A grand compromise might be needed to send a bill to reform the state’s alcohol distribution system to Gov. Tate Reeves’ desk for signature.
The Senate and the House remain at odds, with the Senate favoring outsourcing wholesale distribution of liquor and wine to a single vendor while appropriating funds to improve the existing warehouse.
House leaders are seeking to get the state out of the distribution business entirely and entrust it with the private sector, much as it is done for beer.
Whatever is decided, the need for reform becomes more acute. In fiscal 2021, which started on July 1, collections for the state’s tax on alcoholic beverages and profits from the wholesale distribution of alcohol are up by more than 23 percent, showing a strain on a distribution center ill-equipped to cope.
Mississippi is one of 17 states nationwide that are known as control states, which means government has a monopoly on wholesale distribution of at least one of the three categories of alcoholic beverages (beer, wine and spirits) and even retail, like Alabama.
The state owns a 211,000 square foot warehouse built in 1983 in Gluckstadt with a shipping capacity of 19,000 cases.
House Bill 997 authored by state Rep. Trey Lamar, R-Senatobia, would end the practice of the state being the wholesale distributor for wine and spirits and govern the issuance of wholesaler permits. The original bill also would’ve reduced the tax assessed on wine and spirits from 27.5 percent to 18 percent.
It passed the House 104-3 on February 3 and was amended with a strike-all in the Senate Finance Committee that keeps the state as the wholesale distributor of wine and spirits and mandates that the Legislature appropriate funds for upgrades to the ABC warehouse.
A reverse repealer was also added to the bill to ensure a compromise between the two chambers before it can become law.
Another bill that could act as a reform vehicle that is still alive is Senate Bill 2806. This bill — authored by state Sen. and Senate Finance Committee chairman Josh Harkins, R-Flowood — is a placeholder bill that brings forward code sections related to the Alcohol Beverage Control division of the state Department of Revenue (DOR).
Harkin’s bill would also allow the DOR to contract for a concessionaire to take over management and operation of the state’s alcohol warehouse. By including code sections in the bill, it gives lawmakers more time to work on the issue.
New Hampshire and Ohio are two states that use an outside vendor to operate their distribution warehouses.
The House Ways and Means Committee, chaired by Lamar, approved SB 2806 on February 2. Like HB 997, there is a reverse repealer attached to the bill.
The idea of creating a state-chartered entity, like the Mississippi Lottery Corporation, hasn’t been part of the discussion for how to improve the state’s wholesale alcohol distribution system. Virginia is an example of a state with such a system, but no bill that would’ve created such an entity was dropped in this session.
The appropriation bill for the DOR for this year has a small cut for ABC, with the division slated to receive $8.289 million, down from last year’s $8.597 million outlay. The bill, SB 2923, has already passed the Senate and has been referred to the Appropriations Committee in the House.
The COVID-19 pandemic and the resultant increase in alcohol sales forced policymakers to address ABC issues in this year’s session.
In July, the ABC decided to temporarily suspend alcohol deliveries to retailers to catch up with a months-long backlog after alcohol sales skyrocketed during the lockdowns. After a massive outcry from retailers, the ABC walked back the proposal.
For the fiscal year that ended June 30, the DOR transferred $88.62 million in ABC collections to the general fund. That represents an increase of 9 percent compared with fiscal 2019, when $81.3 million was transferred to the general fund.
So far, this fiscal year, the upward trend in alcohol sales statewide has continued according to data from the DOR. Since the fiscal year started on July 1, alcoholic beverage tax receipts and profit from the ABC warehouse are up more than $13 million as compared to the same period last year. Only one month so far, December, was down (by just over 1 percent) as compared to the same time last year.
December has historically been one of the ABC’s biggest months for revenues.
The biggest increases in ABC revenues compared to the year before were in September (up more than 49 percent) and in October (up more than 36 percent).
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.
Lawmakers are also on the verge of allowing home delivery from package stores and other liquor and wine retailers, with two bills still alive.
HB 1137 was passed out of the Senate Finance Committee on February 2. This bill would create a delivery service permit to allow a company to deliver alcohol from a retailer to a customer at home. The bill was also authored by Lamar. Like HB 997, the Finance Committee added a strike-all amendment.
Harkins has a similar bill, SB 2804, that does the same thing.
Bills that would’ve allowed Sunday sales, sales of wine in grocery stores and direct shipments from out-of-state wineries to customers died earlier in the session.
