Happy hours are here again

Our view: Settlement of lawsuit ensures competitive pricing for wine and spirits and perhaps the possibility of further liquor law reforms

May 19, 2010

Raise your glasses. Prohibition era regulations that have caused Marylanders to pay more for wine and liquor have finally been dumped down the drain for good. The settlement of the lawsuit brought by Beltway Fine Wine & Spirits — agreed to Wednesday by the Board of Public Works — will ensure a measure of competition to the retail alcohol business.

Mom-and-pop liquor stores can't be too pleased with the outcome, of course. It means that big box companies like Beltway can negotiate volume discounts from wholesalers and pass along those savings to their customers. Smaller liquor stores don't have that kind of purchasing clout and will have to find ways to compete, much as independent drugstores, grocers, clothiers and other retailers have before them.

For decades, Maryland's "post and hold" regulations governing liquor and wine and the ban on volume discounting had kept wholesale prices stable — that is, artificially high. The justification has been that higher prices have a tempering effect on consumption, and that may be true to some extent. Taverns don't offer lower prices at happy hour because it drives away customers.

But the requirements have been regarded as unenforceable for several years now by the state comptroller's office and were more recently struck down by a federal appeals court. The settlement merely renders them null and void for good. Besides, there are better ways to make certain liquor prices don't fall so low that public sobriety becomes a distant memory. One much more forthright approach is to raise the state's decades-old taxes on liquor, wine and beer, which would have the side benefit of funding needed programs.

Maryland has some of the lowest alcohol excise taxes in the nation and, as public health advocates have repeatedly pointed out, raising them by the equivalent of 10 cents per drink could not only help resolve the state's continuing budget shortfalls but reduce drunken driving, violent crime and many of our society's other alcohol-related ills. Plus, such a tax is fair, as everyone pays it — rich or poor, and whether they patronize Beltway or a small, local wine store.

The industry has much political pull in Annapolis, and this state's dated and anti-competitive laws have helped some and hurt others. Consumers generally fall in the latter category. Not only have Marylanders paid more for their drinks, but the state's three-tiered distribution system bans direct shipment of wine from producers to consumers.

With this settlement, the door is surely open for the General Assembly to consider clearing up the books and enacting further liquor law reforms next year. Direct shipment should be high on the agenda. Currently, 37 states allow it. The measure's chief opponents are the wholesalers who stand to lose hefty profits. But, as Wednesday's settlement demonstrates, the interests of consumers can sometimes prevail, too.

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