The blue law debate is one of the biggest things the Connecticut General Assembly is taking on in this busy and short session. To me, it is one of the most exciting issues on the agenda. Over 100 people spoke to lawmakers from both sides of the issue the other week at the capitol. The entire building was packed to the gills.
Photo Credit: Kevin Cross
The blue law debate has many different facets and parties that will be affected. It touches on industry protection, small vs. big business, jobs, taxes, lobbying etc. Anyone who is interested in lawmaking and civics in Connecticut should watch this issue carefully because it is one of the most dynamic the state will be facing this year. Gov. Rell didn’t support changes to blue laws, but now Gov. Malloy has thrown his support to the other side.
“Blue laws” is a little bit of a misnomer because they no longer have anything to do with religion. These days, it has more to do with giving small liquor store owners protection against big box stores.
Alcohol can’t be sold for off-premises consumption after 9:00 pm or on Sundays in Connecticut. Alcohol distributors also have to conform to uniform pricing. This means that joe’s liquor mart can buy one case of vodka and Bob’s super liquor store can buy 20 cases and they will spend the same amount per case. Sellers also have minimum pricing, which prevents them from selling below costs for loss-leads. Again, this helps small liquor store owners because a larger seller like stop and shop can’t sell cases of bud light as a loss-lead to get people in the door.
Gov. Malloy proposed sweeping changes to liquor law in January. I wrote an article for the Record-Journal in February about the looming battle that is still raging on at the capitol.
Malloy essentially threw everything but the kitchen sink at the Connecticut Package Store Association knowing that they couldn’t fight off every proposal. Increased hours are inconvenient for liquor store owners, many of whom only have one other part-time employee. Most of the liquor store owners I talked to said that it wouldn’t increase their sales and would just increase overhead.
However, the main problem for liquor store owners isn’t increased hours. Those mean increased overhead and a decrease in profits, but probably not enough to kill a business. Malloy also proposed establishing a medallion system that would allow liquor permit holders to sell rights to their permits on an open market across the state. He also proposed increasing the current maximum number of package stores one person or LLC can hold from two to nine, however, that has since been brought down to six in a new proposal Some liquor store owners fear that this could lead to monopolies when used in conjunction with the eliminating uniform pricing and below-cost sales.
Nearly everyone of the liquor store owners I interviewed said the main problem was the high taxes in Connecticut on alcohol. They predicted that people jump over the border into Massachusetts not for the increased hours, but for cheaper prices.
Credit:Office of Legislative Research CT Sources: Tax Foundation, Federation of Tax Administrators, Commerce Clearinghouse
Members from both sides of the argument have acknowledge that any increase in sales wouldn’t be much to solve Connecticut’s budget woes. Malloy’s proposal cited studies that estimated an increase of between $6.4 and $11.2 million in tax revenue for the state.
Many small liquor store owners I spoke to predicted that they would go out of business within the next few years. This may lead to increased jobs in Connecticut. The smallest liquor store owners I spoke to worked 70 or 80 hours a week and had one or two part-time employees. Mid size and larger stores have more part-timers or a mix of part-timers amd full timers. The medallion system may lead to many small stores selling their rights to larger stores.
There is currently nothing in the current proposal that would prevent the larger stores from hoarding rights to the liquor licenses and consolidating stores. This could lead to more jobs because larger stores typically have multiple workers present at the same time instead of just the owner behind the counter.
Column by Jeff Kurz at the Record-Journal about liquor laws.