CJ Commentary: N.C. sells liquor through 170 independent, political boards: What could go wrong?

On Friday, Carolina Journal’s John Trump published an opinion piece on North Carolina’s government-run liquor business. Trump explains Rep. Chuck McGrady, R-Henderson, has sponsored legislation in the General Assembly that would alter the state’s monopoly on liquor sales. According to Trump:

House Bill 971, which McGrady sponsored, languished in the legislature, yet he still got a hearing in July for a proposed committee substitute in the House’s Alcoholic Beverage Control Committee.

The Modern Licensure Model for Alcohol Control, originally filed in April, basically clears a path for private liquor stores in North Carolina. S.B. 971 would eliminate the state-run alcohol warehouses in Raleigh and phase out the local ABC boards and stores. 

Trump writes, the bill would put liquor distribution and sales more in line with beer and wine in the state:

The bipartisan bill, a news release by McGrady’s office says, replaces the state’s monopoly on the sale of liquor with a system of permitting and taxation modeled on wine and beer sales…

Under the bill, liquor would be taxed per gallon, as opposed to applying the tax as a percentage of the cost. The bill would impose an excise tax of $28 per gallon on the sale of spirituous liquor. Under current law, that excise tax is 30%. In effect, pricier liquor, because of the tax structure, would become less expensive. Cheaper spirits would, conversely, cost more. 

North Carolina is the only state in which localities control liquor sales. North Carolina has 170 ABC boards in the state – that is more than one per county. Trump explains how this system can inhibit government transparency:

In Wake County, the ABC board proudly displays on paper bags money generated by liquor sales. Money going to the state is easier to track, because there’s a single point of collection. But, with 170 ABC boards in communities throughout the state, the chance for residents to learn about exactly where and how that money is used — aside from a vague categorial description — is close to nil. 

What’s key here is accountability and transparency. How and where boards distribute revenue is defined in statute, but the local boards still have a pretty wide berth.

Read the full piece here. Learn more about ABC reform in JFL’s Jon Sanders’ two-part series here and here.