[L]awmakers sitting on a liquor control study committee have no plans to privatize the sale of liquor, but most want to change the state’s management structure.
The Vermont Liquor Control System Modernization Study Committee, created under the 2015 economic development bill, is discussing how to upgrade the Department of Liquor Control’s technology and hold future commissioners more accountable.
The committee held its third meeting Monday at the Statehouse. The next meeting is in October, and there will be three additional meetings before the committee submits a report to the Legislature by Dec. 15.
Sen. Phil Baruth, D-Chittenden, co-chairs the committee with Rep. Tom Stevens, D-Waterbury. Baruth said the committee is in general agreement that the governor should appoint the commissioner of the department but has not reached a conclusion. Right now, the Liquor Control Board appoints the commissioner with no executive branch oversight.
“Part of the thinking is there will be greater turnover and greater responsibility with that setup,” Baruth said. “Usually every six or eight years we have a new governor, so I think at that point we wouldn’t get someone who serves for 17 years the way the last one did.”
The previous commissioner was Michael Hogan. He retired after 30 years in government service following revelations in the Burlington Free Press that he approved more than $100,000 in overtime for the department’s enforcement director without proper payroll documentation.
Committee members are now observing problems that piled up during Hogan’s tenure: The point-of-sale system hasn’t been updated in about 20 years, and runs on dial-up Internet; the department still processes liquor licenses by hand; and the state’s warehouse for liquor is scheduled to run out of space in three to five years.
“The tech boom left the Department of Liquor Control behind, and had there been greater ease with swapping out the person in the top of the organization, I think we might’ve seen a different result,” Baruth said.
“It’s been a very close-knit management structure,” he said. “In some ways I think it has revealed itself to be a sort of slow-moving structure that’s not as transparent as it could be.”
James Giffin, the interim commissioner of the Department of Liquor Control, said the department now has a $2 million contract with Systems Technology Group of Buffalo, New York, to upgrade the point-of-sale software. The implementation has been delayed because of the company’s dispute with a subcontractor.
Giffin supports getting to a digitally based liquor license system. However, he opposes privatizing the control of liquor. Right now, a bottle of tequila is the same price in Burlington as it is in Bennington because the state maintains control and distribution of the liquor, and that “makes it fair to all Vermonters.”
Sen. Dustin Degree, R-Franklin, said maintaining control is important because the Department of Liquor Control can manage the public health aspects involved in selling liquor, such as preventing alcoholism and alcohol abuse by minors.
State Auditor Doug Hoffer last year raised the question of whether the state should be in the business of selling a substance that it also regulates.
Stevens said “the words privatization have come up” but his priority is to make sure the Department of Liquor Control is making as much money as possible.
“Can we increase our net income from one of the very few agencies that makes money for the state?” Stevens asked.
Vermont is one of 15 “control” states and one “control” county across the country, and the state has had this designation since Prohibition ended in 1933. The Department of Liquor Control obtains and stores hard liquor from producers and ships it to local “Vermont Liquor Outlets,” which sell the state-owned liquor but take a commission.
The liquor control and sales functions are in addition to the Department of Liquor Control’s work issuing liquor licenses and its enforcement division, which makes sure that bars and retail outlets are complying with laws, such as not selling to minors and not serving after 2 a.m.
New Hampshire is the nearest control state; it has a Liquor Commission that does wholesale sales and enforcement, similar to Vermont’s model. Maine has a Bureau of Alcoholic Beverage and Lottery Operations, also known as BABLO, to handle the state’s two biggest legalized vices.
In 2014, Maine sold a 10-year, $450 million contract to have a private company run the state’s liquor wholesale business. The money from the contract is projected to fill in a gap in the state’s health care spending. In 2016, Maine expects a marijuana legalization bill to move through and place its regulation under BABLO.
Stevens has a bill sitting in front of the House Government Operations Committee, H.252, that would create an Agency of Controlled Substances. The proposed law would put the Vermont State Lottery and the Department of Liquor Control under one agency and take jurisdiction over medical marijuana, which is currently regulated by the Department of Public Safety.
Stevens said the “controlled substances” model would be useful if the Legislature legalizes recreational marijuana next year. In that case, he said the state could maintain control of marijuana or create a three-tiered licensing model, similar to how non-control states started handling alcohol after Prohibition.
