Alcohol

Virginia Continues to Soak Its Alkies, But Maybe Not for Much Longer

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Things the governor of Virginia is in charge of: 1) governing, 2) speechifying, 3) selling whisky.

Virginia Gov. Bob McDonnell is trying to get his state out of the booze biz. He campaigned on privatizing retail liquor sales—the state currenly owns, operates, and stocks all liquor stores within its borders—and has proposed using the one-time windfall from permit fees to pay for road construction. McDonnell is calling a special session of the legislature to deal with this issue, but it isn't going to be easy.

Here's the sticking point:

In the District and most of Maryland, just a dollar or two from a fifth of Jack Daniel's goes to government. But in Virginia, where whiskey and every other kind of liquor is sold in state-run stores, more than $13 of the retail price goes to the state.

Two possible reactions here: 1) Oh no! Virginia state revenues may be negatively impacted by privatization! (Or not! Depending on how we set tax levels and account for pension obligations!) or 2) Why is the state of Virginia getting $13 every time I buy a bottle of Jack?

Personally, I'm inclined to focus on the second point. As the Washington Post piece quoted above notes, other states take something more like a tax sip than a tax gulp. Just because Virginia has been soaking its citizen alkies for 76 years doesn't mean it should continue doing so. Anyway, McDonnell will be putting together a package that doesn't take much of a bite out of state revenues, at least in the short run. That means customers probably won't see a big drop in prices on the basics, but selection as well as store locations and hours will improve. Plus, as a booze snob I was glad to hear that "the prices of high-end items will fall, resulting in additional sales and increased tax revenue."

There's a throwaway line in the Post piece that deserves a little more attention:

Store owners buy Jack Daniel's from a wholesaler, not the distillery.

Private stores wouldn't buy from wholesalers because they are a bunch of dummies who enjoy paying extra for a middleman. They would do so because the state has a monopoly on liquor wholesale and they will be forced to do so. Another privatization project for further down the line, Gov. McDonnell. (UPDATE: Meanwhile, a move is a afoot on Capitol Hill to insulate state-protected wholesalers from challeneges.)

Maybe Virginia needs a sponsor. You know, guidance from a state that has been through this already. Someone to help get Virginia though the long legislative nights. Iowa? West Virginia? I'm looking at you to step up here.

I've written about getting Virginia off the sauce here.

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  1. Supporters of the 3-tier liquor system piss me off.

    Not that it wouldnt exist anyway – distributors/wholesales exist in many businesses, they serve a purpose. But having the ability to self distribute is important. Not to mention the laws making it hard to fire your distributor (see Bell’s Brewery and Chicago).

  2. In WA, the stores are state-run and the booze tax is 33%; if one of the upcoming privatization referendums passes, some speculate that prices will go even higher as the state may raise taxes to offset the revenue loss. Although, that makes me wonder why the state is taking a profit _and_ taxes off of liquor at their own stores. I suppose the lack of a state income tax makes up for it a bit, but I cringe every time I see a plastic magnum of cheap liquor in a WA store for $23, when the same thing was in my local CA Safeway for $10 on special.

    Opponents of privatization here also claim that the streets will run red with the blood of our teenagers if grocery stores can sell hard booze. If it’s so much easier to fool the cashiers at a supermarket, why aren’t the kids already buying wine or beer?

    1. Have you heard the (unionized) liquor store state employees crying about what will happen if it gets privatized? HILARIOUS.

      Also, I saw a Seattle Weekly article about what will happen if Costco gets control of supplying liquor. I mean, shit, I know leftists hate corporations, but don’t they like cheaper booze? Can’t we all agree on that?

      (Disclosure: I don’t want Costco to get control of the WA liquor business–I want it to be completely opened up–but it’ll still be better than state control.)

      1. Yeah, that’s the article I got the 33% number from. The “blood in the streets” editorial was in Real Change.

        I’d rather support the grocery union stooges than the ABC union stooges. 🙂

      2. Living in the Great State of Anheuser-Busch, we have comparatively low state taxes on booze and a wide-open market…Costco, Sam’s, grocery stores, Kwik-E-marts, etc. all sell it. I don’t see any more teens here careening drunk through the streets than I did when I lived in Ohio or Alabama, both states with ABC stores and laws tighter than a coat of paint.

        1. Living in the Great State of Anheuser-Busch

          You live in Belgium?

  3. That $13 figure seems totally misleading. When you have state liquor stores, everyone in the stores work for the state. Thus, you have state employees getting paid from the revenue of the state liquor stores, along with all of the other liquor store operating expenses, counting for a bulk of the $13.

    The correct figure to report is $13 – (cost/bottle of operating the liquor stores).

    1. Right – another factor the critics conveniently gloss over. They quote the gross revenue figure all the time. Forget about the cost of owning and operating all those stores.

  4. Private stores wouldn’t buy from wholesalers because they are a bunch of dummies who enjoy paying extra for a middleman. They would do so because the state has a monopoly on liquor wholesale and they will be forced to do so.

    So the state would STILL get $13 from a bottle of jack and there would basically be no revenue impact by simply making the stores themselves private.

  5. Yeah this issue has been a somewhat regular topic on logal news and blog sites.

    There are a few lefty defenders of the VABC system who whine and cry about lost revenue – nevermind the revenue that will be generated in selling the stores, taxing the sales and licensing fees. And nevermind the question of why the state should be in the business of selling booze in the first place.

    They justify it solely on the basis of “the state needs money; this is a good revnue source.” I have asked these people, “well then why doesn’t the state go into the shoe-selling business? Or maybe car sales? Heck, gun sales have been way up – the state could make lots of money selling guns.”

    They never have any answer as to why it’s legitimate for the state to have a monopoly on booze sales, but not any other commodity.

    I will say, however, that the VABC store near my house has an impressive variety of bourbons.

  6. Florida has a weird law the outlaws 40 ounce beers / malt liquors. We can only get quarts. Considering some other states restrictions, that’s pretty small, but that just makes me wonder why they put it in in the first place.

    1. That’s right up with crack/cocaine disparity in the annals of racist laws. The legacy of 2 Live Crew.

      How can you pour a 40 for your homie if you can’t get one?

    2. Racism.

  7. “Absolutely,” Houck said. “We don’t need any less revenue than we have now.”

    Houck must be one of the stupidest people on the planet. If the state controls the wholesaling, the state can charge whatever it wants. There would be no revenue impact, BUT there would be a massive SPENDING reduction as you chop state payroll by converting most of those employees working at the stores into employees of some other business instead of the state. Net income for the state would likely INCREASE regardless of the one-time revenue via the sales of the stores.

  8. Ahh, yes, fond memories of buying cheap booze in DC and hiding it in the car trunk for the drive back to NoVA.

    Most southern states have some vestige of Baptist in their liquor laws. Texas has no hard liquor (defined as a percentage) sales on Sunday, so all the liquor stores close down. You also can’t buy beer until after noon on Sunday, which occasionally screws me when I try to pick up stuff for a BBQ on a Sunday morning.

    1. Dixie Liquors right off Key Bridge. We used to pickup kegs and drive down Canal to Chain Bridge instead of crossing straight onto the Key into VA… b/c that would be too obvious. I think it saved us $40 per keg.

  9. Good for McDonnell on pushing hard on this campaign promise. I doubt he’ll be able to get the legislature to pass a perfect law, but I’ll take half a loaf if it gets me better selection without having to go into DC or MD.

  10. A brewery is opening up near me in December with 1/2 gallon refillable growlers. Is that a 1-tier system?

  11. where?

    1. Right at Duke/Wheeler in Alexandria. They took over an old building supply warehouse. Now they have to build the plumbing.

      Brewmaster is set. From an interview w/ the owner:

      We know that you’ve brought Jonathan Reeves on to be the head brewer. He spent a lot of time perfecting his craft brewing at Sweetwater Tavern. What is it about Jonathan and his beers that made you realize he was the one you wanted brewing for Port City?

      Jonathan Reeves has been brewing professionally for over 16 years, and has a long consistent track record of crafting award winning beers. He has won five medals at the Great American Beer Festival, and dozens of regional awards. He has brewed at small brewpubs, established packaging breweries, and has worked several startups as well. We share a similar philosophy of seeking balance and integration of flavors in our beer.

  12. PA state Rep. Turzai introduced H.B. 2350, Privatizing Retail and Wholesale Wine and Spirits Sales in Pennsylvania. Its odd that the state website does not list information about this bill. I really hope they end the damn monopoly and give us real choice. The statewide uniformly high prices suck too.

  13. It’s funny that Md. and DC are better if you like hard alcohol, because Va. is much better for beer and wine drinkers. It’s the only one of the three jurisdictions that allows beer/wine to be sold in grocery stores. In Md. you have to go to (admittedly private) liquor stores, and in DC it’s either those or a handful of licensed convenience-type stores (not 7-11).

  14. It’s the only one of the three jurisdictions that allows beer/wine to be sold in grocery stores.

    I guess Texas must be another one.

    Where’s the third?

    1. Must be Illinois.

    2. PA also changed its law recently to allow grocery stores, gas stations, cafes, etc. to sell beer.

    3. I was referring to the DC/MD/VA region, not the nation generally. Sorry, I guess I should have made that clear.

      Heck, California might be a statist shithole otherwise, but the existence of Liquor Barn makes up for a lot.

    4. KY (at least Louisville, our laws are county/city/PRECINCT, not state) allows them in grocery stores. Well, beer, anyway. Wine/booze requires a special section of the store.

  15. How do you barbarians live with these ridiculous liquor laws? In new Orleans, there are no restrictions on sales at any time. Want rum and coke with your pancakes at 6 am? DONE! My wife was like a kid in a candy store the first time I took her there and she discovered that you can buy hard liquor 24/7 at CVS (or the grocery store, gas station, etc). And it’s not way in the back on the endcap of the tampon aisle, it’s right up front by the Skittles.

    1. I used to live if Lafayette and it was the same thing except there were no sales between 2 a.m. and 7a.m.. Does it vary by parish? I thought that was state law. God I miss drive through daiquiri huts.

    2. I remember the first time I went to the base liquor store in Okinawa.

      With no state of federal taxes, a fifth of Bacardi was $1.85 and a case of beer was around $4 ($5.25 if you wanted to drink Heinekin).

      I completely get you wife’s joy at finding a place that caters to drunks.

  16. Private stores wouldn’t buy from wholesalers because they are a bunch of dummies who enjoy paying extra for a middleman.

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