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CONTROL STATE NEWS We Greatly Appreciate Our Partnership with You and Apologize in Advance for Any Delays This May Have NC: N.C

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CONTROL STATE NEWS We Greatly Appreciate Our Partnership with You and Apologize in Advance for Any Delays This May Have NC: N.C Monday, March 15, 2021 www.nabca.org • NC: N.C. ABC renews contract with subject of 2018 audit, increases warehousing fees • TX: Elimination of the Texas Alcoholic Beverage Commission Filed in Texas House TODAY’S • Canada: No Alcohol In Convenience Stores: Mayor HIGHLIGHTS • UK’s First Indian Wine Specialist Launches • TTB News: Avoiding Common Errors On Your Labels – Government Health Warning • Could restaurant tipping become obsolete after pandemic? Dear Members and Valued Customers, TTB NEWS We have recently been made aware of phishing You can now find all of TTB’s COVID-19-related attempts by third parties purporting to act on behalf of news and guidance in a single location. NABCA. Please be aware that NABCA does not utilize any third-party companies to generate sales—and we have not authorized any third-party marketing ADDITIONAL LINKS company to act on our behalf in relation to our data. Visit NABCA’s website for information on: While it is too early to tell if this is part of an industry- • Control State Agency Information wide scam, we have heard concerns from other • associations currently dealing with similar types of sales Doing Business in Control States fraud. If you have received any suspicious emails • NABCA News relating to NABCA, please let us know by contacting [email protected] CONTROL STATE NEWS We greatly appreciate our partnership with you and apologize in advance for any delays this may have NC: N.C. ABC renews contract with subject of 2018 caused. If you have any additional questions, our line is audit, increases warehousing fees always open. Carolina Coast Online Kind Regards, By John Trump Carolina Journal NABCA Communications Department March 15, 2021 NABCA NEWS The N.C. Alcoholic Beverage Control Commission voted unanimously last week to recommend the state Visit NABCA’s COVID-19 Resource page for updates award a 10-year contract for warehouse services to regarding policy changes that effect on- and off- LB&B Associates, the target of an audit in 2018 that premise retail operations. has over the previous years cost the state about $13.5 New on NABCA’s website: million. The Collection: An Alcohol Research Summary To fund the new contract, bailment — which pays for (formerly Annotated Bibliography) A comprehensive warehouse operations — will increase Aug. 1 to $2.75 overview of the latest scientific evidence on per case of liquor, from $1.50 per case. important topics related to alcohol policy. Sharing Solutions E-Newsletter! A platform for the “There is no change to markup or bailment surcharge, NABCA community to share successful implement- and the resulting impact to the per-bottle price for tations and lessons learned about your good work. consumers for a typical bottle of liquor is expected to be 20 cents,” the ABC says in a statement. The bailment charge is separate from from the bailment surcharge, now at $1.15. 2 The state ABC, according to its 2019 annual report, and recommendation of the incumbent vendor’s bid collected about $1.2 billion in revenue, distributing was made by an outside evaluation committee and some $85 million to city and county governments. It then referred to the commission staff for negotiation. collected another $27 million in permitting fees, LB&B’s bid response was thoroughly reviewed and sending, in total, about $350 million to the state’s found to be well qualified. At its regular monthly general fund. meeting March 10, the commission approved the state to go forward with the award of the negotiated Further, as bars and restaurants closed during the contract.” pandemic, sales at state-run ABC stores soared. From July 1, 2019, to June 30, 2020, sales at Wake County The agreement, the ABC says, includes a requirement ABC stores increased some 11% and nearly 21% in of nearly error-free and on-time deliveries as well as Johnston County, for example. Sales throughout the increased delivery frequency to the state’s 171 local state increased almost 12%, and restrictions on bars ABC boards. “The new contract will involve a and restaurants have remained, in some form, since comprehensive computerized warehouse the end of that management and operations platform that will fiscal year. include backorder capability and increased visibility into real-time warehouse inventory that the local North Carolina has scores of distilleries with products boards have indicated are service priorities.” in state ABC stores. “The increase in costs reflected in the new contract,” That extra 20 cents, if producers do nothing, will says Strickland, “is reasonable, based on the automatically be added to the retail price, one N.C. substantial requirements of this new contract, distiller told Carolina Journal. That distiller just sent in including the enhanced delivery services and robust a price increase, so it will look as though they’re computer capabilities it will provide the ABC system.” raising prices twice in a short time. The prices will look odd, going, for instance, for $23.95 to $24.15. Bailment, Strickland said, is paid on a per-case basis, paid by the ABC boards but also factoring in to the “Why did they decide this year to increase that retail price. particular fee over 83%,” the distiller said. “The suppliers may opt to absorb the bailment costs The N.C. ABC is in charge of controlling state alcohol or may pass the increase along to the consumer. For production, storage, sales, and distribution. North 12-bottle cases of .750 liter bottles, the increased Carolina is one of just 17 control states, meaning the bailment could add 20 cents to the price on the shelf. government oversees wholesaling and/or retail Cases with higher bottle counts would have smaller operations regarding spirituous liquor. It’s the only increases per bottle (5 cents). While cases that have state that uses a system of 171 local boards to six bottles in them, for example, would have a per- regulate spirits, however. bottle increase of 40 cents.” The state posted its request for proposals for The ABC audit, released Aug. 9, 2018, in short, found warehouse services in 2020 after the commission that poor contract administration cost N.C. taxpayers committed after the audit to rebidding the contract. at least $11.3 million over 13 years. Unused A five-member evaluation committee — industry warehouse space potentially cost the state $2.1 leaders and experts who are not members of the ABC million over seven years, and a lack of monitoring left Commission — reviewed the bids, the ABC says in a the state underpaid by at least $297,537 over two news release. years. The committee in December recommended the state The ABC erred in its responsibility to follow state negotiate the contract with LB&B. The contract policies and state practices, State Auditor Beth becomes effective July 1. Wood’s office said in the news release then. The ABC, “Our process has been thorough and transparent the audit concluded, failed to administer the over the entire [request for proposal] process, which warehouse contract in the best interest of the state. has spanned nearly three years at this point,” ABC The General Assembly, at the time, Wood said, asked spokesman Jeff Strickland told Carolina Journal. “We her for an audit of the state’s six largest agencies, have confidence that the bid process for warehouse including the Department of Public Safety, where ABC services has been fair and open to all. The evaluation resides. 3 “My staff said, ‘When we looked at the ABC Commission to perform its responsibilities prudently commission, there’s something not right there,” and economically,” the audit said. Wood told Carolina Journal then. “They’ve got a “Adding this warehouse to the Alcoholic Beverage contract that’s not been put out for bid since 2004, Control Commission Warehouse contract doubled they can’t answer questions about how the contract’s the amount of warehouse space available and has being administered, this is not tied to a financial increased the cost of the contract by approximately statement audit, but it’s info they’ve gleaned about $2.54 million a year on average. that division of DPS.” “The audit process began over a year ago, so the “In state fiscal year 2017, the contract cost for discussion and tighter controls have been under way warehousing and distributing spirituous liquor was for some time,” she said after the 2018 audit. $8.3 million. The total contract cost from July 2004 through June 2017 was $77.7 million.” Auditors found In his response to the audit report, ABC chairman A.D. the commission failed to “procure, administer, and Zander Guy said he had been appointed only the prior monitor the LB&B contract for the warehousing and year and “the majority, if not all of your review distribution of spirituous liquor in accordance with period, was before my tenure as chair.” state policies and best practices.” Guy said then he took the audit seriously and would Lack of accountability for contractors is highly implement changes accordingly. concerning, Wood told CJ at the time. Strickland said the commission accepted the auditor’s LB&B was given pay increases upon demand without findings and put immediate corrective measures in documentation or proof, Wood said. place to address the points raised in the report, which focused on contract administration issues. In some cases LB&B misled the state about fuel cost increases, asking the ABC for money they didn’t really “None of the state auditor’s findings related to the need, she said. warehouse or delivery service performance of the vendor or would have disqualified LB&B from “Whatever they asked for, they got.
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