Charlie Arlinghaus

February 15, 2012

Today we can buy three out of four categories of alcoholic beverages at the grocery store. Adding a fourth category constitutes a convenience not a catastrophe. It will be good for the state, good for revenues, and good for consumers.

When federal prohibition was repealed, then Gov. John Winant still wanted state prohibition but acquiesced to the legislative repeal so long as alcohol sales were a state monopoly sold at the three state liquor stores that opened in August of 1934.

Gradually sales expanded beyond the state-run retail outlets which have grown to 77. There are four categories of alcohol in New Hampshire: beer, table wines, higher alcohol fortified wines and liquor.

Today, the first three categories can be sold at grocery stores (licensed off-premise consumption outlets) but each step was a struggle against the same arguments made today for the retail monopoly.

Initially, non-monopoly beer sales were limited to a small number of outlets. Attempts to open sales to most grocery stores were opposed by the liquor commission. In the 1970s, retailers asked to be allowed to sell wine in addition to beer. For most of a decade the liquor commission fought this expansion with the same arguments made today against liquor sales.

Control advocates argued that selling wine in 1000 stores was too much and should be limited to the 77 state liquor stores. They argued that wine sales would merely cannibalize state sales and cost the state millions of dollars in revenues.

Based on experience, we now know that they were wrong. About half of all wine sales are in state-run stores and half in private outlets. The wholesale side of the business is still a strict state monopoly. Revenues didn’t decline and in fact experienced a significant increase. Just as important, consumers were able to purchase a legal product in 1400 locations instead of 77.

When fortified wines – wines with a higher alcohol content, usually for dessert – were added, the same objections were there but muted by past experience.

Today, you can buy beer, wine, and fortified wines all at your local grocery store. The one exception is liquor. A bill in the legislature would change that. Stores that currently sell beer, wine and fortified wine could add liquor to the shelf. After all, if a store is currently selling all the other alcoholic products, why would it not be able to also sell whiskey responsibly?

The proposal is very simple and does nothing else. The state would still control the import and wholesale operation of liquor. New Hampshire would still be a control state. New Hampshire would still operate liquor stores and private retailers would be required to purchase from the state as the monopoly wholesaler.

Just as when wine was opened up, opponents have claimed the state will lose money. It wasn’t true with wine. It wasn’t true with beer. It wasn’t true with fortified wine but this time they really mean it.

A study by the New Hampshire Grocers – advocates now and advocates when wine was opened up as well – suggests that the state will realize one-time revenue from initial shelf stocking (purchased from the state as the monopoly wholesaler) and licenses. In addition, they believe the state will see an annual revenue increase of $11 million (current liquor commission profits are about $130 million per year).

Opponents dispute those numbers, as they did when we expanded wine sales, but a 9% profit increase from a tenfold increase in retail locations is hardly unrealistic.

Another attempt to stop retail sales is by claiming liquor enforcement needs a dozen new agents. Yet no store that doesn’t already sell alcohol will be added. We already monitor and enforce sales at each of those outlets. How would the addition of a few products that are sold under the exact same rules as products they already sell change anything? Agency administrators like any excuse to add staff but this one is fairly easy to see through.

Finally, more stores mean more choices. The state-run stores necessarily limit products. Currently, locally produced John Stark vodka is about to be removed from state stores. It may be a reasonable business decision but surely with local grocers making their own decisions, the “Live Free or Die” vodka would find a few niches. Specialty drinks that have no room in the limited liquor stores would find a home somewhere.

It is natural for a control agency to want to maintain control. But there is no reason that stores that sell three categories of alcoholic beverages can’t sell a fourth. Arguments that were wrong about wine, wrong about beer, and wrong about fortified wine should be discarded. The change will be good for consumers and good for state revenues.

Charles M. Arlinghaus is president of the Josiah Bartlett Center for Public Policy, a free market think tank based in Concord. He can be reached at Arlinghaus@jbartlett.org.

 

By Grant Bosse

All three of New Hampshire’s Liquor Commissioners have lost the use of their state-issued cars, after racking up thousands of miles in personal use last year. Under a new law, state agencies have to reassign cars that are used more than 15% of the time for Non Business Use, unless a panel of state officials approves a waiver. That committee voted 4-1 against letting all Joseph Mollica, Michael Milligan, and Mark Bodi keep their state cars.

Documents filed with the Department of Administrative Services also appear to show that all three Commissioners originally understated the amount of personal miles they drove when seeking to keep their state cars.

Joseph Mollica

Liquor Commission Chairman Joseph Mollica drove a 2010 Chevrolet Impala a total of 13,836 miles in Fiscal Year 2011. In his waiver request to Administrative Services Commissioner Linda Hodgden, dated August 10, 2011, Mollica claimed to have accumulated 5,520 miles for non-business use, but the official report Hodgden presented to the Legislative Fiscal Committee states that Mollica drove 8,799 miles not on state business.

It would have cheaper for New Hampshire taxpayers to reimburse Mollica at $.55 per miles for the 5,037 miles he drove on state business. According to DAS estimates on the cost of maintaining state vehicles, it cost $1,770 to subsidize Mollica’s personal use of the vehicle.

Michael Milligan

Commissioner Michael Milligan had the fewest personal miles of the three, and the lowest percentage of non-business use. According to the DAS report, Milligan drove a 2008 Ford Fusion a total of 18,329 miles in FY11, 9,916 miles on official business and 8,413 for personal use. But his August waiver requests claims to have only accumulated 5,920 miles non-business use.

That request contained identical language to Mollica and Bodi’s letters, seeking to justify Milligan taking the state vehicle home at night.

This vehicle is used for commission business from the Commission’s offices in Concord and frequently from a home office. On a regular basis, Commissioner Milligan travels directly from his home to visit our 76 retail store locations. It is not unusual for him to spend the entire business day traveling from store to store. Commissioner Milligan also attends meetings throughout the state with business partners and other state officials. In addition, Commissioner Milligan attends special events held at our retail stores and other venues during evenings and weekends.

DAS estimates that Milligan’s personal use of a state vehicle cost $545 more than it would have to reimburse him for his official travel.

Mark Bodi

Commissioner Mark Bodi, who chaired the three-member panel until being demoted last year, drove by far the most personal miles, and the highest percentage of non-business use. According to the DAS report, Bodi drove just under 75% of his miles for non-business use. Bodi accumulated 17,099 miles on a 2006 Chevrolet Impala LS.

Bodi’s waiver request claims that he drove 8,710 miles for non-business use, but the DAS report concludes 12,793 miles were off the clock. DAS estimates the cost of those personal miles at $3,253 more than reimbursement for Bodi’s 4,306 miles driven on state business.

Hodgden tells New Hampshire Watchdog that if the Liquor Commission would like to have a state vehicle to use as a pool car for Liquor Commissioners to use for official travel, that request would likely be granted. The New Hampshire Liquor Commission did not returns requests for comment on this story.

The committee did approve the continued use of one Liquor Commission vehicle that had more than 15% of its miles for non-business use, unanimously approving a waiver for Investigator Glen Bullock to keep using a 2004 Chevy Impala. In FY11, Bullock drove the car 4,877 miles, 1,360 of which were non-business use. DAS estimates that letting Bullock use the vehicle saved taxpayers $343 versus paying Bullock for $.55 per mile for his official travel. A fifth Liquor Commission car that tripped the 15% threshold was reassigned by the Commission. The Liquor Commission has 45 state vehicles in its fleet.

NH Liquor Store photo: Grant Bosse
Commissioner photos: NH Liquor Commission

NH Liquor Commission State Vehicles Requests