Why the state of NC shouldn’t sell alcohol

North Carolina controls liquor sales more than most states, driving up prices. There’s a better way.
North Carolina controls liquor sales more than most states, driving up prices. There’s a better way. Observer file photo

In 1937, after the repeal of prohibition laws, the N.C. General Assembly established a monopoly system for North Carolina and the sale of spiritous liquors. Now, more than 80 years later, the Alcoholic Beverage Control Commission still does exactly that – controls alcoholic beverages in North Carolina.

They not only determine what brands of alcoholic beverages may be sold, maintain the state ABC warehouse for the distribution of liquor, regulate the sale of wine and beer, and issue permits for wineries, breweries, wholesalers, and retailers but they also, with total exclusivity, sell liquor by the bottle.

Simply put, the system hasn’t modernized with the times nor does it meet the needs and wants of today’s consumers.

North Carolina is only one of eight states that controls both the wholesale and retail sale of liquor and the only state where the stores are run by 168 local ABC Boards in individual cities and towns. You may wonder why this matters. To start with, there are 432 stores servicing the entire population of the state of just over 10 million, as well as the out-of-state tourists.

As the state with the ninth largest population, we currently have 0.42 ABC stores per 10,000 people and with most of those stores only open until 9 pm and closed on Sundays, this only adds to the lack of convenience. Meanwhile, you can go buy a liquor drink in any of the privately owned 4,051 bars or restaurants that serve liquor.

Let’s be clear on what this means. Grocery stores, big box stores, pharmacies and other retailers can sell beer and Bordeaux, but if you want your bourbon, you must go across town or miles down the road to search out an ABC store.

Or, as another example, you can go to your favorite restaurant and order a Bloody Mary to drink, but if you want to make one at home, you must go to the ABC store to get your vodka and then to the grocery store to get the rest of the ingredients.

The current ABC structure leads to a system of “haves” and “have-nots” in terms of local government revenues. Yes, the system produces revenue but with that responsibility comes operational costs. These are costs that are born by the state and local government rather than private industry.

Producing millions in revenue also costs millions. While urban or tourist areas like Charlotte or Wilmington, with robust sales of distilled spirits, are able to offset those expenses with significant revenue distribution, some rural areas like Lumberton or Warsaw actually have a negative net income.

Some make the claim that with ABC stores selling liquor, it is more controlled, but logic would tell you otherwise as there is no other product state government is selling, even those with similar potential misuse.

A regulatory body whose charge is divided between regulating and raising revenue from the same product is conflicted. For instance, the N.C. Board of Pharmacy is a regulatory body with enforcement authority but it neither sells pharmaceuticals nor does it operate state-owned pharmacies staffed by state employees. N.C. Alcohol Law Enforcement enforces tobacco laws along with alcohol laws, but they neither warehouse, nor sell, tobacco products.

We believe the time has come to reevaluate and modernize our 80-year-old ABC system.

Andy Ellen is president and general counsel of the N.C. Retail Merchants Association.