Two legislators from Guilford County are prime movers in a proposal to privatize alcohol sales in North Carolina and liquidate the state’s network of locally owned ABC stores.
State Reps. Jon Hardister, R-Whitsett, and Pricey Harrison, D-Greensboro, are among the four primary sponsors of a bill that would allow supermarkets or other licensed retailers to sell hard alcohol and other forms of what the law calls “spiritous liquor.”
Hardister said his interest in changing the law that currently limits such sales to government-owned, operated and regulated liquor stores dates back years and stems from his belief in “free market” economics.
“I don’t think it’s appropriate for the government to own and operate ABC stores,” Hardister said. “It just doesn’t make sense to me from a philosophical perspective.”
The state Alcoholic Beverage Control organization would still serve as a watchdog to make sure the private licensees toe the line in such areas as thoroughly checking IDs to discourage underage drinking, he said.
“When the private sector takes over, you can control a licensing system just as much, if not more” than an all-government operation, Hardister said.
Harrison said she signed onto the legislation, House Bill 971, based on her interest in reforming an antiquated framework that has put unrealistic restrictions on craft distillers and other entrepreneurs.
North Carolina is among a dwindling number of states that restrict the sale of bottled liquor to government-owned and operated outlets.
“Some of them seem nonsensical,” Harrison said of the current statutes controlling alcohol sales. “I’m not sure the state should be in the business of selling alcohol.”
At the local level, the potential change drew a wary response from several Greensboro officials.
Mayor Nancy Vaughan said the current system that nets municipal government about $4 million per year seems to be working well.
“When you look at our ABC stores they are situated evenly throughout the community,” Vaughan said. “They are in clean shopping centers, they are well-lit, and they are professionally run.”
Vaughan said she can’t see any compelling reason to change something that seems to be working quite well under the leadership of the local ABC board.
“I have seen these stores in other states and they have a tendency not to be run as well,” she said.
The bill as currently written would start taking effect next year, but Hardister said the date is subject to change. The bill sponsors do not expect passage this session and would push back the start date as needed to accommodate change, perhaps 2023 or 2024, if necessary, he said.
They want to start a conversation about both the pluses and challenges of making such a change, Hardister said, then put together a “hold harmless” format that would leave no community or group disadvantaged by the switch to a licensed system of private retailers.
“It’s not going to happen this year. It’s in the realm of possibility that it could happen next year,” he said of the General Assembly in Raleigh enacting the proposed changes.
Currently, the North Carolina system operates under the supervision of local boards that own and run a total of 500 stores. The stores are then policed by local officials, the state ABC Commission and by the Alcohol Law Enforcement arm of the State Bureau of Investigation.
Guilford County has three separate ABC boards: Greensboro, and smaller systems in High Point and Gibsonville.
The Greensboro system is significantly larger than its local counterparts, with 16 stores throughout the city and in Summerfield; dozens of employees; and an administrative hierarchy that includes CEO Vickee’ Armstrong, a chief of finance, deputy finance officer, a director of operations and a manager of human resources.
State Rep. Chuck McGrady, R-Hendersonville, has been the General Assembly’s point man in the effort to overhaul the state’s 80-year-old system for distributing and selling distilled spirits, which he described as “outdated and inefficient” in a recent news release.
As HB 971’s chief sponsor, McGrady said the bill would increase revenue flowing to both state and local governments. In addition to Hardister and Harrison, the other sponsor is state Rep. Jason Saine, R-Lincolnton.
With its 170 ABC boards scattered across 100 counties, North Carolina is the only state in the nation where local government boards have total control over retail liquor sales to both consumers and businesses, McGrady noted.
“I think our citizens and businesses are more than ready to be treated like we live in the 21st century,” McGrady said.
The proposal has attracted strong support from the N.C. Retail Merchants Association and the N.C. Restaurant and Lodging Association.
But at a recent legislative committee hearing in Raleigh, the bill drew fire from several critics led by state Rep. Pat Hurley, R-Asheboro, who said the proposal would end up “hurting the people of North Carolina” in such ways as triggering increased alcoholism and drunken driving deaths.
Harrison said she also has heard “pushback” from other conservatives who object to any perceived loosening of restraints on alcohol sales, sometimes on religious grounds.
But Andy Ellen, the president and general counsel of the merchants association, said the state’s ability to regulate sales and police the manner in which alcohol is dispensed would only gain ground if licensing and regulation were government’s sole focus.
He said that the state’s hodgepodge of efficient, mediocre and poorly run ABC systems is costing North Carolina tons of potential revenue at the same time it deprives many consumers of quality service and access to a full range of desirable alcoholic beverages.
“Is the bartender at your local Applebee’s any more responsible than a person who is working in a retail store to sell you the very same product?” Ellen asked rhetorically. “With 170 ABC boards, some counties have 10, some have one and some have none.
“Some are much more effective than others. Some are losing money, even as a monopoly.”
Vaughan said she believes the Greensboro ABC system is among the better run. She noted that the City Council recently passed a resolution endorsing the ABC system.
Like the mayor, Councilman Justin Outling said he has yet to see a compelling reason for changing Greensboro’s current arrangement.
“There may be good justification, but I haven’t seen that case being made,” Outling said.
He also echoed Vaughan’s support for the way that Greensboro’s local control has resulted in the “burden and benefits” that ABC stores bring to their host neighborhoods dispersed equitably throughout the community.
The Greensboro ABC Board has five members, led by Greensboro businessman Jim Galyon who serves as the chairman. he City Council appoints the board members to staggered, three-year terms.
One thing that’s certainly in the cards for Greensboro if and when change does come — it will be a massive task to make the transition.
Galyon said the local operation has a significant investment in real estate that includes the stores and other property.
“It’s well into eight figures,” he said.
The local board’s legal counsel, Mike Fox, said that if the system were phased out, the local organization would have to sell assets ranging from the buildings it owns to delivery trucks, office equipment and inventory of distilled spirits.
“I think the place to start thinking about this is, these local ABCs are just like businesses,” said Fox, a Greensboro lawyer.
Employees would lose their jobs, so their retirement benefits under the local government employees’ program would be a consideration. The board would have to “negotiate paying its way out” of the property it leases.
“It would be quite onerous,” Fox said of such a complex closure process.
Hardister said that as complicated as the statewide version of such a transition would be, legislators are not facing any deadline and have plenty of time to build in protections so that all stakeholders — from city governments to individual employees — emerge in at least as good a situation as they have now.
Public sector jobs would be lost in the process, but they likely would be supplanted by many more new positions in the private sector, he said.
“I’ve asked our staff to take a look at how this would impact Guilford County as the bill is currently proposed,” Hardister said. “Bear in mind, we’re at the beginning of a process. ... We don’t want to rush it. We know it’s a big change.”