State Line = State of Mind

Not too far south of the Mason-Dixon Line is an odd little Pennsylvania-like anomaly within Maryland: the Montgomery County Department of Liquor Control. It's the last municipal control county in the U.S. They actually go the PLCB one better (one worse?): they have a monopoly on spirits, wine and beer sales, wholesale and retail off-premise. But like the PLCB, they are being called out for not serving the customers well and there are calls to privatize the system.

The funny thing is, the calls are from the DEMOCRATIC leadership of the state.  Specifically Maryland Comptroller Peter Franchot (D), whose office is in charge of liquor regulation for the state. Unlike the Democrats here in PA who would never say  something like “The county’s monopoly is bad for consumers, bad for small businesses and for our local economy” about the PLCB, the Comptroller is not only saying that, but saying it out loud and producing these anti-control broadsheets:

Clearly Franchot is not a student of Wolfonomics. He even has put out a report detailing exactly how and why privatization is better.

Of course the Union (who else?) opposes any talk of privatization saying that privatization would not create real competition.
"Under Maryland state law, two wholesalers may not distribute the same product in the same market at the same time. There is always one approved, designated wholesale distributor in a given market for each brand or product. Private liquor will have its own liquor monopoly."

So there won't be competition when Smirnoff is in direct competition with the other 40 brands of vodka in their price range? Somebody needs to go back to school and take some Econ classes. Competition will hold except at the very ends of the bell curve where there is no suitable substitute for the product you want: like a 60 year old bottle of Glenfiddich Scotch or a half-liter bottle of MD 20/20. That's true for the majority of states and countries, and is considered the norm so it really isn't pertinent to the privatization argument.

Of course, this ignores the indisputable fact that there is NO COMPETITION at all, be it real or fake, in Montgomery County now.

We here at the blog wish you the best of luck, Mr.Franchot! May you show our legislature the way to satisfying the consumer and ridding us of the archaic system now in place.

"Just give me something"

I was talking to a licensee (that's PLCB-speak for a bar owner) the other day about this whole thing. What do you guys think about the movements towards privatization, I asked her.*

"What kind of chances do you think it has?" she asked in response. "Is this really going to happen?" I said that I'd heard G. Terry Madonna, the Pennsylvania politics maven at Franklin & Marshall College (full disclosure: I am a proud F&M grad, class of 1981, and if you have high school age children, you should consider this excellent college.) discussing it; his opinion was that it was the best shot we'd had at privatization since Repeal...and he gave it a 40% shot. That was back in the spring, though, and things had moved forward since then; insiders tell me that the votes are there in the House, and the Senate's swinging our way (and there may yet be some action from a Marcellus Shale tax deal; a 'you vote for my bill, I'll vote for yours' kinda thing). So again, I said...what do the licensees think about this?

"I'll tell you," he* said, and paused. "The Tavern Owners don't know what to do. You know, it would be great; in other states, the Absolut rep would come to you and say, 'I got a deal on this week; you buy two cases, I give you this price,' and I could say, well, what can you give me if I buy four cases, and he'd say...ooookay, and he'd give me another price, and then, then I could pass that on to the customers, do a special that week." And, I said, not only that, they'd deliver it to you. "Right!" they both* said, beaming.

"But you know," he* continued, and got right in my face: "The prices we have to pay are crazy. We don't get a good discount. And the beer sales thing? [meaning the six-pack sale monopoly taverns currently have] We know the beer stores are going to get into wine and liquor sales if this goes private; they've got the money, they're already set up. We're going to lose a lot of takeout sales [we'd already guessed that wine and spirits in the distributors would mean sixpack sales there as well], I know that, but no one's putting anything for us in the privatization [bill]. Just give me something! Ease up some of the regulations, cut back on the fees; just give me something."

Why don't you say something, I asked. They* shook their heads, and she* said, "We don't know if it's going through." The implication was clear: no one wants to piss off the PLCB by being openly pro-privatization...and then face the bureaucrats if it fails.

My advice to the 'privateers' (as Hereditary Union President For Life Wendell W. Young IV has wittily tagged the pro-privatization forces): give them something. Put something in the bill that acknowledges licensees are getting a raw deal; level the playing field by putting no exclusivity on suppliers -- let licensees buy from whatever source they want -- or take off that ridiculous 'happy hour' restriction, or let all bars sell packaged goods (to-go wine, liquor, and beer) and don't tell them how they have to do it. You'll get a powerful ally...and be a giant step closer to getting privatization.


*Might have been a woman, might have been a guy, might have been a husband and wife; might have been around here, might have been up in Clinton County where I was vacationing...I ain't saying, for obvious reasons.