A Brewing Battle: Loosening liquor laws worry experts

Published: Saturday, Jan. 14 2012 1:40 p.m. MST

SALT LAKE CITY — Pittsburgh, Pennsylvania is affectionately known to locals as a "drinking town with a football problem." But you won't find beer in their grocery stores. In fact, the few large grocery chains that actually go to the trouble of selling beer can only do so if they have a license for a separate café adjacent to the building. On top of that, the café must have at least 30 seats, and beer must go through a separate check out. And still, no more than two six packs at a time. Meanwhile, wine and distilled spirits are only found in state-controlled stores.

Pennsylvania actually has some of the toughest liquor laws in the country, including liquor sales in state-owned stores. But that could be changing, as pressure grows for privatizing alcohol sales. Pennsylvania is not alone. The state of Washington recently privatized its liquor sales, and Virginia and Michigan are both toying with liberalization. Here in Utah, some state legislators continue to look for solutions that would get the state out of the liquor sales business without fully unleashing the market.

Arguments for privatization differ from one location to the next. Some are libertarians and free-market Republicans who want to shrink government, while arguing that consumption and abuse will not increase. Others speak on behalf of the consumer, and some privatizers are clearly carrying water for producers and retailers who want in on the action. On the other side are health and public safety officials who argue that privatization will result in looser liquor laws and that could cause consumption among problem drinkers to go up.

"Each year, 2,500 people in Los Angeles County die from alcohol-related causes," says Los Angeles County Public Health Director Dr. Jonathan E. Fielding, the author of a recent peer-reviewed study on alcohol privatization. Fielding opposes privatization and calls for raising liquor taxes. "We should be doing everything we can to reduce consumption," he says. "We need to change the economics."

By many accounts, Utah and Pennsylvania share the title for the most rigorous liquor laws in the country. Pennsylvania also puts quotas on liquor licenses for bars or restaurants based on county population, one per 3,000 residents. Licenses are in high demand, and there is only one type, so bars compete directly with chain restaurants. There's a hot market for licenses, which can run as high as $400,000. This makes Pennsylvania arguably more demanding than Utah, where more overlapping quotas allow more total licenses per capita, and because of Utah's teetotaler culture, certainly more per drinker.

While Utah and Pennsylvania may be unique they are not, however, alone in wrestling to contain the well-documented negative effects of alcohol abuse. American states, counties, and municipalities have long sought to balance the role of moderate social drinking against the potent social, health and public safety problems caused by America's recreational drug of choice.

After Prohibition was repealed in 1933, the power to regulate alcohol sales returned to the states. Currently, seventeen states and one major urban county (Montgomery, MD, pop 950,000) directly control alcohol sales. While Utah and Pennsylvania have some of the tightest restrictions, Oregon, Montana, Alabama, North Carolina, and Vermont also directly control the sale of distilled spirits. Idaho, Maine, New Hampshire, Ohio, and Virginia, meanwhile, control retail spirits above a given alcohol content.

Washington was a control state until last year, when a ballot initiative allowed retailers with over 10,000 square feet of floor space to sell all types of alcohol. Costco pumped $22.5 million into what became the most expensive initiative in state history. The "Costco law" also allows Washington retailers to bargain directly with distilleries, removing a barrier in the distribution chain. So not only will alcohol be more widely available, but also likely cheaper. Washington has thus offered itself as a natural experiment in alcohol privatization.

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