The "ABC" of Legal Liquor in Virginia

In stereotypes about the "Old South," rich folks stand on the plantation veranda near the boxwoods, leaning on the tall white columns with the brick house behind them and casually sippin' mint juleps brought by servants on silver platters. Gone With the Wind was set in Georgia, but the scenes on the plantation (Tara) reflected the lifestyle of high society of Virginia as well.

Fast forward to the first Monday in November, then jump one more day to Tuesday. If you want to go buy some bourbon for a modern mint julep, you have to go to a state-run liquor store... and it will be closed.

The first Tuesday after the first Monday in November is always Election Day in Virginia, every year. (In even-numbered years, registered voters choose 11 different representatives to the US Congress. Every 6 years, the race for one U.S. Senate seat is on the ballot. In odd-numbered years, all 100 seats for the House of Delegates are on the ballot. Every 4 years in odd-numbered years, voters make decisions on all 40 seats for the State Senate.) The state has decided that booze and elections don't mix - and the Commonwealth of Virginia controls the sale of hard liquor.

The Virginia Department of Alcoholic Beverage Control (ABC) has a monopoly on the sale of hard liquor in Virginia. The hours of operation, the products carried, the price, and the locations of ABC stores are government decisions. To reduce the chance that voters might be swayed by liquor, the ABC stores are closed on election days.

All liquor in Virginia is sold in over 330 "ABC" stores, managed by the Department of Alcoholic Beverage Control. Virginia started control of alcohol sales after Prohibition ended. In 1933, over 60% of Virginians voted in favor of ending prohibition and creating a state-controlled monopoly to manage liquor distribution and sale. Virginia was the 29th state to ratify the 21st Amendment to the US Constitution ending Prohibition. Within two months of the Virginia vote, Utah became the 36th to ratify. Virginia authorized retail stores to sell beer and wine (over 16,000 retail licenses today), but set up state-run ABC stores to sell hard liquor.1

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. Liqour 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. The Virginia Administrative Code still limits advertising that uses the words Bar Room/Saloon/Speakeasy/Happy Hour, hoping to minimize the potential for excessive drinking - and 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."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.

The top 10 products sold in ABC stores in 2010 and 2011 (based on total dollars, rather than total volume) were:4

Brand
Product Category
1Jack Daniel's 7 BlackTennessee whiskey
2Smirnoff 80domestic vodka
3Grey Gooseimported vodka
4Jim Beamstraight bourbon whiskey
5Crown RoyalCanadian whisky
6Absolutimported vodka
7Bacardi Superiordomestic rum
8Aristocratdomestic vodka
9Jagermeisterimported cordials
10Captain Morgan's Spicedimported rum

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 2011, the Department of Alcoholic Beverage Control collected $218 million from taxes and licenses fees The ABC monopoly also generate massive profits by buying alcohol at wholesale rates and selling at retail prices, generating an additional $121 million in 2011.5

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:6

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, Goveror Robert McDonnell tried to abolish the system of state control and privatize alcohol sales. 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 main ABC warehouse at 2901 Hermitage Road in Richmond (known locally as "Alcohol and Broad") would have been sold. The governor claimed privatization would generate $500 million, which would be used to finance transportation projects.7

However, the governor's proposed tax on restaurateurs selling alcohol was unpopular among conservatives. 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 surge of funding from selling 1,000 licenses, the state would end up getting $47 million less annually. In the end, the General Assembly killed the proposal in February, 2011 without a hearing, and the governor found a different way to finance his transportation agenda.8

Not every community in Virginia allows alcohol sales. 100% of the cities are "wet," reflecting the influence of the hospitality industry in urbanized areas. Between 2001-2012, the number of "dry" counties had shrunk from 35 to 10 - 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.9

Links

References

1. "History of Virginia ABC," Virginia Department of Alcoholic Beverage Control, p.53, ; http://www.abc.state.va.us/admin/hist1.htm; "2011 Annual Report," Virginia Department of Alcoholic Beverage Control, p.8, p.10, http://www.abc.state.va.us/admin/annual/docs/2011ar.pdf (last checked August 26, 2012)
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. "2011 Annual Report," Virginia Department of Alcoholic Beverage Control, p.5
4. "2011 Annual Report," Virginia Department of Alcoholic Beverage Control, p.11
5. "2011 Annual Report," Virginia Department of Alcoholic Beverage Control, p.12
6. "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)
7. "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)
8. "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)
9. "2001 Annual Report," Virginia Department of Alcoholic Beverage Control, p.53, http://www.apa.virginia.gov/reports/ABCAnnualRep01.pdf; "2011 Annual Report," Virginia Department of Alcoholic Beverage Control, p.24, http://www.abc.state.va.us/admin/annual/docs/2011ar.pdf (last checked August 26, 2012)


Virginia and Alcohol
Virginia Places