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Saturday, November 10, 2018

Ohio Liquor Laws - Mixing Dumb with Dumber

TL:DR - The state controls what is sold, when, where, and the price, which inhibits a free market and oversteps the role government should play in society by limiting the supply and demand for liquor.

Since starting this blog, I've received a fair amount of questions as to why availability is part of the scoring criteria? I thought it would be beneficial to write a post on how liquor works in Ohio, why it is a antiquated system, and what should happen in the future.

The way the current law works in Ohio is that all liquor sold in the state has to be sold from a state-run liquor store. The
administration of this is done though the Ohio Department of Commerce Division of Liquor Control. This group determines what brands are sold, where in Ohio they are sold, the quantity allocated per location, and the prices. 

This is an inefficient system because it suppresses a free and open market. Having the state control everything means that high demand liquors aren't available in Ohio and the flow of supply doesn't come close to meeting demand. If a person in Ohio wants something unique or new, their best bet is to travel to Michigan or Kentucky, resulting in lost tax revenue for the state. I know every year when I visit Illinois during the holidays, I stock up on bottles and bottles that I can't get in Ohio.

If Ohio were to privatize their liquor system, they could learn from the state of Washington. They  voted to privatize five years ago. However, they added a 10 percent fee paid by distributors, which dropped by half in 2014, and a 17 percent fee paid by retailers. Consumers also pay a 20.5 percent retail sales tax. With all these taxes, the price of liquor has actually increased and yet they still are getting more tax revenue than they did when the state controlled it because there is a lot more supply and locations selling liquor. Ohio could leverage similar taxes as our neighbors (Kentucky and Michigan) to remain competitive without being as extreme as Washington. This would allow for the tax revenue to stay consistent, while moving to a more open market.

At the end of the day, I don't feel comfortable with the government trying to make a profit off of the citizens they are trying to serve. Ohio needs to move to a system of independently owned liquor stores that are monitored by the Division of Liquor Control. They should be able to buy and price in accordance with what the market wants, not what an ineffective bureaucracy determines. This will result in more sales (more tax revenue) and more choice for consumers. My only wish is that one of the elected officials would have the stones to try to change an antiquated system.

This post was written by Mark Roehl

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