Michael Hicks is the George and Frances Ball distinguished professor of economics and the director of the Center for Business and Economic Research at Ball State University. His column appears in Indiana newspapers.
The Legislature will be taking up the issue of Sunday alcohol sales this session. At the outset, I want to lay out my biases and clearly state that I think it silly to tell adults where and when they can purchase an entirely legal substance that has a 4,000 cultural history. It is even more senseless to prohibit the sale of wine that would be used in communion on the day it would be used. But there is a lot more to the story than the repeal of an inane Blue Law.
Like all states, Indiana has regulated alcohol sales since the end of prohibition. The Sunday sales of retail alcoholic beverages may be the most visible relic of prohibition, but it is hardly the only one. Package liquor stores remain highly regulated. They are limited to the type of items they may sell, the places they locate, the age of employees, the hours they can remain open and the type of ownership structure they can operate under.
In short, the regulation of alcoholic beverages in Indiana contains a vast web of laws that apply differently to different types of businesses. Over the past 80 years firms across Indiana have in good faith made investment and location decisions based upon these laws.
Now the Legislature proposes to eliminate one of these laws under the belief that to do so would increase market competition, leveling the playing field between liquor store owners and other retailers. If only the issue were this simple; I would be an adamant supporter of the law. The truth is a bit different.
Eliminating the prohibition on Sunday alcohol sales will not improve competition between package liquor stores and other retailers. Instead it will clearly shift the balance to other retailers with the primary beneficiary being big box and convenience stores. There are consequences of this.
In 2009 a colleague and I tested the effect of ending Sunday sales on the package store industry using data from all fifty states over the past few decades. The result was, though overall alcohol sales remained unchanged, about one in four package stores closed. If this law passes in Indiana, we should expect much the same effect. All the lost sales in package stores will be made up at stores that are not bound by the remaining restrictive laws governing package stores.
As Indiana legislators debate Sunday alcohol sales they should know what it is they are voting on. While a part of the legislation laudably dismantles a bad idea from nearly a century ago, the proposed law is dangerously incomplete. To be clear, this law is not an extension of free markets. It instead lessens competition by leaving in place too many restrictions on existing package stores.
Indiana has much work to do on our laws concerning alcoholic beverages, but perhaps the biggest mistake we can make is to dismantle them piecemeal. This will only punish Indiana-owned businesses, while doing nothing to unleash the benefits of free markets for beer, wine and liquor.