For the Good of Illinois

Colorado Watchdog: Taxpayer money fights booze, tobacco while backing liquor, cigarette stores

March 23, 2015 04:40 AM
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Original Article, click here.
Colorado_Watchdog

 

By Arthur Kane | Watchdog.org

 

States spent about $38 million last year fighting tobacco addiction, and tobacco use costs the economy $289 billion a year in medical costs and lost productivity, according to the Centers for Disease Control.

 

And the National Institute on Alcohol Abuse and Alcoholism spent nearly $460 million researching the impact and methods to prevent problem drinking, the NIAAA budget shows.

 

At the same time governments were spending the public money to fight alcohol and cigarettes, another federal agency — the Small Business Administration — was providing millions in loan guarantees to liquor stores and tobacco shops around the country, according to Watchdog.org analysis of a database obtained by openthebooks.com.

 

In two  states — Oklahoma and Colorado — SBA provided more than $9 million in loan guarantees to start-up and grow liquor and tobacco small businesses in the past five years, the openthebooks.com data revealed.

 

Photo Courtesy of Openthebooks.com

Photo Courtesy of Openthebooks.com

SBA CRITIC: Openthebooks CEO Adam Andrzejewski said SBA shouldn’t back businesses that other agencies are spending money to curtail.

"This is a great example of government hypocrisy and inefficiency," said Openthebooks CEO Adam Andrzejewski after Watchdog.org explained the expenditures it found. "It’s not only wasteful, it’s contradictory."

 

Chris Chavez, SBA regional communications director, conceded there’s a legitimate question about whether one agency should back businesses that other agencies are fighting to control. But Chavez said the SBA doesn’t consider the nature of the business when guaranteeing loans, as long as it’s a legal business.

 

"We don’t look at whether the loans go to a ‘good’ business or whether the business owner is doing good," he said. "It’s strictly a business decision – is it fiduciarily responsible?"

 

The SBA, for example, could not work with Colorado’s legal marijuana dispensaries because pot is illegal under federal law, he said.

 

But SBA rules do ban loans to some legal businesses for what appears to be moral reasons, Watchdog.org found in reviewing SBA regulations.

 

Loans should not go "(t)o a business deriving more than one-third of its gross annual revenue from legal gambling activities," according to SBA rules for some loans.

 

Chavez said he wasn’t familiar with that provision but pointed out those rules are set by Congress.

 

Watchdog.org searched the openthebooks.com database in Oklahoma and Colorado using key words like "liquor," "cigarettes" and "wine" to find liquor stores and tobacco businesses that received federal guarantees that allowed them to receive favorable loan terms.

 

In Oklahoma, for example, Getting Place LLC and Joe’s Liquor in Canute, Okla., received a $425,000 SBA loan guarantee in 2010, according to the data. In 2011, 2012 and 2013, The Cigarette Store in Boulder, Colo., had a series of transactions, including a $4 million loan guarantee in 2011 that appeared to be paid back the following year and a $1.05 million loan guarantee — $88,000 of which was paid back in 2013, Openthebooks.com data shows.

 

A liquor store in Brighton, Colo., under only its corporate name in the database, received a guarantee last year of nearly $3.6 million, records show. Joe’s and Smoker’s owners could not be reached for comment.

 

Andrzejewski said it’s time Congress takes a close look at the whole SBA loan guarantee program.

 

"This has to lead to oversight hearings in Congress," he said.

 

Original Article, click here.

 

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