By: From the Desk of The Journal Editorial Team
Last week, the Northwest Grocery Association proposed an initiative for the 2016 Oregon ballot that would change how liquor is sold and regulated in the state.
If approved, the regulation and sale of alcohol would undergo privatization, rather than the current system in which the state monitors licensed liquor stores.
Currently, the Oregon Liquor Control Commission (OLCC) oversees all regulation of the sale and taxation of liquor sales.
The move to privatize liquor sales is a poor move, and would only result in harm to consumers and to small businesses.
Encourages alcoholism
Look, we get it: privatizing the sale of liquor would make purchasing it much more convenient. There would be no more scrambling to make it into the liquor store 10 minutes before closing on a Saturday night since you could just run into Waremart and buy whatever you need there without the worry of missing the store’s hours.
However, there is a reason that you can’t buy liquor at certain times of the day.
In Oregon, alcohol of any kind cannot be purchased between the hours of 2:30 a.m. and 7 a.m., and liquor stores themselves are even more heavily mandated by the state.
In Oregon, liquor stores are required to be open between 12 p.m. and 6 p.m., but cannot open before 7 a.m., and they cannot close after 10 p.m., according to the OLCC. Stores also have “the option of being open on Sundays and legal holidays with hours of operation varying from store to store.”
Removing the monopolized regulations on the sale of liquor encourages alcoholism by allowing people to go and purchase hard alcohol with far fewer restrictions. Increasing the ease of access for hard liquor only plays the role of enabler.
Privatizing sales may also increase the chance for traffic collisions, since people then have access to hard alcohol when they otherwise would not. More people buying liquor at later times at night spells disaster for drivers all across the state.
According to a study from the Alcohol Research Group (a program of the Public Health Institute), “the real and potential effects of privatization project that the modification and/or elimination of monopoly status [state regulation] would increase consumption and alcohol-related problems such as assault, motor vehicle accidents and deaths from alcohol-related causes.”
The ARG also claimed that privatizing the liquor market “may result in increased sales to underage and intoxicated patrons.”
Increase in costs
The Tax Foundation, a Washington, D.C.-based think tank, found that Washington state has the highest average cost of liquor in the country, and that the average price of liquor increased by $8.52 per gallon after privatization.
The Oregonian reported that when sales were privatized in Washington state, the initiative “included taxes aimed at producing as much revenue as the state made when it acted as the state’s sole liquor retailer.”
In the proposed measure for Oregon, however, the decision for how to tax liquor would be left up to the state legislature.
In addition, the ARG noted that prices in Washington state have increased by as much as 15 percent in some areas.
Tina Mulkey, owner of the Independence Liquor Store in Independence, Ore., said that she thinks the state does a good job of regulating the market and controlling the prices.
“I like that the state controls the prices, it takes the havoc off of my shoulders,” Mulkey said. “The state has been doing very well at controlling the regulation of liquor.”
The ARG also noted that replacing the state-controlled system with a private system, combined with a tax plan aimed at achieving the same revenues as before, will result in significantly higher prices to consumers.
Drives small liquor stores out of business
According to an article by the Oregonian, Costco spent more than $20 million on the effort to privatize alcohol sales in Washington state. Now, it controls about 10 percent of the alcohol market in the state.
Advocates for privatization in Oregon claim they want to end the state’s monopoly on alcohol, but privatization simply creates the opportunity for big box grocery stores to take the monopoly over for themselves.
Since the state would no longer have control over the regulation of sales, businesses with high revenue streams – like Costco – could set lower prices to drive other, smaller businesses out.
“[Privatization] will affect my business quite a bit,” Mulkey said. “I do not want [the measure] to pass because what happened up in Washington will happen down here.”
Privatization could also decrease the state’s revenue from alcohol tax.
After Washington state privatized its liquor sales, liquor stores on the Oregon side of the border increased their sales by 30 percent, possibly indicating a decrease in alcohol sales on the Washington side, according to an article from the Washington Post.
Privatization doesn’t decrease prices, increase selection, or provide more convenience. It seems as if the sponsors of the initiative just want privatization for privatization’s sake.
It’s a matter of simple supply and demand: if you increase the price of a product, people are going to buy less of it, or in this case, they will drive somewhere else to go get it, thus reducing the sales in Oregon and losing tax revenue.
This especially hurts small liquor stores: since people are no longer willing to pay the higher prices for liquor, and liquor is the main source of revenue for them, their revenue streams will be severely damaged.
In order for the initiative to get on the ballot next November, sponsors must gain 88,184 signatures to qualify.
