The Mississippi House did a little bit of rewriting of its own last week in a battle over whether to end the state's monopoly on wholesale distribution of wine and spirits or build a new warehouse.
The House of Representatives passed a rewritten bill that would get the state out of the wine and spirits distribution business, while the Senate passed a rewritten bill that would appropriate $55 million via bonds to build a new warehouse. After the Senate rewrote and passed its version of House Bill 512, the House rewrote Senate Bill 2844 to resemble what they initially passed.
The bill, which was amended with what is known as a strike-all, passed the Senate by a 46-5 margin on March 8 and has been returned to the House for concurrence. The House will likely invite conference on the bill rather than agree to the changes.
The House approved its rewritten version of SB 2844 by an overwhelming 115-1 margin on March 8 and it sent it over to the Senate for an unlikely concurrence. It is likely that one of the bills will die and the other will become the vehicle for a possible compromise.
The bill was rewritten in the House Ways and Means Committee by committee chair and state Rep.Trey Lamar, R-Senatobia. He authored the original version of HB 512.
The Senate wants to appropriate $55 million in bonds to build a new warehouse to replace the Department of Revenue's 212,000-foot warehouse in Gluckstadt that was built in 1983 and is hopelessly out of date compared with advancements in logistics since its construction.
The DOR's Alcohol Beverage Control division would contract with an operator for 10 years to take over the new warehouse's operations. The contractor would be paid per case of alcoholic beverages sold and the state would pay regular maintenance costs for the warehouse.
The state (or the contractor) would also levy a 25 cent per case shipping fee until a special fund created to pay for warehouse improvements reaches $25 million.
SB 2844 is authored by state Sen. Chris Johnson, R-Hattiesburg, and would take effect after passage.
The House wants to end the state’s monopoly on the liquor and wine distribution business by January 1, 2023. As in the case with beer, wholesalers take over distribution of wine and spirits if HB 512 became law. It would also lower the excise tax on wine and spirits from 27.5 percent to 18 percent.
The tax would also be collected by the Department of Revenue’s Alcoholic Beverage Control in a different fashion. Right now, the 27.5 percent tax is assessed on each bottle sold from the Gluckstadt warehouse, but the lower rate would be assessed on wholesalers on their gross proceeds from each wholesale purchase by a retailer.
Lawmakers have approved money to improve the warehouse before. The Legislature voted to spend $4 million in 2019 in warehouse improvements, but the bonds were never authorized. In 2013 and 2014, $1 million was appropriated for repairs and renovation at the warehouse. The last expansion was 2003, when a climate-controlled wine room was added.
The COVID-19 pandemic spotlighted that the 212,000 square foot state-run warehouse (built in 1983) isn't capable of handling a large surge in sales. The DOR tried to stop shipments in July 2020 for two weeks to catch up with demand, but retailer outcry caused them to scuttle that plan.
Increasing volumes necessitate something being done. In fiscal 2021, total tax collections and profit from the warehouse were up 18.83 percent from the year before, increasing from $129.2 million to $153.5 million. In 2020, tax collections and profit from the warehouse grew by 13.1 percent, improving from $114 million in fiscal 2019 to $129 million.
Mississippi is one of 17 states that are known as control states, where the government acts as the wholesale distributor for at least one of the three tiers of alcoholic beverages — wine, spirits and beer — and possibly acts as the retailer (like in the case of Alabama) as well.
The last state to transition from a control state to a license state was Washington. The DOR, through its ABC division, licenses retailers, collects taxes at both the wholesale and retail levels and manages the Gluckstadt warehouse that contracts with a trucking firm to ship product to retailers statewide.
