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Saturday, March 17, 2018

Alcohol Prohibition Isn’t Dead in Mississippi

It's time for Mississippi to release its stranglehold on the alcohol industry.

The Mississippi Legislature recently considered House Bill 1556, which would have issued up to $35 million in bonds for the expansion of an Alcohol Beverage Control warehouse in Madison. All hard alcohol and wine sold in the state currently pass through this singular location, which functions as the state’s wholesaler to restaurants, bars, and liquor stores.

Proponents of the legislation claimed that expansion is necessary since the warehouse is operating at capacity (since, naturally, demand for alcohol is high). But what if this is a wake-up call for Mississippi to bring its alcohol laws into the 21st century?

Mississippi’s Complicated Relationship with Alcohol

In 1908, Mississippi outlawed alcohol a decade before the passage of the 18th Amendment banned it nationwide. In 1933, the 21st Amendment ended Prohibition. It was ratified by 36 states in 288 days.

Meanwhile, Mississippi continued to enforce statewide Prohibition until 1966. As of May 2017, though, 32 counties in Mississippi are still considered “dry.” Although 24 of those dry counties do contain “wet” cities, eight of them don’t sell alcohol at all.

Although Mississippi took a step in the right direction, breweries were still faced with a number of hurdles. 

According to VinePair, a website dedicated to alcohol data and content, Mississippi is also last in craft beer production. In 2016, Mississippi craft breweries only produced 0.4 gallons of beer per adult of legal drinking age. For comparison, Vermont, which leads the nation in craft beer production, produces 17.4 gallons per adult. The craft beer industry in Mississippi contributes approximately $150 in economic growth per capita, compared to nearly $650 per capita in Vermont.

Begrudgingly permitted by the state to begin operations, Lazy Magnolia Brewing Company was started in 2003 as the first craft brewery in Mississippi. Lazy Magnolia remained the only brewery of its kind in the state until 2011. In 2012, efforts led by local nonprofit Raise Your Pints resulted in the state legislature passing a law that increased the maximum alcohol content in beer from 6.5 percent to 10 percent. The following year, Mississippi lawmakers legalized homebrewing.

Although Mississippi took a step in the right direction, breweries were still faced with a number of hurdles. Beer producers could give brewery tours and free samples but could not sell their products on-site until the passage of H.B. 1322 in 2017. Keeping to tradition, Mississippi became the next to last state to allow breweries to sell their own product—but with the paternalistic caveat that breweries could only sell up to two cases of beer per customer per day.

Slow to Act

Residents fully understand that Mississippi has a tendency to be slow in enacting change. When asked for comment, Mississippi homebrewer Mark Van Norman stated, “[Mississippi] seems to be going in the right direction with breweries now being able to sell their product direct to their visitors. The fact they couldn’t always seemed ridiculous to me.”

Although Mississippi’s craft beer economy may finally be coming of age, the Magnolia State’s monopoly on liquor distribution through the singular ABC warehouse in Madison is a step backward. Strict regulation of the state liquor economy may be the reason why moonshine is still either produced or available in every county via the shadow economy, which is the term for any economic activity that is not taxed or recorded. (Mississippi has the largest shadow economy in the nation, accounting for 9.54 percent of annual GDP.)

The Magnolia State will continue to change incrementally.

Mississippi currently charges a 27.5 percent markup on every bottle of alcohol sold. In 2016, the warehouse provided an entire economy with 3.2 million cases of alcohol.

In October 2017, the Mississippi Department of Revenue (DOR) requested information from private firms on how to move towards privatizing the liquor warehouse. If the DOR is considering privatizing the warehouse logistics—assuming the state would not forfeit the $58 million per year generated by the warehouse back to the consumer—how would expanding the facility to the tune of $35 million make the operation more lucrative for a third party? Could the ABC not meet demand by building separate, less-expensive warehouses in other regions of the state?

The Magnolia State will continue to change incrementally. The Sun Herald reported in October 2017 on the state’s inadequate ABC warehouses and draconian liquor laws. If these remnants of Prohibition were updated or altered, Mississippi could naturally attract businesses like Costco and Whole Foods instead of just offering them cronyist incentive packages (as the state currently does).

Allowing for craft beer, privatizing ABC warehouses, and modernizing alcohol laws are nudges in the right direction. Expanding one state-owned liquor distribution center is an obviously bad call—especially if taxpayers are footing the bill.

  • Stephen Lusk is a Young Voices Advocate and senior at Mississippi State University. His Twitter handle is @LuskBrand.