Should Iowa Stay in the Liquor Sales and Distribution Business?

Radio Iowa had a story up yesterday about Governor Terry Branstad announcing that the State of Iowa and a dozen Iowa cities splitting the cost of a 18-month-long “rolling billboard” campaign to promote tourism in Iowa.

Kay Henderson writes:

State-owned trucks making alcohol deliveries from the state liquor warehouse are carrying the messages. Iowa Alcoholic Beverages Division director Steve Larson says his agency’s fleet of trucks logs more than 1.6 million miles on Iowa’s roads and highways each year.

Why does the state of Iowa have alcohol delivery trucks that make shipments from a state-owned liquor warehouse?  I didn’t realize the state did this, so please forgive my ignorance.  I knew of the Iowa Alcoholic Beverages Division, but I thought they just were responsible for licenses, fees and excise taxes – not the sale and distribution as well.  It’s just not an aspect of state government that I think about.

So in order to answer my own question I checked out the Iowa Alcoholic Beverages Division website it’s clear we’ve been doing this for a long, long time.  Move over Al Capone, it’s hard to compete with a state.  I guess is one way of keeping organized crime out of this particular industry.

The Iowa Alcoholic Beverages Division is responsible for the regulation and control of alcohol in the State of Iowa. Iowa is one of eighteen control states that, since the repeal of prohibition, directly control the sale and distribution of alcoholic beverages. In addition, the Division is responsible for the enforcement of state and federal laws

In Fiscal Year 2012, the Division generated nearly $115.1 million in state funds, representing around 2% of the state’s total revenue. The Division generated $78.5 million in net profit from the direct sale of alcohol in Iowa. In addition to revenue from alcohol sales, the Division collects liquor license fees, excise tax on beer and wine, and civil penalties levied through administrative sanctions.and regulations regarding the sale and use of alcohol and tobacco products.

And looking at their 2012 annual report you can see they turned a 34.17% profit.  They sell the liquor and collect taxes on it.  A store’s only source for spirits also charges them an excise tax.  Nice.  I also learned that Fremont County, at least in FY 2012, is the driest county in the state.  Dickinson County, per capita, you guys are a bunch of lushes.  But looking at the picture below you can see it is good business for the state.

Setting the budget question aside because it’s obvious this is a positive budget item for the state; why is the state engaging is something that should be left up to the private sector?  It reminds me of the state-owned dairy farm that the state of Alaska owned until former Governor Palin had it sold.  There are legitimate functions of state government and this doesn’t seem like one of them.

What say you?  Is it ok for one government entity to control the sales, distribution, taxation and licensure for one industry?  Even if it turns a profit?  Should Iowa continue to be in the alcohol sales and distribution business?