By Stephen Groves
The way Virginians buy their hard liquor may be changing in coming months. If Gov. Robert F. McDonnell has his way, the state will sell its rights to the hard booze business.
That’s the message Eric Finkbeiner, McDonnell’s point person on his privatization of state liquor stores push, shared Tuesday with the governor’s Commission on Government Reform and Restructuring during its second meeting in Richmond.
Under one privatization plan, Finkbeiner said the state would sell off the wholesale and retail parts of ABC, but keep the power to grant licenses to liquor stores. That way, the state could regulate the number and location of liquor stores.
The state would grant licenses through a bidding process and auctioning them off to the highest bidder, he said. And licenses granted would be designed for three types of sellers — large grocery stores, specialty liquor shops and smaller convenience stores.
Finkbeiner said this system has been “gaining the most consensus” with the liquor retailers and suppliers that have been in contact with the governor’s office.
This model would create a one-time windfall for the Commonwealth, but also allow a continual flow of money from the sale of the licenses, Finkbeiner said.
This was one of four plans the governor’s office on Tuesday outlined before the reform commission for the privatization of the alcohol business.
The state owns all 332 “ABC” stores that sell hard liquor, but McDonnell promised during his campaign to privatize the stores. In recent weeks, McDonnell’s advisors have been meeting with suppliers, retailers, and even faith-based groups to figure out the best scheme to sell off the stores.
But liquor sales in the Commonwealth could also grow. Finkbeiner said 15 percent to 20 percent of potential alcohol sales are lost because people cross the Potomac River to buy their liquor.
But for opponents of McDonnell’s plan, increased sales are not necessarily a good thing.
Del. Bob Brink, D- Arlington, said in an interview that ABC stores are not designed to attract people.
“It’s like being in the Soviet Union,” Brink said.
While the governor’s office has suggested privatized stores would attract more people, Brink said it may not be good for the community, he said.
“I’m more concerned about the collateral impact of privatization,” Brink said. “You have this structure that has been in place for over 75 years, since the days of Prohibition.”
He said local governments could lose control over the stores and where they are placed.
But McDonnell placed high importance on allowing localities to object to a store getting a license, the same way they can object to beer or wine licenses now.
Finkbeiner said the final plan would also give local governments the power to regulate signs and marketing for the new liquor stores.
But Brink and others are concerned that the state would lose money under the plan. The state gets about $115 million a year from the ABC stores, he said. Also, $65 million of the revenue is ear-marked for alcoholism treatment and prevention. Brink said that fund should be protected.
So far, McDonnell’s plans do not have any numbers behind them to evaluate the economics of the deal. Finkbeiner said that is the next step.
“[We will] put some harder numbers around these,” he said.
The other plans Finkbeiner laid out on Tuesday include:
Agency Store Model
- Private stores would sell hard liquor, but the wholesale and retail would still be controlled by the state.
- Liquor stores would act as agents of the state and receive a share of the profits.
- Prices for liquor would be the same from one store to another.
Asset Monetization Model
- Private business or group of businesses buy the entire system.
- The Commonwealth would get a slice of the annual revenue.
- It would create a monopoly on liquor sales in Virginia.
Full Privatization Model
- The state would sell retail licenses for hard liquor to anyone who applied.
- Allow any wine/beer licensees to sell distilled spirits (3,000+ wine and beer licensees in Commonwealth).
- Would result in significant increase (approximately between 2,000-3,000) distilled spirit retail outlets statewide.
I do not have any problem with the concept, I have often thought it was a rather odd business for the state to be in. There is no mention of stats on state jobs that would be lost when stores are privatized under any of the models. What is the impact, in budget terms, of the elimination of all those jobs? Will there be any attempt to move those employees to other state positions?
Doesn’t matter to me and many others if the State privatizes liquor stores. The problem is that over $100 million per year goes to education and alcohol abuse programs and there is zero indication so far that McDonnell is concerned with assuring those funds and the services they support.
The undeniable fact is that Republicans including McDonnell are of the mindset to avoid paying for government services. Republicans have lived according to the “Starve the Beast” mindset which is they always have to cut revenue which always results in not having the money to pay for services.
Stupid, stupid, stupid! Where is the Governor’s head!
Hello, I’ve been reading through the blog only a few weeks and wanted to express that your way with words is great. Good luck.
I think it’s great that Virginia is planing on making liquior access easier for minors. Pennsylvania has the same plan.