Privatizing liquor sales is wrong for North Carolina

Posted 5/7/19

House Bill 971 was recently filed in the North Carolina House of Representatives. This bill would privatize the current Alcoholic Beverage Control system in North Carolina, allowing for liquor to be …

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Privatizing liquor sales is wrong for North Carolina

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House Bill 971 was recently filed in the North Carolina House of Representatives. This bill would privatize the current Alcoholic Beverage Control system in North Carolina, allowing for liquor to be sold in grocery stores, convenience stores, pharmacies or any retail business. In addition, this bill would authorize liquor to be sold between the hours of 7 p.m. and 2 a.m.

While some may say that alcohol is alcohol is alcohol; I say that couldn’t be farther from the truth. Spirituous liquor is a unique commodity in that its alcohol content is considerably more than beer and wine; therefore, liquor should be controlled differently than beer and wine. One shot (1 ½ ounce) of liquor is equal to one glass of wine (5 oz.) and one can of beer (12 oz.).

There’s a simple reason our ABC system exists today; it addresses the sale and distribution of spirituous liquor while simultaneously addressing public health and revenue objectives.

It is a core function of government to protect the safety, health and welfare of its citizens, and state and local governments are better suited to do this than the private sector. The Centers for Disease Control and Prevention recommended against the privatization of government-run alcohol sales after a review of existing evidence. Less control means more off-premise liquor outlets per capita. In the seven states surrounding and including North Carolina, three are control states and four are license states. There are three times as many outlets per capita in those license states than in those control states.

The terrible effect of higher outlet density is clear. Higher outlet density leads to increased underage drinking, increased alcohol-related injury crashes, higher levels of alcoholism and violence, increased physical assaults and higher murder rates. The N.C. Department of Health and Human Services states that excessive alcohol use is the third leading preventable cause of death in North Carolina. In addition, 27% of high school students report current alcohol use and 50% of those report binge drinking. DHHS also notes that excessive alcohol use cost North Carolina $7 billion in 2010. DHHS recommends some strategies to reduce excessive drinking, including supporting and maintaining a control system as well as regulating alcohol outlet density.

Compare North Carolina with all 50 states and you will see that our state ranks 44th-lowest in consumption per capita and seventh-highest in revenue per capita. Our Carolina neighbor to the south, a license state, ranks 27th in consumption and 38th in revenue. In a private system, these private retailers would seek decreased taxation of liquor and greater consumption. Our proven system works and accomplishes both public health and revenue objectives.

North Carolina is unique among other control states in that local ABC boards are established by local elections and liquor profits are distributed to their local governments, thereby reducing the need to increase costs of services to the local taxpayers (e.g. increased property taxes). No state or local government funds are used to sell or distribute liquor in North Carolina. Actually, the state receives money from the sale of liquor through excise taxes, mixed beverage taxes and sales taxes. In fact, the N.C. ABC Commission, which regulates all alcohol (including beer and wine), is 100% funded by local ABC boards (no tax money used).

Local ABC boards are self-sustaining and funded through their sales revenue; in other words, our customers fund local and state ABC operations. The more than 2,870 local ABC board employees across North Carolina are exactly that, employed by the local board and not the state. Local ABC boards distribute money for alcohol/substance abuse education, prevention and treatment as well as local law enforcement. This money stays in their local communities. During fiscal year 2018, local ABC boards distributed $80 million to local counties and cities where alcohol sales are allowed; the state’s general fund received $323 million; funding for local alcohol education/treatment was $13 million; county rehabilitation services received $5 million; and local law enforcement received $8.8 million. Again, tax money is not used to support the ABC system in North Carolina.

The Program Evaluation Division, a nonpartisan unit of the General Assembly, recently released its latest report on the ABC system and did not recommend privatization. A previous PED report released in 2008 also did not recommend privatization. Both reports, however, recommended some good changes to improve our system.

The last state to implement privatization was Washington State in 2011. Since that time, the number of liquor outlets increased from 328 to more than 1,400 and the hours of sale per week went from 73 to 140. Consumers have also seen higher prices and lower selection as a result. In addition, Washington State only received $30.75 million from auctioning off the rights to apply for liquor permits.

If this bill were to become law, it would mean a minimum of 1,500 businesses would be able to sell hard liquor throughout North Carolina. An increase in the number of locations selling alcohol affords youth with many more opportunities to obtain and consume liquor. These businesses would be less concerned with keeping liquor from our children and more concerned with making a profit. Local ABC boards practice responsible sales by refusing to sell to minors. Many local boards have a zero-tolerance policy regarding sales to minors and employees are terminated for negligent violations of this policy.

Regardless of your political affiliation, supporting our current ABC system is the right thing to do. Former Democratic Gov. Beverly Perdue said in 2011, “I don’t want to be the governor who has to hold my granddaughter’s hand as we walk past the liquor bottles on our way to the toy aisle in Walmart, or toward the cereal in Food Lion.” Perdue added “That isn’t North Carolina. That isn’t who we are or what we want to become.”

Former Republican lieutenant governor and past ABC Commission Chairman Jim Gardner said “Privatization does not make fiscal sense, nor does it make public health sense. In the end, it comes down to a philosophical question: Should the government be in the business of selling liquor? There is no stauncher Republican than I am. There is no one more pro-business than myself. And there is no one more convinced than myself that continuing the Alcohol Beverage Control system in North Carolina is the right thing for this state and particularly for the children of this state.”

Privatization of liquor will lead to many adverse effects and the following organizations support keeping the ABC System in place: Christian Action League; N.C. Family Policy Council; N.C. Association of Chiefs of Police; N.C. Police Benevolent Association; North Carolina State Lodge - Fraternal Order of Police; Mothers Against Drunk Driving; N.C. Association of Local Health Directors; N.C. Public Health Association; National Association of Social Workers - North Carolina Chapter; N.C. Society for Clinical Social Work; North Carolina Association of Campus Law Enforcement Administrators; N.C. Substance Abuse Prevention Providers Association; N.C. Substance Use Disorder Federation; Addiction Professionals of North Carolina; N.C. Alcohol Policy Alliance; Alcohol/Drug Council of North Carolina; Recovery Communities of North Carolina; N.C. Association of ABC Boards and N.C. ABC Law Enforcement Officers Association.

Alcohol is the most commonly used addictive substance in the United States and is a gateway to other illicit drugs. Alcohol is no ordinary commodity and liquor is the strongest type. The “C” in ABC stands for control. Taking the control away by privatizing liquor sales will do nothing more than increase consumption and decrease profits to our citizens. Greater consumption means more harm and higher costs to society in the form of underage drinking, increased alcohol-related injury crashes, higher levels of alcoholism and violence, increased physical assaults and higher murder rates.

Privatization of our ABC system does not make fiscal sense and it does not make public health sense!

Larry Etheridge


The writer is general manager of the Wilson County Alcoholic Beverage Control Board.