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Maine welfare cash spent at liquor stores, bars, strip clubs and smoke shops

ebt cardMaine’s welfare system is supposed to provide a social safety net for poor families, but an analysis of the Temporary Assistance for Needy Families (TANF) program suggests some are spending their welfare cash on tobacco, alcohol and adult entertainment.

According to Department of Health and Human Services records obtained by The Maine Wire pursuant to a Freedom of Access Act request, abuse and misuse of cash welfare is a much bigger problem in the Pine Tree State than previous thought.

More than $145,000 has been spent or withdrawn from ATMs at locations that primarily or exclusively sell liquor, beer and wine, including more than $20,000 spent at liquor stores outside the state of Maine, according to an analysis of TANF transactions spanning the last three years.

At one liquor store in Somersworth, New Hampshire, Borderline Beverage at 20 Market Street, more than $16,000 in cash welfare has been accessed.

In Skowhegan, at the Beverage Mart, a store that primarily sells beer, wine and liquor, EBT cardholders have accessed $50,720 in welfare cash.

In addition to spending welfare cash at liquor stores, some EBT cardholders are also accessing their benefits at pubs, bars and taverns:

Although the data shows definitively that EBT cardholders have accessed more than $145,000 at stores that exclusively or primarily sell alcohol, the true scope of alcohol-related welfare abuse is likely much higher due to the nature of cash welfare benefits.

According to DHHS, TANF recipients are not allowed to spend welfare cash at retail establishments that derive more than 50 percent of gross revenues from the sale of prohibited items, such as alcohol, tobacco and pornography. However, the state has no formal mechanism in place to ensure that this law is followed and the regulation is easily avoided by withdrawing benefits as cash from an ATM.

The vast amount of TANF funds are withdrawn from ATMs, and once a benefit becomes cash, the state has no way of determining how it has been spent.

DHHS records also confirm that, at a minimum, cash welfare accessed at stores with the words “smoke”, “tobacco”, or “cigarette”, in the name amounts to $360,000 of all cash welfare spending for the past three years.

That’s enough to buy 72,000 packs of cigarettes.

At the Maine Smoke Shop in downtown Skowhegan, EBT cardholders have accessed $18,460 in welfare cash. At the Maine Smoke Shop on Union Street in Bangor, $28,000 worth of welfare cash has been accessed. EBT cardholders at Joe’s Smoke Shop on Congress Street in Portland have used $55,000 in welfare cash.

As is the case with transactions associated with liquor stores and bars, the data only confirms that an ATM withdrawal or purchase was made at that location. Moreover, the data only provides a minimum figure for the amount of welfare actually spent at a given location.

The data only reveals where a TANF recipient used their card, not where they spent their welfare cash. But in many instances, the location is telling.

According to DHHS data, for example, $340 in welfare cash has been withdrawn from ATMs at 190 Harlow Street, Bangor. That address happens to be the location of Diamonds Gentleman’s Club, a strip bar. Similarly, $2080 in welfare cash has been withdrawn from ATMs at 200 Riverside Drive, Portland. That happens to be the address of PT’s Show Club, a strip club.

In February 2012, Congress passed the Welfare Integrity and Data Improvement Act as part of the Middle Class Tax Relief and Job Creation Act of 2012. The Act requires states, by Feb. 22, 2014, to establish practices and policies that prevent TANF assistance from being used in any EBT transaction at any liquor store or other prohibited venues.

States that fail to meet this deadline could see their TANF block grants decreased by up to 5 percent.

Steve Robinson
Maine Wire, Editor