Report Sounds Alarm on Efforts to Privatize Alcohol Distribution

Proposals by distributors and big box retailers in Washington and Virginia to eliminate state regulation of distilled spirits would be costly to the states and dangerous to the public's health and safety, Marin Institute announced Sept. 21. 

The Marin Institute report, “Control State Politics: Big Alcohol's Attempt to Dismantle Regulation State by State,” documents the benefits of alcohol regulation and attempts to dismantle it in Washington and Virginia. The two states are among the 18 U.S. states that regulate the distribution of alcohol. If they privatize, they would sell off state liquor stores and sell licenses to private retailers. 

Big box retailers Costco and Wal-Mart, along with distributors Young's Market and Odom-Southern, have provided significant financial support to two voter initiatives to privatize alcohol in Washington State. Virginia's proposal to privatize alcohol distribution has been promoted by Virginia Governor Bob McDonnell, who received contributions of nearly $450,000 between 2008 and 2010 from Anheuser-Busch InBev, Diageo, and Associated Distributors. Significant opposition to privatization proposals has come from beer and wine industries, which do not want distilled spirits sold with wine and beer.

Supporters of privatization argue that states badly need the millions of dollars in one-time revenue that they would gain from selling off control of alcohol distribution. Marin Institute researchers argue that long-term revenue would drop, stating that “privatization in either state will decrease annual state alcohol revenue by $200-$300 million.”

Their report quoted estimates predicting that privatization would increase total alcohol consumption by 7 percent, and that spirit sales would jump 21 percent. They wrote that, “increased consumption in either Virginia or Washington State will cause an estimated $50 million per year in harm paid from state coffers (mostly criminal justice costs), and $1 billion per year in total harm costs.”

Similar conclusions were drawn in a study by Dr. Randy J. Koch released by the VCU Institute for Drug and Alcohol Studies at Virginia Commonwealth University.

The Richmond Times-Dispatch reported Sept. 22 that Koch said that making alcohol more broadly available would make consumption rise, and that higher levels of consumption increase “chronic disease, motor vehicle and other accidents, violence, and loss of productivity in the workplace.”