Rattacasa: S.C. needs a smarter way to regulate liquor stores

The laws regulating the distilled spirits business are unique in South Carolina. Distilled spirits are the only regulated product for which the government owns licenses and severely restricts — to three — the number of licenses anyone can own. There are other regulated retail businesses — pharmacies, gasoline stations, lottery vendors and wine and beer distributors — but no other limits on how many stores a company can own.

This archaic regulation is bad for consumers and businesses. It is inherently anti-free market.

It is time to reform the six-decade-old law governing retail spirits operations in South Carolina. The group I represent, the South Carolina Liquor Retailers Alliance, is supporting House bill 3375, which does this while taking into account religious, business and community concerns. A House subcommittee is holding a hearing on the bill Wednesday.

I have been involved in the alcohol beverage business for 14 years, first as a stock person at a family owned retailer in another state and eventually working myself into management, consulting for a large convenience store operator and finally owning a retail store in South Carolina.

During that time, I have seen what works, what does not work and ways we can improve the alcohol beverage business in South Carolina.

There are many facets to any debate, and the discussion about this bill is no different. We need to respect all retailers — not just a select few large liquor retailers who seek to protect their virtual monopolies on the backs of smaller retailers, the national retailers who wish to expand into other markets in our state or the small retailers for whom their stores are their full livelihood. We also need to consider strongly held religious principles, community concerns and the economic impact the alcohol beverage industry has, and can have, on our great state.

H.3375 offers South Carolina a tremendous opportunity to modernize the alcohol beverage business in a customer-focused, pro-business, pro-business-owner, pro-growth manner. This bill would do so much to protect existing retailers who have worked very hard to build their businesses, to create value in their licenses and to create barriers to entry, which do not currently exist in South Carolina.

We consider this bill beneficial to all retailers, regardless of size, amount of available capital or manpower. It would for the first time limit the total number of licenses granted in the state, which would inherently build value into retail licenses and potentially increase the revenue the state can collect. It also would allow the state and the industry to grow in a logical way, proportionate to the state’s population, and each county’s population.

The bill is not perfect. As an example, we believe that South Carolina also needs to consider reasonable distance buffers between retail locations to prevent stores opening in close proximity, as currently happens in major markets such as Myrtle Beach and Columbia.

While other interest groups advocate for the maintenance of a three-license limit, claiming to support small retail operations, in actuality they use that limit to put smaller retailers out of business. Many of these larger retailers have forced stores to close in their markets, such as in Mt. Pleasant, where one retailer proudly worked to buy out and close several smaller retailers in his neighborhood. These retailers use their Class-B wholesaler permits to artificially manipulate pricing and increase market share instead of competing fairly.

Our state is built on the principles of liberty and unfettered economic opportunity for all. Unquestionably, the liquor industry is and should be regulated, but South Carolina needs to regulate the industry in a way that respects all retailers and communities while also creating net benefits for the state.

H.3375 is a step in that direction that further enhances the privilege of working in the alcohol beverage industry.

This story was originally published May 12, 2015 at 4:54 PM with the headline "Rattacasa: S.C. needs a smarter way to regulate liquor stores."