State's ABC system makes no sense

The best argument for privatization of alcohol sales in North Carolina might be the New Hanover County ABC Board. As WRAL reports, the board resigned this week rather than face the scrutiny of county commissioners, who might want an explanation of why the county's ABC manager is being paid $214,000 a year, plus a $30,000 bonus. Other news organizations have reported on the wide discrepancies in ABC store profits across the state. Some ABC systems even lost money, which must be a pretty difficult thing to do when you own a monopoly on one of the most popular consumer products in the state.

The way the state ABC (Alcoholic Beverage Control) system works seems normal to those of us who grew up in North Carolina after the ABC system came into being after Prohibition (Wilson County had the first ABC store in the state). But from an efficiency and management basis, it makes no sense at all. Individual counties operate ABC boards, which oversee county ABC stores, but the county ABC stores can only buy their stock from the state ABC Board, which operates a state liquor warehouse. The state has a monopoly on wholesaling, the counties have a monopoly on retailing, and county ABC boards can pay whatever salaries they want and accept whatever profits (or lack thereof) they deem acceptable.

What is missing is any profit-and-loss control. A store manager can't decide to run a special on Absolut vodka, for example, because he's got an oversupply, and he can't accept an offer from Seagram's for a cut-rate wholesale price. He has to buy through the state warehouse. Does anyone think the state's system of county ABC stores are run as efficiently as Wal-Mart or Family Dollar? In other states, the free market sets the price of alcohol. Consumers win because retailers pay attention to their interests instead of dictating what will be sold and what it will cost.

North Carolina should abolish the system of county ABC vendors, replacing the stores with independent, state-licensed alcoholic beverage stores. Sales would be limited to specialty stores that sell nothing but alcoholic beverages; no minors would be allowed in the stores. The state Alcohol Law Enforcement system would remain in place to prevent underage sales and to address addiction problems. This system should have no effect on drunken driving; those laws would remain in effect or even be strengthened. Consumers would benefit from increased competition and lower prices (the result of not paying six-figure salaries to county ABC managers). Many North Carolinians would appreciate being able to take advantage of a sale on Maker's Mark when they drop into Total Wine for a bottle of chardonnay.