Tuesday, March 29, 2011

Liquor privatization, fact or fantasy....

The HDPC has been holding public hearings across the state on 2011's hot topics including liquor privatization. Here is some of what I've been hearing so far:

The Math

Privateers have speculated that the sale of 850 licenses would garner $2 billion or more. To generate that much, each would have to be sold for $2.3 million. No other state has experienced that windfall.
·       An audit in Virginia found that 1000 licenses would need to be sold to raise $200 million, an average of $200,000 per license
·       In West Virginia, 89 of 165 stores licenses sold for less than $200,000 in 2010, an additional 45 sold for less than $100,000

Pennsylvania's Wine and Spirits stores generate more than $500 million for the state annually.

Consumer Choice

Currently there is a wine and spirits store in each of Pennsylvania's 67 counties. West Virginia had a similar system, however when it was privatized 5 rural counties lost their liquor stores. Several others have licenses held by convenience or drug stores, which offer little shelf space for liquor and wine selections, thereby limiting consumer choice.


Not only will the roughly 4500 currently state store employees lose their jobs, but experience in other states demonstrates that licenses go to existing stores, which choose to use existing staff to stock their shelves.

Public Safety/Social Costs

Independent research by the Marin Institute has found that "increased availability of alcohol is generally associated with increases in consumption."[1]

Increased consumption due to privatization has proven harmful and costly, as higher instances of violence, burglary, vandalism, drunk driving, reckless sex, teen pregnancy and addiction occur.

These costs have a number associated: $3.6 billion annually, including increased medical costs, criminal justice and public program costs, property damage, lost work hours and quality of life costs.

[1] Privatization of State-Run Alcohol Sales and Expensive Solution, Marin Institute May 2010