Getting Virginia Off the Sauce
The Old Dominion's new governor promises to end the state liquor monopoly
Ask an immigrant to tell you about her first impressions of America—especially someone who hails from a communist or socialist state—and eventually she'll get to the part about the grocery store. After a lifetime of empty shelves, poor selection, and unreliable hours, the cornucopia of an American Safeway or Kroger is a revelation. The colors, the music, the lights, the people! Massive stores crammed to the gills with three-dozen brands of cereal and 17 kinds of frozen potato products seem like something out of a dream.
This is how I felt the first time I bought booze outside my home state of Virginia.
Growing up in Virginia, the only liquor store I knew was the ABC "package store" in the local Bradlee Shopping Center. The linoleum was dingy, the adjustable industrial shelving a grimy grayish off-white. Unlike every other store on the strip there was no music, just the hum of the florescent lighting and the consumptive coughs of the other patrons. The clerks wore smocks over their clothes, a practice that had been abandoned by virtually all other retail establishments by my 1980s childhood. Every shelf was tidy and completely full of liquor—no problem there—but the selection was abysmal, with rows and rows of identical bottles lining the walls.
There was a Giant grocery store next door—a convenient place for revelations about the glories of the capitalist system—and a wine shop a few doors down. But neither of them sold booze. Only the state-owned, state-run ABC was authorized to vend hooch.
Virginia is one of 18 states where the government is the monopoly rumrunner. Supermarkets, gourmet shops, and corner stores are all forbidden to sell liquor. But Bob McDonnell, the newly-elected Republican governor, has promised to end the monopoly on liquor sales in the Old Dominion.
This bold gesture isn't because McDonnell is an especially thoroughgoing libertarian; there are plenty of other areas where he'd like to see more state involvement in the private lives of citizens, not less. This isn't a 12-step program to help the commonwealth go cold turkey on alcohol money either. McDonnell has no intention of letting Virginia's bottle-based income fall below its current levels of more than $100 million a year. In fact, part of the reason McDonnell is considering privatization at all is that he is looking for cash to spend on transportation infrastructure. He predicts that selling off the state's 334 liquor stores to private players and gathering licensing fees from more private sellers will bring in $500 million in the short run, while leaving long-run income intact. (The Washington Post remains unconvinced, noting that McDonnell's figures may be too optimistic.)
But no matter what the political and budgetary machinations, Virginians are unlikely to wind up paying more for their rotgut, and they are very likely to wind up with a better selection and a relatively skeeze-free shopping experience. Commonwealth officials can focus on governing a large landmass without having to fuss with the details of running a liquor empire. And the move may even represent a net gain for the state budget in the future when the state sheds responsibility for ABC employee benefits and pensions, and starts bringing in real estate and other tax revenue from the privatized stores.
And assuming they're not regulated within an inch of their lives and hemmed in by the continued existence of a state-dominated wholesale system, the privately-run stores are likely to be more profitable. In addition to being able to compete with D.C. on price, they can expand their stock—80 proof and otherwise. Right now, high-margin novelty rim salt and Jimmy Buffet-themed blenders aren't sold alongside the tipple in Virginia because the only thing stupider than a state selling intoxicants is a state selling Margaritaville Mixers to go with them. The number of stores will likely increase under privatization, although the cautious McDonnell has promised "a limit placed on the number of authorized retail outlets to reflect community concern."
Virginians haven't suffered alone with terrible state liquor retail establishments. But the number of states with public provision for gin gimlets mixins' is shrinking. Iowa, West Virginia, and Alberta, Canada have all privatized their moonshine vendors. Each of those states adopted revenue neutral privatization policies—meaning that they pledged to set rates to keep the flow of cash into state coffers from liquor sales steady. As it happens, the booze biz boomed and the tax money started flowing in, which meant those states had to reduce wholesale markup rates in order to keep too much money from flowing in to the state coffers and violating the terms of the deal. Washington State, North Carolina, and Pennsylvania are considering similar plans.
Another citizen-improving side effect of privatization: An end to the petty crime encouraged by the deprivations of a restrictive state monopoly. Turns out, for instance, that a friend of my family—a Virginia lady and veteran party thrower—has been violating state law for decades by popping up to Calvert Woodley Fine Wines & Spirits in D.C. to stock up the Bloody Mary bar. Bringing a case of Capital City booze into Virginia risks a $2,500 fine, a year in jail, and confiscation of her trusty Model A. But who can blame her? When I moved to D.C. as an adult, the liquor stores were a revelation. For starters, there are so many! Can't find Old Overholt for your Manhattans in Rosebud on 17th and R? No problem, they probably have it at Cairo on 17th and Q. Sure, most of the clerks are still surly, but you can always choose to hit a different store next time if the checker gives you guff about your fondness for Malibu rum.
Katherine Mangu-Ward is a senior editor at Reason magazine.