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Private vs. Public Liquor Sales
Washingtonians will consider two ballot measures this November which would privatize liquor sales in the state. Like Oregon, Washington's state government controls liquor sales. Hard liquor is sold only in state-owned or state-contracted stores. The state regulates the price of spirits as well as the hours stores can be open and what other products they can carry. One of the proposed initiatives in Washington (I-1100 pdf) would privatize the sale, distribution and importing of hard liquor. The other (I-1105 pdf) would privatize retail sales but maintain state laws governing distributors. I-1100 is backed largely by Costco, a retailer which would directly benefit from privatization that would allow them to bypass distributors. Liquor distributors are backing I-1105.
If Washington voters pass either of the two ballot initiatives, Oregon will be the only state on the west coast with government-controlled liquor sales. (California was not one of the many states that got into liquor sales after prohibition.) Political junkies predict that Oregon could be the next state to privatize booze. It's already been an issue in this year's gubernatorial campaign. Candidates Chris Dudley and John Kitzhaber have expressed opposing views on privatization as part of their approach to the state budget.
Do you own a liquor store? How would privatization affect you? Does it matter to you whether the state controls the price of your booze?
Tagged as: alcohol · initiative · liquor sales · washington
Photo credit: im.no.hero / Creative Commons
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The whole idea seems silly when you think about it. Speaking of silly, maybe we can finally get rid of Oregon's ban on pumping your own gas too? Oregon and New Jersey are the only two states that ban-self service. -- Bluewater42 — Mon Sept. 13th 5:30p.m.
Yes, apparently we who live in Oregon and New Jersey are the ONLY PEOPLE who live in all of North America who are not, in the judgement of our respective legislatures, sufficiently intelligent to pump our own gas. (Really and truly, it doesn't take a lot of brains to do, since the nozzles have an automatic shut-off.)
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The gas pumping thing has nothing to do with the customer; its in place to impact unemployment. Can you imagine how high the unemployment rate would be if all the people pumping gas were suddenly out of a job? As Penny points out, it doesn't take a lot of brains, so its an easy way to create guaranteed jobs.
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Thanks for your comments. We may take up the subject of pumping your own gas on a future show (and you're welcome to suggest it here: http://www.opb.org/thinkoutloud/blog/suggest-show/)
If you have more to say on the subject of liquor sales, please don't be shy!
- Julie Sabatier, "Think Out Loud" producer
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After living in Hawaii and California which both sell alcohol at grocery stores I wondered why that couldnt be done in Oregon. If sold in stores instead of liquor stores much overhead could be eliminated without revenue loss for the state. The taxes would be collected by the distributors and their would be competition in the market which could benefit the consumer. this seems to work well in CA and HI why not here. I looked up the OLCC charter which was written in the 30s and its purpose is some vague statement regarding supporting the Moral turpitude of the state, give me a break, we have medical marijuana, doctor assisted suicide and state sponsored gambling where are we promoting "moral turpitude"? its time to drastically cut back a state agency which provides little benefit to the people of Oregon.
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I think the OLCC should be banned. I have always been a responsible drinker and so have my friends but the OLCC has just been a royal pain in the butt. Some examples: 1) two friends were visiting from Europe and following what their tour guide book said for America they left their Passports in their hotel for safe keeping, one even had a drivers license from the mid-west. The server at a local restaurant would not serve us alcohol because they did not have their passports for ID to prove they were older than 21 (they were both 30). The server stated that the OLCC only accepts a passport as proof of age for foreigners. I was amazed that the OLCC was so full of them that they would not accept national ID cards as proof of age. The national ID cards are valid in 12 EU countries but not in Oregon. 2) They can not keep their warehouses stocked with common liquors. I was once looking for an obscure vodka and one liquor store used to have it and the store owner told me they were at the mercy of the OLCC. He then proceeded to tell me the OLCC regular screws up and can not provide reasonable supplies. He specifically noted that in the last two years there was a month when no on in the State of Oregon could get Smirnoff vodka for 1 month because of the OLCC incompetence. 3) The OLCC has inconsistent rules on how late minors can stay with family at local pubs or other establishments. I have been with friends and their kids at one pub and we were asked to leave at 8 pm, another 8:30 pm and yet another 9 pm. We should have a rule where kids under a certain age (10 maybe) can be with their parents at a pub until later in the evening. I have heard from many people that the OLCC is accountable to no one and I tend to agree. I find it amazing they can micro manage people’s lives and provide a website that lets you search the state for liquor stores with a particular liquor but they can not manage to keep their warehouses well supplied. I think the whole state agency should be demolished and started over. And I am a screaming liberal and in general think the state does a decent job.
I think we should privatize it.
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I do not own a liquor store, and I would still be able to buy hard alcohol under either a control system like Oregon currently has, or a privatized system, but I support the current state-run model in Oregon and would not want to see it privatized.
The OLCC serves two significant yet distinct functions. One is to sell alcohol through liquor stores, bars and other outlets. The second (and, in my view, equally important) function is enforcement of alcohol laws and rules. OLCC works with the Oregon State Police and local law enforcement agencies to monitor and fine stores that sell alcohol to minors and bars and restaurants that sell alcohol to visibly intoxicated patrons. If we privatize or abolish OLCC, which agency becomes responsible for ensuring that appropriate alcohol laws are enforced? Who will license and train servers in bars? Who will be responsible for working with bars and restaurants whose patrons repeatedly cause problems to address those problems before businesses are shut down?
Alcohol is not a product like soap or toothpaste. It is a drug that, while legal for those over 21 to consume, can significantly impair cognitive functions. Numerous studies have also shown alcohol to have a dramatic effect on brain development in youth and young adults. This is one of the reasons why 21 is the legal drinking age in Oregon and all other states, and it is why it is wise to have a state agency dedicated to monitoring and enforcing responsible sales to legal purchasers.
Those who wish to buy alcohol when OLCC stores are closed can still buy a drink in bars and taverns at most hours of the night. And with Sunday sales and expanded hours at most OLCC stores, it is still relatively easy for a consumer to purchase bottles of hard alcohol at a time that is convenient in his or her schedule. -
"KenRay — Tue Sept. 14th 9:30p.m."
I agree with this post.
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Or we can simply stock up in a nearby state with greater selection and (hopefully) lower costs which, with any luck, will soon be just across the Columbia... just like we did in the late 70's when we ran loads of Coor's up from Cali.
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The OLCC is at this point in time just...
It is not so much the 25 to 50% inflated prices, though that is certainly a factor! It is the dreadfully poor selection that is allowed by the OLCC.
Nevada is a nice place to buy liquor; hotel rooms at the Casinos are about 1/2 the price they are in Oregon (if you do not gamble you beat the house) NV 'allows' a far better selection in spirits and it is often possible to save enough to pay for a real nice suite. So, Nevada gets my money when I have the time for a lightening run. Yes, yes, I know, I am not legally allowed to bypass the benevolence of the OLCC!
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Several years ago I went to the liquor store to buy my favorite brand of rum. I was told that OLCC no longer offers it. I was surprised to learn that OLCC does the buying for every liquor store in the whole state. What a dumb idea! If I wanted my brand of rum I'd have to get it on special order and add to the cost -- an even dumber idea.
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I've long been annoyed by the stranglehold that OLCC keeps on the kinds and brands of liquor allowed into Oregon. I like the sorghum distillates from China, but there are no liquors imported from the PRC in the state liquor stores. San Francisco or Canada are my closest options to find liquors like Mao Tai, Wu Liang Ye or Luzhou Lao Jiao. I hope Oregon moves to a less restrictive system.
For the curious:
en.wikipedia.org/wiki/Bai_jiu -
Yes, Jon is right. I, too, would like to see Oregon with a less restrictive system. It will sure expand the variety of liquor people can buy, hence increases revenue/tax. It will also bring down the prices, which in turn would drive up sales. I know for a fact, some folks living at the south border would go to Costco's in California for cheaper liquor. We've got to get those revenues back.
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Working in the liquor industry, I can understand the frustrations with the OLCC and its inefficiencies. Ideally, there is a need for a change in the way the OLCC operates. But those who want to get rid of the OLCC all together probably don’t realize two key effects that it would have on the state.
For one, the state generates approximately $150 million each year in profits that are intended for the general fund. I have yet to hear from any candidate how that $150 million would be generated in a privatized state. If it is from a tax on products or a licensing fee, it would create a scenario where consumer prices would not necessarily be lower than current prices.
Also, in terms of the restricted selection of liquors, it would only get worse in a privatized state. Not only would obscure foreign liquors be more difficult to obtain, but even many of the local liquor producers and micro distillers based out of Oregon would lose out on important distribution and their local products would be difficult to find. In other privatized states, we have seen a market where only the best selling brands supported by the largest marketing budgets are offered in most retail outlets.
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Having lived in a state where liquor sale was privatized and comparing the selection with that available in Oregon, I can assure you that selection is not better in Oregon.
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"Also, in terms of the restricted selection of liquors, it would only get worse in a privatized state. Not only would obscure foreign liquors be more difficult to obtain ..."
Simply not true. The current status is that bai jiu, the traditional liquor of one-fifth of the world's population, is completely unavailable though the OLCC. With an end to the OLCC purchasing monopoly, some bai jiu would come into Oregon, at least into the Asian markets if not into specialy liquor stores.
Tax the imports, keep the OLCC as a regulatory and enforcement orbganization, but loose the government stranglehold on purchasing and importing liquors.
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Considering you can grow pure corn based 100% ethanol for less than a dollar a gallon and Brazil can grow cane based Ethanol for much less, we are far beyond Prohibition. A homeless alcoholic almost can stick the gas pump nozzle in his mouth for the world's cheapest binge.
Alcoholics seek alcohol in every possible source; look at Russian soldiers drinking transmission and brake fluid. Let commercial grade Ethanol flood the market and it would be priced at $1.00 a gallon. Use it for fuel or to fuel your liver.
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I sympathize with the frustration over many of the OLCC's policies and the unintended consquences of higher prices and lower selection have been posted here. A more reasonable solution is to decouple enforcement from liquor sales. There curently exists a conflict in the OLCC with the stores division profiting from liquor sales and the enforcment division spending the majority of the budget on enforcing liquor laws tha,t in many cases, are an antiquated attempt to curb alcohol consumption.
Decoupling would free up the stores division to focus on good retail practices andimproving customer service. The money spent on enforcement could then be redirected to local law enforcement agencies - agencies that already are charged with ensuring public safety.
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For once, the Oregon Republican Party is ahead of the curve on this and is picking up an issue which could stir younger voters its way. Their newest party platform calls for a reduction of liquor taxes by 50% and an elimination of the OLCC, which mirrors their gubernatorial candidate, Chris Dudley, who also calls for the dismantling of the agency.
I stand fully behind this as a college aged Republican.
I also work for a band, and a lot of us purchase liquor in California when we go tour there as even with an 8.75%+ sales tax, it's still upward of 30% cheaper. Stores like CostCo or any grocery store, really, are also allowed to sell alcohol, which is one less stop one has to make to obtain spirits, which is less driving (or bussing or biking).
The OLCC has also done a damn good job of squashing the concept of all age venues. When I moved here, I was 19 and had never drunk before. I started drinking underage when I moved here because I couldn't see any shows. This wasn't the case in California. There are a lot of things which would benefit from taking away some of the ridiculous initiatives which are part of the OLCC.
As far as the high liquor taxes go, the reason Oregon has a thriving micro brewing industry is one, great NW hops and two, about the third or so lowest beer taxes. I feel the nixing higher liquor taxes might increase distilling within the state, which like brewing, is recession proof (no pun intended).
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Irrespective of the practical annoyances of state controlled liquor, such as limited selection, hours and locations, it is downright creepy having the government oversee a retail business. How is a thing like this possible in a state that has legalized assisted suicide and medical marijuana? There is nothing progressive about this! It seems like a rather shocking, and willy-nilly double standard that sends a detestable message, and ends up equating to, a kind of marketplace censorship. Why not have the state control pornography? How is this different from having the state control the morning-after pill, or abortions, for that matter? If you moralize liquor what is to stop other groups from doing so on topics like abortion? What the hell are we doing? This is an embarrassment!
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One of the key elements in the debate about privatizing liquor sales is this. Alcohol in general, costs the American taxpayers a ton of money. Money from the effects of drunk drivers, domestic violence, general violence, alcoholism, lost time at work...and on and on. These costs are not covered by the sale price of a beer or a mixed drink. Alcohol possesses the same economically dysfunctional characteristics as tobacco. Liquor should be taxed at a higher rate to capture these costs or every American who does not drink to excess will continue to subsidize those who do.
If the State of Oregon is adding over a hundred million dollars in "profits" to the state treasury, I say keep state control of the booze. But tax it higher to properly fund the true costs of alcohol. If we privatize it, the private sector, looking for unjustifiably higher profits, will simply scream "no new taxes" in order to maintain their un-earned largesse.
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I would be completely in favor of the complete and total abolishment of the OLCC, which is one of the WORST ideas and organizations ever. A throwback to Prohibition which in many ways violates the US Constitutition which serves no useful purpose. The OLCC does a horrible job at everthing it does. Enforcement of liquor laws should migrate to a small nimble department created specifically for that purpose, with NO ONE from the current OLCC allowed to apply. This is such a no brainer. The state (both Ore. and Wash.) needs to get out of the liqour sales business. This is a capitalist country, not a communist (Cuban/Soviet type).
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:-) My wife came from the ex-USSR... vodka was dirt cheap and relatively plentiful in Soviet times (~$1/L)... sadly not anymore. That said, they don't have to stand in line for butter, meat and TP anymore either.
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to your guest who was complaining about funding for enforcement my response is simple:
I do NOT care. I do NOT care about states budgets taking a hit for ripping off consumers. If you care that much about enforcement, and if constituents did, then they would gladly pay taxes toward enforcement. From my perspective, most of the enforcement attempts are failures anyway, especially with underage drinking so what do they have to show for blatantly stealing, I mean mark up from consumers?
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I'm a liquor agent (NOT A STATE EMPLOYEE) operating a retail outlet for distilled spirits. Perhaps I can shed some light on how the system works and how much revenue is generated for the state by the sale of distilled spirits. The OLCC sets the retail price, supplies the inventory and pays the agent a percentage based on sales. The agent is responsible for all costs of running the liquor store, including the store's lease, payroll, insurance and other expenses generally incurred in running a typical small business.
For the fiscal year 2008 to 2009, here's the revenue distribution:
Liquor sales: $413.7 million
OLCC retail operating expenses: $12.4 million
Store operating expenses, including agents' commission: $36.8 million
Liquor inventory cost: $201.0 million
Total cost of retail operation: $250.2 million
Net revenue from liquor sales: $163.5 million
A net revenue of $163.5 million (fiscal 2008-2009) just from liquor sales was returned to the citizens of Oregon.
In addition to profit, however, one should also look at the retailing models. Do we want alcohol to be available on all major street intersections, which is where you find 7-11, AM/PM, Plaid Pantry and any number of gas stations and grocery stores? The easy availability of distilled spirits will result in higher incidents of teenage drinking.
If we decide to privatize the retailing of distilled spirits, how are we going to make up the loss of $163.5 million of revenue that directly goes to cities, counties and the state general fund? Let's say that the state adds that amount as a tax on alcohol. What's that going to do to the retail price? The state pays liquor agents 8.88 percent for retailing the product. All the associated costs of retailing that product are paid for by the liquor agent. For every $1 of gross revenue the state
pays the agent, we (agents and the commission) generate $ 4.44 of net profit for the state.
Are there inefficiencies in the system? Yes. What we need to do rather than throw out the entire system is to modernize the retailing model, allow liquor agents more flexibility in meeting local market conditions and demands and share in the profits more equitably.
Saleem S Noorani – Liquor Agent – Corvallis & Springfield
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"The easy availability of distilled spirits will result in higher incidents of teenage drinking."
Before you make a statement like this, you need to compare teen drinking rates in privatized states to our own... when I was a teen here in Oregon, I never had a problem with access to alcohol.
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It is important to understand that if we privatize liquor sales in Oregon liquor prices will go up. The state is not going to give up the revenue currently generate by liquro sales and private companies will require 25% or more to distribute distilled spirits.
California is not a good model as they have much higher volume due to population and even with the higher volume, in most cases, have much higher taxes in many other realms. Take for example the $1000 or more it takes to register a car in CA as opposed to the $100 in Oregon.
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WRT the volume argument, chain stores can balance that out... otherwise I'd pay more for items at Costco here than in CA, you don't. Unfortunately that's not true for Mom/PoP stores.
$1000 to register a car? Nice car!, When I moved back home from Cali in 2007 I was only paying $240 per year for one vehicle and $64/year for the other. :-)
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How honest is Costco? Well Oregon has a deposit law on soda pop cans and bottles but Costco sells a variety of coca cola in the old style bottles that has cane sugar in it and there is no deposit on those bottles. In effect Costco is stealing from the state of Oregon.
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I am currently drinking a Pepsi Throwback with cane sugar that does indeed have the OR five cent stamp on the top. And it is tasty! So yes, there is a deposit on these. Don't know about the bottles, cause this is a can.
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I've wondered if cane sugar coca cola tastes different. I believe that Costco imports it for their many Mexican-American customers.
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I've spent time in Ohio and Pennsylvania. Things may have changed since 1983, but they used to have State Stores that had all the liquor in glass cases, you'd fill out your order slip and hand it to the clerk. The product was all in the back room. Truly archaic.
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Open up liquor sales to free market competition, the argument against the Washington initiatives are weak . I am responsible for making sure my kids do not have access to alcohol, not the state, this is about money the beer and wine industry do not want to give up their foothold on the market place, as an Oregon resident I hope that Oregon abolishes the OLCC’s ability to sell distilled spirits. Come on look how they handled the Jason Evers cover up in Bend Oregon, Put it this way, it is easier for me and my neighbors to road trip to the Redding California Costco, purchase all we need for our personal consumption. Washington is finally waking up to the 21th century, I can only hope Oregon will also moves in that direction and allows up open market sales
buying alcohol in oregon is like going to the Adult book store and coming out with a brown bag...come open do really have to act like this?
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Question: Of the 18 states that control liquor sales and the 32 that do not, what are the alcoholism rates like.. or DWI convictions?
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Having lived in California for many years and in Oregon for the past 5, I can tell you the price difference is huge. The numbers being discussed about Washington markup and tax don't stack up against the reality of the prices in California, which are far more than $4/bottle cheaper. Last time I checked neither Bev Mo or Costco in California were going broke from selling alcohol at good prices.
As far as moral terpitude (or whatever) - yes alcohol is different than cotton balls (duh), but over-the-counter medications are as addictive and in some cases more dangerous than alcoholic beverages, and you can get them almost anywhere. The OLCC is "protecting" the public from anything. It's ALL about the control and the money, here and in Washington.
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There is only one issue at play here: who makes money from hard liquor sales. Most states allow sales of liquor in all stores without any problems, and at a much lower cost to consumers. A seperate store for liquor is as silly as having a seperate state-owned store for milk.
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The number of 8th graders in Oregon who have had an alcoholic drink in the past 30 days is twice the national average.
Research also shows that the more alcohol is available, the more people drink. With that comes the attendent problems such as crime and DUIIs.
Mary Ellen Glynn
Alcohol and Drug Policy Commission
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But then why is Oregon twice the national average when already Oregon is one of the few states that the state controls liquor? And what is an underage drinker more likely to drink? Boones, Wine Coolers, Hard Lemonade, beer or spirits? Cause I know what I drank when I was under 21 and it was all the "soft" liquors. So what is this really about?
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Exactly! Echolynch is right. If minors have access to alcohol more than anywhere else, despite the draconic control the state has on alcohol sales, then it sounds like it has utterly failed with the current approach and it therefore needs to be revamped.
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I've gone into state liquor stores and requested bai jiu. They say the state doesn't buy it and they can't get it. Perhaps the OLCC is willing, but the retailers I've spoken with won't follow this up. From my perspective, this leads to the same result: no Chinese liquor. The system leads to this situation. It should be changed.
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Nice try with fearmongering there Mary Ellen Glynn.
One alcoholic drink does not equal a drinking problem. Look at Europe and how much lower their fatalities are because alcohol is introduced there in small amounts to teenagers so they don't revert to binge drinking once they become of legal age. This is an educational problem as much as it is financial. And please stop quoting research like we're supposed to take your word for it as soon as you or anyone else tosses it out.
Research suggests that all research is biased and you shouldn't trust it until you evaluate it.
You don't want children to have access to alcohol? Become more involved in their lives. Have the state educate parents and provide incentives for them to make alcohol look less appealing at home. If the state is so concerned with how bad alcohol is then maybe they should ban it altogether. Now wouldn't that just be the ultimate solution? It is hypocritical that the state insists on this so called "responsibilty" and yet they are the ones supporting this vice and profiting from it. Some people have an alcohol problem and the state should help alleviate that instead of feeding the habit and ripping people off in the process.
As far as state liquour employee jobs goes, it would be unfortunate if they had to lose their jobs, but perhaps the state can reallocate them elsewhere. Or have them become compliance inspectors once the private sector deals with retailing alcohol.
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State stores are a remnant of Prohibition and artificially inflate the price of a legal product.
Get the states (OR and WA) out of the liquor business. Put a fair tax on retail sales and maintain the DUI laws, but save the money of maintaining state agencies to manage liquor sales.
Cheers! Drink up and don't leave any in your glass! Remember there are sober people in other parts of the world.
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Comments are now closed.
I suppose it would depend on the specific initiative. I wouldn't be against privatizing liquor sales and charging a license fee/tax to retailers that would be revenue neutral. There are some things I can agree that it makes sense for the government to do instead of businesses like providing public utilities, policing, or certain types of insurance (flood, etc), but selling alcohol? I can't think of a single reason the government would have an interest in selling alcohol now that the alcohol prohibition has been repealed. The government doesn't sell tobacco as far as I know.
The whole idea seems silly when you think about it. Speaking of silly, maybe we can finally get rid of Oregon's ban on pumping your own gas too? Oregon and New Jersey are the only two states that ban-self service.