What can we learn from Maine about liquor privatization By Shawn Sullivan, staff writer
In November, voters will have a chance to decide on I-1183, which would eliminate the state’s monopoly on the sale and distribution of liquor, strengthen regulations governing the sale of liquor and generate hundreds of millions of new dollars for state and local government services. In the midst of this debate; however, is a confusing process, mandated by the Legislature to examine the option of a new, private, monopoly controlling the distribution of liquor to state stores. Although I-1183 would circumvent this process, one needs to look at Maine as the shining example of how we might end up if 1183 does not pass. In 2004, Maine’s legislature approved a contract to distribute spirits with Maine Beverage CO. The state received $125 million in cash, and Maine Beverage took control of the state’s alcohol distribution. So far, the move has cost the state $100 million in lost revenues.
governments”, the Washington State Liquor Control Board (LCB) is authorized to contract out the warehousing and distribution function to a private monopoly for at least a decade. It is important to note that since Maine awarded the contract, it missed out on an estimated $280 million in revenue. WRA is concerned that the distributor will simply increase costs for moving product to the state’s stores, leading to increased costs for customers. “Like every other state, Washington will continue to face difficult budget challenges in the near future; I-1183 will provide a much needed boost in revenues to support state and local government services” WRA Director of Government Affairs, Bruce Becket said. “While it won’t be enough to balance the projected shortfall of the state’s 2012 budget, it will help.”
Maine also decided that the legislature would set the prices and limit distribution to one central distribution facility in Augusta. However, Augusta is not centrally located and current regulations force distilleries to ship everything to the Augusta facility. Some vendors like Cold River Vodka, which is fewer than two miles away from Bow Street Market in Freeport, must first ship its bottles to Augusta, and then back to Freeport.
The model proposed by SB 5942 will simply transfer money from the consumers to a new private distributor; it will not result in long-term benefits to either the consumer or state and local governments. Initiative 1183 would avoid the Maine debacle proposed by the Legislature by privatizing the distribution and sale of liquor in Washington state, provide hundreds of millions of dollars in additional revenues to state and local governments, and increase consumer choice and convenience.
Last year, the Washington Legislature passed SB 5942, which directs the Office of Financial Management to issue a Request for Proposal to solicit bids for the distribution and warehousing of liquor essentially adopting the same approach as Maine. If the state receives bids that provide a “positive financial benefit to state and local
“[Privatizing alcohol is] also a better deal than the one the Legislature is considering to privatize just the warehouse side of the system,” Seattle Times Columnist Danny Westneat recently wrote. “There was never much reason for the state to be in liquor but the money. Now it can make more of that by getting out.”
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