The North Carolina Liquor Control Board recently banned Utah-based beer company – polygamy porters – for sale, citing that the brand is “inappropriate.” Despite the absurdity of the decision, the problem runs much deeper. Across the nation, states have maintained alcohol monopolies which have prohibited businesses from flourishing. Instead of perpetuating monopoly controls on an entire industry, privatization would make state economies thrive while supporting consumers and businesses alike.
North Carolina is not alone in showing the overreaching power of liquor control boards. In 2011, Ontario province in Canada banned Crystal Skull Vodka while Utah had for years its infamous “Zion Curtain” law. While seemingly trivial cases, these decisions can add a lot of costs to businesses.
Joel LaSalle, owner of bar in Utah, told NPR that the “Over the last two years, [the Zion Curtain] probably cost us $350,000 in sales.” Similarly, in Montgomery County, Maryland, where alcohol control has long been established, restaurant owner Jackie Greenbaum said, “I’ve suffered for 12 long years under the current system and have vowed that I would never open another restaurant in Montgomery County.” Clearly these controls are not in the best interest of small businesses.
Additionally, alcohol monopolies don’t always deliver on the intended effects. For instance, while alcohol control has lowered liquor consumption in North Carolina, it has, in turn, caused people to shift to similar beverages – namely beer and wine – to compensate. Similarly, Virginia shares high levels of wine consumption for an alcohol control state. Simply put, control impositions can become counterintuitive, making the laws largely ineffective.
Monopolies also place a financial burden on consumers. Alcohol monopolies, like any monopoly, increase prices due to lack of competition. A 2014 study found that alcohol in privatized states was $2.03 cheaper on average compared to alcohol controlled states. However, these prices are not felt equally across the board. As shown in soda price increases, low-income households experience a larger brunt of the costs due to alcohol monopolies, compared to high-income households that can easily weather such increases.
Even something as simple as ending Sunday afternoon alcohol sales in the small County of Shelby, Alabama can have enormous effects. Research indicates the change would create $11 million dollars in output and 171 jobs all while generating an additional $1 million in tax revenue. One can only imagine the implications if applied to an entire state.
However, some are worried that privatizing alcohol would make state governments lose revenue. It’s a philosophically hard argument to make the case that the government needs to collect money through monopoly power. On economic grounds alone, it doesn’t seem to pan out. The Program Evaluation Division shows, if North Carolina chose the privatization route, the revenue stream would be the same if replaced with a 12 percent excise tax on alcohol. Under these plans, revenue would remain the same while encouraging job creation.
As the nation continues to grapple with alcohol monopolies, there lies a necessary fundamental change. Businesses find themselves in perpetual threat that their product might be pulled from the shelves because control boards don’t approve of their product. State economies are hindered from fewer jobs and businesses. Finally, consumers are hit the hardest with higher prices and limited options. Even though it’s been 100 years since the prohibition, it seems that the spirit of prohibition remains well alive.