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State Owned Liquor Stores, Explained

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We think the 21st Amendment did more good than harm when it abolished Prohibition, but like most laws, it had unintended consequences. It gave purview over the sale and distribution of booze to each individual state. That system not only means you can’t get certain brands in certain places and that deliveries can go awry. It also means that some state governments have taken complete control of liquor stores. They’re known as ABC (alcoholic beverage control) states.

Unlike states that opt for free enterprise or those that license “package stores” (where private retailers must specially package liquor before letting it out the door), control states completely and totally command the sale of alcohol. There are pros and cons to state control, but navigating them does take a little know-how—so here’s how.

Note: Alcohol law can get a little dense, so we’ll be concentrating on spirits specifically here.

How many states are ABC states?

There are 17 states that control the sale of liquor one way or another. They’re generally split into two groups, those that directly own all of the liquor stores in the state, and those that control distribution to private retailers.

Which states own all the liquor stores?

The states of Alabama, Idaho, New Hampshire, North Carolina, Pennsylvania, Utah and Virginia all own the liquor stores directly.

Which states control distribution?

Iowa, Maine, Michigan, Mississippi, Montana, Ohio, Oregon, Vermont, Wyoming and West Virginia pull the strings from on high, selling a selection of spirits to all private vendors. The state sets minimum costs, essentially dictating prices on the consumer level.

What does state control mean in practice?

Splitting liquor law hairs all day can be fun (wait, that’s not fun for you?), but what really matters is how decisions in the state capital affect your shopping experience. First of all, control states decide where you can shop. While in free-for-all states like California and Louisiana you can pick up a bottle of tequila with your shampoo at the drugstore, in a control state you have to go specifically to a state-run shop. Once there, you will typically see fewer brands than in stores in other states, with an especially glaring lack of craft brands, since small companies may lack the time and resources to navigate the legal system to get their products on the shelf. You may even find a store completely closed. While most states have moved to revoke blue laws (those that enforce religious standards like the sanctity of the Sabbath), state-run stores may be closed or limit hours on Sundays, like in Alabama where stores are closed until noon on Sundays. Closures and limited hours are also the norm on federal holidays.

What are the advantages of state owned stores?

State-run stores conceivably generate income for the state, money that could be put towards education, infrastructure, you name it, in addition to standardized, effective training for liquor store workers (which states argue will help prevent workers from accidentally selling to people under the age of 21). Control states also dictate where people can buy booze, restricting the number of liquor stores and, state control advocates argue, preventing liquor stores from proliferating into every corner of society.

What are the benefits of private liquor stores?

Arguments for privatization of any industry almost always focus on lower consumer prices driven by competition. A 2014 study found that liquor in privatized states was $2.03 cheaper on average. If you’re anything like us, that savings adds up quick (if only to expand our collection of two-dollar bills). Private liquor stores also exercise much more freedom in what brands they stock, passing on more selection to drinkers. Finally, private stores benefit small craft distillers who can easily meet liquor regulations in other states but cannot run the obstacle course of ABC rules.

What happens when a state privatizes?

If all of this theory has your head spinning, consider a real life example. Washington state residents voted to privatize their liquor stores in 2012, providing a pretty clear case study. Over two years, prices actually rose under the new private system from an average of $21.19 to $24.39 per liter of liquor—but that’s only because legislators added license fees for retailers and distributors to recoup the lost revenue. Meanwhile, the number of liquor stores ballooned from 329 to 1,400. While that sort of expanded market may seem like a good thing, many residents who voted for privatization expressed remorse for that decision a few years later, citing the massive surge in liquor stores.

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