Yesterday, the Virginia Retail Federation (the advocacy arm of the Retail Alliance and the Retail Merchants Association) came out in support of privatizing liquor sales throughout the Commonwealth of Virginia. They did, however, have one condition for their support: make it easier for small and independent retailers to obtain licenses by increasing availability and reducing the minimum bids on the initial license auction.
As I have written in the past, Virginia is one of only 18 states to retain it’s monopoly on liquor sales after prohibition. The current proposal would shut down the state’s 332 liquor stores and auction off 1,000 licenses to businesses around the state (most of which already sell wine and beer) and use the money for Virginia’s transportation projects (the revenue generated from the initial sale of licenses and taxes is disputed, but it’s somewhere in the neighborhood of $400 million).
The current proposal for privatization of Virginia liquor sales:
1,000 Retail Licenses up for Auction
600 Tier 1 licenses (i.e. grocery stores) cost= min. bid + $2,000/year
150 Tier 2 licenses (i.e. specialty stores) cost = min. bid + $1,000/year
250 Tier 3 licenses (i.e. convenience stores) cost = the min. bid + $500/year
Wholesaler Fees: Licensing fee= 2.5x profits of spirits lines to be distributed
Excise Tax: $17.50 per gallon
Some statistics about Virginia liquor sales versus the rest of the country:
Outlet Density in Virginia: Density of liquor store outlets in Virginia is 0.6 per 10,000 adults
Outlet Density in the U.S.: Density in the U.S. on average is 3.2 per 10,000 adults
Sales in Virginia: Liquor sales rate is 1.62 gallons per adult
Sales in the U.S.: 2.04 gallons per adult
Sales in D.C.: 4.46 gallons per adult
Excise Tax on Liquor in MD/D.C.: $1.570 per gallon
Excise Tax on Liquor in Virginia: $20.13 per gallon
Though there are concerns that selling the state’s profitable liquor sales “business” will result in an net revenue drop for Virginia, it is unlikely that this will be the case (considering the number of residents who will repatriate liquor stores, restaurants, and bars in Virginia). Regardless of the final numbers, the state needs to get out of the business of selling booze and back to its proper role of serving citizens. Even if the revenue generated from the sell-off of licenses is only enough to widen Route 1 it will still result in tangible benefits for residents, unlike the archaic state-controlled liquor sales that provide absolutely zero value and, in fact, hinder life and business in the Commonwealth of Virginia.