Alcohol Regulation


Conor Friedersdorf reminds me of one of the odder regulations out there, New York State’s rules about who can sell liquor:

In New York, supermarkets aren’t allowed to sell liquor. What possible reason could there be for this? Were members of the New York Legislature to tour California, they’d see that supermarkets are the most responsible sellers of alcohol, and that high school kids with fake IDs always seek out small liquor stores.

As I recall the rule is actually even odder than that. You can’t sell liquor in a supermarket or deli in New York, but you also can’t sell beer in a liquor store! Rules that make it inconvenient to buy hard liquor are arguably a form of public health paternalism, but the no beer in a liquor store rule doesn’t seem to pass muster on any kind of grounds other than that the current sellers of beer like it that way.

Driving through New Hampshire last week also reminded me that I find some states’ habit of insisting on a state-owned liquor store monopoly to be pretty weird. Whatever this is supposed to accomplish seems like it could be accomplished much more easily by simply taxing alcoholic beverages and leaving the actual operation of the businesses in the hands of the private sector. Indeed, my general view is that booze in the United States should be more taxed but less regulated. Rules that aim to promote public health by restricting the availability of alcohol create a large regulatory surplus that accrues to license-holders. If you try to do the same thing through booze taxes, then the surplus accrues to the state and can be used to finance lower sales taxes or better public services.