Lawmakers are considering withdrawing the state from the liquor and wine business, letting private industry take over warehousing and distributing liquor — something the state has struggled to do efficiently.
The Legislature is also considering allowing home delivery of liquor, wine and beer, similar to delivery services for groceries and restaurant takeout that have become popular during the COVID-19 pandemic.
Both measures appear to have traction in the Legislature this session, even in a Bible Belt state that has been slow to relax or change its strict liquor laws.
“The time has come that we address these issues,” House Ways and Means Chairman Trey Lamar said of the move to privatize liquor distribution. “… I happen to believe that it is not a core function of government to run a liquor warehouse … If it were done today, if it were day one, we would never put government in charge of liquor. How do we unwind it? That’s where it gets a little hard.”
Mississippi is one of 17 states that tightly control the sale of liquor, and one of 10 that sell spirits to all private package stores. Seven directly own all the liquor stores in their states.
Mississippi’s warehouse and distribution, run by the Alcoholic Beverage Control division of the Department of Revenue, has for years struggled to keep up with demand and new products and its warehouse is too small and antiquated. Lawmakers have been reluctant to sink money into upgrades of the warehouse and system. Upgrading the state’s warehouse and distribution system would cost taxpayers an estimated $40 million.
House Bill 997, which passed Ways and Means and is before the full House, would allow private distributors to come in and take over distribution and warehousing of liquor and wine.
Lamar said that “on paper,” it would look like the state would lose millions in revenue from privatization, but he believes state coffers will instead see increases.
Mississippi marks up the liquor it sells to package stores and bars by 27.5%, which Lamar said brings in about $80 million. The new legislation would reduce that state markup 18% as private distributors take over.
“On paper, it would drop to about $55 million,” Lamar said. “However, we’ve received commitments from three major wholesalers that we know will enter this state. They will buy and construct large warehouses, and hire 100 to 200 employees each. Plus we’ll see smaller wholesalers. So we will have multiple investments, including 500 to 1,000 new jobs.
“Plus, the private sector will be able to properly meet demand, unlike we’ve been doing,” Lamar said. “I believe it would be sound policy to expect with the demand met, we would see more than we are collecting now. I believe a conservative estimate would be $100 million or more a year.”
Rep. Tommy Reynolds, D-Charleston, told Lamar, “This is a great bill. The only problem I see is that we should have done it 40 years ago. We’ve wasted a lot of time and money.”
Rep. Kevin Horan, R-Grenada, offered a successful amendment to the bill to provide pricing protection for package stores. It would prohibit private distributors from making sweetheart pricing deals with particular stores or chains and require them to offer uniform pricing to all stores.
Rep. Jerry Turner, R-Baldwyn, said he believes privatization is the right move, but he would like to see taxpayers’ decades long investment reimbursed by private industry.
“I think (distribution) should go through a public bid process — not just give it away,” Turner said. “Taxpayers have invested in this for many years, and they need to see a return on it.”
Senate Bill 2804 and its mirror House Bill 1135 would allow private delivery companies — such as Shipt and Instacart — to bring liquor, wine and beer to consumers 21 and older at their homes.
Both the Senate Finance committee and House Ways and Means committee passed the measures on to their full chambers.
Senate Finance Chairman Josh Harkins, author of the Senate measure, said the deliveries would be similar to grocery deliveries that have become more popular during the pandemic. He said deliveries could not be made to people in dry jurisdictions, nor could purchases be made after hours for liquor stores.