What Is an ABC State? 5 Tips for Liquor Store Success

An alcoholic beverage control (ABC) state, commonly referred to as an alcohol control state, is a location where the state government directly regulates the sale or distribution of alcohol.  

Usually, this control is asserted at the wholesale level and in retail pricing but in seven of the 17 control states, all hard liquor must be sold directly through state-run liquor stores.

What does this mean if you want to sell beer, wine, and liquor in an ABC state? For starters, you’ll likely have to follow stricter, more competitive licensing procedures. It also requires a little more creativity and planning than stores operating in open states.=

However, with the extra challenge comes exciting opportunities for success. With less competition, you could become the go-to source for alcoholic drinks in your area. 

In this article, we’ll answer your biggest questions about ABC states, including:

• Which states are ABC States?
• Why are there ABC states?
• What do liquor store owners need to know when operating in an ABC state?

Which States Are ABC States?

Wondering what states are ABC states? Here is a list of the 17 control states:

• Alabama
• Idaho
• Iowa
• Maine
• Michigan
• Mississippi
• Montana
• New Hampshire
• North Carolina
• Ohio
• Oregon
• Pennsylvania
• Utah
• Vermont
• Virginia
• West Virginia
• Wyoming

Of that list, Alabama, Idaho, New Hampshire, North Carolina, Pennsylvania, Utah, and Virginia directly control the sale of liquor through state-run, ABC-licensed liquor stores. Certain jurisdictions in Alaska, Maryland, Minnesota, and South Dakota also have restrictions similar to those of an ABC model.

Additionally, some ABC states allow private sellers to sell beer and wine. To understand the exact rules you’ll need to follow, check your state requirements.

Why Do ABC States Exist?

It’s hard to answer what an ABC state is without going into why they exist in the first place.

After prohibition was repealed in the 1930s, it was decided that state and local governments should decide liquor laws. That’s why when applying for a liquor license, there are often slightly different requirements between cities and counties in the same state, even in open states.

Most states opted for a license model, where any private seller can buy and sell alcohol as long as they follow state laws. However, after heavy lobbying by temperance groups, some states maintained more direct control over liquor sales. 

ABC states assert that by controlling who can sell alcohol and how it’s sold, they:

• Can fund public programs on alcohol education and abuse prevention
• Limit the number of locations selling alcohol
• Reduce sales of alcohol to minors and visibly intoxicated people

To that end, ABC states effectively limit alcohol sales, with open states accounting for over 80% of total sales despite only making up 65% of the country.

5 Tips for Finding Liquor Store Success in a Control State

Thinking of running a liquor store in an ABC state? Here are five tips for maximizing your profits and staying in compliance.

1. Prepare To Pay More and Have Less Say in Product Selection

If you’re determined to operate a business selling hard liquor in a control state, know from the get-go that running your store will likely be more expensive and complex. 

For example, the application for a liquor license in Arizona (an open state) costs between $100 and $400. Compare that to a control state like Iowa, where the annual licensing fee is $715 to $1,625. 

If you’re in a control state, you also will have limited control over what you stock and how to price it. You can put in special requests for certain products, but generally, you are limited to what the state approves. This can make it harder for craft distillers and breweries to enter the market.

Generally speaking, most control states mainly control the sale of hard liquor, with separate, less restrictive licenses and rules for beer and wine. If that’s true in your state, you might consider carving out a niche as a craft beer store or wine shop instead.

2. Use an Inventory and Employee Management System

Running a liquor store in a control state also presents some unique inventory challenges, which can be exacerbated if you track inventory by hand.

In an ABC state, you need to keep track of:

• What quantities of different bottles you have on hand
• Who is selling it
• How much is sold to one individual
• Control State Codes (CSCs) and/or product SKUs

Many liquor store point of sale (POS) systems come with helpful inventory management features that can help you stay compliant with state rules (and reduce time spent on admin). 

When evaluating a POS system, look for these must-have features:

• Real time inventory tracking
• Mobile scanning
• Custom reports and sales records
• Employee management and access controls
• Case break inventory tracking

Liquor-specific systems like Bottle POS also have additional ways to help stores in ABC states stay compliant, such as setting minimum pricing, special tax rates, and hours of sale restrictions.

Related Read: How To Manage Liquor Store Inventory: 4 Best Practices

3. Use ID Scanners To Maintain Compliance

It’s the responsibility of all liquor stores, not just those in control states, to prevent underage sales of alcohol — but the consequences for a slip-up can be much worse in an ABC state.

That’s why ABC state liquor stores need to use age-verification tools like ID scanners. ID scanners avoid human error by instantly validating licenses and other IDs before a sale is made. Some POS systems make it a requirement to validate ID before a sale can be completed, further reducing compliance risk.

4. Know Liquor Marketing Rules

Liquor store marketing is essential for retaining and drawing in new customers. However, if you’re in a control state, you may be limited in what tools you have at your disposal.

In most control states, you cannot offer:

• Discounts
• Limited sales
• Customer loyalty programs

That means you have to be more creative with how you promote your business. If you can’t lure in customers with deals, you should establish yourself as a great place for expert recommendations instead.

Hire and train staff to know their way around certain sections of the store, and create signage that encourages customers to ask for help. An expert recommendation can be just as valuable as a discount, especially when the cost of living is up and people are less likely to splurge on something new.

5. Optimize Store Layout 

Changing your store layout is a great way to encourage repeat business and ensure customers find exactly what they’re looking for. 

Not sure where to start? Use the sales data on your POS system to identify bestselling products and product categories and arrange your shelves accordingly. You can also use product displays to highlight the availability of top-selling items.

However, make sure you know your state’s rules before making any changes. Some control states have direct control over what displays can be used, while others are more lax. 

Navigate ABC States Effectively With a Liquor Store POS System

Starting a liquor store requires a big investment, a can-do attitude, and the right tools, especially if you operate in an ABC state. 

With stricter compliance and inventory rules, you can’t afford to take chances.

Bottle POS was built by liquor store owners for liquor store owners, with industry-specific tools to help liquor store owners in any location find success. With support for custom SKUs (and CSCs), employee management features, and more, Bottle POS has everything you need to stay open and drive growth.

Schedule a demo today to see how Bottle POS can help your liquor store.