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 Putting Lipstick on the ABC Pig
by Tom Campbell
March 2, 2010
A growing number are concluding that North Carolina’s ABC system is antiquated, poorly regulated and yields poor returns to local and state governments. What began as a reform effort is now gaining momentum for outright privatization, but a recent proposal falls far short of being a sensible solution.
If asked to design from scratch a model to tax and control distribution of alcohol, few would come up with North Carolina’s current ABC system. It was, after lengthy debate, designed following the repeal of prohibition. Our state, like others, had the choice between two approaches: control or licensing of liquor sales. We chose control and built a system to appease local governments, groups fearful of rampant abuse and those insisting upon state oversight. Recent news reports about overpaid executives, construction cost overruns, negligent oversight and generous perks to local ABC boards provide proof this system is broken. Additionally, few local boards make acceptable profits from their exclusive sale of liquor. As Representative Pryor Gibson said, “The ABC system in NC is much like a great big old onion. The more you peel, the more layers you get and the more you cry."
A growing number favor privatization, but it is becoming clear this means different things to different people. Governor Perdue, in a letter to legislators, appears to be advocating selling a concession to one or more private entities. The state ABC board has requested an evaluation to see what the property and distribution network is worth, causing some to speculate if the current system might be sold intact. Perdue is clear that she wants North Carolina to remain a “control” state. This is not privatization. It isn’t even genuine reform.
North Carolina currently has in place an effective system for distribution and control of beverages that would work well with liquor, the system employed in the sale of beer and wine. This could be modified to be a good business model for the privatization of alcohol. Any loss of current revenues to local governments could easily be addressed and fixed, as could other desired regulations.
Advantages to true privatization clearly outweigh disadvantages. Those worried about liquor stores popping up in drug stores and supermarkets have obviously not been in either of late. The amount of space devoted to wine and beer has increased dramatically. The folks expressing fear that alcohol abuses would increase as a result of privatization are the same ones who feared liquor by the drink. Those fears were exaggerated then and would be with privatization. The debate over whether or not to sell liquor is over. The present debate is over how to license, regulate and tax liquor sales. Privatization would extricate state and local governments from the real estate business. The sale of ABC stores would assuredly provide needed income. Liquor prices to consumers would likely decrease. The proposition of getting our state out of a business we have no business being in, reducing the size and cost of government while almost guaranteeing increased tax revenues to government is as commonsense as…well, ABC.
If true reform of the ABC System is called for, and we think it is, let us not close avenues that stand a chance to maximize results. Merely selling a concession or leasing our current system does little more than putting lipstick on a pig. Aside from fresh cosmetics, there would be no real change where change is badly needed.
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