Control State Politics
Big Alcohol’s Attempt to Dismantle
Regulation State by State
A Marin Institute Report
September 2010
U.S. Alcohol Control System

Two models try to protect
public health and maintain a
three-tier system
1 - Control Model state has
direct role in alcohol sales
2 - License Model state
agency licenses private
businesses to sell alcohol

Privatization eliminates
government control in favor
of license model
Producer
(Distilleries, Breweries, Wineries)
Distributor/Wholesaler
Retailer
(Bars/Restaurants, Liquor Stores,
Grocery Stores)
Drinker
What’s Going On Now?

State control is important to
public health

Control provides states with a
significant and stable
source of income

Big Alcohol and big box
retailers are using their
power to eliminate
state control of alcohol
Many Benefits of State Control

Consumption lower rates of drinking and binge drinking

Availability fewer stores with fewer hours of operation

Accessibility state employees better trained and motivated
to keep alcohol out of the hands of underage drinkers

Harm reduced violence, suicide, homicide, assaults

Money control generates hundreds of millions in revenue to
states; lowers the costs due to alcohol-related harm
Where Control Eroded = More Harm


Privatization increases outlet
density, which is associated
with increased consumption and
alcohol-related harm
Studies from Iowa, West Virginia,
British Columbia and Alberta
Canada, United Kingdom, and
most recently from Sweden all
support need for control.
Erosion of Three-Tier System




Concentration of power
vertical integration
Industry influence on
lawmakers, lobbying,
contributions
Spirits v. Beer & Wine
spirits manufacturers want to
normalize their product
Big Guys v. Little Guys
Big Alcohol wants a level
playing field, small breweries,
wineries, and distilleries don’t
want to get edged out
Erosion Through Court Challenges

Granholm v. Heald: narrow
ruling on constitutionality of
direct shipping laws

Litigation has expanded
Granholm to further
deregulate alcohol

House Resolution 5034
would protect the state’s
authority to regulate
alcoholic beverages
Battleground: Washington State



Currently State Liquor
Control Board controls the
distribution and retail of
spirits
Initiative 1100 the
“Costco Initiative” would
dismantle three-tier system
Initiative 1105 a
distributor-backed initiative to
privatize the sale of spirits
Washington: Privatization Pushers

Costco based in
Issaquah, WA. Wants to
buy spirits direct from
supplier (volume
discounts) as other
products ($70 billion in
annual sales)
Washington: Initiative 1100


Privatizes the sale of
distilled spirits
Deregulates the sale of
beer and wine

Demolishes 3-tier system

Costco has opposed state
control in courts, legislature

Costco has contributed
more than $1 million in
cash and in-kind to I-1100
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Washington: Initiative 1105




Privatizes distilled spirits
sales; allows volume discounts
Maintains three tier
system, most other controls
Privatizes spirits sales,
results: increased availability,
higher outlet density
Young’s and Odom-Southern
contributions = $2,244,000
Washington State: Control Allies



Protect Our Communities
Coalition health care, firefighters,
police, parents, teachers, churches,
wholesalers, social services
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“Small Alcohol” small wineries,
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breweries, distillers that don’t want
to be shut out of the market
Governor Christine Gregoire
Also making major donations to the “No” campaign: Beer
Institute, National Beer Wholesalers of America ($2 million each)
and the Washington Beer and Wine Wholesalers ($975,000)
Battleground: Virginia

Governor Bob McDonnell
used privatization as a
campaign platform

Promises (without basis) a
huge cash windfall to fund
the transportation

Claims that selling alcohol is
not government’s job
Virginia: Privatization Supporters


ABC Privatization
Coalition Costco,
WalMart, Kroger,
Safeway, Food Lion,
restaurants
Big Alcohol
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Virginia: Control Allies
•
McDonnell’s faces opposition
from skeptical legislators

Local Virginia governments
concerned about impact

Law enforcement officials

Small breweries, wineries,
distilleries

Faith coalition, including
Virginia Interfaith Center for
Public Policy and Baptist
General Association of VA
(yourvaluesyourvoice.com)
Recommendations

Politicians Stop using alcohol regulation as a bully pulpit
to call for smaller government. Alcohol is regulated because it is
potentially harmful to residents of (and voters in) your states.

Governors, legislators, and staff Get a
history lesson in the horrible conditions that led to Prohibition,
and why 18 states chose to control alcohol sales to protect health
and safety.

State regulatory agencies

Voters
Understand why your
jobs are so important and play a more vocal role in defending
state alcohol control and protecting the public.
In Washington State, vote “No” on both initiatives
there. In Virginia and in every control state, tell your political
leaders to protect the public interest over corporate profits.
Recommendations

National trade orgs for state alcohol regulators
Distance yourselves from industry influence and do more to stop state
alcohol control erosion efforts.

Federal government Help strengthen state role in alcohol
regulation; stop undermining state authority.

Public health groups A single-issue focus (e.g. drunk driving,
underage drinking) is not sufficient. Support state control and
regulation of alcohol sales.

Alcohol control allies Alert state residents to the harm and
cost privatization will bring to their states. Urge them to vote down any
privatization initiatives, and tell lawmakers to do the same.
For more information
You can download the full text of the report,
Control State Politics: Big Alcohol’s Attempt to
Dismantle Regulation State by State
along with fact sheets and other resources:
MarinInstitute.org
Report Authors
Sarah Mart & Michele Simon
Contact (415) 456-5692
Info@MarinInstitute.org