Virginia ABC Privatization Recommendations Unveiled

September 8, 2010

Senior members of Governor Bob McDonnell’s staff unveiled the official staff recommendation for ABC privatization in the Commonwealth at a meeting of the Simplification and Operations Committee of the Governor’s Commission on Government Reform and Restructuring in Richmond.

Virginia grocery stores are only permitted to sell beer and wine, but if McDonnell's plan is adopted, customers could begin seeing liquor added to the shelves.

What it could mean for consumers is more access to alcohol, more access to alcohol and possibly lower prices because of increased competition. However, some stores say many things will need to be considered before getting into the alcohol business.

"We'd just treat it like all our other items and bring it in. Again, it would take a much bigger space than you would normally put into an item, but it would just have to be one of those things you'd have to look at," said Kim Miller, Reids Supermarket Manager.

Speaking about the staff recommendation, Governor McDonnell noted, “This is an opportunity to put half a billion dollars into transportation simply by eliminating an outdated government monopoly. $500 million for roads and rail will mean congestion relief for our citizens. By privatizing ABC, Virginia will join the majority of states in the nation that have long recognized alcohol distribution is not a core function of government... ABC privatization is one part of the overall solution to our transportation challenges.”

The staff recommendation, which is expected to undergo changes through the Commission approval and legislative processes, is highlighted by the following points:

- Privatization is expected to provide $500 million in new funding for transportation

- 1,000 retail licenses will be auctioned off to the highest bidders

- The licenses will be broken into three categories: 600 licenses for large establishments such as grocery stores; 150 for smaller establishments such as package stores and wine and beer shops; 250 for convenience stores/retail pharmacies

- 332 licenses will be guaranteed for areas currently served by an existing ABC outlet, and the additional 668 licenses will be granted based on population density

- No one company will be allowed more than 25% of licenses within each level

- The wholesale side will also be privatized, allowing the Commonwealth to completely focus on law enforcement and regulation of distilled spirits

- There is no tax increase in the privatization proposal

- The Commonwealth will also make an additional $33 million on the sale of the ABC warehouse in Richmond and 19 state owned outlets

- The number of ABC enforcement agents will be increased by 25%

- The Commonwealth, through the ABC board, will maintain health, safety, law enforcement and marketing regulatory authority over private distilled spirit sales and distribution

The Committee heard the recommendation Wednesday, and will vote to send the proposal to the full Reform Commission at a meeting to be held the week of September 27.

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