North Carolina: The True Cost of Privatizing Liquor Sales

State governments closely regulate the sale of liquor in 18 states in this country. In these “control” states, the government limits access in an effort to protect public health and limit alcohol-related costs. But there’s increasing pressure to privatize, in spite of research that shows “control” systems work well.

Just ask Paul A. Stroup, III, Chief Exeutive Officer of the alcohol beverage control board in Mecklenburg County, N.C. In an editorial published Jan. 9 in The Charlotte Observer, Stroup laid out a pretty convincing rationale for not privatizing liquor in his state:

  1. State regulation moderates alcohol consumption, yet brings in revenue. North Carolina, he noted, is ranked 48th in per-capita alcohol consumption, but third in alcohol taxes per capita.
  2. In North Carolina, anyway, county alcohol control boards are self-funded — they don’t cost taxpayers a dime. In fact, the state’s control boards generate monies that underwrite local government, libraries, law enforcement, and substance abuse education and treatment. 
  3. The kicker: privatizing costs money. Lots of money in health care, law enforcement, and court costs. In 2004, The National Center on Addiction and Substance Abuse estimated that alcohol cost the nation $220 billion — more than for obesity or cancer. Privatization sends those costs up.

How? Privatization increases consumption, according to researchers. But it doesn’t take a scholar to figure out why: more retail outlets, and lower price add up to more consumption. What happens then? A Pacific Institute study estimated that if North Carolina’s alcohol consumption went up just 10 percent, it would add half a billion dollars to the state’s existing alcohol-related costs. 

Conclusion? There’s always room for fine-tuning regulatory systems. But when it comes to alcohol, the free market isn’t cheaper; nor is it the greatest good for the greatest number of people.

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