Running a liquor store is no easy task. You have to juggle hundreds of bottles, build strong relationships with your regular shoppers, and handle the day-to-day responsibilities of small business ownership.
If that's not enough, operating in an alcohol control state comes with even bigger challenges since state-run liquor stores can create friction for small liquor store owners.
That’s why we’ve created this quick guide to opening a liquor store in a control state. Keep reading to learn state-specific regulations and get our top tips for achieving success — even in an alcohol control state.
What Is an Alcohol Control State?
After prohibition was repealed in 1933, states were given discretion on how to handle the sale, manufacture, and distribution of liquor. This resulted in some states opting to take a more direct hand in liquor sales.
Put simply, in control states, the state government directly regulates the sales or distribution of alcohol. While for some states, this applies at the wholesale level, Alcohol Beverage Control states (aka ABC states) require liquor to be sold through state-run package stores.
Conversely, in an “open” state, licensed private sellers are allowed to buy and sell alcohol and are only restricted by state laws.
Which States are Alcohol Control States?
There are currently 17 alcohol control states. Within those states, the exact rules around alcohol sales vary considerably. So, if you’re thinking of opening a wine, beer, or liquor store in a control state, make sure to check your state requirements first.
Alcohol Control/ABC States
- Alabama
- Idaho
- Iowa
- Maine
- Michigan
- Mississippi
- Montana
- New Hampshire
- North Carolina
- Ohio
- Oregon
- Pennsylvania
- Utah
- Vermont
- West Virginia
- Wyoming
Of that list, Alabama, Idaho, New Hampshire, North Carolina, Pennsylvania, Utah, and Virginia directly control the sale of alcohol through ABC-licensed liquor stores.
What’s the Difference Between Alcohol Control States and Dry Counties?
Are dry counties and alcohol control states connected? In short, no.
Some states, including open states, have dry counties where alcohol sales are prohibited entirely. This is possible because the repeal of prohibition gave control of alcohol sales to governments at the state and local level.
In short, a control state has state-level restrictions, whereas dry counties prohibit the sale of alcohol altogether.
Dry counties are increasingly rare, whereas liquor control states are here to stay for the foreseeable future.
Related Read: Liquor Store Compliance Solutions: 4 Ways Your POS System Can Help
4 Things To Know When Operating in a Control State
The goal of alcohol control states is to ultimately benefit public health by limiting the sale of alcohol and to pass on profits from liquor sales to state programs.
On a practical level, it means that operating a small wine, beer, or package store is a bit more complex than in an open state.
Here are a few important things to keep in mind:
1. Getting a License May Be More Expensive
Every business that sells alcohol needs to apply for a liquor license. The exact procedures and fees vary per state, but in general, maintaining an off-premises license in alcohol control states tends to be more expensive.
For example, in Georgia (an open state), an application fee is $100, and the annual licensing fee ranges from $25 to $1,000. But in Idaho (an ABC state), the initial state fee can run a whopping $25,000 with varied (but unspecified) annual fees.
2. Don’t Skimp on Inventory and Employee Management
Some control states have strict limits on what alcohol you can carry, who can sell it, and how much an individual can buy. In addition, some alcohol control states use a Control State Code (CSC) instead of a typical SKU.
We can’t stress how important it is to have a trustworthy liquor point of sale (POS) and inventory management system in place. POS systems that are designed for liquor stores have flexible inventory systems that let you track inventory down to the bottle, and built-in employee management so you know exactly what’s being sold and by who.
When thinking about a POS system for package stores in alcohol control states, look for the following features:
- Real-time inventory management
- Mobile scanning
- Employee tracking
- Custom reports for compliance
- Automatic sales tax calculation
- Case break inventory tracking
- Age verification and ID scanning
Liquor-specific POS systems like Bottle POS can also be configured to adhere to laws specific to alcohol control states, such as minimum pricing, special taxes, and hours of sale restrictions.
3. You Can’t Offer Discounts (but You Can Still Promote)
Because the general idea behind an alcohol control state is to limit alcohol consumption, there also tends to be stricter rules when it comes to promoting it. Generally speaking, in alcohol control states, you can’t offer:
- Discounts
- Limited sales
- Customer loyalty programs
However, that doesn’t mean you can’t promote your business at all — it just means you have to get creative!
For instance, you could collect customer emails and sign them up for a newsletter to highlight new arrivals or staff picks. For some customers, expert guidance can be just as enticing as a discount.
As with the other points on this list, check the rules of your state. Discounts or customer loyalty programs (if available) are a fantastic way to increase revenue.
Related Read: Display, Layout, and More: 3 Liquor Store Design Ideas to Inspire You
4. Selection is Limited, but You Can Make Special Orders
Because of the complexity and high cost of operating in alcohol control states, many craft brewers and distillers don’t appear on the shelves. This makes understanding your customer’s preferences more important than ever.
Using sales reports or Bottle POS’ auto ranking, you can see what’s selling and what’s not, and use this data to manage inventory, adjust store layout, and prioritize reorders.
If your customers want to get something that’s not on the state’s list of items, you can make special orders to get a temporary listing. If demand for certain special orders remains high enough, an item might be added to the state’s inventory as well.
Related Read: Managing Your Liquor Store Back Office: POS Solutions for 2024
Navigating the ins and outs of state liquor laws is a challenge, especially if you’re operating in an alcohol control state. However, the right partner can make it easier.
Bottle POS was built by liquor store owners for liquor store owners to address the unique challenges of operating beer, wine, and package stores. With customizable and user-friendly inventory management, employee tracking, and more, Bottle POS is equipped to help your business thrive, no matter what restrictions you face.
To find out how Bottle POS can help your small liquor store, schedule a demo today.
