Back in the days of yore, the Progressive Party and other prohibitionists in Colorado managed to put in place laws restricting the sale of alcohol in the state. Decades later, it was still illegal to open a liquor store on Sunday or sell liquor or wine or full-strength beer in grocery stores. The alcohol prohibitionists are long gone, but the liquor store lobby has ensured that restrictions on grocery store sales remain. Using the Baptists-and-Bootleggers metaphor, we could say that the Baptists are gone, but the bootleggers remain.
Fortunately, the power of the liquor stores has been waning in recent years. Liquor store owners long opposed the sale of alcohol on Sunday because it removed an automatic day off every week when they faced no legal competition at all. That law was finally repealed over their objections several years ago, and buying a bottle of cabernet (to go with your legal cannabis-infused brownies, I suppose) is now legal on Sunday.
Nevertheless, a prohibition on alcohol sales(in almost all cases) is still in force, and now the craft beer industry is doing all it can to make sure that grocery stores will be unable to sell full-strength beer. Craft beers tend to have higher-than-usual alcohol content, so a 6-pack of 3.2 beer offers little appeal to the craft beer industry’s core demographic.
In any case, liquor stores are the only place that can legally sell craft beers right now. The liquor stores don’t want to have to compete with grocery stores, and the craft beer makers don’t wan to have to compete for the limited shelf space in grocery stores.
So, the liquor stores and craft beer makers joined forces to make sure that you, the consumer, will have fewer choices in where you buy your alcohol.
A pro-grocery store lobbyist sums up the situation:
“The liquor stores, of course, love the Prohibition-era laws that give them a monopoly, and there’s no amount of silly spin and gimmickry they won’t use to protect it at the expense of Colorado consumers,” he said. “So we congratulate the liquor store monopolies on the launch of their new beer. Wouldn’t it be great if you could pick it up while you’re shopping for dinner?”
But a lobbyist for the liquor stores takes exception to the use of the word monopoly:
Denise Baron, an organizer for Keep Colorado Local, responded. “If you were trying to define the exact opposite of a monopoly, you’d only have to look at Colorado’s current liquor system with nearly 1,600 independent businesses competing against each other. We have a level playing field that allows each person to own one liquor store. That means anyone from the mom-and-pop store around the corner to Wal-mart have the same opportunity.”
Baron is wrong, however. Just because liquor stores have some competition in some ways, does not mean they do not enjoy monopolistic power. The fact of the matter is that liquor stores have a monopoly on craft beer sales. In this, competition is outlawed, and of course, the monopolistic power goes even deeper than simply outlawing grocery store sales. If I tried to sell beer out of the trunk of my car, I would be fined or arrested post haste. Indeed, the competition for liquor stores is limited in a number of ways. Also, it’s disingenuous for a lobbyist to claim that her clients don’t enjoy monopoly power because her clients compete against each other. If competition is limited by government edict, then the incumbent firms are benefiting from at least partial monopoly power. The fact that some firms compete with each other does not change the fact that firms that do not pass the government’s muster are excluded from competing.
Similarly, multiple airlines competed with each other during the period of airline regulation under the CAB. But few would deny that the incumbent firms enjoyed monopolistic pricing power. The fact that the CAB could control which firms could compete in the market — and in what way — granted monopoly powers to the firms who were on the receiving end of favors from the CAB.
