Privatizing state liquor a bad business deal
The privateer’s opening salvo at the PLCB – “Pennsylvania must join the other 48 states in privatizing this antiquated relic of prohibition .” – is devoid of both historical accuracy and contemporary relevance.
The 21st amendment, ratified in 1933, simply ended federal regulation of the liquor business. Thirty-three states deferred to local municipalities, where there are “dry” counties today.
They never had a state system to privatize. Seventeen states opted to stay in the liquor business, with only a few adjustments since. Based on these adjustments, we see there is no cash windfall.
West Virginia and Iowa sold their retail in 1986 and 1987, earning less than $20 million each. Maine signed a 10-year lease for its wholesale in 2004 for an advance payment of $125 million, and estimates losses of at least $100 million to date.
Only Washington fully privatized a state system. That was in 2012. They earned a one-time payment of $181 million, on an annual cash flow of $459 million in 2011, which was very near the size of Pennsylvania’s.
Prices increased 9 percent, selection dropped in the majority of new locations, border bleed ruptured into Oregon and Idaho.
The PLCB’s record-earnings year in 2012 is typical of public control states.
In the July/August 2013 issue of “State Ways, the Beverage Alcohol Merchandising Magazine for Control States, National Alcohol Beverage Control Association Board Chairman J. Neal Insley reports that since 2008 “control systems outpace private retailers in sales increases and revenue generation while ameliorating alcohol abuse, according to most peer-reviewed scientific studies.”
To the privateer’s castigation of Utah and Pennsylvania – they each control the entire liquor bailiwick – which makes Pennsylvania, at least, a happening state, for both the taxpayer and alcohol consumer.