Tuesday, February 23, 2016

Oklahoma Liquor Battle Heats Up

  Anheuser Busch is running some very direct hit pieces on Oklahoma TV and radio. their target is Senator Clark Jolley of Edmond. The subject have to do with distributorship laws in Oklahoma. I spoke to a lobbyist involved. He explained that the state mandates a "middleman" entity in the distribution process (for anything over 3.2% alcohol). And the distributor must be an Oklahoma sole proprietor, not a corporation.
  Perhaps it's just to more conveniently enforce tax collection at the wholesale point of distribution?  But it's essentially an economic fascist regulatory model. The state picks winners and losers.

Current law stifles free enterprise competition.

  In my view, the problem lies with the regulatory model. Anyone should be able to get into the distribution business, with reasonable oversight.  Evidently Clark Jolley has good insight into the situation, but some claimed that he has a conflict of interest, given a rumored business involvement in distribution.
Update: Senator Jolley has released the following clarification regarding rumors of some conflict of interest. 
 " I own no alcohol interests whatsoever. I'm not involved in any business operations anywhere nor do I own any shares of corporations other than some old shares of tech stocks and mutual funds in retirement account. "

  Also, corporations should be able to incorporate in Oklahoma and compete in liquor distribution. The Oklahoma sole proprietor requirement was probably so that state  courts could easily prosecute violators of liquor and taxation laws.
  Current liquor stores and distributors roundly reject the new laws, from an economic argument, because of the stiff competition that they would face. If the state constitutional question passes, this fall, and the statutory changes do not pass, there will be a very confusing situation resulting.
A Fort Smith media outlet posted an article on the liquor battle.  They said:
  "Oklahoma liquor store owners and a group representing liquor distributors have filed legal challenges to proposed State Question 783, which would expand the types of beers grocery and convenience stores are allowed to sell."
Most of the voices in this debate are players in an economic war.
 For that reason we would do well to ignore a good amount...
  So the current privileged few who have exclusive rights to distribute and retail all liquor, are just fighting to keep the stiff regulations because it protects their business model. Free enterprise would subject them to new competitors.
  Fans of free enterprise need to philosophically support open markets. Oklahoma has practiced protectionism for many decades. Mostly it has been a way for politicians to get campaign contributions from trade groups and their lobbyists. It's also an easier way for state regulators to monitor commerce more easily. But if government convenience is at the cost of economic freedom, the free people need to win that battle.
    Most of the voices in this debate are players in an economic war. For that reason we would do well to ignore a good amount of what Anheuser Busch and the liquor retailers are saying. They just are the lucky and well-connected who have scored a state license and guaranteed territory. Quite often we've seen tag agency owners earn these licenses in the same scenario, from giving sufficient campaign contributions to powerful state officials. For instance, it used to be essentially impossible for a Republican to be awarded a tag agency, until recent years.
  Liquor prices will go down from broader competition. Increased liquor taxes might cancel out those decreases. Either way, Oklahoma has for too long held to a 1950's prohibition-era model of controlling liquor in our state.

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