Liquor Control States

Liquor Control States

Image: NABCA

There are 17 states that continue to control liquor licenses through a quota system. There are also 17 states in which the state governments control the sale of hard alcohol, referred to as liquor “control states.” Of these states, there are five that fall on both lists: Idaho, Montana, Ohio, Pennsylvania, and Utah. The other states rounding out the list of control states include Maine, Vermont, New Hampshire, Maryland, Virginia, North Carolina, West Virginia, Mississippi, Alabama, Idaho, Wyoming, and Oregon, according to the National Alcohol Beverage Control Association.

Until June 2012, Washington was also a control state; however, Initiative 1183 to end the state’s liquor store monopoly was passed in November 2011.

The term “control state” may be misleading since all state governments exercise some control over the sale of alcohol. However, the term is used to describe states in which the government has a monopoly on liquor sales. These monopolies stemmed from the overturn of Prohibition with these states opting to completely control alcohol sales within their borders.

Virginia created the Department of Alcoholic Beverage Control in 1934, becoming the first state to create a monopoly on the sale of liquor. In “Alcohol Problems and Solutions,” David J. Hanson, Ph.D. quotes Virginia Historical Society records:

“Compulsory abstinence proved unpopular and impossible to enforce. In 1933 Virginians voted to ratify the Twenty-first Amendment repealing prohibition and to devise a plan for liquor control. Governor John Garland Pollard, a loyal prohibitionist, warned ‘Now that prohibition is doomed, the supreme question of the hour is: What new weapon shall we adopt to combat this age-old evil?’

“That new ‘weapon’ turned out to be the first state agency of its kind in the nation, the Alcoholic Beverage Control Board.”

Monopolizing the Liquor Industry

Of the control states, half simply control the wholesale distribution of liquor while the other half maintains a direct monopoly on the industry (“America’s Booze Laws: Worse Than You Thought”).

Pennsylvania, one of the five states that is a control state and uses the quota system, not only controls the sale of liquor; the commonwealth also controls the sale of wine as well. This state is the largest purchaser of wine and spirits in the U.S. according to the Pennsylvania Liquor Control Board Facts and Figures.

In defense of its monopoly, The PLCB suggests that as the largest purchaser of alcohol and wine, it generates significant volume discounts that are passed on to customers. Whether or not those savings are passed along to consumers is the question. In fiscal year 2011-12, sales in the states “Wine and Spirit Shoppes” generated $2.1 billion in sales with $494 million in profits and tax revenue.

With those figures, and recent failure to privatize alcohol sales in the Pennsylvania legislature, it’s easy to understand why this liquor control state is unwilling to give up its monopoly on alcohol sales.