For the 50 percent of Mississippians who enjoy a glass of wine with their meal, the last few months have been educational as the state-run Alcohol Beverage Control warehouse has been in disarray.
Mississippi has the fifth lowest alcohol consumption in the nation at 2.17 gallons per year. Utah is the lowest at 1.34 followed by West Virginia, Arkansas, Oklahoma and Georgia.
Roughly 30 of Mississippi’s 82 counties are dry in some fashion. Many of these “dry” counties are considered “moist” since towns and cities within those counties are wet.
Then there is the distinction of hard liquor versus beer and wine. Add in those variables and you have a true hodge podge of alcohol laws across our state.
Partly because of our state’s historical skepticism about alcohol, Mississippi has kept a tight control over its distribution. Mississippi is one of 17 “control” states with the state Department of Revenue acting as the sole wholesaler.
Not only is the state the sole wholesaler but it only has one 211,000 square foot wholesale warehouse for the entire state. This creates a big bottleneck and over the last few months this bottleneck has clogged.
Ruan, a private company, received the state contract to run the warehouse. The company decided to make two big moves at once: upgrade their order and delivery software and reorganize their physical distribution system. Chaos ensued. Hundreds of liquor stores were unable to stock their shelves, causing millions of dollars in lost business.
Ruan may have made these changes in anticipation of possible legislative changes that would allow grocery stores to sell wine. So far this effort has died in committee, especially opposed by the liquor stores who fear the bill would put them out of business.
If that happens, the ABC, which currently has 600 or so liquor store clients, will have thousands of grocery stores as clients. The antiquated software and delivery systems would be hard pressed to keep up.
Forty out of 50 states in the U. S. allow grocery stores to sell wine. Thirty-one states allow hard liquor to be sold in grocery stores. Not so in Mississippi.
Ruan got the contract to run the warehouse in 2023, a year after the legislature passed a bill to contract the running of the warehouse to a private company. Ruan was one of four bidders for the four-year contract.
Meanwhile, the state is planning to build a new warehouse with Ruan as the manager.
Multiple Mississippi liquor store owners have filed breach of contract lawsuits against Ruan for the software implementation fiasco.
Ruan is a transportation company just venturing into state-level alcohol logistics. The company has a rags-to-riches story based on its founder John Ruan, who started from nothing and built a billion-dollar company. The warehouse disaster is a rare misstep.
Mississippi’s control of liquor isn’t surprising given our history. Mississippi didn’t wait for federal prohibition. In 1908, Mississippi passed statewide prohibition 12 years before the 18th Amendment banned alcohol nationwide. Then Mississippi was the first state to pass the 18th Amendment.
When the 21st Amendment repealed prohibition, Mississippi refused to follow suit. It was the last state to repeal statewide prohibition in 1966.
During this period of statewide prohibition, Mississippi realized it was missing out on tax revenue, so the legislature passed a 10 percent tax on the sale of illegal goods, called the Black Market Tax, in 1944.
This bizarre system continued until the famous 1966 raid of the Country Club of Jackson which outraged the affluent class and pressured the legislature to end this hypocrisy.
No doubt the existing system of controlling all alcohol through one warehouse is motivated by the legislature’s desire to make taxation easy and unavoidable. ABC collects over $100 million a year.
Last year, in a rare loosening of restrictions, Mississippi passed a new law allowing consumers to receive wine shipments direct to their home, provided the winery gets a state permit.
The new law is far from the free market. For instance, a winery can only ship direct to consumer if the ABC warehouse doesn’t carry the wine. It remains to be seen if the new law will truly spur a boom in direct shipments from wineries to consumers.
No history of Mississippi’s relationship to alcohol is complete without mentioning Noah "Soggy" Sweat, a young lawmaker from Corinth. When asked about his stance on liquor in 1952, he delivered a masterpiece of political double-talk that is still studied today:
"If when you say whiskey you mean the devil's brew, the poison scourge, the bloody monster... then certainly I am against it. But, if when you say whiskey you mean the oil of conversation, the philosophic wine, the ale that puts a song in your hearts and laughter on your lips... then certainly I am for it."
