The "ABC" of Legal Liquor in Virginia

ABC stores are commercial operations, often located in strip malls ABC stores are now standard self-service, customer-based facilities
ABC stores are commercial operations, often located in strip malls and now standard self-service, customer-based facilities<

After Prohibition ended, Virginia authorized retail stores to sell beer and wine (over 16,000 retail licenses today), but retained direct control over the sale of hard liquor. The General Assembly set up what is today the Virginia Department of Alcoholic Beverage Control (ABC) and gave it the exclusive right to sell hard liquor directly to the public.

Until restaurants were authorized in 1968 to sell liquor by the drink (one glass at a time), the only legal hard liquor sales in Virginia were bottles handed by ABC clerks to customers standing on the other side of counters in state-owned stores.

In contrast, after Prohibition the state allowed the sale of wine and beer in numerous places. Today, various forms of wine and beer are sold at the 7-11, the grocery store, and even gas stations that obtain the required ABC license for off-premise sales. Those stores compete for customers by offering different prices, hours of operation, and levels of service.

On-premise alcohol sales are also authorized by the Department of Alcoholic Beverage Control. Restaurants serving beer, wine, and since 1968 hard liquor have competitive business practices, but the Department of Alcoholic Beverage Control limits their ability to sell alcohol at a discount.1

The Virginia Administrative Code also limits advertising that uses the words Bar Room/Saloon/Speakeasy/Happy Hour, hoping to minimize the potential for excessive drinking. Beer and wine wholesalers are not allowed to deliver beer/wine on Sundays "except to boats sailing for a port of call outside of the Commonwealth, or to banquet licensees," and retail outlets are required to purchase their beer/wine through wholesale distributors that are regulated by the state.2

Billboard advertising of alcohol is now permitted, but billboards:3

may not depict persons consuming alcoholic beverages, may not use cartoon characters, nor use persons who have not attained the legal drinking age as models or actors. The billboards may not be placed within 500 feet of a church or synagogue; a public, private, or parochial school, college, or university; a public or private playground or similar recreational facility; or residentially zoned property.

In contrast to retail sales of wine/beer and the sale of hard liquor by the drink in restaurants, the only competition for the sale of bottles of hard liquor in Virginia comes from moonshiners selling untaxed and illegal liquor in plastic one-gallon jugs or even in the classic Mason jar container. No matter what the size of the bottle, the state has a monopoly on the legal sale of rum, vodka, bourbon, etc. through 350 state-owned and state-operated ABC stores. Whenever hard liquor is sold in bottles legally in Virginia, that alcohol is sold in a state-run ABC store.

Counties and cities in Virginia can ban the sale of alcohol, but otherwise the hours of operation, the brands sold, the price of different products, and the locations of ABC stores are state government decisions. Customers who want buy a bottle of bourbon for a modern mint julep (perhaps pretending it was brought by servants on silver platters to their plantation veranda near the boxwoods) must go to a state-run liquor store.

In most cases, it would be a short trip to buy a bottle. The Department of Alcoholic Beverage Control claims that an ABC store is located within a 10--minute drive of 92% of Virginians.4

ABC stores are scattered across Northern Virginia in all jurisdictions, but Lee County forbids sale of alcohol - so someone living at Cumberland Gap (near Middlesboro, Kentucky) would have to drive over an hour to the ABC store in Big Stone Gap (in Wise County) or in Gate City (in Scott County) to purchase a bottle of hard liquor legally in Virginia ABC stores are scattered across Northern Virginia in all jurisdictions, but Lee County forbids sale of alcohol - so someone living at Cumberland Gap (near Middlesboro, Kentucky) would have to drive over an hour to the ABC store in Big Stone Gap (in Wise County) or in Gate City (in Scott County) to purchase a bottle of hard liquor legally in Virginia
ABC stores are scattered across Northern Virginia in all jurisdictions, but Lee County forbids sale of alcohol - so someone living at Cumberland Gap (near Middlesboro, Kentucky) would have to drive over an hour to the ABC store in Big Stone Gap (in Wise County) or in Gate City (in Scott County) to purchase a bottle of hard liquor legally in Virginia
Source: Virginia Alcoholic Beverage Control Board, ABC Store Finder

All ABC stores used to be closed on the Tuesday after the first Monday in November, in addition to the traditional holiday closings on Thanksgiving, Christmas Day, New Year's Day and Easter. The state had decided that bottles of hard liquor and elections don't mix. The Commonwealth of Virginia controls the sale of hard liquor, and closing the ABC stores was expected to reduce the chance that modern voters might be swayed by liquor.

The first Tuesday after the first Monday in November is always election day in Virginia, every year. Every year, sale of hard liquor in bottles is banned on that Tuesday. In odd-numbered years, all 100 seats for the House of Delegates are on the ballot. Every 4 years in odd-numbered years, voters also make decisions on all 40 seats for the State Senate. In even-numbered years, registered voters can choose one of the 11 different Representatives who serve in the US Congress. Every 6 years, the race for one U.S. Senate seat is on the ballot.

The now-repealed election day closure of ABC stores contrasted with the confluence of drinking and voting in colonial elections. In the 1700's, candidates in Virginia offered alcoholic punch to voters throughout election day.

The free drinks offered to all voters gave rural farmers a rare opportunity to gather, see their neighbors, and party at the expense of the candidates. Voting in Virginia was by "open outcry" (viva voce), not by secret ballot, until after the Civil War. Voters would approach the sheriff and announce their decision, and candidates and onlookers heard each vote announced. Candidates who failed to provide any alcoholic rewards for participating in the process could be punished by the voters.

James Madison lost only one election in his life, in 1777, when he failed to offer Orange County voters any refreshments on election day. George Washington was rejected by the voters of Frederick County in 1755 when he first sought election to the House of Burgesses. One reason for the rejection was his opposition to local taverns selling alcohol to the Virginia Regiment troops. Washington led the militia from his headquarters in Winchester at the start of the French and Indian War, and his major discipline challenges were exacerbated by the easy availability of booze.

In George Washington's second attempt at office in 1758, he made sure to treat the voters liberally to honor their participation in the electoral process and to obtain their support. He provided about 150 gallons of beer, hard cider, punch, and rum to entertain 391 voters. Simple math suggests that they drank heavily throughout the day, or shared with others who took advantage of Washington's hospitality.5

until almost the end of the 20th Century, ABC stores were drab facilities that required customers to order liquor from clerks at a counter, and not the modern self-service stores with customer-friendly lighting and displays for most of the 20th Century, ABC stores were drab facilities that required customers to order liquor from clerks at a counter, rather than self-service stores with customer-friendly lighting and displays
for most of the 20th Century, ABC stores were drab facilities that required customers to order liquor from clerks at a counter, rather than self-service stores with customer-friendly lighting and displays
Source: Virginia Alcoholic Beverage Control Board, Image Bank

The ABC monopoly generates substantial revenues for the state. The state excise tax is 20% on distilled spirits and 4% on wine, and the ABC stores also charge 5% sales tax. In the fiscal year ending June 30, 2014, the Department of Alcoholic Beverage Control sold $801 million of product.

The ABC monopoly also generates massive profits by buying alcohol at wholesale rates and selling at retail prices, generating a profit of $140 million in 2014. By 2016, that rose to a $165 million profit on $898 million in revenue. That year, Virginia made an impressive 18% profit on its alcohol monopoly.6

The top 10 products sold in ABC stores (based on total dollars, rather than total volume) have been:7

2015 Rank
2014 Rank
2013 Rank
2012 Rank
Brand
Product Category
1111Jack Daniel's 7 BlackTennessee whiskey
2222Smirnoff 80domestic vodka
3517-Fireball Cinnamoncordials
47911Hennessy VS (1)Cognac\Armagnac
5334Jim Beamstraight bourbon whiskey
6443Grey Gooseimported vodka
7655Crown RoyalCanadian whisky
8866Absolutimported vodka
9978Aristocratdomestic vodka
10131314Maker's Markimported rum
11111112Patron Silverimported rum
1210109Bacardi Superiordomestic rum
141287Captain Morgan's Spicedimported rum

In the fiscal year ending June 30, 2012, three of the four top-selling ABC stores were located in Virginia Beach - a key destination for tourists. Store No. 256, in the Hilltop North Shopping Center, was the "king of booze" in Virginia:8

No. 256, off Laskin Road, sold more than $9.2 million worth of booze. That was nearly 40 percent more than the $6.7 million brought in by the state's second-most-successful ABC store, in Vienna. Most of the store's business, manager David Warren said, comes from about 175 restaurants and bars, which must buy their liquor from the ABC agency. He said he also benefits from affluent residents of nearby neighborhoods, as well as a steady stream of tourists in search of a major shopping center.

If the state tries to make too much profit from its retail markup, customers can not go to a competitor down the street. Because the state ABC stores are the only legal places for selling hard liquor by the bottle, customers must travel across the state line to find a different price on hard liquor.

To limit that competition, Section 3VAC5-70-10 of the Virginia Administrative Code prohibits importing more than one gallon of alcoholic beverages from outside the state or from military posts with PX stores. Many Virginians working in Washington DC who plan to "stock up with cheap liquor for a party" have heard rumors of ABC agents staking out DC liquor stores, then tailing cars with Virginia plates back across the Potomac River to enforce the one-gallon import limit.

In 2010-11, Governor Robert McDonnell tried to abolish the system of state control and privatize alcohol sales, eliminating the state monopoly on the sale of hard liquor. In the original proposal, 1,000 retail licenses would have been auctioned, tripling the number of outlets in Virginia for liquor sales.

Wholesale operations would also be shifted to the private sector, and the state would sell the main ABC warehouse at 2901 Hermitage Road in Richmond (known locally as "Alcohol and Broad"). The governor claimed privatization would generate $500 million, which would be used to finance transportation projects.9

the central warehouse at Alcohol and Broad (2901 Hermitage Road in Richmond) ships bottles of hard liquor to the 350 or so local ABC stores, which sell directly to customers and supply local businesses serving liquor by the drink
the central warehouse at "Alcohol and Broad" (2901 Hermitage Road in Richmond) ships bottles of hard liquor to the 350 or so local ABC stores, which sell directly to customers and supply local businesses serving liquor by the drink
Source: Virginia Alcoholic Beverage Control Board, Image Bank

The governor's proposed new tax on restaurants selling alcohol was unpopular among anti-tax conservatives in the General Assembly. When the governor modified his plan and dropped that tax, outside reviewers determined that privatizing the entire ABC operation would not be revenue-neutral. After the one-time initial surge of funding from selling 1,000 licenses, the state would end up receiving $47 million less annually.

In the end, the General Assembly killed the proposal in February, 2011 without a hearing. The governor found a different way to raise taxes that financed his transportation agenda in 2013.10

top-selling products at ABC stores change a little every year, as customer tastes change
top-selling products at ABC stores change a little every year, as customer tastes change
Source: Virginia Department of Alcoholic Beverage Control, 2015 Annual Report

Virginia has permitted sale of "liquor by the drink" in food establishments (as opposed to whole-bottle sales in ABC stores) only since 1968. Restaurants and the entertainment industry lobbied for that change in the 1960's. Liquor by the drink eliminated the "brown bag" requirement that customers join a private club and bring their own bottle to the restaurant in order to enjoy a drink before a meal.

Not every community in Virginia allows alcohol sales. In some rural Virginia counties, there have been odd alliances of religious opponents opposed to the use of alcohol and moonshiners who wanted to protect their business from legalized competition. Since 1968, however, the lure of additional tax revenue from ABC payments and especially from restaurants selling liquor by the drink has overcome the opposition in nearly every jurisdiction.

100% of the cities are "wet," reflecting the influence of the hospitality industry in urbanized areas. Between 2001-2015, the number of "dry" counties changed from 35 to 8. In 2016, Russell County voters approved sale of alcohol in the Town of Lebanon. Remaining "dry" counties are Appomattox, Bland, Botetourt, Buchanan, Campbell, Carroll, Charlotte, Craig, Dickenson, Floyd, Franklin, Giles, Grayson, Green, Halifax, Henry, Highland, King William, Lee, Louisa, Lunenburg, Mecklenburg, Montgomery, Patrick, Pittsylvania, Pulaski, Russell, Scott, Smyth, Surry, Tazewell, Warren, Washington, Wise, and Wythe.11

officially-dry counties are concentrated in southwestern Virginia, but all counties on the I-81 corridor are wet
officially-dry counties are concentrated in southwestern Virginia, but all counties on the I-81 corridor are "wet"
Source: US Geological Survey (USGS) National Atlas, County Map

The Little River District of Floyd County, one of the magisterial districts in the county, went "wet" in 1996. Voters in that district had rejected alcohol sales in a 1991 referendum, but changed their mind five years later. Only one restaurant, Ray's, sold liquor-by-the-drink consistently after the vote.

In 2013 entrepreneurs creating a legal moonshine distillery, Five Mile Mountain, discovered the limits on alcohol sales in Floyd County would prohibit serving their product to customers. The distillery owners partnered with local restaurants seeking the opportunity to sell alcoholic drinks to diners, and arranged for a referendum to authorize liquor sales in the Courthouse District (including the town of Floyd with its restaurants). In 2014, voters approved liquor sales in the Courthouse District.

That decision led to several restaurants getting ABC licenses for liquor-by-the-drink sales. It also led to the opening of the first ABC retail store in Floyd County.

Under state law, restaurants must purchase their liquor from ABC stores for resale to customers. Food and all other items used in restaurants/bars can be purchased directly from wholesalers, but in Virginia hard liquor must be bought at the ABC store.

In Floyd County, the restaurant Ray's had to drive to an ABC store in another county to purchase its liquor. When the voters in 2014 authorized alcohol sales in the Courthouse District as well as the River District of the county, the state expected a significant increase in the number of Floyd County restaurants obtaining ABC licenses to sell liquor by the drink.

The Department of Alcoholic Beverage Control chose to open an ABC store to supply hard liquor to those restaurants, and to sell directly to individuals as well. When that store opened (in the Courthouse District) in 2015, people could purchase a bottle of hard liquor in Floyd County legally for the first time since 1934.12

in Floyd County, only the Little River district and the Courthouse district (including the Town of Floyd) have authorized sale of liquor-by-the-drink
in Floyd County, only the Little River district and the Courthouse district (including the Town of Floyd) have authorized sale of liquor-by-the-drink
Source: Floyd County, iGIS

In 1935, the Sunset Hills dairy farm in western Fairfax County had plenty of grain, so it opened a distillery in a building that was once the town hall for Wiehle. The building had also housed the Wiehle Methodist Episcopal Church; the steeple was removed when the building was converted into a distillery.

The dairy cows ate the grain after it was used to make "Virginia Gentleman" and "Fairfax County" whiskey; the family claimed it has "the most contented cows in Virginia." Sale of the most of the Bowman farmland in the 1960's for development of Reston forced up land prices and taxes, and in 1988 the A. Smith Bowman distillery relocated to Fredericksburg.18

For years, Bowman operated the only licensed distillery in Virginia. After the General Assembly loosened the laws on farm wineries and allowed them to charge for tastings, the number of wineries in Virginia exploded. Tourism increased in rural areas near major highways, stimulating the economy and generating revenue for local governments.

Based on that model, the state also revised the laws and regulations to spur new distilleries, and by 2014 six craft distilleries were licensed in Virginia. Belmont Farm Distillery in Clarke County now sells "White Lightning" products - legally, in ABC stores.

> legal liquor is marketed with a nod to Viginia's moonshining past...
legal liquor is marketed with a nod to Virginia's moonshining past
Source: Belmont Farm Distillery, Virginia Lightning

Links

former Bowman distillery - and former Wiehle town hall/Methodist church - at Sunset Hills farm (now Reston)
former Bowman distillery - and former Wiehle town hall/Methodist church - at Sunset Hills farm (now Reston)
Source: Virginia Department of Historic Resources, Bowman Distillery 029-5014

References

1. "History of Virginia ABC," Virginia Department of Alcoholic Beverage Control, p.53, no longer available from Virginia Department of Alcoholic Beverage Control; http://www.abc.state.va.us/admin/hist1.htm; "Mission in Review - 2011 Annual Report," Virginia Department of Alcoholic Beverage Control, p.8, p.10, https://www.abc.virginia.gov/about/agency-overview/sales-and-revenue (last checked September 27, 2015)
2. "Advertising; exterior," Virginia Administrative Code 3VAC5-20-30, http://leg1.state.va.us/cgi-bin/legp504.exe?000+reg+3VAC5-20-30; "Sunday deliveries by wholesalers prohibited; exceptions," 3VAC5-60-90, http://leg1.state.va.us/cgi-bin/legp504.exe?000+reg+3VAC5-60-90 (last checked August 26, 2012)
3. "Mission in Review - 2011 Annual Report," Virginia Department of Alcoholic Beverage Control, p.5, https://www.abc.virginia.gov/about/agency-overview/sales-and-revenue (last checked September 27, 2015)
4. "Store Information," Virginia Department of Alcoholic Beverage Control, https://www.abc.virginia.gov/about/store-information (last checked September 27, 2015)
5. Garry Wills, James Madison, Macmillan, 2002, p.13, https://books.google.com/books?id=EtEqdvpuOwQC; "Booze on Election Day was an American tradition," National Constitution Center, http://blog.constitutioncenter.org/2012/11/booze-on-election-day-was-an-american-tradition/>; Daniel Okrent, Last Call: The Rise and Fall of Prohibition, Simon and Schuster, 2010, p.47, https://books.google.com/books?id=MJbBqn3XWqAC (last checked September 27, 2015)
6. "Virginia ABC Earns $801 Million in Gross Sales in Fiscal Year 2014," Virginia Department of Alcoholic Beverage Control news release, September 16, 2014, https://www.abc.virginia.gov/about/media-room/2014/virginia-abc-earns-$801-million-in-gross-sales-in-fiscal-year-2014; "Virginia ABC Marks 18th Consecutive Record-Breaking Year for Sales," Virginia Department of Alcoholic Beverage Control news release, November 10, 2016, https://www.abc.virginia.gov/about/media-room/2016/11102016-fiscal-year-2016 (last checked November 28, 2016)
7. "Mission in Review - 2013 Annual Report," Virginia Department of Alcoholic Beverage Control, p.11, https://www.abc.virginia.gov/about/agency-overview/sales-and-revenue; "Mission in Review - 2014 Annual Report," Virginia Department of Alcoholic Beverage Control, p.11, https://www.abc.virginia.gov/about/agency-overview/sales-and-revenue (last checked September 27, 2015)
8. "Among Virginia's ABC stores, Hilltop is king booze," The Virginian-Pilot, August 26, 2012, http://hamptonroads.com/node/649991 (last checked August 26, 2012)
9. "Governor's Staff Recommendation for ABC Privatization Unveiled," news release by Governor McDonnell’s Government Reform & Restructuring Commission, September 8, 2010, http://www.reform.virginia.gov/News/viewRelease.cfm?id=361 (last checked August 26, 2012)
10. "McDonnell is handed legislative defeat as Virginia assembly drops bill to privatize liquor stores," The Washington Post, February 9, 2011, http://www.washingtonpost.com/wp-dyn/content/article/2011/02/08/AR2011020806203.html (last checked August 26, 2012)
11. "2001 Annual Report," Virginia Department of Alcoholic Beverage Control, p.53, http://www.apa.virginia.gov/reports/ABCAnnualRep01.pdf; "2013 Annual Report," Virginia Department of Alcoholic Beverage Control, p.24, http://www.abc.virginia.gov/admin/annual/docs/2013ar.pdf; "2014 Annual Report," https://www.abc.virginia.gov/library/about/pdfs/2014ar.pdf; "2015 Annual Report," Virginia Department of Alcoholic Beverage Control, p.35, https://www.abc.virginia.gov/library/about/pdfs/2015annual-report; "2016 November General Results - Referendums," Virginia State Board of Elections, http://www.wcyb.com/news/virginia/russell-county/lebanon-voters-approve-liquor-sales-in-restaurants/147978129 (last checked November 9, 2016)
12. "Floyd County lands its first ABC store," The Roanoke Times, August 14, 2015, http://www.roanoke.com/news/local/floyd_county/floyd-county-lands-its-first-abc-store/article_d9fdbda6-44e4-5169-ac5e-325fb173ed96.html; "Floyd County's first ABC store is now open," The Roanoke Times, September 14, 2015, http://www.roanoke.com/business/columns_and_blogs/blogs/storefront/floyd-county-s-first-abc-store-is-now-open/article_b76f0110-bfec-5c7a-be29-661a9a3563bb.html (last checked September 16, 2015)
13. Sarah Hand Meacham, Every Home A Distillery: Alcohol, Gender, and Technology in the Colonial Chesapeake, Johns Hopkins University Press, 2009, p.1, http://books.google.com/books/about/Every_Home_a_Distillery.html?id=pXARFubMv5MC (last checked October 22, 2014)
14. Sarah Hand Meacham, Every Home A Distillery: Alcohol, Gender, and Technology in the Colonial Chesapeake, p.5
15. "Distillery," Mount Vernon Ladies' Association, http://www.mountvernon.org/the-estate-gardens/distillery/ (last checked October 22, 2014)
16. Thomas P. Slaughter, The Whiskey Rebellion: Frontier Epilogue to the American Revolution, Oxford University Press, 1988, p.151, http://books.google.com/books?id=Hym2U_4C5fYC (last checked October 22, 2014)
17. "The Old Dominion goes dry: prohibition in Virginia," Brewery History, Number 138 (Winter 2010-2011), http://www.breweryhistory.com/journal/archive/138/Benbow.pdf (last checked October 22, 2014)
18. "Visit Us," A. Smith Bowman, http://www.asmithbowman.com/distillery.aspx; "Bowman Distillery 029-5014," Virginia Register of Historic Places, Virginia Department of Historic Resources, 1999 nomination form, (last checked October 22, 2014)


Virginia and Alcohol
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