By L.A. Williams
Christian Action League
March 21, 2019
If North Carolina privatized liquor sales, the number of outlets would more than double, and consumption would rise an estimated 20 percent, despite higher alcohol prices. Those are just a few of the findings of the Program Evaluation Division report shared Tuesday with the N.C. House Alcoholic Beverage Control Committee.
Carol Shaw, the PED’s principal program evaluator, told the committee that among southeastern states, North Carolina collects the most public revenue per gallon of liquor sold, has the lowest liquor outlet density, and has the second lowest adult per capita liquor consumption. She said the state’s control system has become more efficient since the implementation of new performance standards in 2011, with the overall profit percentage and the percentage of ABC boards with profit margins of 5 percent or more having increased.
The report Shaw shared says lawmakers could modernize the current system by merging ABC boards that are located in the same county, eliminating the purchase-transportation permit for liquor, monitoring the selection of a new ABC warehouse contract, and giving local ABC boards more flexibility to charge delivery fees, serve special-order customers, open stores on Sundays, and offer in-store liquor tastings. The suggestions are all provisions of House Bill 91, now in the Committee’s hands and expected to be debated more fully at its April 2 meeting.
This week, Shaw answered questions about price projections and the effort to force board mergers. And the committee heard testimony opposing Sunday sales.
Rep. Larry Yarborough (R-Granville) asked Shaw why prices wouldn’t fall under a privatized system, since liquor is cheaper in states such as South Carolina and Louisiana.
“North Carolina collects a lot more public revenue than South Carolina and Louisiana does on liquor,” said Shaw, “and with my training as a fiscal analyst, I never assume that the legislature wants to have less money. So we based this on assumptions that revenue would be maintained.”
She said since private wholesalers must make a profit and pay for operations, PED analysts were told that their general markup is 20 percent. On the contrary, the state’s ABC system is not profit driven, but still brought $1.1 billion in sales revenue into North Carolina last year and added more than $430 million to local government and state coffers without any state funding.
With regard to how merged boards would distribute proceeds to local governments, Shaw told Rep. Susan Fisher (D-Buncombe) that arrangements vary but that many merged boards had worked out equitable systems, some involving tracking point-of-sale so that proceeds from particular stores were earmarked for the communities where they were located. In answer to a question from Rep. Graig Meyer (D-Caswell) regarding whether merged boards could operate across county lines, she cited the Triad Municipal ABC Board, which, since 2005, has operated ABC stores in Forsyth, Guilford, Davie and Yadkin counties.
Even so, Rep. Frank Iler (R-Brunswick), whose county includes nine ABC Boards, told the committee that forcing mergers would benefit some towns at the expense of others.
“Fairness is the key,” Iler said. “A lot of individuals are for changing the system, but most of the towns are not.”
According to the Rev. Mark Creech, executive director of the Christian Action League, the CAL is concerned that the merging of ABC Boards can diminish local influence and authority over liquor sales and the way liquor sales affect their communities. Creech said HB 91 would force the boards to merge when it was local alcohol referenda that gave them the authority to exist.
“It only seems proper that the people, not simply the boards, but the people determine whether boards merge,” he said.
Creech was glad to hear former Rep. Gary Pendleton, who served in the House from 2015 to 2017 and has experience as an ABC board member and county commissioner, speak out against Sunday sales.
Pendleton told the committee that keeping alcohol sales in check is a matter of public health and warned that counties should not be permitted to legalize public sales.
“If you do that, people in the liquor business will go to the county commissioners, make them a big campaign contribution and they’ll appoint people to do their will. I don’t want that to happen,” Pendleton said.
From a more personal standpoint, he told the committee that alcoholism affected his immediate family.
“It is something I had to grow up with. My mother was an alcoholic, and my brother was an alcoholic, and I had to live through that as a teenager, and it was tough,” Pendleton said. “I’m sure some of you others have also. … I beg you not to make it easier to buy alcohol.”
Earlier in Tuesday’s meeting, the ABC committee gave its approval to Senate Bill 11, which has already passed the Senate.
“This is not a modernization bill, a privatization bill or a promotion bill. This is a law enforcement bill,” quipped Sen. Andy Wells (R-Catawba), who penned the seven-page piece of legislation in response to several killings outside Hickory bars.
In addition to raising the legal age for holding an ABC permit from 19 to 21, the bill would increase fines for ABC violations that involve violence, controlled substances or prostitution. It would authorize the ABC Commission to limit a permittee’s operating hours and would require establishments seeking to operate as “private clubs” under ABC laws to first prove that they are nonprofit entities that have been in operation for at least 12 months prior to their permit application.
Wells said he worked with law enforcement, ABC, ALE and other stakeholders, including licensees to craft the measure, which has gone through about 30 iterations and is headed to the Finance Committee.