Updated: Beer and wine wholesalers oppose McDonnell's ABC privatization plan
The Virginia Beer Wholesalers Association has joined the wine distributors in opposing Gov. Bob McDonnell's plan to privatize the state's liquor system.
The beer association represents 32 distributors while the Virginia Wine Wholesalers Association, which voted Sept. 7, represents 14. Most members are Virginia-based family businesses.
Both groups oppose the proposal primarily because small businesses would not be able to afford the licenses, spokesman Jim Babb said.
McDonnell's proposal calls for auctioning off 1,000 licenses to sell liquor. Minimum bids for licenses would be based on a formula that takes into account the size of the proposed store and the current profitability of ABC stores in different geographic regions.
For instance, the governor's office says the minimum bid for stores in rural Page County would range from $102,844 to $257,114, depending on the license tier. In more populated Virginia Beach, they would range from $191,072 to $477,681. Businesses would have to renew licenses annually at a cost of $500 to $2,000, depending on the size of the store.
"A lot of businesses don't have access to that kind of capital,'' Babb said.
McDonnell's plan would provide a one-time windfall of $458 million for transportation and recurring revenue of $229 million a year through a series of fees.
Babb said beer and wine distributors are also concerned that the proposal does away with a state-run system that consistently provides nearly $260 million to the state for just $458 million.
Though they didn't say it, it's also likely beer and wine distributors also are worried that shelf space at stores now devoted to beer and wine would be replaced with liquor.
Meanwhile, Del. Joe Morrissey, the House Democratic whip, came out against the ABC privatization plan at a political fundraiser Thursday night in Richmond. He said he was speaking on behalf of House Minority Leader Ward Armstrong (Henry) and House Caucus Chairman Ken Plum (Fairfax). Armstrong spokeswoman Claire Wilker said that was not the case, though the two men do not support the plan in its current form.
Morrissey listed eight potential problems with McDonnell's plan, including an increase in alcohol consumption, a diminished quality of neighborhoods and a lack of consenses for the proposal. He also said the system is worth much more than the governor's plan realizes.
"Why would we sell off this crown jewel for a mere $458 million when it is worth billions?" he asks.
We have reached out to the governor's office and will let you know when we hear back.
Updated, 7:30 p.m. The governor's office responds -- with a bit of a zinger. "It's not news to me that the beer wholesalers don't want competition and Joe Morrissey doesn't know what he's talking about," McDonnell spokesman Tucker Martin said.
| September 16, 2010; 5:42 PM ET
Categories: Anita Kumar, Liquor privatization, Robert F. McDonnell, Transportation
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