Alcohol Deregulation: Considering the Hidden Costs

Excessive alcohol consumption remains a leading cause of public health harm, but there are some evidence-based approaches for prevention. The Community Preventive Services Task Force systematic review has recommended several effective policies for preventing excessive alcohol consumption, including limiting alcohol outlet density and hours or days of sale and countering efforts to privatize alcohol sales (i.e., recommending against privatization of government-controlled distribution systems), on the basis of evidence of their influence on per capita alcohol consumption, excessive consumption, and related harms.¹

RECENT ALCOHOL DEREGULATION POLICIES

In contrast to public health recommendations, during recent years some government entities have acted to deregulate or relax restrictions on alcohol distribution and sales. In 2015, the province of Ontario, Canada, partially deregulated the government-controlled alcohol distribution system and began to allow beer and wine sales through licensed grocery stores.

In the United States, Washington State voters passed Initiative 1183, which privatized liquor sales in the state. Before this change, the state controlled what liquor products were sold, where, and when, and it issued standardized prices statewide. Implementation of Initiative 1183 on June 1, 2012, closed state-controlled liquor stores, allowed stores in the private sector to begin selling liquor (e.g., vodka, rum, whiskey), and removed bans on spirits advertising in stores, uniform pricing, and bans on quantity discounts.

More states are contemplating privatization of alcohol sales. For example, in 2014 and 2016, petitions were initiated in Oregon for voter initiatives on the privatization of liquor sales.

EFFECTS OF DEREGULATION

In Ontario, as anticipated, the total number of alcohol outlets increased following deregulation, but what may have been unexpected were findings from Myran et al. (p. 899), in this issue of AJPH, showing that the increase in availability of outlets and hours of sale was greatest in low socioeconomic status (SES) neighborhoods. The study conceptualized SES using an established multidimensional index measure that included residential instability, material deprivation, government dependency, and ethnic concentration, and it controlled for urbanicity. Findings were robust when tested using multiple iterations of outlet density measures.

Similarly, after Washington’s change in alcohol law, there were increases in hard liquor sales outlets: more than four times as many off-premise outlets were selling liquor statewide—more than 1400 outlets after privatization, in comparison with 328 state-controlled outlets before privatization—and allowed up to double the weekly total hours of sale, from 73 in most state-controlled stores to a maximum of 140 in private stores.²

Although the Ontario study did not examine changes in behaviors or public health outcomes following deregulation, some data are available to describe population-level outcomes following deregulation in Washington State. The total volume of hard liquor sold in the state increased in the two years after privatization by about 6.5%, and per liter prices increased by about 8.0%.² During the same period, the state’s Behavioral Risk Factor Surveillance System indicated that the prevalence of adult alcohol drinking increased modestly, including hard liquor–specific drinking (e.g., 59% of men and 51% of women reported drinking liquor in the past 30 days in January through May 2014, compared with 50% and 44%, respectively, in January through May 2012).³

Although Washington’s school-based youth survey indicated that the prevalence of youth alcohol use and binge drinking in all grades declined after privatization, continuing a trend from the immediately previous years, general population prevalence measures may have masked changes in risky drinking patterns among youths who drink. During the two years following privatization, there were increases in alcohol-related emergency department visits, single-vehicle nighttime traffic crashes (a proxy for alcohol-impaired driving), and alcohol dependence treatment among youths.³ Notably, the observed public health outcomes could have been worse without the associated increase in liquor price following privatization.

DEREGULATION POLICY DECISIONS

Full consideration should be given to health impacts that may be associated with alcohol deregulation. In Washington, public discussion on the initiative included anticipation of large revenue gains and concerns that youths would have easier access to alcohol. Importantly, the initiative did not fully address downstream consequences of increasing alcohol access, incorporating youth access prevention in a limited way by restricting liquor sales to larger-sized stores (e.g., not gas stations or convenience stores), and increasing penalties for selling liquor to minors. The fiscal impact statement for the initiative that was included in the Washington State voters’ pamphlet discussed estimated net revenue increases between $216 and $253 million to the state general fund and $186 to $227 million to local governments over six fiscal years; the fiscal impact statement did not address any potential social or health consequences and their costs.⁴

Following implementation, revenues were in fact generated as predicted, but so were some social and health costs that could also have been predicted on the basis of the evidence about policy environments and their effects on excessive alcohol consumption.¹ These costs were borne not only by the state in terms of publicly funded or private services (e.g., health care, law enforcement) but also by families and communities.

Impacts on health equity should also be anticipated. Alcohol-attributable diseases disproportionately affect people of lower SES, despite similar or lower patterns of consumption than higher SES groups.⁵ Findings from Ontario suggest that deregulation could exacerbate health disparities because low SES neighborhoods were more affected by increases in alcohol outlets and their hours of operation. Myran et al. note that greater alcohol outlet presence in neighborhoods may affect consumption behaviors by making alcohol easier to access, decreasing price, and increasing marketing and promotion. Although observations in Washington were not disaggregated by SES, it is possible that there were differential effects by community type. For those working to achieve health equity and minimize health burdens among vulnerable populations, consideration must be given to how deregulation will influence health disparities.

Further, the public should be fully informed about the potential benefits and costs of any change. Washington State residents may have been dissatisfied with the effects of privatization that they personally experienced. A study conducted in 2014 (two years after privatization) asked Washington State voters whether they would change their original vote on Initiative 1183, having observed the results.⁶ One in five (20%) people who had voted “yes” said they would change their vote to “no” after seeing the outcomes of privatization; by contrast, only four percent of people who voted “no” would have changed their vote to “yes.” This proportion might have been large enough to alter election results, suggesting state-level “buyer’s remorse.” Although the detailed reasons behind a change of mind were not assessed, they may have been related to some of the effects that were not fully considered or predicted before voters made their decision, such as the increased visibility of liquor, influences on behaviors and outcomes, and changes in price.

CONCLUSIONS

As government entities contemplate proposals to privatize or otherwise relax alcohol regulations, understanding the potential public health consequences of these choices is critical. Deregulation that increases where and when people can buy alcohol may offer benefits in generating revenue and convenience for customers. However, evidence also indicates there will be costs in public health harms, potentially disproportionately borne by vulnerable populations. Responsible consideration of any such policy actions should include a thorough accounting of these potential costs and assessment of the net public value.