The Legislature’s Appropriations Committee will hear details Friday of a plan for the state’s wholesale liquor business that could bring Maine an additional $13 million per year while lowering retail prices.

The increase in revenue would come from changes to the lease for Maine’s wholesale liquor distribution. The current lease, held by Maine Beverage Co., expires in 2014.

A restructuring of the contract could boost Maine’s share of the revenue to more than $40 million a year and lower prices by $2 to $7 a bottle, making Maine more competitive with New Hampshire’s state-run liquor stores.

Maine loses out on an estimated $10 million to $20 million a year that gets spent on liquor in New Hampshire.

Gerry Reid, director of the Bureau of Alcoholic Beverages and Lottery Operations, outlined the plan this week before the Legislature’s Veterans and Legal Affairs Committee.

He declined to discuss the plan Thursday, before his presentation to the Appropriations Committee. He referred questions to Adrienne Bennett, Gov. Paul LePage’s spokeswoman. She did not return calls.

Rep. Michael Carey, D-Lewiston, the ranking minority member of the Veterans and Legal Affairs Committee, said, “The administration said there should be a competitive process (for the next contract) so the state spends the least amount of money possible in order to get this service.”

The future contract for wholesale liquor distribution would not call for a large amount of up-front money from the contractor, Carey said.

In 2004, the state signed a 10-year lease with Maine Beverage Co. for $125 million. That payment helped close a $1.2 billion budget deficit.

Rep. Diane Russell, D-Portland, another member of the Veterans and Legal Affairs Committee, compared the 2004 lease to a fire sale, made in desperation.

“It may be that continuing to outsource our liquor sales will be the best value for Maine taxpayers, but without performance metrics, without hearing from people and without a transparent process, we can’t be sure,” said Russell.

Maine is one of 19 “liquor-control” states, where the state is the only entity that can bring in liquor and set prices. Maine Beverage Co. is responsible for warehousing and delivering liquor to agency stores.

The contract initially was awarded to Martignetti Cos. of Massachusetts. After Maine-based companies threatened to sue, Martignetti joined with Pine State Trading Co. of Augusta and Lindsay Goldberg, a New York-based financial group that holds majority interest, to form Maine Beverage Co.

The fair market value of the liquor distribution business was pegged at $378 million as of Jan. 1, 2009, according to a study done by Deloitte & Touche.

Neither George Woods, Maine Beverage Co.’s chief financial officer, nor D. Dean Williams, the president and CEO, returned calls seeking comment Thursday.

Carey said he knows of two Maine-based parties that are interested in the new contract, but he would not name them. One has spent a significant amount of money to prepare for negotiations, he said.

The possibility of lower liquor prices is welcome to Doug Weber, who owns Downeast Beverage Co., a shop that sells wine, beer and liquor on Commercial Street in Portland. He believes that he loses business from tourists and vacation-home owners who buy liquor in New Hampshire before coming into Maine.

“There’s a reason New Hampshire has these Taj Mahal liquor stores right on our border,” Weber said.

He said resources would be needed to fight the longstanding perception that New Hampshire’s prices are always better than Maine’s.

Rep. Margaret Rotundo, D-Lewiston, the ranking Democrat on the Appropriations Committee, said it appears that much research and work has been done to put together the plan.

“Clearly, there’s an opportunity there. There’s an opportunity for the state to be making more money than it currently is,” said Rotundo. “People in Maine deserve a fair deal with this contract.”

 

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