I made a presentation recently to a community GOP club, a group of kind people who were smart, engaged, and curious. Much like many of the other groups I speak to and with.
Most recently, I spoke about the N.C. Alcoholic Beverage Control Commission and how it keeps a stranglehold on the production, sale, distribution, and enforcement aspects of all spirits coming in and out of North Carolina.
It’s not so easy to explain, as the laws, rules, and codes date to Prohibition. It’s much like peeling the layers of a rotting onion.
Generally speaking, I’m always struck by how little people really know about the history and machinations of the N.C. ABC system. But how would they? And it’s just the way things are, right?
I grew up in Pennsylvania, where, outside visiting a bar, the only place to buy beer was from a distributor. By the case. No six-packs, no singles. Things have changed some, but the Keystone State, when it comes to all sorts of alcohol, isn’t a place one might call consumer-friendly.
It was just the way things were. Or, in many respects, are.
If they choose to buy spirits, people who move to North Carolina from the North or Midwest soon become familiar with the state’s ABC system. They get used to it and may even become friendly with the clerks and managers.
But none of this absolves the system from a blind commitment to its Prohibition-era, heavy-handed rules. There are better, more market- and consumer-friendly ways to sell liquor, which dozens of other states have shown through privatization and even centralized governance, as opposed to 168 independent boards.
Someone recently asked me why North Carolina keeps an interminable death-grip on an archaic system that’s more about control than commerce, more about dumping money into state and local coffers than into the hands of entrepreneurs and innovators.
It’s difficult to provide a clear answer, but a couple of factors are at play here.
Primarily, it’s about control. The N.C. ABC system has been in place since 1938 — some five years after federal repeal of Prohibition — and only incremental changes have since been made. That state’s local control boards and the nonsensical system in which they operate are inherently political and absolutely entrenched. These boards, which respectively operate the state’s ABC stores, transfer millions of dollars each year to county and municipal governments throughout the state.
Overall, the N.C. ABC boasts in its annual report, fiscal 2018 marked the third consecutive record-setting year for “ten-digit sales.” The billion dollars in revenue, the report says, resulted in a all-time high transfer of money to the General Assembly, which funded state departments and agencies, as well as UNC System universities such as UNC-Pembroke and Western Carolina University.
Does anyone else see a disconnect here?
The state, as evidenced by the ABC system, believes it’s a better steward of people’s money than private businesses and local entrepreneurs, who, should the state go private, would replace that “lost” revenue through property taxes, jobs, and ancillary investments.
The biggest obstacle I see in reforming this antiquated system is — and this may sound harsh — the absence of an informed public, who, generally speaking, have just a superficial knowledge of how the system works and exactly who profits from it.
People just don’t know that each boards operates as an independent fiefdom, that distillers winning their approval sometimes have to circumvent and quell old feuds and prejudices. That getting into ABC means local products are relegated to “N.C. Products” shelves, oftentimes near the back of stores. That ABC rules make it increasingly more difficult for small distillers to prosper and grow.
That all spirits are sent to Raleigh and shipped from there, regardless of whether there’s an ABC store just blocks from the producers. That distillers can sell just five bottles per customer, per year, that they can’t make visitors mixed drinks, and that customers at ABC stores can’t possibly sample a product for which, considering taxes, the state has priced at $40 or more. Distillers can’t ship products directly to buyers. The list goes on; brewers and vintners, though on a separate legislative plane, are hampered by the ABC, too.
Many N.C. distillers are proponents of the state ABC, and each has her or his own reasons. Thing is, though, they have a better understanding of system intricacies than do most customers, and they make concessions and take advantage based on that knowledge. Many ABC store workers and managers are great people, who know their inventory and make extraordinary efforts to satisfy customers. But that doesn’t apply to all, and these ABC workers have no real incentive to do better. Why would they? It’s not their business.
North Carolina is one of 17 remaining alcohol control states in the country, and it’s also one of the most restrictive.
Consumer choice is, at best, limited, and some products just aren’t available in North Carolina, regardless of how much someone is willing to pay for them. I’ve seen some alleged whiskey aficionados respond to that with a shrug, then say they know a store in South Carolina, or that a store manager in Virginia, also a control state, can order a single bottle should they just ask for one.
The N.C. ABC system has serious issues requiring immediate and aggressive legislative action. Trying to explain why lawmakers won’t move to make sensible reforms is, well, getting kinda old.