Wednesday, April 13, 2011

Drinks on the House

There has been a lot of buzz and misinformation recently regarding a proposal to get the Utah state government out of the alcohol distribution business. 

Rather than try to summarize the proposal myself, I will let its sponsor, Rep. Ryan Wilcox, do it for me.  Here is an excerpt from his post on Vox Populi:
I am proposing that we divest ourselves of our retail outlets; that we move toward truly limited government, and that we allow the market to determine the success or failure of retail stores, the fate of communities who depend on the services, tax revenue, and jobs they provide, and NOT politics and budget cuts at the state.

Currently, in smaller communities throughout Utah, the DABC already licenses what are called “package agencies” (similar to a franchisee) to essentially run privately held “State” liquor stores. In fact, this model is the norm, for the majority of “control” states. In Utah, this is primarily done in areas where there is less demand for the larger, more expensive stores we are familiar with along the Wasatch Front.

Under this bill, the DABC would be required to sell each of the state-owned liquor stores to private operators. Just as with any other business, these so-called “package agencies” would be allowed to succeed or fail, based not on whether or not the State of Utah was experiencing a downturn in the economy and was forced to cut their budget, but rather whether or not they offered excellent customer service, and on how they responded to market demands and customer needs.

As a control state, the state of Utah would remain as distributor, and as such, would also retain the 85% markup that currently provides the bulk of the profit margin. Both the state and the communities who depend on sales tax provided at the register would retain those revenues, just as they do now. Additionally, we anticipate a small windfall, as properties and stores are either leased or sold outright, and as the additional state employees are removed from the payroll.
It seems that the news media is so giddy with excitement about this story that even though they are supportive, they are still getting the facts wrong.  The history of alcohol control in the state hearkens back to the exaggerated acrimony of Mormon vs. Gentile coexistence.  It appears the media is rehearsing this tired historical narrative either a.) out of its own ignorance on the issue or b.) to sell more papers, ad space, ect. 

This legislative proposal is just a mild first step towards more liberated markets and warrants the support of the public. However the media and public must also recognize that it is not a complete dismantlement of the State's alcohol control system.  To believe otherwise is to set up oneself for disappointment. 


  1. i want the 85% markup to be renamed a sin tax, or sin fee.

  2. This comment has been removed by the author.


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