ABC System Changes Considered

Special Report - March 10, 2010
Lawmakers in the TarHeel State are considering an overhaul of the 75-year-old Alcohol Beverage Control (ABC) System that could include opening the business of selling liquor to contractors or private retailers. The Joint Study Commission on Alcohol Beverage Control met on March 9 to begin its study of “all aspects of the current state and local structure of alcohol beverage control in North Carolina.”

The Program Evaluation Division of the North Carolina General Assembly presented an updated version of its December 2008 report about which we reported at that time. The Division concluded, “North Carolina’s Alcohol Beverage Control System is outdated and needs modernization,” a sentiment echoed by Governor Perdue and other legislative leaders in recent months as the system has been rocked by local scandals like those in Mecklenburg and New Hanover counties. Additionally, the Division’s report found substantial inefficiencies in local ABC operations.

North Carolina is the only state to operate as a “local control” state, meaning that local counties and municipalities hold elections in order to decide whether to be wet or dry. If a county or municipality elects to authorize the sale of liquor, a local government owned and operated ABC board is established to distribute liquor. Eighteen other states operate as control states, but at the state, rather than local level, and with varying degrees of direct involvement in the sale of liquor. North Carolina boasts the lowest per capita consumption and the highest revenue per gallon of any of the control states in the country.

The members of the Study Commission will be considering whether the current retail system, where the state owns and operates liquor stores, is best suited to the changing landscape of North Carolina liquor proliferation, or whether the State needs to change that system. The choices the commission is considering include: an agency system, where the state contracts with private liquor stores; a combination of the agency system and the current system; a wholesale system, where the state controls the wholesale supply of liquor to private stores; or complete privatization, where the state’s only involvement is to tax and regulate the liquor sale business. The Governor has commissioned an independent study of the state’s ABC system.

The Study Commission must provide a report with any legislative recommendations by May 12, 2010—in time for the General Assembly to take up any reform bills during the “Short Session.” Their next meeting will be March 24 at 2 p.m. in the legislative office building. The second hour of the meeting will be reserved for public comment.

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