state liquor stores

Alcohol Myths Persist Beyond Prohibition

by Michelle Minton on October 21, 2011 · 1 comment

in Features, Nanny State, Personal Liberty

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In a recent article for the Mackinac Center for Public Policy, I make the case that many elements of Prohibition did not fade away after the repeal of the 18th Amendment. In his October 13 opinion piece for The Detroit News, former police chief Jerry Oliver proves my point by digging up an old alcohol myth — one that was used to force Prohibition on the nation. In short, Mr. Oliver expresses the belief that producers of alcohol only seek to have customers consume as much alcohol as possible, thereby making it necessary for the government to intervene in the name of “moderation.”

Historically, it was unscrupulous alcohol producers selling directly to consumers or in cahoots with bars to sell only their products, sometimes at artificially low prices, that fostered an environment for abusive alcohol consumption. It was these excesses that helped trigger the Prohibition backlash.

…Today, most states require producers to sell to state-licensed distributors who in turn sell to local retailers. Exceptions abound where specific states allow direct-to-consumer shipments from wineries…

Critics of this time-tested approach argue the system is antiquated, citing its roots to the last days of Prohibition. That’s like arguing the Constitution is antiquated because it was written in the 1700s.

While Chief Jerry Oliver is correct that Prohibition was a backlash against Americans’ increasing alcohol use (or at least the perception of increasing use) there is no evidence that the system of direct sales or “unscrupulous” producers were the cause of increased consumption. His claim that “tied houses” (saloons owned or operated by alcohol producers) caused people to drink more is the same old myth used by the Temperance movement to push Prohibition on the country. However, we now have a large body of historical evidence that seems to debunk this presumption. Using cirrhosis of the liver as a proxy, historians have found that drinking sharply decreased in the decade preceding Prohibition — even though tied houses still abounded. While incidences of cirrhosis declined further at the start of Prohibition, they rose again toward its end.

This myth of “unscrupulous” producers has been used to maintain the mandatory three-tier system that forces alcohol producers, like brewers, to rely on a middlemen — wholesalers — to get their products into bars, restaurants, and stores. The only real reason not to shift to a voluntary system is to protect the profits of middlemen, who wield considerable political power. A voluntary distribution system would allow small producers to skip the middleman and cut costs, resulting in lower prices for consumers.

Alcohol Regulation Roundup: October 7, 2011

by Michelle Minton on October 7, 2011

in Features, Nanny State, Personal Liberty

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National:

A Supreme Court decision is being heralded as potentially liberating the advertising market for tobacco and alcohol as it expands first amendment protections on all types of commercial speech. Eugene Volokh analyzed the Sorrell v. IMS Health Inc. decision and it’s implications on whether or not commercial advertising may be generally restricted on the grounds that it might persuade people to do something that the government thinks is bad.

Also in National news, the neo-prohibitionist group “Alcohol Justice,” (formerly known as the Marin Institute) is taking aim at Facebook. The group claims that Diageo, makers of popular drinks such as Guinness, have struck a “youth oriented” advertising campaign with the social media site and they are demanding that the Federal Communications Commission step in.

Georgia: One of the last few states to overturn its statewide ban on Sunday sales will soon give each district a chance to vote on whether to keep the ban or open up Sunday liquor sales.  Georgian towns will vote on the referendum on November 8.

Massachusetts:  In September, Attorney General Martha Coakley announced approval for proposed ballot questions in the 2012 election, including a proposal to end the ban on grocery store beer and wine sales. Also approved were questions about legalizing medical marijuana and repealing the state’s health care law.

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State Losing Control of Pennsylvania Liquor

by Michelle Minton on September 12, 2011

in Deregulate to Stimulate, Economy, Nanny State, Odds & Ends, Personal Liberty

Privatizing Pennsylvania’s liquor stores has been a subject of debate for decades. Proposals in the past have been met with fear about the effects privatization would have on public safety and skepticism about the need for change. Most recently, Rep. Michael Turzai, Pennsylvania’s House majority leader, introduced a bill that would sell of state-owned liquor stores and provide more licenses for private businesses to retail liquor and wine and this time it looks like the proposal might have a chance.

The difference this time around is residents’ increasing frustration with the Pennsylvania Liquor Control Board’s draconian policies, and the growing body of evidence that privatized liquor sales would not adversely affect public safety. In fact, privatization would increase choices for residents and would actually bring more money into the state than the current government control system.

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Alcohol Regulation Roundup: Independence Day Edition

by Michelle Minton on July 5, 2011 · 4 comments

in Deregulate to Stimulate, Economy, Features, Nanny State, Personal Liberty

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Hopefully, this Independence Day weekend you liberated some nice libations from their containers. As Founding Father Ben Franklin said, “there can’t be good living where there is not good drinking.” If he’s right, then this week’s alcohol regulation roundup would probably bring a smile to old Ben’s mug — as the changes in most states’ alcohol laws mean that the quality of life in this country is clearly improving.

Alabama: At the end of May, the Alabama legislature approved the Craft Brewery Modernization Bill after much effort from the state-based beer rights group Free The Hops (FTH). Just last month, Governor Robert Bently signed the bill into law, allowing breweries to give visiting patrons a taste while they tour the brewery. Unfortunately, another bill that would have allowed residents to brew for at-home consumption without a license (illegal only in Alabama and Mississippi), failed to make it through the legislature.

Kansas:* When it comes to selling alcohol to patrons, convenience and grocery stores in Missouri are restricted to 3.2 percent ABV beer and wine coolers. Liquor stores may sell liquor and wine, but are banned from selling groceries. However, efforts to change the outdated laws are underway. Republican Senator Tim Owens has been pushing a bill that, if passed, would abolish both prohibitions, allowing grocery stores to sell full-strength beer and liquor and permitting liquor stores to sell grocery food items.

Maryland: Good and bad news for Maryland’s drinkers, as laws passed earlier in the year went into effect last week. Liquor taxes went up by 50 percent, with projected revenue increases of $85 million. On the positive side, the state’s new laws allowing direct shipping for wine also went into effect.

Michigan: A bill that would eliminate a 1.85 percent sales tax on distilled spirits is making its way through the Michigan legislature.

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VA Liquor Privatization Bought with Higher Taxes?

by Michelle Minton on September 8, 2010 · 1 comment

in Deregulate to Stimulate, Economy, Nanny State, Personal Liberty, Regulation

Free marketeers in the Commonwealth of Virginia waited with high hopes after Governor Bob McDonnell made the announcement that he planned to privatize state-run liquor stores in the state.

In the beginning, McDonnell’s rhetoric sounded good:

[I]t’s getting the government out of the business of alcohol distribution, which I don’t think it needs to be in. We’ve [sold] beer and wine [privately] for 70 years; we can certainly do distilled spirits” in the same way.

Unfortunately, it proved to be just that: rhetoric. It was pretty clear from the start that his ultimate motivation was the state budget’s bottom line. That fact was reinforced with the news that McDonnell’s privatization plan includes a bevy of new taxes on businesses:

4 percent tax on restaurants and bars… Included in the 4 percent is a 2.5 percent tax imposed solely on restaurants’ annual liquor receipts and a 1.5 percent tax imposed on restaurants and all stores that sell alcohol, including grocery stores…McDonnell’s proposal also includes other fees, including a $17.50-per-gallon excise tax and a 1 percent tax on gross receipts, both charged to wholesalers

While this increase in taxes speaks negatively toward McDonnell’s convictions, just as bad are his plans to limit the number of licenses available. Initially, Bob’s plan is to auction 1000 licenses to the highest bidders, but there’s no indication that more licenses will be available once those are all sold.

Licenses will be divided into three categories: big-box stores, such as grocery stores and Wal-Mart (600 licenses), package stores (150 licenses), and convenience stores and drug stores (250 licenses)

Though the committee was set to vote on the measure today, plans were postponed due to the fact that a completed proposal wasn’t made available to committee members.  It seems we’ll have to wait until November to see how far McDonnell strays from his supposed free market ideals.

Liquor store privatization on tap in WA

by Michelle Minton on June 25, 2010

in Nanny State, Odds & Ends, Personal Liberty, Regulation

In Washington state’s November election ballot will have a very interesting twist: dueling initiatives to privatize the state-run liquor stores: Washington Privatize State Liquor Stores Initiative 1100 and the Washington Revise State Liquor Laws Initiative 1105.

The first, initiative 1100 would:

direct the liquor control board to close all state liquor stores; terminate contracts with private stores selling liquor; and authorize the state to issue licenses that allow spirits (hard liquor) to be sold, distributed, and imported by private parties. It would repeal uniform pricing and certain other requirements governing business operations for distributors and producers of beer and wine. Stores that held contracts to sell spirits could convert to liquor retailer licenses.

On June 23rd supporters of the initiative delivered boxes to election officials containing almost 400,000 signed petitions far more than the required 241,000 to qualify it for a ballot vote in November. If it passes, state stores would be abolished and retailers already licensed to sell beer and wine could begin selling liquor as well. Best of all, the state pricing regime, which includes bans against volume discounts would be repealed and retailers could buy directly from manufacturers–cutting out the middleman of distributors. Not surprisingly, Costco has been one of the initiative’s biggest supporters.

Issaquah-based Costco Wholesale Corp. has contributed about $735,000 to the campaign, along with roughly $107,000 in other donated assistance – including the use of staff to collect petition signatures in its stores.

Costco has unsuccessfully fought the state’s existing liquor system for years, both in the Legislature and the federal courts. If I-1100 passes, the retailer would be able to apply its considerable buying power and supply system to selling hard liquor, as it does in other states with different liquor laws.

But there is another initiative that might be on the ballot in November, too. Though the  Washington Revise State Liquor Laws, Initiative 1105 doesn’t yet qualify to be on the ballot, supporters are confident that they’ll get the necessary petitions. Like 1100, 1105 would close all of the government run liquor stores and give the state the ability to issue licenses to private sellers. However, this bill would continue to protect distributors (aka “the middle man”) and retain price controls, preventing volume discounts. The biggest financial supporter for this initiative is, unsurprisingly, distributors who need government to protect their industry. Apparently, unless government forces all retailers to buy their goods from distributors, distributors fear that they’ll have nothing to offer the in the open market.

We will just have to wait and see how the good people of Washington State feel about this come November.

Privatization in VA: Not as easy as ABC

by Michelle Minton on February 12, 2010 · 2 comments

in Nanny State, Odds & Ends, Personal Liberty, Regulation

As I wrote back in November at the Objective Standard’s blog (my colleague Ivan Osorio also wrote about the topic here), Virginia’s new governor Bob McDonnell showed a very promising inclination toward free markets and privatization, though his rhetoric on the subject may have left something to be desired. Specifically, he floated the idea of privatizing the 300+ state-run liquor stores in order to pay for his transportation plan. Regardless of his stated or actual motivation, the end result could have been the long-awaited liberalization of alcohol sales in the state.
The bill SB 443 introduced by state Senator Mark Obenshain (R-Harrisonburg) would auction off the existing licenses in a public auction (with pre-qualified bidders), sell all the real property and allow for the issuance of liquor retail licenses in the amount of 1 per ever 10,000 residents.

On the surface this seems like a definite step toward market freedom.

Unfortunately, Obenshain put the bill on the shelf this week, withdrawing it from the senate Finance committee. Obenshain said he wanted to give the governor more time to consider the bill. On the bright side Obenshain seems committed to the issues and plans to reintroduce a modified version in the special session that may occur later this year or in the following session.  According to the Senator:

“Divesting Virginia’s ABC stores is a win-win situation…Privatization offers consumers the benefits of competition: more convenient hours, wider selection, lower prices, and innovation, just to name a few. It does away with the more than $120 million the government spends each year on administrative costs while creating new revenue streams by auctioning off wholesale and retail licenses. And it gets the state out of something in which it never had any business getting involved.”

Picture via www.usbeerrunners.com

Virginia May Privatize ABC Stores; It’s about Time

by Ivan Osorio on November 6, 2009

in Deregulate to Stimulate, Economy, Nanny State, Regulation

In a time when the federal government’s involvement in the economy appears to only grow, it’s encouraging to see at least one industry where the trend may soon move in the opposite direction, even if at the state level. Virginia Governor-elect Bob McDonnell has proposed priviatizing the state’s liquor stores — known as ABC stores, for Alcoholic Beverage Control.

As Garrett Peck, author of The Prohibition Hangover, notes in The Washington Post, this is long overdue. (The op ed is due to appear in the Post‘s Sunday edition, but it’s already online.) The ABC system, which several states adopted after the end of Prohibition in 1934, is today an anacrhonism that doesn’t even work very well.

ABC was once about promoting temperance, but the abstinence movement has basically died. Two-thirds of American adults drink alcohol. In reality, Virginia ABC is now about generating revenue for the state — and at that, it isn’t particularly efficient. Virginia can make more money — as can localities — by privatizing the system, both from auctioning the licenses and through ongoing tax revenue. The private sector will assume the operating costs, shifting ABC authority to where it properly belongs — regulation and enforcement.

And then there are the consumer implications.

Virginia’s ABC stores are a tower of mediocrity. They are centrally managed retail outlets that would have been palaces in the Soviet Union, but today they are anachronistic. They offer highly limited choices, often lacking exciting new brands or those with a cult following. Staff members generally aren’t knowledgeable about how to mix drinks or make cocktails. And the prices are artificially high because there is no competition: The state decides what to charge.

For more on The Prohibition Hangover, see here.