Oregon’s whiskey ring shows the dangers of state liquor control

Notorious after 150 years”whiskey ringUlysses S. Scandal During the Grant administration, Oregon became the latest state to have its own whiskey scandal In today’s increasingly whiskey-obsessed world, it is becoming increasingly apparent that state governments are violating the public trust in managing the alcohol supply.

According to Report from The Oregonian, high-ranking government officials at the Oregon Liquor and Cannabis Commission (OLCC) are snapping up elite and hard-to-obtain bourbons, such as various Pappy Van Winkle varieties, for their personal use. Even more explosively, OLCC officials also reported securing rare bourbons “hundreds of times” at the request of state legislators and other interests.

Oregon is one of 17 states known as “control states” where the government regulates the wholesale and/or retail sale of spirits distilled in the state. Almost all liquor in the state goes to one the warehouseFrom which it then to distribute At various retail outlets, known as “contract stores” that are managed by state-appointed liquor agents.

The way the OLCC siphoning process worked was alarmingly simple. OLCC officials will email Ask the warehouse supervisor to set aside a bottle, then arrange for it to be picked up at the most convenient contract store. Warehouse Supervisor Report That practice predates his tenure at the OLCC, meaning it has been going on for at least eight years and possibly more than a decade.

This scandal is particularly reminiscent of recent ones The Virginia Whiskey Scandalwhere a former employee of the Virginia Alcoholic Beverage Control Authority was caught selling inside information on which state-run liquor stores were expected to get new caches of rare whiskey.

At this point, it is clear that control state models are particularly inappropriate for recent management.Bourbon bubbles” Given that bourbon is enjoying near-unprecedented popularity—coupled with the fact that no one, by definition, can increase production of 10- and 15-year-old whiskeys overnight—bourbon prices have skyrocketed.

In a control situation, however, prices cannot effectively float to meet market demand. Rather, these states impose uniform government-mandated markups that lead to a situation where a $2,000 bottle of bourbon on the secondary (illegal) market sells for $100-$200 in a state-run store. Inevitably, the rush to get these bottles abounds and creates ideal conditions for inside jobs and abuse of power.

In contrast, if a private liquor store owner in an unregulated state decides to hoard numerous bottles of rare whiskey for himself, he only hurts his own bottom line — and turns off potential customers who would otherwise frequent his store. Customers can vote themselves out and start buying their liquor from a competitor down the street instead.

In Oregon, there is no alternative—only insiders who get special access to rare whiskeys, and outsiders in the public who are rarely, if ever, able to get their hands on such bottles. Oregonians have tried to privatize their state liquor system on several occasions, most recently this past year when a voter initiative It was canceled before it was put on the ballot.

Like most regulatory states, some are extreme opponents Privatization in Oregon is public unions, such as the American Federation of State, County and Municipal Employees, who represent not only OLCC workers but also local government workers who benefit from the massive profits they initiate for local municipalities.

It’s not entirely the government’s fault that a bourbon bubble exists. But it is the responsibility of the government to create a clean and fair market environment that does not turn the market bubble into a continuous scam. Control state systems continue to fail that test miserably.