Vermont’s by 300,000. The county is right next to DC and Northern VA both of which have some good to great wine stores and restaurants with terrific wine lists. In short, good wine is in high demand here and people can afford to pay for it. Unfortunately, every drop of alcohol that gets sold in the county has to be bought from the county, plus there are limits on how much you can bring into the county for personal use. There is no practical way you can legally self cater a wedding, New Year’s party etc. unless you buy from the county. This is because you would be importing too much alcohol. This is enforced. County police will observe people loading cars on the DC side of the line.

    For a wholesaler to sell wine in the county that’s not stocked by the county there is an automatic 25% mark up from the wholesaler to the retailer. In other words, I sell something for $10.00 a bottle in DC to a shop. This same bottle in a shop in Montgomery County Maryland – two blocks away, has to be sold to the county at $10.00 per bottle then resold to the shop at $12.50. Plus I can only change prices in the first five days of the month – for the following month. There are a lot of other details that I won’t rant about, such as the way the product is handled in a non air conditioned ware house in August. But to put it simply and politely – it’s a frustrating situation that is unlikely to change. I am confident that the county would make more money by privatizing but there is no real hue and cry from the populace. People who care about wine either pay the premium or just go to DC, VA or neighboring counties. People who don’t care about wine just buy whatever is in stock at the county. Same is true for craft beers of course but that’s for other spots in the blogosphere.

    Thanks for letting me get on my soap box.

  5. “I am calling on all politicians in control states to put their money where their mouths are. Are you in favor of market-based capitalism, or of the heavy, controlling hand of government?”

    Careful Steve, your call and sentiment could spread to the hallowed halls of Health Care, the Post Office, Social Security, all manner of Welfare and even Marijuana legalization. By golly, I am proud of you.

  6. Ray, I occasionally enjoy turning Repub logic back on them.

  7. Ah – Americans. This is all a religious based issue – NOTHING else. Oh and there is a rumor that we are to have separation of church and state in America. Not!

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