Popping the cork on archaic alcohol regulations

by Tom Campbell, Executive Producer and Moderator, NC SPIN, April 30, 2015.

When North Carolina “popped the cork” on the alcohol limit in beers sold in our state we saw an immediate increase in diversity and choices, with an explosion of some 140 breweries. We became the Brew-capital of the South but this law, as well as our entire system of laws involving alcohol, needs revising.

Current legislation limits a local brewery from distributing more than 25,000 barrels of its own product per year, a measure that protects beer distributors but inhibits growth from homegrown breweries. Easing that self-distribution cap to 100,000 or more barrels would encourage this growing industry and result in more jobs. Our wine industry is also growing rapidly and regulations for wineries need relaxation.

North Carolina needs to review and reform of our laws regarding alcohol from top to bottom. We junked our ‘37 Chevy years ago but continue to drive our archaic 1937 ABC system, devised shortly after the end of prohibition. It is inefficiently managed, inhibits competition, has too many public employees and doesn’t generate nearly enough tax revenues. We need 21^st Century reforms that privatize our licensing, control and sale of alcohol.

Opponents to privatization cite three reasons to keep our current system. At the heart of their opposition is the loss of power and control of money by local boards. The 163 local ABC boards in our 100 counties determine salaries paid to executives and employees. Some receive more compensation than our Governor, our family doctor and infinity more than teachers. News reports have documented poor management and lavish entertainment by liquor companies for board members, but the most damning evidence is that far too many report little or no profit at the end of the year, despite having a monopoly that allows as much as a 40 percent markup on each bottle.

Others oppose privatization on moral grounds, fearing we will see liquor stores popping up on every corner, every Laundromat and juke joint. They warn that free flowing demon run will be the ruination of this state, but that dog won’t hunt. We lost the moral high ground, if we ever had it, in 2005, by starting the state lottery.

The final argument is that the state provides the liquor warehouses and can control what products are sold; privatization would require more people to license and inspect wholesalers and retailers who sell the product. If our state oversight is so valuable and effective why not require the same for beer and wine, tobacco or even prescription drugs?

Our state collects $343 million in sales tax revenues from the sale of alcohol. Both the state and counties should be able to easily double that amount through properly conceived and regulated privatization.

More outlets, efficiently licensed and regulated, would certainly increase sales even if we left the current tax rate the same. Privatization would get the state out of the alcohol business, stimulate private sector businesses and create jobs. It would also eliminate public employees from our payrolls, health and retirement systems and the sale of current ABC stores could provide money to repair and maintain other public infrastructure.

Instead of some of the subjects our lawmakers are considering the reform of our alcohol sale and distribution system would be considerably more valuable and rewarding.