Is Liquor Privatization a Public Health Issue?

A look at potential impacts amid Pennsylvania’s legislative debate

On March 21, the Pennsylvania State House approved a liquor privatization bill aimed at eliminating state liquor stores and allowing wine to be sold in grocery stores. While the possibility of privatization has been discussed for years, this is the first time in state history that such a bill has cleared the House.

Currently, Pennsylvania’s liquor laws are some of the most restrictive in the country.

Much of the debate regarding liquor privatization has been about whether or not it is good fiscal policy. Questions being asked are: How will this help to fill the current gaps in the budget? Is this model economically sustainable? What does it mean for taxpayers?

And while these questions are important, there is another question to add to the list: If liquor is more readily available, will we see an increase in consumption?

Some of the Research

In a 2009 study, the Commonwealth Foundation, a Harrisburg conservative think tank, looked at the effects of deregulation in Iowa and West Virginia. Researchers John Pulito and Dr. Anthony Davies, of Duquesne University, found that after breaking states down by their level of control, “evidence suggests that, while regulating liquor at the wholesale level may contribute to reduced consumption, there is no clear evidence that regulating liquor at the retail level affects consumption.”

In fact, the researchers found that with deregulation, per capita consumption decreased by as much as 5.9 percent. They said with more convenient hours and less restrictive purchasing guidelines, consumers were actually purchasing less alcohol per trip.

“Divestiture of Pennsylvania’s state liquor stores would represent a financial windfall to the state, while posing no threat to public safety, as it would not result in the social ills many opponents of privatization fear,” they write.

However, a much larger study, published last year in the American Journal of Preventative Medicine, found that it is likely that the privatization of liquor sales will lead to an increase in alcohol-related social ills.

In it, the Community Preventative Services Task Force, a resource for evidence-based recommendations and findings about what works to improve public health, recommended against the privatization of alcohol retail sales, based on their summary of 17 studies on the privatization of retail alcohol sales throughout the U.S., Canada and Europe.

They found that across the 17 studies, there was a 44.4 percent median increase in the per capita sales of privatized alcoholic beverages in locations that privatized retail alcohol sales.

The report also found that privatization may also be associated with more lax enforcement of sales regulations.

And within the last year, researchers at Drexel University projected that the number of retail alcohol outlets in Philadelphia might increase by 1, 115 “with concomitant negative health, crime and quality of life outcomes that accompany such an increase.”

What happened in Washington?

seattle — Washington State privatized liquor sales last June. Credit: Daniel Schwen

One way to glimpse Pennsylvania’s possible future would be to look at the impact liquor privatization has had in Washington State since it took effect in the last June.

According to the Washington Department of Revenue, during the first four months of privatization, the state’s hard liquor sales increased from a year earlier, despite higher prices.

Sales of spirits by volume increased almost three percent in the four months ending in September. Nearly 13.6 million liters were sold in the period compared to 13.2 million liters during the same four-month period a year earlier, when state-run liquor stores were still in operation.

In a survey of Washington police chiefs released in September, the Association for Washington Cities found a number of impacts related to privatization.

They found:

63% report an increase in liquor theft
30% report an increase in alcohol related crimes near grocery stores
40% said they needed more officers for liquor enforcement and alcohol-related crimes
25% said they needed more support for liquor enforcement from the Liquor Control Board

View the full report

Excessive consumption and its impact on public health

In a statement released after the vote, Rep. Jake Wheatley, D-Allegheny, said he voted against the bill because liquor licenses could more than double under privatization.

Wheatley said the bill contains no provision that would protect Pittsburgh from being saturated with liquor stores.

“That would be devastating to our quality of life,” he said. “The bill also lacks funding to help cities and other local governments deal with the social and law enforcement impacts of increased alcohol abuse and related crimes.”

According to the Center for Disease Control, nearly 80,000 deaths in the U.S. can be attributed to excessive drinking annually, making alcohol use the third leading preventable cause of death in the country. And in 2006, the last year data is available for, binge drinking cost the U.S. economy nearly $223.5 billion in related health care costs.

The Pennsylvania Senate will be holding hearings over the next two months on the topic.