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Updated: Beer and wine wholesalers oppose McDonnell's ABC privatization plan

Anita Kumar

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.

By Anita Kumar  | September 16, 2010; 5:42 PM ET
Categories:  Anita Kumar, Liquor privatization, Robert F. McDonnell, Transportation  
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"Doesn't know what he's talking about?" The gov's office can pick and choose the studies that support their arguments and opposition can pick and choose theirs, such as research finding 16 to 20 percent less alcohol consumption in control states and less drunk driving. It is common sense that consumption would be up with hard liquor everywhere --Walmart, Costco, Safeway, Walgreens, Sheetz gas -- and available for purchase in stores 24/7. And, hello, the governor actually wants more sales to try to match lost ABC revenue through liquor taxes/fees! With more consumption of this potent, addictive substance, and less control to prevent underage drinking and sales to the already inebriated, of course there is more trouble. Realize, too, that a lot of the damage liquor causes is under the radar of any study.

My sense is that thousands upon thousands of Virginians, regular people with no special business interests, but who care about their families, their neighborhoods, their state pride, and maintaining the peace, don't like the way this smells. I could list more than 8 reasons to say no.

Posted by: anonymousid | September 17, 2010 12:19 AM | Report abuse

"a lack of consenses"


Posted by: j00_suxor | September 17, 2010 4:08 AM | Report abuse

the whole idea behind this was to provide money for transportation. So why don't they just take those new "fees" (taxes) and go ahead with them alone.

then they'll have money for transportation and won't be killing the golden goose that is those ABC stores.

Posted by: MarilynManson | September 17, 2010 8:09 AM | Report abuse

The wine and beer wholesalers looking our for the little guys ... what a joke. This is a small handful of multi-millionaires who are trying to protect their shelf apace.

If anyone has any questions on whether distilled spirits carry an extra health or safety risk compared with wine or beer, go to the Centers for Disease Control website, look at the alcohol section and go to frequently asked questions. It states unequivically that spirits have NO HIGHER HEALTH/SAFETY risk compared with wine or beer. So why treat them differently? This should be a no brainer.
My strong sense is that the vast majority of Virginians WANT ABC privatization.

Posted by: Virginian64 | September 17, 2010 8:41 AM | Report abuse

To Virginian64, for the Virginians I know their stance on this issue is easy: what is the impact on the state budget?
Does privatization make money or lose money for the state? Because if it loses money who will be filling in that hole? (The entire tax base instead of just drinkers)

This is a bad deal for Virginia. Short term gain for long term loss.

Posted by: CrabHands | September 17, 2010 8:57 AM | Report abuse

Re the privatization of liquor plan by Gov McDonnell. Just remember former Gov Gilmore's plan to reduce and ultimately end the personal property tax...I'll pay $500 this October for 2 older cars. It's deja vu all over again.

Posted by: j4tb | September 17, 2010 9:30 AM | Report abuse

Re the privatization of liquor plan by Gov McDonnell. Just remember former Gov Gilmore's plan to reduce and ultimately end the personal property tax...I'll pay $500 this October for 2 older cars. It's deja vu all over again.

Posted by: j4tb | September 17, 2010 9:32 AM | Report abuse

Idiotic plan from an idiotic Gov.Has anyone taken into account the monies that will be paid out for UNEMPLOYMENT for the present state workers who will become UNEMPLOYED?? How does HE figure a windfall ?? Who is going to replace the lost revenue?? The individual taxpayer, of course !! As for his idea of repairing roads in NORTHERN VA., put in tolls road, let Northern Va. pay for their own improvements and leave me alone. I don't go up there , thus DON"T USE MY MONEY TO FIX YOUR SCREW UP !!! Another thought, replace all the rail lines that were torn out, take the "big rigs" off the road , thus saving wear and tear on the "paved ribbons" of Virginia !!! Does any of these "elected" idiots have a grain of common sense? Not likely..Common sense went out of the window.

Posted by: nwcmbrg57 | September 17, 2010 11:30 PM | Report abuse

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