It’s uncanny that in 2009, North Carolina still follows the same system of alcohol regulation that was established following the repeal of prohibition in the 1930s. It still has local Alcoholic Beverage Control operations that dictate prices, determine ABC store locations, pick which brands are available for purchase and administer the sale of liquor in their counties or municipalities. It’s a disjointed system — 158 separate local boards govern their own district independent of each other as long as they operate loosely within some state guidelines. North Carolina’s ABC system is an incredibly inefficient relic of a bygone era that hurts businesses in North Carolina and needs to go.
With a government monopoly comes higher prices. Anyone who grew up near the South Carolina border can tell you that the price of liquor is cheaper across the border than it is here in North Carolina. This harms the consumer and might as well be another hidden tax in the form of higher prices to the citizens of North Carolina.
Restaurants receive a large portion of their revenue from alcohol sales rather than the sale of food — hence the reason that there are rarely any chain or particularly upscale restaurants in areas where liquor sales aren’t allowed by local ABC regulations. On top of the regulations, licensing fees and typically higher prices for liquor, ABC boards require that restaurants and bars receive at least 30 percent of their revenues from food, creating another burden for establishments that are attempting to operate as bars.
ABC Stores contribute $250 million in tax revenue to the state. It’s a cash cow for the state and local governments. Regardless of the profits through taxes and revenues, the system’s inefficiencies cannot be ignored. Of the 158 local ABC Boards, most of them oversee only one store and many of the stores do not make a profit.
Rural stores, where there is little demand, see a limited choice of products and struggle with lost revenue year in and year out. This is where true market forces could correct a government problem. When stores became unprofitable they would close and when populations created a demand for a product, stores would be built and opened. Politics, as unquantifiable as it is, certainly comes into play when it comes to opening and closing stores. Local boards typically have not been willing to adjust their operations when sales in their county have declined.
Government control of alcohol sales is no longer necessary to prevent alcohol abuse and is no more than another revenue stream for the legislature. We’re one of 19 states that still have government monopolies over liquor sales. ABC Boards and the bureaucrats who oversee their operations have become entrenched in a system that’s inefficient and needs to be replaced.
North Carolina needs to privatize alcohol sales, albeit with regulation to ensure that there is no abuse. The state allows private business to sell beer and wine with special taxes and regulations; why can’t liquor be sold in the same manner?
Privatization will result in more efficient investment by private owners that can better serve particular locations and allow the government to focus its time and revenues on more important and pertinent issues.
