Regulatory Flexibility: Good for the Booze Business and Consumers

The coronavirus pandemic has taught us a few things, including the economic fragility of many industries. The restaurant industry, with its reliance on in-person dining, seemed particularly imperiled by lockdowns. To help these businesses survive, 39 states chose to relax laws restricting alcohol home delivery, allowing restaurants and bars to deliver beer, wine, spirits, and even cocktails along with food. As Adam Thierer of the Mercatus Center recently wrote in The Hill, the sky didn’t fall, bedlam did not follow, and levels of alcohol consumption remained relatively unchanged. All of this should make one wonder why policies intended to restrict access to alcohol were ever implemented in the first place and whether we’d be better off if they never returned.

On the plus side, as states have begun to open back up, most of those that relaxed their alcohol laws during the pandemic have kept the new rules in place or made them permanent. That’s good for restaurants, small breweries, vineyards, and distilleries that continue to struggle to make ends meet. But it is also good for consumers, especially lower-income consumers.

Despite cheering for health care providers and offering thanks to essential workers, the world’s elite classes during the pandemic have continued to show little real understanding of the economic realities faced by those with fewer resources. Prior to the pandemic, wealthy residents of neighborhoods around the country routinely banded together to prevent governments from issuing new liquor licenses, often fearing that increased access to alcohol would lead to more alcohol consumption, crime, and other nuisances. As a result, higher income areas tend to have fewer alcohol retailers.

For wealthy NIMBY (not in my backyard) types, such restrictions have little effect on their ability to buy and consume alcohol. They typically have access to transportation, money, and time to find an outlet that sells the $200 bottle of whiskey they enjoy. But for people who work non-standard hours, have multiple jobs, less money, and no transportation, these limitations can create significant burdens.

No doubt, many of those who support limiting liquor licenses see those burdens as a good thing.  Less access should, they assume, result in less drinking (at least among those with lower incomes) and that should be good for public health, right? In fact, public health is often the go-to justification for a range of policies aimed at making alcohol more expensive and harder to get, even if they have little effect on problem drinking and tend to have the greatest burden on the poor. The public health justification worked to get such policies enacted, and it did so, in large part, because such policies have little effect on middle- and upper-class consumers. Then came the novel coronavirus.

With the lockdowns and quarantine, challenges associated with purchasing alcohol were no longer related to time, money, or transportation. The problem, especially during the early months of the pandemic, was that lockdowns reduced the number of open businesses serving alcohol and made in-person purchases riskier due to potential exposure to the virus. Suddenly, consumers in states with more restrictive alcohol laws began looking with envy at their neighbors in states that already allowed for home delivery by liquor stores or to-go cocktails from restaurants.

Despite attempts to scare the public into thinking that alcohol consumption would worsen COVID-19 outcomes and exacerbate existing public health problems, anti-alcohol activists have mostly failed to stop the widespread deregulation of booze laws in the states. Now, after months—in some cases years—of enjoying a more relaxed approach to alcohol without society crumbling, it will be even more difficult to convince the public to return to the old rigid regime.

Of the lessons learned from our experience with the coronavirus, a major one should be how important flexibility is. Meddlesome regulators might be tolerable during times of stability, but they can cause catastrophe during a crisis by stymieing businesses’ ability to pivot, innovate, and survive. That is why authorities at all levels of government took swift action to eliminate or suspend many rules governing telemedicine, transportation, employment, and manufacturing, among other areas. Arguably, that deregulatory effort helped preserve businesses and prevented the economy from freefalling. But it has also shown us that these rules, and perhaps many more, were never needed in the first place.