Alaska News

New liquor store in Kotzebue is a hit

"Jailhouse Liquor" is a hit.

The first liquor store in Kotzebue in more than 20 years -- the nickname comes from its proximity to the city slammer -- is making nearly twice as much money as expected and is on pace to bring $600,000 a year into city coffers.

"I got told one day that I was the most popular guy in Kotzebue," said store manager Tryson Ferguson, whose biggest sellers are 30-packs of Budweiser cans and $21.60 bottles of R&R whiskey.

The Kotzebue city manager calls the store a "grand experiment." Created by voters, it's owned and operated by the city. The government also runs a new distribution center, which tracks and taxes all legal alcohol shipped into the so-called "damp" community of more than 3,200 people in Northwest Alaska.

The new alcohol center is taking in about a quarter million dollars a month before expenses, Ferguson said.

It's too soon to say what the store means for life in Kotzebue, where bars have been outlawed for a generation, or surrounding villages. Police numbers show no major increase in many categories of alcohol-related offenses within the city. But some see evidence of more alcohol abuse.

"Before it opened up there was a lot of fear. Fear about what might happen and things getting out of control," said Chad Nordlum, a 36-year-old village planner for the Kotzebue-based Northwest Arctic Borough, who has shopped at the store. "It's actually been more mellow than you might expect."


One thing is for sure. Business is brisk, and other cities that wrestle with alcohol policy, as well as alcohol regulators, are watching Kotzebue to see what happens next.


Opened Aug. 25, the liquor store and shipping site are expected to make about $340,000 in profit by the end of 2010, city officials say.

(There's always a chance sales could drop off, or winter air freight expenses could chew into earnings, city officials note.)

The money comes from sales, $50 permits customers must buy in order to purchase alcohol and the $25 you pay every time you pick up any orders from Anchorage or Fairbanks.

Money from the alcohol site flows into city coffers, which pay for government services like police, road work and building upkeep.

"That's additional city projects. Additional donations to local nonprofits," said Ryan Cope, the finance director. Kotzebue's aching for a new fire truck, for example -- the current rig's ladder might not reach the roof of the town's newest hotel.

Exactly how the extra money will be used will be decided when the city writes Kotzebue's more than $6 million annual spending plan in the spring, said city attorney Joe Evans.

Already, some Kotzebue residents are eyeing the alcohol revenue as a way to slash the local 6 percent sales tax.

"If the liquor store revenue numbers show that the city could still operate efficiently with a reduced sales tax, I intend to start a petition to get the question on the ballot," said Alvin Werneke, who recently created an online survey asking people if they favored repealing or cutting the tax.

Most called for lower taxes.


When you walk into the Kotzebue liquor store, here's how much alcohol you can buy in a single day:

• 30 cans of beer.

• One 750 ml bottle, or "fifth," of hard liquor.

• Three liters, or four bottles, of wine.

The restrictions, crafted by a local alcohol control board, are placed on top of monthly importation limits enforced by state law.


The store itself is an old public works garage that shares a wall with the jail. One customer made an orange "Jailhouse Liquor" T-shirt, Cope said, and some residents have taken to the name.

The location has its benefits.

Nearby public safety dispatchers, watching the store on security cameras, once noticed possible bootleggers passing money back and forth outside the store and sent police to check it out, Cope said.

On opening day, the store made about $8,000, said Ferguson, who handed out key chains and Anheuser-Busch T-shirts as people waited in line. The city expected the initial rush of customers to die down.

Instead, people collectively spend as much as $9,000 on any given Monday, Tuesday or Wednesday, Ferguson said. That's more than $1 per day for every person in the borough.

"We basically sold all of the Budweiser within a month," said the finance director.

City officials say that while people see all the money spent at the store, they forget about expenses, such as shipping the alcohol by barge or plane. "We just want to give off the message that it's not the pot of gold at the end of the rainbow, but it certainly is making a difference," Cope said.

Nordlum, meantime, sees a disconnect. The alcohol revenue goes to the city, meaning it may pay for things like ambulance service, the village planner said, but that's not necessarily where it's needed most.


"It's going to be Maniilaq (the regional health and social service agency) and the tribes, they're the ones that are going to foot the bill if there are more alcohol problems," he said.


In a state fighting alcohol abuse and where modern-day prohibition is common in many rural villages, Kotzebue's approach is a potential blueprint for other small towns and hubs seeking answers to generations-old liquor struggles.

The idea: Make alcohol easier to legally buy in your community in exchange for tighter control over shipments and a steady source of cash to run local government or fund social-service programs.

Kotzebue voters freed the city to open and operate a liquor store and distribution site -- and one day a bar -- in October 2009.

The Inupiat village of Kiana, east of Kotzebue on the Kobuk River, voted for the same approach in 2009. Officials at the city, which is starting with a distribution center only, did not return calls.

Bethel voters, fed up with monthly shipment limits and other restrictions that go with being a damp community, took a far different tactic. Also voting in October 2009, they opted to go "wet" -- meaning no limits on monthly shipments, and alcohol sale is legal with a permit -- in hopes that no one would actually be able to open a bar or liquor store in Alaska's largest rural hub.

They were right about no new stores. The state, at the city's urging, has denied liquor license permits in the Southwest Alaska city of 5,800. But people can ship as much alcohol to the city as they want.

A drawback: Unlike Kotzebue, Bethel isn't tracking the sales and can't collect sales tax on the liquor that arrives in town.

In both hubs, the more important question might be this: What do the more liberal liquor rules mean for nearby villages that ban alcohol altogether?


Walking to the Post Office from her home in Buckland -- a three- or four-hour snowmachine ride from Kotzebue -- Josephine Thomas recently spotted something she rarely saw before the Kotzebue liquor store opened.


Beer cans.

Buckland is a dry village -- it forbids the sale and importation of liquor. The alcohol that arrives is bootlegged, but heavy, bulky items like beer didn't make sense to smuggle. That seems to have changed because the beer now can be spirited to town from Kotzebue.

Hard liquor may be easier to get, too. Before the store opened, people bought bootlegged bottles in Kotzebue for about $70. Now they can pay as little as $10 for a temporary non-resident permit and get a bottle of R&R for under $25.

Ferguson suspects that the store is driving down bootlegging prices, leaving people with more money for necessities.

When you visit Kotzebue these days, you see more people staggering around town after the store opens at 3 p.m., Thomas said.

She recently began working as a temporary police officer for Buckland, which was busy preparing for a weekend Christmas celebration of Eskimo games. "I sure would close it right now because of our young kids now that are going to be graduating ... for them to have the liquor store in Kotzebue, I think it will be pretty hard on them," Thomas said.


Of the more than 1,000 people who bought permits to use the liquor store and distribution site, hundreds live outside of Kotzebue, according to the city.

Ferguson, the store manager, couldn't say exactly where the out-of-towners are from. Some are summer workers visiting Kotzebue for the season. Some are certainly villagers from surrounding towns.


Since the store opened, the Maniilaq emergency shelter in Kotzebue has seen no obvious change in women seeking shelter, rape victims or people calling for help because a family member has been drinking, said crisis advocate Nancy Moulton.

In October, the number of alcohol-related emergency room visits rose, from 24 in 2009 to 32 in 2010. That according to the Maniilaq Health Center, the hospital for Kotzebue and 11 surrounding villages.

Locally, city police report little or no change in many alcohol-related crimes in three months following the August opening. Reports of under-age drinking, sexual assault and fights, remained steady for September through October, compared with the year before.

Drunken driving doubled, however, and calls for "intoxicated persons" rose more than 25 percent over the three-month period, according to the police department.

City Manager Rick Hohnbaum says he hears of less "power drinking" in the city now that liquor is more accessible.

"They're seeing less hard stuff out there but more beer," he said. "Is that good, bad? I don't know."

Read The Village, the ADN's blog about rural Alaska, at Twitter updates: Call Kyle Hopkins at 257-4334.


Kyle Hopkins

Kyle Hopkins is special projects editor of the Anchorage Daily News. He was the lead reporter on the Pulitzer Prize-winning "Lawless" project and is part of an ongoing collaboration between the ADN and ProPublica's Local Reporting Network. He joined the ADN in 2004 and was also an editor and investigative reporter at KTUU-TV. Email