Commentary: House Leaders Were Right to Pull the Plug on the ABC Warehouse

By Joyce Kohn, CEO of Free Our Spirits NC

Speaker Destin Hall and the North Carolina House leadership team deserve credit for stopping the proposed $310 million ABC warehouse project before taxpayers and consumers were saddled with another costly mistake.

The idea was flawed from the start.

After recent news reports described behind-the-scenes pressure, favored developers and the appearance of insider dealing, it became indefensible.

North Carolina’s ABC Commission never made a convincing public case that a new state-built warehouse was necessary. It asked lawmakers to authorize a massive loan for a 600,000-square-foot facility, yet failed to demonstrate why the state monopoly should expand its footprint instead of reforming the way liquor is sold and distributed.

Before borrowing hundreds of millions of dollars, public officials should demand proof of need, proof of competence and proof that consumers will benefit. The ABC Commission has not met that test.

The warning signs are not theoretical. Two state auditors, Beth Wood and Dave Boliek, have produced deeply troubling findings about the ABC system’s warehouse operations. Ms. Wood’s earlier audit found inadequate oversight of warehousing and distribution and millions of dollars in waste.

Mr. Boliek’s recent performance audit again showed that the state’s warehouse and distribution system failed to consistently meet key delivery standards, even while operating under an expensive long-term contract. That is not a record that inspires confidence.

This is the larger problem with North Carolina’s state-run liquor monopoly.

It combines commercial power, political influence and a police function inside one protected system. That structure invites waste, cronyism and complacency. When a government monopoly controls the market, controls distribution and then asks for more debt to build more infrastructure, the public is right to ask who benefits.

Why in the world would North Carolina allow this ABC Commission to build anything new when its existing warehouse affairs have drawn such repeated criticism?

If private companies had this record, they would face competition, contract penalties or replacement. The ABC Commission asks instead for more authority, more money and more trust.

The House was right to pause this project.

Now lawmakers should go further. When the General Assembly returns in January, North Carolina needs a thorough, public debate about modernizing our ABC laws.

The question is not whether liquor should be regulated responsibly. It should be. The question is whether a state monopoly is still the best way to serve a fast-growing, competitive state.

Why borrow $310 million for a new government warehouse when the private marketplace already has the capacity, expertise and incentives to manage sales and distribution better? Modernization can protect public safety, improve service, reduce political favoritism and spare taxpayers from unnecessary debt.

Speaker Hall and his leadership team made the right call by pulling this project. In January, the General Assembly should finish the job by opening the ABC system to real reform.

Free Our Spirits NC | www.freeourspiritsnc.com

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