Maine changes liquor contract

Maine is one of 18 states that controls the sale of alcohol and monitors the prices on a monthly basis. According to Bangor Daily News, the state of Maine is losing up to $30 million per year in alcohol sales to New Hampshire due to New Hampshire’s liquor tax.

New Hampshire undercut several of Maine’s prices by as much as 2-7 dollars per bottle,  and sometimes as much as 17 dollars.  Although it is illegal to bring more than four quarts of alcohol across state-borders, Mainers add up to at least 8% of alcohol sales in New Hampshire.

In 2004, the state leased its liquor system to Maine Beverage Co. to fill a budget hole in exchange for a $125 million upfront payment and an annual profit stake. The deal guaranteed Maine Beverage Co. a 36.8 percent profit. For the consumer, a $15.99 bottle of alcohol has a wholesale price of $8.74 while $1.60 goes to the store and the remaining $5.65 is split between the state and Maine Beverage Company (with their 36.8 percent profit guarantee). In New Hampshire however, the liquor agent could sell that same bottle for as little as $12.99.

In a new statewide effort to boost sales, a plan to lower alcohol prices is on the way. State officials and economists worry that the plan may not increase sales enough to cover the reduced revenues. Taxpayers could instead be forced to cover the shortcomings of the new program, it could put other community programs on hold, or cancel programs.

According to Richard Rosen, Finance Commissioner of Maine, Maine is expected to pay off more than $180 million in debt to hospitals over Medicaid. The state is now backing away from the original plan, and it won’t be implemented as forcefully as originally envisioned.  This will also put obstacles in the way for sewer improvements for several towns across Maine.

It is widely accepted that the Maine Beverage contract was undervalued, and former Director of the Bureau of Alcoholic Beverages and Lottery Operations Gerry Reid is determined to increase the state’s share in the growing liquor sales. Whereas the state gained between $7-$9 million a year (plus the $125 initial grant), the company made roughly $36 million. His new contract drafted a deal split into two parts: one for marketing and one for distribution and warehousing.

The state granted the initial marketing contract to Pine State Trading Co., but cancelled the deal when it found out that Pine State Trading understated its market share in New Hampshire.

Critics are growing more and more weary of this new contract.The future has yet to reveal who will be granted this valuable marketing contract and if it can turn around the lost profits.

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