For all of it reputation as the “tax-free state” and “live free or die,” New Hampshire has some pretty convoluted ways of making ends meet. True, we have no sales tax and no income tax, but that simply means finding a lot of nickel-and-dime ways of raising public revenues, starting with a hefty property tax rate. (Renters, of course, get no break on their federal taxes there, either – as I said, convoluted.) And if you dine out, even for breakfast, there’s another big hit, eight percent or so, one of many others. Eventually, it all adds up.
New Hampshire also has a reputation as the go-to state for cheaper liquor, compared to the rest of the Northeast. For all of the official conservative rhetoric of free enterprise, the state clutches its monopoly on the sale of hard liquor, unlike, say, neighboring Massachusetts, with its liberal tradition of neighborhood mom-and-pop “package” stores.
The conflict I see comes in the fact the state is both the regulator of alcoholic beverage sales, ranging from bars to groceries and wine stores and home consumption, and also the distributor. That is, the same agency, the State Liquor Commission, is both the policeman and an active dealer in what it is policing. It’s a situation rife with the potential for favors, favoritism, and outright bribery or corruption. As the Founding Fathers were well aware, whoever polices the police should not be the police. You separate them – the classic separation of powers, each keeping jealous watch over the other.
Not so here in New Hampshire. When it comes to alcohol, the only line of defense might be the Legislature or the Governor and Executive Council as the counterbalance, but that’s not the way it should be, especially when we factor in the possibilities of hefty campaign donations. The enforcer and distributor should be under separate agencies – then, if conflict arises, they appeal to higher authority. As it is, they’re likely to squelch any complainer … or else.
In addition, when it comes to wine, all the supermarkets, grocers, and independent wine shops face a double whammy. They’re required to buy their wine from the state (through the one and only licensed warehouse dealer), even though the state also sells directly against them. In fact, it’s the same agency they must apply to for their very permit to do business in this field. And then the agency adds its own percentage to the product, even if it’s from a winery the state wouldn’t otherwise stock except for the retailers’ order. As I said, convoluted and rife for abuse.
I first noticed this when I found a certain label for sale much cheaper in Massachusetts. Seems the Bay State has one less layer of middleman in the process. So much for the “Taxachusetts” tag we Granite Staters so often brush on our southern neighbor. Tain’t always so.
More recently, I found an example of the state’s monopoly bully at work when a local supermarket was out of several of its more popular varieties. Could it be someone had said something that miffed somebody in the state agency that was supposed to deliver the product, which now was just sitting in the warehouse? Who do you complain to, after all? You can’t switch to a different supplier, either. Where’s the free market free enterprise in this case? The official line may have been that the state was in the midst of shifting from one licensed warehouse operator, which had held the contract for decades, to a new one. But, as the old contractor miffed, the situation “is just the latest example of many where the the commission has cut a special deal” with the new licensee.
For years, I received the weekly release of which bars, restaurants, and convenience stores or supermarkets had their liquor licenses suspended by the State Liquor Commission, usually for underage sales of beverages. Not once did I see a State Liquor Store in that list. Not that they weren’t as prone to violations. As I said, who polices the police?
Yes, New Hampshire gets the revenue. As long as I’m not forced to go to Maine or Massachusetts to get the wine I want, where it’s available, maybe even more cheaply.
Any future MBAs interested in doing a case study? This one could be a doozy.
Jnana's Red Barn 