Staff column: Alcohol and the free market

By Mike Hanks – Sun Current Newspapers

Mike HanksA recent online conversation left me scratching my head, again.

Why don’t the rules of the free market prevail when it comes to the selling of alcohol in Minnesota?

The online conversation was started by a friend who lives far from Twin Cities. He implored his community members to join him in his crusade to stop the city from granting a liquor license to an applicant. Why? The applicant was a foreigner, as in “somebody who didn’t live in Small Town, Minn.”

By allowing this foreigner to open a new liquor store in town, the profits wouldn’t stay in the community, my friend surmised.

And besides, the community didn’t need another liquor store. By his count there were six liquor stores in town, and that was enough. Opening a new liquor store wouldn’t create new jobs, it would only cannibalize the local liquor business, my friend argued.

It’s nice to support local businesses, and perhaps easier to do in a town where most people know one another, but realistically you can’t know who owns every business in your town. And last I checked, I’m not obligated to invest in a business in the town I live in, just as he is not obligated to shop at a liquor store with a foreign owner. But to argue against a business based upon the residency of the owner is foolish.

The only reason the residents of Small Town have a leg to stand on is the antiquated idea that cities should be in the business of dictating the terms of the free market when it comes to liquor stores. Cities can decide how many liquor licenses they issue, and they get to set their own rules in determining how to hand them out.

A recent debate in Brooklyn Park opened a can of worms. The short version of the story is that there are more liquor licenses available than liquor stores, but once upon a time the city created a Mason-Dixon line and deemed that no more than 12 licensees could be south of the line.

Whatever the science behind it, there’s interest in a 13th liquor store south of the line, but still only 12 licenses available.

Why is the free market being stifled? You can’t open up a fast food restaurant in the middle of a resiential zone, but do you see cities capping the  umber of licensed fast food restaurants, pharmacy chains or nail salons at an intersection or district of the city?

I had the pleasure of sitting in on a Minnetonka City Council meeting several years ago when an applicant wanted to open a specialty liquor store. Some residents were against the proposal because it would impact an established, smaller liquor store in the immediate trade area.

One council member rationalized that the city didn’t need to grant an 11th liquor license. There were 10 licensed liquor stores in the city – roughly one per every 5,000 people – and that was enough. According to whom? I’d love to see the ratio for pizza parlors, mobile phone retailers and coffee shops in Minnetonka.

Brooklyn Park’s formula, by the way, is one liquor license per 4,000 residents. It must have been a decade ago that I watched a debate in Excelsior, the small town that is the hub of activity on the south shore of Lake Minnetonka.

The details are fuzzy at this point, but I remember this much: the city’s ordinances dictated that the council had one off-sale liquor license to hand out, and somebody was looking for a second one.

After much hand wringing a majority of the council decided the free market should determine whether or not two businesses could sell beer and wine within the city limits.

There is no cap, however, on the number of antiques dealers who are allowed to set up shop in Excelsior.

I understand the need for added controls on the sale of alcohol, and concerns for the impact of alcohol use on society. What I can’t figure out is why cities are allowed to dictate how the free market operates in the selling of a legal product?

Shouldn’t the free market prevail?

 

Contact Mike Hanks at mike.hanks@ecm-inc.com

 
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