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 Put a Cork in North Carolina’s Alcohol Beverage Control System
by Tom Campbell
April 3, 2008
It is time for North Carolina to get out of the alcohol business. Our Alcoholic Beverage Control system is antiquated, inefficient, and monopolistic. It may even be unconstitutional.
When Prohibition ended in 1933 the states were basically given the task of controlling alcohol. North Carolina had lengthy debates about whether it would be best to license those who sold liquor or have a state-run monopoly. The current ABC system was put in place in 1937, allowing for the creation of local ABC boards to open stores to sell alcohol.
70 years after the creation of this system we have 156 local ABC boards operating 400 ABC stores in our state. Two-thirds of those boards operate only one store. In 2005-06 these stores generated 0 million in sales, yielding 4 million in tax revenues to the state and almost million to local governments. Mark Johnson of The Charlotte Observer found that many of these stores make little or no profit. Nearly twenty percent did not return a single dollar to their communities.
Why aren’t these stores making money? It certainly isn’t because competition is selling alcohol at lower prices. Our ABC stores have a total monopoly. More likely the problem is too much bureaucracy, too much overhead and poor management. A cursory review would suggest we don’t need 156 local ABC boards for the 100 counties in our State. Neither should there be stores that don’t generate profits.
There may have been some legitimate reasons in 1937 for choosing a state-run system, but few if any exist today. North Carolina is one of only 18 states to continue a monopolistic model. We should dismantle this system in favor of a state licensing form of control.
Some might argue that eliminating state controls would result in more alcohol use and abuse. Many of these same voices predicted our citizens would become raging alcoholics if we allowed liquor by the drink but it hasn’t happened. Ours is not a treatise about the merits or evils of demon rum, rather it is a discussion about how to optimize the revenues to state and local governments from the warehousing, sales and distribution of alcohol. We have yet to hear any claims that alcohol problems are any more or less in our state than those which allow a system of licensing.
There are many endeavors in which government can and should involve itself on behalf of its citizens, but evidence is overwhelming that our ABC system does not fall in that category. Our system of licensing and controlling outlets that can sell and serve beer and wine isn’t perfect but functions well. We should do the same with alcohol. Such a change would instantly increase the taxes and revenues received by state and local governments because we would concurrently reduce the costs of buildings, staffing, and administration associated with our current system.
Let us allocate government resources on things which government can do best. Being in the alcohol business isn’t one of them.
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