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Free (Market) The Booze! 

Our Glass Slipper this week goes to Rob Patridge who heads a five-person policy panel for the Oregon Liquor Control Commission and who is co-introducing (with the OLCC's Executive director) a bill for the February session of the Oregon legislature to, hold on to your bowler hat, loosen the OLCC's grip on liquor sales—potentially the biggest deregulation of alcohol in Oregon in 80 years! Patridge's proposal is fairly simple and places liquor sales slightly more in the context of free enterprise: Under the new plan, by March 2015 larger grocery retails (read: Costco) would be allowed to sell spirits and liquors.

At first blush, it is somewhat surprising that Patridge would present such an idea. Currently, gin, vodka and whiskies are only sold in the 248 state-sanctioned liquor stores; those stores are operated by independent owners, but who are approved and licensed by the OLCC and buy directly from the OLCC, and sell at prices determined by the OLCC.

Patridge's proposal is sort of like Mikhail Gorbachev declaring that the Soviet Union will open its doors to free trade. Yes, it will fundamentally change the purpose and strength of the OLCC, which, in our sober opinion, is a good direction to head.

The OLCC is out-of-date. Set up in the years after Prohibition—yes, as in 80 years ago, which would be a lot like holding onto regulations of automobiles from the time of Model T's. The agency's purpose was to manage the sale of a commodity—alcohol—that only years earlier had been illegal, and what sales that had been happening were famously and largely in criminal hands. Yes, at that time, liquor sales needed a state agency to smoothly transition into the free flow of commerce. However, that was 80 years ago.

The proposed concept to allow a more free-market approach to liquor sales seems to make simple sense. Not surprising, though, the most vocal opponents to the proposed changes are those who currently benefit most from the state-control of the marketplace—the 248 business-owners who are licensed to sell liquor at the state-controlled stores. Some of these owners have bellyached that nearly half the state-sanctioned agents will go out of business.

Why yes, that might happen. Ma Bell did not do so well in the years after the federal government deregulated the phone company in 1984.

The second complaint is that prices on liquor will rise. Toward that calculation, those protecting the idea of exclusive state-control of liquor stores and sales have pointed to Washington, where voters dismantled their liquor commission—and, yes, there have been minor price jumps, about $2 for a 750 ml bottle, in the months after deregulation.

More broadly, though, there is no consensus whether prices will rise or fall if liquor is sold on the free market. Likewise, control of alcohol sales by a liquor commission does not seem to decisively affect drunk driving rates or general alcohol consumption. And regardless, the state will continue to collect some $200 million in taxes from liquor sales under either a state-controlled economy or a free market. In fact, after deregulation, in spite of slightly increased prices, liquor sales in Washington have increased by 10 percent (perhaps to celebrate all those same-sex marriages?), bringing more tax revenue to the state.

We applaud the OLCC's move to allow liquor and spirits to join beer and wine to be sold (partly) on the free market, outside of state-designated liquor stores. Even so, there is concern that the OLCC's action may be an attempt to end-run around further deregulation. Over the past several years, there have been increasing grumblings about altogether abolishing the OLCC, including a potential ballot measure by the Northwest Grocers Association this coming November. Certainly, this move in February to loosen its heavy hand on liquor sales could play out in a November ballot. "Hey," the OLCC could say, "we're already doing enough."

While we don't entirely agree that the OLCC permitting liquor sales in large retail groceries is the be-all end-all, we do agree that it is one earnest and small step in the right direction. Let's not wait another 80 years to take the next leap.


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